UNITED
STATES
 
 SECURITIES
AND EXCHANGE COMMISSION
 WASHINGTON,
D.C. 20549
  
 
 FORM
10-Q
 
 (MARK
ONE)
 
 x QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF
1934
 
 FOR THE
QUARTERLY PERIOD ENDED March 31, 2009
 
 OR
  ̈ TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF
1934
 
 COMMISSION
FILE NUMBER: 0-53225
  
 ECOSOLUTIONS
INTL
 (Exact
name of registrant as specified in its charter)









Nevada
              
              04-3803966(State
      or other jurisdiction of
                incorporation
      or organization)
              
              (I.R.S.
      Employer
                Identification
      Number)





295
East Main Street, Suite 1,


Ashland,
Oregon 97520


(Address
of principal executive offices)





(541)
552-9360


Issuer’s
telephone number:




(Former
Name or Former Address, if Changed Since Last Report)





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days:


Yes x No  o .





Indicate
by check mark whether the registrant is a large accelerated filer, a
non-accelerated filer, or a smaller reporting company.





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





Indicate
the number of shares outstanding of each of the registrant's classes of common
stock, as of the latest practicable date:


As of May
1, 2009, the issuer had 25,992,884 shares of common stock
outstanding.





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act):


Yes  ̈ No x















ECOSOLUTIONS
INTL


FORM
10-Q


For
the quarterly period ended March 31, 2009





TABLE
OF CONTENTS





PART
      IITEM
      1.
                Condensed
      Financial Statements
                
                3ITEM
      2.
                Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                
                18ITEM
      3.
                Quantitative
      and Qualitative Disclosures About Market Risk
                
                26ITEM
      4T.
                Controls
      and Procedures
                
                26PART
      IIITEM
      1.
                Legal
      Proceedings
                
                27ITEM
      2.
                Unregistered
      Sales of Equity Securities and Use of Proceeds
                
                27ITEM
      3.
                Defaults
      Upon Senior Securities
                
                27ITEM
      4.
                Submission
      of Matters to a Vote of Security Holders
                
                27ITEM
      5.
                Other
      Information
                
                27ITEM
      6.
                Exhibits
                
                28




2




PART
I


ITEM 1.   FINANCIAL STATEMENTS
..





ecoSolutions
Intl


Condensed
Balance Sheets







March
      31,
                      
                      
                      December
      31,2009
                      
                      
                      2008(Unaudited)AssetsCurrent
      assets:Cash
                      
                      $
                      16,225
                      
                      
                      $
                      12,906Trade
      accounts receivable
                      
                      
                      -
                      
                      
                      
                      8,419Prepaid
      expenses, deposits and advances
                      
                      
                      156,359
                      
                      
                      
                      54,697Total
      current assets
                      
                      
                      172,584
                      
                      
                      
                      76,022Property and equipment,
      net of accumulated depreciation
                      
                      
                      47,282
                      
                      
                      
                      71,737Deferred
      financing costs
                      
                      
                      56,945
                      
                      
                      
                      46,295Accounts receivable non-current (related
      party - see Note 6)
                      
                      
                      28,770
                      
                      
                      
                      27,270Security
      deposits
                      
                      
                      5,454
                      
                      
                      
                      5,454Total
      assets
                      
                      $
                      311,035
                      
                      
                      $
                      226,778Liabilities
      and Stockholders’ DeficitCurrent
      liabilities:Accounts
      payable (related party balances of $53,721 and $46,911, respectively - see
      Note 6)
                      
                      $
                      244,862
                      
                      
                      $
                      258,638Accrued
      liabilities
                      
                      
                      67,081
                      
                      
                      
                      52,279Accrued
      payroll - officer/stockholders
                      
                      
                      105,000
                      
                      
                      
                      115,807Current
      portion of loans payable and interest payable (related party balances of
      $484,694 and $262,937, respectively)
                      
                      
                      487,490
                      
                      
                      
                      274,537Total
      current liabilities
                      
                      
                      904,433
                      
                      
                      
                      701,261Loans and interest
      payable, (including related party balances of $3,012,926 and
      $2,944,514, respectively, less current portion)
                      
                      
                      3,025,396
                      
                      
                      
                      2,971,890Total
      liabilities
                      
                      
                      3,929,829
                      
                      
                      
                      3,673,151Stockholders’
      deficit:Common
      stock, par value $.001; 100,000,000 shares authorized; 25,492,884 and
      24,417,884 shares issued and outstanding at March 31, 2009 and
      December 31, 2008, respectively
                      
                      
                      25,493
                      
                      
                      
                      24,418Additional
      paid-in capital
                      
                      
                      2,418,469
                      
                      
                      
                      2,047,152Accumulated
      deficit
                      
                      
                      (6,062,756
                      )
                      
                      
                      (5,517,943
                      )Total
      stockholders’ deficit
                      
                      
                      (3,618,794
                      )
                      
                      
                      (3,446,373
                      )Total
      liabilities and stockholders' deficit
                      
                      $
                      311,035
                      
                      
                      $
                      226,778





The
accompanying notes are an integral part of these condensed financial
statements.





3





ecoSolutions
Intl


Condensed
Statements of Operations (Unaudited)










Three
      Months EndedMarch
      31, 2009
                  
                  
                  March
      31, 2008Product
      sales
                  
                  $
                  88,284
                  
                  
                  $
                  1,733,805Shipping
      revenue
                  
                  
                  -
                  
                  
                  
                  24,294Licensing
      revenue
                  
                  
                  27,856
                  
                  
                  
                  -Services
      income from related party
                  
                  
                  1,500
                  
                  
                  
                  1,500Net
      sales
                  
                  
                  117,640
                  
                  
                  
                  1,759,599Cost
      of goods sold
                  
                  
                  86,462
                  
                  
                  
                  1,376,206Gross
      profit
                  
                  
                  31,178
                  
                  
                  
                  383,393Selling,
      general and administrative expenses:Payroll
      and benefits
                  
                  
                  167,186
                  
                  
                  
                  258,525Expense
      for outside consultants
                  
                  
                  199,956
                  
                  
                  
                  19,127Professional
      fees
                  
                  
                  35,149
                  
                  
                  
                  28,502Other
      selling, general and administrative expenses
                  
                  
                  64,242
                  
                  
                  
                  120,749Total
      selling, general and administrative expenses
                  
                  
                  466,533
                  
                  
                  
                  426,903Operating
      loss
                  
                  
                  (435,355
                  )
                  
                  
                  (43,510
                  )Interest expense,
      net
                  
                  
                  109,458
                  
                  
                  
                  99,450Net
      loss
                  
                  $
                  (544,813
                  )
                  
                  $
                  (142,960
                  )Net loss per share,basic and diluted
                  
                  $
                  (0.02
                  )
                  
                  $
                  (0.01
                  )Weighted
      average shares used in per share calculations:Basic
      and diluted
                  
                  
                  24,565,662
                  
                  
                  
                  13,930,404





The
accompanying notes are an integral part of these condensed financial
statements.





4





ecoSolutions
Intl


Condensed
Statements of Cash Flows (Unaudited)


Increase
(Decrease) in Cash










Three
      Months EndedMarch
      31, 2009
                    
                    
                    March
      31, 2008Cash
      flows used for operating activities:Net
      loss
                    
                    $
                    (544,813
                    )
                    
                    $
                    (142,960
                    )Adjustments
      to reconcile net loss to net cash provided by (used for) operating
      activities:Depreciation
                    
                    
                    5,790
                    
                    
                    
                    6,335Gain
      from sale of property and equipment
                    
                    
                    (3,123
                    )
                    
                    
                    -Issuance
      of common stock for services
                    
                    
                    164,000
                    
                    
                    
                    6,250Stock
      option compensation expense
                    
                    
                    208,392
                    
                    
                    
                    37,459Convertible
      promissory note beneficial conversion feature
                    
                    
                    31,011
                    
                    
                    
                    41,874Changes
      in assets and liabilities:(Increase)
      decrease in assets:Trade
      accounts receivable
                    
                    
                    6,919
                    
                    
                    
                    (258,678
                    )Finished
      goods inventory
                    
                    
                    -
                    
                    
                    
                    11,281Prepaid
      expenses, deposits and advances
                    
                    
                    (101,662
                    )
                    
                    
                    70,787Deferred
      financing costs
                    
                    
                    (10,650
                    )
                    
                    
                    -Increase
      (decrease) in liabilities:Accounts
      payable and accrued liabilities
                    
                    
                    (9,781
                    )
                    
                    
                    (90,203
                    )Accrued
      interest
                    
                    
                    72,770
                    
                    
                    
                    43,963Customer
      deposits liability
                    
                    
                    -
                    
                    
                    
                    (7,526
                    )Net
      cash used for operating activities
                    
                    
                    (181,147
                    )
                    
                    
                    (281,418
                    )Cash
      flows provided by (used for) investing activities:Acquisition
      of property and equipment
                    
                    
                    -
                    
                    
                    
                    (6,220
                    )Proceeds
      from sale of property and equipment
                    
                    
                    21,788
                    
                    
                    
                    -Net
      cash provided by (used) in investing activities
                    
                    
                    21,788
                    
                    
                    
                    (6,220
                    )Cash
      flows provided by (used in) financing activities:Borrowings
      on notes payable
                    
                    
                    186,389
                    
                    
                    
                    182,700Repayments
      on notes payable
                    
                    
                    (23,711
                    )
                    
                    
                    (230,378
                    )Proceeds
      from issuance of common stock
                    
                    
                    -
                    
                    
                    
                    567,978Net
      cash provided by financing activities
                    
                    
                    162,678
                    
                    
                    
                    520,300Net
      increase in cash
                    
                    
                    3,319
                    
                    
                    
                    232,662Cash,beginning of
      period
                    
                    
                    12,906
                    
                    
                    
                    10,755Cash,end of
      period
                    
                    $
                    16,225
                    
                    
                    $
                    243,417Supplemental
      disclosure of cash flow information:Cash
      paid during the period for interest
                    
                    $
                    5,677
                    
                    
                    $
                    13,614Supplemental
      disclosure of non-cash financing activities:Conversion
      of promissory notes to common stock
                    
                    $
                    -
                    
                    
                    $
                    167,495





The
accompanying notes are an integral part of these condensed financial
statements.





5





ecoSolutions
Intl


Notes
to Condensed Financial Statements


Quarterly Period Ended March 31,
2009




(1)
                Summary
      of Significant Business and Accounting
  Policies:








Basis
of Presentation





The
accompanying condensed balance sheet as of December 31, 2008, which has been
derived from audited financial statements, and the unaudited interim condensed
financial statements as of March 31, 2009 have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X and therefore
do not include all of the information and footnotes required by accounting
principles accepted in the United States for comparable annual financial
statements. In the opinion of the management of the Company, the accompanying
unaudited interim condensed financial statements include all adjustments,
including those that are normal and recurring considered necessary to present
fairly the financial position as of March 31, 2009, and the results of
operations for the three months ended March 31, 2009. Unaudited interim
results are not necessarily indicative of the results for the full year. The
Company’s operating results will fluctuate for the foreseeable future. 
Therefore, period-to-period comparisons should not be relied upon as predictive
of the results in future periods.  The results of operations for the three
months ended March 31, 2009 are not necessarily indicative of the results to be
expected for any subsequent periods. Certain notes and other information have
been condensed or omitted from the interim condensed financial statements
presented in this quarterly report. These unaudited interim condensed financial
statements should be read in conjunction with the financial statements of the
Company for the year ended December 31, 2008 and notes thereto contained in the
information filed in our Annual Report on Form 10-K.





Certain
reclassifications have been made to prior years to conform to the current year
presentation. These changes include the reclassification of employee stock
option expense from other selling, general and administrative expense into
payroll and benefits on the condensed statement of operations.




Business
Organization





ecoSolutions
Intl (formerly 360 Interchange, Inc.) (the “Company”) was founded on July 24,
2004 as an Oregon corporation. The Company reincorporated in Nevada on January
3, 2005. No discontinuance of Company operations occurred during this period. On
March 17, 2008, the Company changed its name to ecoSolutions Intl.





Business
Activity





The
Company sources products from overseas, selling to various retailers,
distributors or manufacturing customers located in the United States or
overseas. Through March 31, 2009, the Company’s product sourcing has originated
from Asia, with major product categories of wood flooring products and foam
products such as yoga mats, flooring underlayment, ecoFoamÔ for sandals and the
licensing of ecoFoamÔ.
The Company has developed exclusive business arrangements with certain Asian
manufacturers to market and sell eco-friendly products, focusing on selling
plastic alternatives to polyvinyl chloride (PVC).





Use
of Estimates





The
preparation of condensed financial statements in conformity with accounting
principles generally accepted in the United States of America (GAAP) requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.





Fair
Value





Unless
otherwise indicated, the fair values of all reported assets and liabilities,
which represent financial instruments, none of which are held for trading
purposes, approximate carrying values of such amounts.




6





ecoSolutions
Intl


Notes
to Condensed Financial Statements


Quarterly Period Ended March 31,
2009




(1)
                Summary
      of Significant Business and Accounting Policies
      (Continued):







Going
Concern





The
condensed financial statements have been prepared on a going concern basis which
contemplates the realization of assets and the satisfaction of liabilities in
the normal course of business. The Company incurred a net loss of $544,813 for
the three months ended March 31, 2009. The Company had a working capital
deficiency of $731,849 and an accumulated deficit of $6,062,756 as of March 31,
2009. These factors raise substantial doubt about the Company’s ability to
continue as a going concern for a reasonable period of time. Management’s
intention is set forth in a business plan which assumes increased operating
revenues and additional financing. These business plans include the potential of
obtaining financing through bridge loans and equity financing arrangements,
maintaining a revenue focus of targeting large potential customers with the
Company’s eco-friendly plastic alternative products and controlling selling,
general and administrative expenses. However, there is no assurance that the
Company will be successful in these efforts, which raises substantial doubt as
to its ability to continue as a going concern.  The ability of the Company
to continue as a going concern is dependent on the plan’s success, as well as,
achieving profitable operations in the future. The condensed financial
statements do not include any adjustments that might be necessary if the Company
is unable to continue as a going concern.




Comprehensive
Loss




Comprehensive
loss consists of net loss and other gains and losses affecting stockholders
equity that, under generally accepted accounting principles, are excluded from
net loss in accordance with SFAS No. 130, "Reporting Comprehensive Income” (FAS
No. 130). The Company, however, does not have any components of other
comprehensive loss as defined by SFAS No. 130. For the three months ended March
31, 2009 and 2008, comprehensive income consists only of net loss and,
therefore, a Statement of Other Comprehensive Loss has not been included in
these condensed financial statements.




7




ecoSolutions
Intl


Notes
to Condensed Financial Statements


Quarterly
Period Ended March 31, 2009







(1)
              Summary
      of Significant Business and Accounting Policies
      (Continued):








Segment
Reporting





Statement
of Financial Accounting Standards No. 131, “Disclosures about Segments of an
Enterprise and Related Information” (SFAS 131), establishes standards for
reporting information on operating segments in interim and annual financial
statements. In accordance with this guidance, the Company has determined that it
has one operating segment. The Company has historically sold wood flooring, foam
underlayment for flooring, yoga mats and ecoFoamÔ for sandals and is in the
process of transitioning to the selling of eco-friendly plastic
alternatives. The chief operating decision-makers review the Company’s operating
results on a consolidated basis, discrete financial information is not available
for each product line and the operations are managed as a single operating
segment.





Recent
Accounting Pronouncements




FSP FAS 107-1 and APB
28-1 - In April 2009, the FASB issued FASB Staff Position No. FAS 107-1
and APB 28-1, "Interim Disclosures about Fair Value of Financial Instruments,"
which requires disclosures about fair value of financial instruments for interim
reporting periods of publicly traded companies as well as in annual financial
statements. This Staff Position is effective for interim reporting periods
ending after June 15, 2009, with early adoption permitted for periods ending
after March 15, 2009. Management does not believe the adoption of this staff
position will have a material impact on the Company's financial position or
results of operations.




FSP FAS 115-2 and FAS
124-2 - In April 2009, the FASB issued FASB Staff Position No. FAS 115-2
and FAS 124-2, "Recognition and Presentation of Other-Than-Temporary
Impairments," which amends the other-than-temporary impairment guidance in U.S.
GAAP for debt securities to make the guidance more operational and to improve
the presentation and disclosure of other-than-temporary impairments on debt and
equity securities in the financial statements. This Staff Position is effective
for interim and annual reporting periods ending after June 15, 2009, with early
adoption permitted for periods ending after March 15, 2009. The Company has not
determined the impact, if any, of its adoption of this staff position.





FSP FAS 141(R)-1 - In
April 2009, the FASB issued FASB Staff Position No. FAS 141(R)-1, “Accounting
for Assets Acquired and Liabilities Assumed in a Business Combination That Arise
from Contingencies” (FSP FAS 141(R)-1), that amends and clarifies FASB Statement
No. 141 (revised 2007), “Business Combinations”.  FAS 141(R)-1
addresses application issues raised by preparers, auditors, and members of the
legal profession on initial recognition and measurement, subsequent measurement
and accounting, and disclosure of assets and liabilities arising from
contingencies in a business combination.This Staff Position is
effective for assets or liabilities arising from contingencies in business
combinations for which the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after December 15,
2008.  Management will evaluate the impact FSP FAS 141(R)-1 may have
on the accounting for any future business combinations that may be
considered.





FSP FAS 157-4 - In
April 2009, the FASB issued FASB Staff Position No. FAS 157-4, “Determining Fair
Value When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly” (FSP
FAS 157-4).  FSP FAS 157-4 provides additional guidance for estimating
fair value in accordance with FASB Statement No. 157, “Fair Value Measurements”,
when the volume and level of activity for the asset or liability have
significantly decreased. This Staff Position also includes guidance on
identifying circumstances that indicate a transaction is not orderly. This Staff
Position shall be effective for interim and annual reporting periods ending
after June 15, 2009, and shall be applied prospectively. Early adoption is
permitted for periods ending after March 15, 2009. Earlier adoption for periods
ending before March 15, 2009 is not permitted. The Company has not determined
the impact, if any, of its adoption of this staff position.





FSP FAS 157- 3 – In
October 2008, the FASB issued FASB Staff Position No. FAS 157-3, “Determining
the Fair Value of a Financial Asset in a Market That Is Not Active” (FSP 157-3),
which clarifies the application of SFAS 157 when the market for a financial
asset is inactive. Specifically, FSP 157-3 clarifies how (1) management’s
internal assumptions should be considered in measuring fair value when
observable data are not present, (2) observable market information from an
inactive market should be taken into account, and (3) the use of broker quotes
or pricing services should be considered in assessing the relevance of
observable and unobservable data to measure fair value. The guidance in FSP FAS
157-3 is effective immediately and management does not believe that this will
have an impact on the Company’s financial statements.





FSP APB 14-1 –
In  May 2008, the FASB issued FSP APB 14-1 , “Accounting for
Convertible Debt Instruments That May Be Settled in Cash Upon Conversion
(Including Partial Cash Settlement).” This FSP applies to convertible debt
securities that, upon conversion by the holder, may be settled by the issuer
fully or partially in cash (rather than settled fully in shares) and specifies
that issuers of such instruments should separately account for the liability and
equity components in a manner that reflects the issuer’s nonconvertible debt
borrowing rate when related interest cost is recognized. This FSP is effective
for our company beginning January 1, 2009 with retrospective application to
all periods presented. The Companhy's adoption of FSP APB 14-1 did not have a
material effect on its financial statements.





8




(2)
              Customer
      Concentrations:







The
customer accounts receivable balance is $0 at March 31, 2009 and $8,419 due from
two customers at December 31, 2008.  For the quarter ended March 31,
2009, two customers of our foam products accounted for approximately
ninety-nine percent (99%) of our sales revenues.




(3)
              Property
      and Equipment:








Property
and equipment as of March 31, 2009 and December 31, 2008 consisted of the
following:




(Unaudited)
                          March
      31,
                        
                        
                        December
      31,2009
                        
                        
                        2008Automobiles
                        
                        $
                        19,084
                        
                        
                        $
                        69,798Computer
      equipment
                        
                        
                        31,730
                        
                        
                        
                        31,730Furniture
      and fixtures
                        
                        
                        19,050
                        
                        
                        
                        19,050Computer
      software
                        
                        
                        13,019
                        
                        
                        
                        13,019Leasehold
      improvements
                        
                        
                        12,262
                        
                        
                        
                        12,262Telephone
      equipment
                        
                        
                        4,021
                        
                        
                        
                        4,021Camera
      equipment
                        
                        
                        2,461
                        
                        
                        
                        2,461101,627
                        
                        
                        
                        152,341Less
      accumulated depreciation
                        
                        
                        54,345
                        
                        
                        
                        80,604$
                        47,282
                        
                        
                        $
                        71,737





Depreciation
expense amounted to $5,790 and $6,335 for the three months ended March 31, 2009
and 2008, respectively. Automobiles with a net book value of $14,051 are
collateralized against automobile loan balances of $15,264 as of March 31,
2009.





9




ecoSolutions
Intl


Notes
to Condensed Financial Statements


Quarterly
Period Ended March 31, 2009





(4)
              Loans
      Payable and Accrued
Interest:








Loans
payable and accrued interest as of March 31, 2009 and December 31, 2008 are
summarized as follows:




(Unaudited)
                          March
      31,
                        
                        
                        December
                          31,2009
                        
                        
                        2008Convertible
      promissory note including interest to William Patridge, President and CEO,
      for funding of the Company bearing interest at 10.0% (which commenced
      accrual as of January 2006), due January 2013, payable as $388,870 in
      2009, $1,000,000 in 2011, $1,000,000 in 2012 and $1,012,926 in 2013
                        
                        $
                        3,401,796
                        
                        
                        $
                        3,144,514Automobile
      loan payable, bearing interest at 5.3%, secured by automobile, payable in
      monthly principal and interest installments of $822, matures June 2011.
      Paid in full in March 2009 through sale of automobile.
                        
                        
                        -
                        
                        
                        
                        23,044Automobile
      loan payable, bearing interest at 7.5%, secured by automobile, payable in
      monthly principal and interest installments of $321, matures December
      2013
                        
                        
                        15,266
                        
                        
                        
                        15,932Convertible
      promissory notes including interest to related parties, bearing interest
      at 6.0%, interest payable at maturity, net of unamortized debt discount of
      $34,649, maturities of July 2009
                        
                        
                        95,824
                        
                        
                        
                        62,9373,512,886
                        
                        
                        
                        3,246,427Less
      current portion
                        
                        
                        487,490
                        
                        
                        
                        274,537$
                        3,025,396
                        
                        
                        $
                        2,971,890




10




ecoSolutions
Intl


Notes
to Condensed Financial Statements


Quarterly
Period Ended March 31, 2009





As of
March 31, 2009, the outstanding balance of the Company convertible
promissory note (“Patridge Note”) issued to William Patridge (“Patridge”),
President and Chief Executive Officer, is $3,401,796 for funding of the Company
since inception. The Patridge note bears interest at 10.0% and is due January 2,
2013. Installment payments on this note are $388,870 due on June 30, 2009,
$1,000,000 due on January 2, 2011, $1,000,000 due on January 2, 2012 and
$1,012,926 due on January 2, 2013. For the three months ended March 31, 2009,
Patridge provided $186,389 of borrowings to the Company.  Patridge may
at any time, in his sole discretion, convert all or a portion of the principal
amount outstanding, together with accrued interest, into shares of common stock,
at a conversion price of $0.50 per share of common stock. The fair market
value stock price on December 31, 2008, the initial date of the Patridge Note,
and March 31, 2009, the note date for the additional borrowings since
December 31, 2008, as quoted on the OTC Bulletin Board, were $0.35 and
$0.33 per share, respectively. In accordance with guidance under Emerging Issues
Task Force Abstract 00-27, “Application of Issue No. 98-5 to Certain Convertible
Instruments”, no beneficial conversion was recorded due to the conversion price
of $0.50 per share being higher than the fair market value of the stock on the
note issuances dates. For the three months ended March 31, 2009 and 2008,
$70,895 and $48,067 of interest expense, respectively, has been recorded on the
Patridge Note. In accordance with the guidance under SFAS 133 “Accounting for
Derivative Instruments and Hedging Activities,” SFAS 150 “Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity”, EITF
00-19 “Accounting for Derivative Financial Instruments Indexed To, and
Potentially Settled In, a Company’s Own Stock,” EITF 05-02 “Meaning of
Conventional Convertible Debt Instrument in Issue No. 00-19” and EITF 07-5
“Determining Whether an Instrument (or Embedded Feature) Is Indexed to an
Entity's Own Stock,” such notes were determined to be conventional convertible
and no separate derivative accounting was considered necessary.




On July
8, 2008, the Company issued to T Squared Investments LLC (“T
Squared”), a related party, a convertible promissory note in the aggregate
principal amount of $100,000 (“T Squared Note”) at an interest rate of 6% per
annum. On July 8, 2008, the Company issued to Westside Capital LLC
(“Westside”), a convertible promissory note in the aggregate principal amount of
$25,000 (“Westside Note”) at an interest rate of 6% per annum. Westside is
managed by the same managing partners as T Squared. The T Squared Note and the
Westside Note mature and are payable, together with accrued interest, one year
from the date of issuance. T Squared and Westside may at any time, in their sole
discretion, convert all or a portion of the principal amount outstanding,
together with accrued interest, into shares of common stock, at a conversion
price of $0.50 per share of common stock.  As of March 31, 2009, accrued
interest of $5,473 is included in the notes payable balance. In accordance with
Emerging Issues Task Force Abstract 00-27, “Application of Issue No. 98-5 to
Certain Convertible Instruments”, the beneficial conversion feature of $125,000
was recorded as a discount to the notes at issuance and is being amortized over
the one year lives of the notes using the effective interest method and
effective interest rate of 6%. For the three months ended March 31, 2009 and
2008, amortization of the discount was recorded as interest expense of $31,011
and $0, respectively. The unamortized debt discount is presented as a contra
amount in current portion of loans and interest payable of $34,649 as of March
31, 2009. Contractual interest expense for the three months ended March 31, 2009
and 2008 was $1,875 and $0, respectively. In accordance with the guidance under
SFAS 133 “Accounting for Derivative Instruments and Hedging Activities,” SFAS
150 “Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity”, EITF 00-19 “Accounting for Derivative Financial
Instruments Indexed To, and Potentially Settled In, a Company’s Own Stock,” EITF
05-02 “Meaning of Conventional Convertible Debt Instrument in Issue No. 00-19”
and EITF 07-5 “Determining Whether an Instrument (or Embedded Feature) Is
Indexed to an Entity's Own Stock,” such notes were determined to be
conventional convertible and no separate derivative accounting was considered
necessary.





The
aggregate maturities of loans payable and accrued interest at March 31, 2009
were as follows (unaudited):





Year
      ending December 31,2009
                      
                      $
                      486,7702010
                      
                      
                      2,9582011
                      
                      
                      1,003,1872012
                      
                      
                      1,003,4352013
                      
                      
                      1,016,536Thereafter
                      
                      
                      -$
                      3,512,886




(5)
              Deferred
      Costs:








During
the year ended December 31, 2008 and the quarter ended March 31, 2009, the
Company incurred $56,945 cumulative direct costs associated with the efforts to
raise capital for the business. In accordance with Staff Accounting Bulletin 5,
“Miscellaneous Accounting,” Topic A, “Expenses of Offering,” these costs were
capitalized and are reported as a long-term asset on the accompanying Condensed
Balance Sheet. Upon the completion of a contemplated offering, these costs
will be offset against equity proceeds or amortized over the term of financing
proceeds. In addition to this offering, the Company expects to continue capital
raising activities in the forms of bridge loans during 2009.





11




ecoSolutions
Intl


Notes
to Condensed Financial Statements


Quarterly
Period Ended March 31, 2009










(6)
              Related
      Party Transactions:




The
Company’s office business facility located in Ashland, Oregon is owned by Main
and Second Street LLC, a company which William Patridge, Chairman, Chief
Executive Officer, President and principal stockholder of the Company is
the sole managing member and is not a variable interest entity per FASB
Interpretation 46R, “Consolidation of Variable Interest Entities (as amended)”
(FIN 46R). Rent expense was accrued but not paid per agreement with William
Patridge since inception through December 31, 2007. Beginning January 1, 2008,
the Company paid the monthly rent due through November 2008, however, December
2008 through March 2009 payments were accrued but not paid. The monthly terms
are set at a fixed price, which can increase with notification from Main and
Second Street LLC. The rental agreement is not collateralized. The liability to
Main and Second Street LLC as of March 31, 2009 of $53,721 is classified within
current liabilities as payment is expected within the next twelve
months.





Fees for
management services provided by the Company to Patridge & Company of Nevada
LLC are recorded as services income and recorded in non-current accounts
receivable as services are incurred. William Patridge is the managing member of
Patridge & Company of Nevada LLC. As of March 31, 2009, the noncurrent
accounts receivable balance was $28,770 and fees earned for the three months
ended March 31, 2009 were $1,500. As of March 31, 2009, the amount past due over
ninety days is $27,270. This non-interest bearing accounts receivable balance is
classified as a non-current asset as likelihood exists that collection over the
next twelve months may not occur. However, the Company anticipates full
collectability in the long-term.





As of
March 31, 2009, the Company has convertible promissory notes outstanding to
William Patridge, President and Chief Executive Officer of $3,401,798 and to T
Squared Investments LLC and Westside Capital LLC of an aggregate balance net of
unamortized debt discount of $95,824. T Squared Investments LLC is a beneficial
owner of the Company, and Westside Capital LLC is managed by the same managing
partners. Terms of these convertible promissory notes are discussed in Note
4.




Westside
Capital LLC also provides consulting services to the Company and received
compensation through non-qualified stock options to purchase 1,000,000 shares of
the Company's common stock. The stock options were granted on May 5, 2008 under
the Company's 2007 Equity Incentive Plan. The exercise price of the options is
$0.40 per share, with a vesting period of three years and a term of five years.
The Company accounts for equity instruments issued in exchange for the receipt
of goods or services from other than employees in accordance with Statement of
Financial Accounting Standard No. 123R, "Share Based Payments" ("SFAS 123R").
The Company utilized the Black Scholes option-pricing model and expensed $16,118
for the three months ended March 31, 2009 related to these services, with a
remaining unrecognized compensation cost of $128,942 as of March 31,
2009. As of March 31, 2009, none of the stock options have vested and the
current fair value at March 31, 2009 of these non-vested non-employee options to
purchase 1,000,000 shares of the Company's common stock was $252,332. See Note 9
for further discussion of stock options.




(7)
              Leases:








The
Company maintains an office in Shanghai, China that is obligated under a
non-cancelable operating lease for office space that expires in July 2009. The
office space in Ashland, Oregon, rented from Main and Second Street LLC, is on a
month-to-month basis. The Company leases a company automobile with lease
payments beginning November 2007 and ending October 2012. Total minimum rental
lease expense for all leases was $22,733 and $19,632 for the three months ended
March 31, 2009 and 2008, respectively. Lease expense is recorded within other
selling, general and administrative expenses in the condensed statements of
operations.





The
aggregate future minimum annual lease payments under non-cancelable operating
leases as of March 31, 2009 were as follows (unaudited):





Year
      Ended December 31,2009
                      
                      $
                      23,8512010
                      
                      
                      19,2842011
                      
                      
                      19,2842012
                      
                      
                      14,4632013
                      
                      
                      -Thereafter
                      
                      
                      -$
                      76,882




12




ecoSolutions
Intl


Notes
to Condensed Financial Statements


Quarterly
Period Ended March 31, 2009


(8)
                Equity


The
Company’s authorized capital stock consists of 100,000,000 shares of common
stock, $0.001 par value per share, and 20,000,000 shares of preferred stock, par
value $0.001 per share.  As of March 31, 2009 and December 31, 2008,
the Company has no shares of preferred stock issued and outstanding, and
25,492,884 and 24,417,884 shares of common stock issued and outstanding,
respectively. Common stock issuances for services rendered during the three
months ended March 31, 2009 of 1,025,000 shares are discussed in Note
10.  Common stock issuances for stock option exercises during the
three months ended March 31, 2009 of 50,000 shares are discussed in Note
9.




13




ecoSolutions
Intl


Notes
to Condensed Financial Statements


Quarterly
Period Ended March 31, 2009









(9)
            Stock
      Options:





The
Company has granted non-qualified and incentive stock option agreements (the
“Agreements”) to certain employees, advisors, consultants and board members. The
Agreements provide for the grant of stock options, exercisable for shares of the
Company’s common stock. In May 2007, the Board of Directors, by unanimous
written consent, adopted the 2007 Equity Incentive Plan and Incentive Stock
Option agreement. For the three months ended March 31, 2009, the Company granted
options to purchase 2,500,000 shares of the Company’s common stock. These
options were granted with an exercise price ranging from $0.16 to $0.20 per
share. These options were granted with vesting terms between zero and three
years and expire in five years. For the three months ended March 31, 2009,
50,000 non-employee options were exercised with an intrinsic value of
$8,500.  Cash proceeds to be received by the Company through a
cashless exercise of these options is $8,000. For the three months ended March
31, 2009, 415,000 options were forfeited with 6,264,500 options
outstanding.





A summary
is as follows:




WeightedWeighted
                                    
                                    
                                    AverageAverage
                                    
                                    
                                    RemainingNumber
                                    
                                    
                                    Exercise
                                    
                                    
                                    Contractualof shares
                                    
                                    
                                    Price
                                    
                                    
                                    LifeBalance
      at December 31, 2008
                                    
                                    
                                    4,229,500
                                    
                                    
                                    $
                                    0.257
                                    
                                    
                                    
                                    3.51Granted
                                    
                                    
                                    2,500,000
                                    
                                    
                                    $
                                    0.168Exercised
                                    
                                    
                                    (50,000
                                    )
                                    
                                    
                                    0.160Forfeited
                                    
                                    
                                    (415,000
                                    )
                                    
                                    
                                    0.265Balance
      at March 31, 2009 (Unaudited)
                                    
                                    
                                    6,264,500
                                    
                                    
                                    $
                                    0.222
                                    
                                    
                                    
                                    3.79Exercisable
      at March 31, 2009 (Unaudited)
                                    
                                    
                                    1,929,169
                                    
                                    
                                    $
                                    0.214
                                    
                                    
                                    
                                    3.18





Commencing
January 1, 2006, the Company adopted Statement of Financial Accounting Standard
No. 123R, “Share Based Payments ” (“SFAS 123R”), which requires all share-based
payments, including grants of stock options, to be recognized in the income
statement as an operating expense, based on fair values.





The
Company accounts for equity instruments issued in exchange for the receipt of
goods or services from other than employees in accordance with SFAS 123R and the
conclusions reached by the Emerging Issues Task Force, Issue 96-18, “Accounting
for Equity Instruments That are Issued to Other Than Employees for Acquiring,
or in Conjunction with Selling, Goods or Services”, (EITF 96-18). Costs are
measured at the estimated fair market value of the consideration received or the
estimated fair value of the equity instruments issued, whichever is more
reliably measurable. The value of the equity instruments issued for
consideration other than employee services is determined on the earlier of a
performance commitment or completion of performance by the provider of
goods or services as defined by EITF 96-18. During the three months ended March
31, 2009, options to purchase 1,000,000 shares of the Company’s common stock
were granted to non-employees, of which 500,000 were granted with immediate
vesting. The current fair value at March 31, 2009 of the non-vested non-employee
options to purchase 500,000 shares of the Company’s common stock was
$134,905.





Under
SFAS 123R, forfeitures are estimated at the time of valuation and reduce expense
ratably over the vesting period. This estimate is adjusted periodically based on
the extent to which actual forfeitures differ, or are expected to differ, from
the previous estimate. The Company utilized a 10% forfeiture rate. The Company
recognized $208,392 and $37,459 of stock option expense for the three months
ended March 31, 2009 and 2008, respectively. As of March 31, 2009, there was
$530,010 of total unrecognized compensation cost related to non-vested
share-based compensation arrangements granted under existing stock option plans,
with a weighted average remaining contractual life of 3.77 years. The total fair
value of shares vested and non-vested as of December 31, 2008 was $1,222,557, of
which $405,940 is attributed to employee options. The intrinsic value of vested
options to purchase 1,929,169 shares is $286,575 as of March 31,
2009.





14




ecoSolutions
Intl
 Notes
to Condensed Financial Statements
 Quarterly
Period Ended March 31, 2009
  
  (9)
                Stock Options
      (Continued):
  The fair
value of options granted to employees was estimated using the Black Scholes
option-pricing model. These same assumptions were also used in applying the
Black Scholes option-pricing model for any stock based option compensation paid
to non-employees. For the three months ended March 31, 2009, expected future
volatility is based on review of historical volatilities for similar public
companies. With the Company’s limited trading history and infancy in its product
line, management believes that the historical volatility of the Company’s stock
price does not best represent the expected volatility of the stock price.
Management intends to continue to consistently use the same group of publicly
traded peer companies to determine volatility in the future until such time that
sufficient information regarding the volatility of the Company’s share price
becomes available or unless the selected companies become unreliable for this
purpose. The fair value of options at the date of grant and the assumptions
utilized are indicated in the following table:
 
 (Unaudited)Three
      Months EndedMarch
      31, 2009Weighted
      average of fair value at date of grant for options granted during the
      period
                            
                            $
                            0.168Risk-free
      interest rates
                            
                            
                            1.14%-1.28
                            %Expected
      option life in years
                            
                            
                            5Expected
      stock price volatility
                            
                            
                            94.9%-97.6
                            %Expected
      dividend yield
                            
                            
                            -
 
 The
following summarizes the activity of the Company’s non-vested options for the
three months ended March 31, 2009.
 
 WeightedAverageExerciseShares
                          
                          PriceNon-vested
      at December 31, 2008
                          
                          
                          2,882,332
                          
                          
                          $
                          0.259Granted
                          
                          
                          2,500,000
                          
                          
                          
                          0.168Vested
                          
                          
                          (632,001
                          )
                          
                          
                          0.182Forfeited
                          
                          
                          (415,000
                          )
                          
                          
                          0.265Non-vested
      at March 31, 2009 (Unaudited)
                          
                          
                          4,335,331
                          
                          
                          $
                          0.225
  15
  ecoSolutions
Intl
 Notes
to Condensed Financial Statements
 Quarterly
Period Ended March 31, 2009
 
 (10)
                Shares Granted for
      Services:
  Services
provided by consultants were recorded as compensation expense in other selling,
general and administrative expenses for the three months ended March 31,
2009 and 2008 of $20,446 and $188, respectively. The fair market value of common
stock used to value the services during 2009 ranged from $0.16 to $0.25 per
share and was based on the closing prices of quotations on the OTC Bulletin
Board on the measurement dates. The fair market value of common stock used to
value the services during 2008 was $0.15 per share and was based on the offering
price under Rule 504 of Regulation D. Shares issued for such services during the
three months ended March 31, 2009 and 2008 were 1,025,000 and 41,666,
respectively, representing a total fair value on March 31, 2009 of $338,250
and $13,750, respectively.
  16
  ecoSolutions
Intl
 Notes
to Condensed Financial Statements
 Quarterly
Period Ended March 31, 2009
 
 (11)
                Loss per
      Share:
 
  The
Company has adopted Statement of Financial Accounting Standards No. 128,
“Earnings per Share” (SFAS 128). SFAS 128 provides for the calculation of
basic and diluted earnings per share. Basic earnings per share includes no
dilution and is computed by dividing income available to common shareholders by
the weighted average number of common shares outstanding for the period. Diluted
earnings per share reflect the potential dilution of securities that could share
in the earnings of an entity, such as stock options, warrants or convertible
securities. Loss per share is computed as net loss divided by the weighted
average of common shares outstanding for the period, as follows:
  (Unaudited)Three
      Months Ended March 31,2009
                                  
                                  2008Net
      loss available to common stockholders
                                  
                                  $
                                  (544,813
                                  )
                                  
                                  $
                                  (142,960
                                  )Weighted
      average common shares outstanding, basic and diluted
                                  
                                  
                                  24,565,662
                                  
                                  
                                  
                                  13,930,404Basic
      and diluted loss per share
                                  
                                  $
                                  (0.02
                                  )
                                  
                                  $
                                  (0.01
                                  )
  At March
31, 2009, common stock equivalents of 13,329,038, comprised of stock options to
purchase 6,264,500 shares and convertible promissory notes convertible to
7,064,538 shares were outstanding and could affect future periods, but were not
included in the computation of diluted loss per common share as the effect would
be anti-dilutive.  At March 31, 2008, common stock equivalents of
10,810,650, comprised of stock options to purchase 3,154,500 shares and
preferred stock convertible to 7,656,150 shares were not included in the
computation of diluted loss per common share as the effect would be
anti-dilutive.
  17
  ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS .
  This Report, including any documents
which may be incorporated by reference into this Report, contains
“Forward-Looking Statements” within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. All statements other than statements of historical fact are
“Forward-Looking Statements” for purposes of these provisions, including any
projections of revenues or other financial items, any statements of the plans
and objectives of management for future operations, any statements concerning
proposed new products or services, any statements regarding future economic
conditions or performance, and any statements of assumptions underlying any of
the foregoing. All Forward-Looking Statements included in this document are made
as of the date hereof and are based on information available to us as of such
date. We assume no obligation to update any Forward-Looking Statement. In some
cases, Forward-Looking Statements can be identified by the use of terminology
such as “may,” “will,” “expects,” “plans,” “anticipates,” “intends,” “believes,”
“estimates,” “potential,” or “continue,” or the negative thereof or other
comparable terminology. Although we believe that the expectations reflected in
the Forward-Looking Statements contained herein are reasonable, there can be no
assurance that such expectations or any of the Forward-Looking Statements will
prove to be correct, and actual results could differ materially from those
projected or assumed in the Forward-Looking Statements. Future financial
condition and results of operations, as well as any Forward-Looking Statements
are subject to inherent risks and uncertainties, including any other factors
referred to in our press releases and reports filed with the Securities and
Exchange Commission. All subsequent Forward-Looking Statements attributable to
the company or persons acting on its behalf are expressly qualified in their
entirety by these cautionary statements.
  Introductory
Comment
  The
following discussion should be read in conjunction with our unaudited financial
statements (including the notes thereto) included elsewhere in this report and
our audited financial statements and the notes thereto, Item 7,
“Management’s Discussion and Analysis of Financial Condition and Results of
Operations” and Item 1A, “Risk Factors” included in our Annual Report on
Form 10-K for the year ended December 31, 2008.
 
 Throughout
this Quarterly Report on Form 10-Q, the terms “we,” “us,” “our,” “our
company,” and “the Company” refer to ecoSolutions Intl, a Nevada
corporation.
  Organizational History
  Our
company was originally incorporated as “360 Interchange, Inc.” under the laws of
the State of Oregon on July 24, 2004. On January 3, 2005, we reincorporated
under the laws of the State of Nevada. We subsequently changed our name to
“ecoSolutions Intl” on March 17, 2008 to reflect our current business focus. Our
principal executive offices are located at 295 East Main Street, Suite 1,
Ashland, Oregon 97520, and our telephone number is (541) 552-9360. Due to our
business relationships in Asia, we also maintain a branch office located at 2299
Yan An Road, West Shanghai Mart, Suite 3B55, Shanghai, 200336 PRC. We maintain a
website at http://www.ecosolutionsintl.com
.. Our Internet website(s) and the information contained therein, or connected
thereto, are not and are not intended to be incorporated into this Quarterly
Report on Form 10-Q.
  Until
2007, we were a trading company operating out of the State of Oregon focusing on
the sale of wood flooring and yoga mat products in North America. However, we
have not generated significant revenues from our trading company operations, and
have incurred net operating losses since our inception in 2004. At March 31,
2009, our accumulated deficit was approximately $6.1 million.
 
 The wood
flooring industry is dependent on activity in the construction and real estate
markets, and our operations in this industry have been affected by the financial
troubles in the real estate market. In addition, the number of trading companies
has grown substantially with foreign companies competing with the Asian
traditional traders. There has also been a growth resulting from the Internet
explosion, in that there are now many sites offering direct communication with
the factories and manufacturers, and functioning effectively as online trading
companies. As more companies in the United States become savvy about working
directly with factories, trading companies have to adapt and become more service
oriented to retain their customer base. This has presented significant
challenges for what we believe to be an already crowded market.
 
 Due
to growing troubles in the real estate market and its ancillary industries, and
sluggish industry sales resulting from stiff competition, in early 2007, our
Board of Directors considered entering into a number of other businesses that
would enable us to be able to provide our shareholders with future value. Our
Board subsequently decided to develop a business in the alternative plastics
market as a distributor of non-PVC plastics and bioplastics, having concluded
that there was a significant opportunity to participate in the rapidly growing
eco-consciousness and “green” industry, including the sale of eco-friendly
alternatives to ordinary consumer goods.
  18
 In 2007,
we adjusted our business plan to focus primarily on providing ecologically
friendly alternatives to plastic, PVC (polyvinyl chloride, commonly called
vinyl), rubber and non-sustainable wood products throughout the world. While
currently maintaining a presence in the wood flooring and yoga mats space as we
transition into our new business plan, we have extended our business operations
to include the development and sales of a range of competitive to premium priced
products that are environmentally attractive alternatives to more toxic and
damaging materials such as PVC. During this transition, management reports sales
from all product lines under a single segment as discrete product line
information is not available and this is consistent with the review by the chief
decision makers of the Company.
  In
particular, in connection with our new line of business, we are offering a suite
of products classifiable into one of three broad product lines, namely: (i) a
Correlative Product Line, (ii) an Enriched Product Line, and (iii) an Overall
Sustainability Product Line. The nature and types of products included in our
Correlative Product Line will be products designed to contain no toxic PVC
materials compared with non-green substitutes, which contain PVC. Products in
our Correlative Product Line will perform similarly to the non-green substitutes
that they replace but their production will emphasize their inclusion of more
readily recyclable and eco-friendly materials. Our Enriched Product Line will
include products manufactured with an eco-friendly focus, as in the case of our
Correlative Products; however, our Enriched Products will feature improvements
in product performance (compared to their non-green competitors) in addition to
the “green” nature of these products. Our Overall Sustainability Product Line
will feature products that improve the overall sustainability of the materials
that they replace by using technology that builds upon the other two categories,
including benefits relating to biodegradability, among others.
  More
specifically, we currently market ecoPlasticTM, ecoFoamTM and ecoWrapTM suites of
products. Our ecoPlasticTM brand represents our primary suite of products, and
includes products/materials from our Correlative Product Line, Enriched Product
Line and Overall Sustainability Product Line. Our ecoFoamTM suite includes
offerings from our Correlative Product Line and Enriched Product Line only, and
represents a subset of our ecoPlasticTM suite. Our ecoWrapTM suite includes
offerings from our Correlative Product Line and represents a subset of our
ecoPlasticTM suite. For additional details regarding our principal product
offerings, please see “Item 2 Business - Principal Products.”
  We
are presently focused on building a brand around our suite of eco-friendly
solutions and products, including our ecoPlasticTM, ecoFoamTM and ecoWrapTM product
lines, and co-brand opportunities with our customers. Given the 350 billion
pounds per year of plastics that are produced annually, growing at a rate of 5%
per annum, we believe that we are targeting a market with enormous growth
opportunities for our products. Additionally, with our broader line of product
offerings, relative to more conventional players in the bioplastics space, we
offer environmentally friendly solutions in a way that non-diversified
bioplastics companies cannot.
 
 Business
Strategy
  Our
goal is to develop and successfully commercialize cost-competitive
environmentally sustainable alternatives to conventional petroleum-based
plastics. To accomplish this, we have divided our operations to focus on the
development and commercialization of both bioplastic alternatives, as well as
alternatives though while not purely “bioplastic,” nonetheless provide immediate
solutions to several of the environmental and health concerns associated with
the consumption of conventional plastics.
  While our
competitors in the bioplastics space are focusing almost exclusively on
bioplastics where the practical applications have so far been limited (65% of
bioplastics in 2007 were estimated to be limited to the packaging and food
industries), we intend to develop and market products that provide immediate
solutions to ecological and health issues. For manufacturers and other companies
that are plagued by public relations nightmares of manufacturing unsafe
products, the closest thing to a solution is to eliminate PVC from its
production process. PVC has been declared to be the equivalent of public enemy
number one for many manufacturers, and as such, the eradication of PVC in the
production process is far more important than the relative environmental merits
of bioplastics versus petroleum based plastics. In addition, despite the
positive press that bioplastics have received in recent years, their
applications are still quite limited in the marketplace and are dwarfed by the
opportunities for eco-friendly petroleum-based plastics, a segment which we
believe is being ignored by competitors in the strictly bioplastics
market.
 
 For
industries like toy manufacturing, where the intensity of negative press has
steadily increased with highly publicized toy recalls, the pressure to find
non-toxic applications has never been greater. Yet, the challenges of
manufacturing a toy that won’t biodegrade too quickly, but is safe for young
children, remain difficult for producers. For applications like these,
bioplastics have not emerged as a viable solution and are not expected to in the
near term. Instead, we believe that eco-friendly petroleum-based plastics,
similar to the products available in our ecoPlasticTM and ecoFoamTM solutions, are
perfectly positioned for application in the toy industry to address some of the
concerns about conventional petroleum-based plastics.
 19
  We
plan to provide alternatives to conventional plastics.  Although not
strictly bioplastic, our alternatives meet most of the criteria for inclusion in
this market category because the production and consumption is gentler on the
environment, and they are non-toxic, fully recyclable and degradable. It is our
plan to market our ecoPlasticTM, ecoFoamTM and ecoWrapTM suites of products as
currently viable alternatives to toxic PVC-based plastics, the component found
in most conventional plastics. Available in an endless array of applications
from building materials to toys and blister pack material for consumer goods
packaging, ecoPlasticTM, ecoFoamTM and ecoWrapTM are an ecologically advantageous,
currently available, and cost competitive alternative to toxic PVC that
addresses the broader plastics market applications relative to pure bioplastics.
As a result, given the relative infancy of the bioplastics market and limited
commercial applications for such products, we believe that our ecoPlasticTM,
ecoFoamTM and ecoWrapTM solutions provide us with immediate and substantial
returns at the same time that we are carving out market share into the future
bioplastic boom.
  Our
current product line consists of our branded ecoPlasticTM, ecoFoamTM and ecoWrapTM
products, sold in the form of plastic pellets, foam or stretch wrap to
manufacturers or other large companies who process these materials into everyday
products. These eco-friendly non-PVC alternatives utilize no heavy metals in
production, contain no chloride, latex, lead or phthalates and do not outgas
toxic fumes. The products are also typically photodegradable and recyclable,
allowing for many generations of products to be made from the original
material.
  Compared
with conventional petroleum-based plastics, our ecoPlasticTM and ecoFoamTM lines
of products possess the following characteristics:
  o
Versatile - Products
that are manufactured for several plastic uses and applications, from next-step
materials to bio-based plastics.
 
 o
Mature - Materials that
have been in research and production for years and some are protected by U.S.A.
and Asian patents.
  o
Viable - Materials that
are ready for production today and in most cases can be formulated to meet
specific production needs.
  o
Environmentally
Friendly - Materials that are easily recyclable, have less impact on the
environment in production and, in many instances, are degradable.
  While
current practical commercially profitable applications for pure bioplastics are
limited, in addition to our efforts in the non-PVC alternative plastic space, we
also plan to identify current applications for pure bioplastics that have proven
to possess successful commercialization opportunities. One popular use of
bioplastic products is shopping bags - which can possess all of the
functionality of their conventional plastic counterparts in addition to the
advantages of bioplastics, including biodegradability. We currently have an
agreement in place with an Asian manufacturer for the supply of such bioplastic
shopping bags.
 
 We are
also working to build a brand around our ecoSolutionsTM suite of services. This
typically involves working with manufacturers and customers to understand their
specific plastic needs and applications, and designing bioplastic or non-PVC
alternatives to conventional plastics to meet such needs. With our suite of
ecoSolutionsTM, we are targeting and servicing the broadest market of
applications that address toxic and environmentally hazardous products within
the plastics industry. Given the 350 billion pounds per year of plastics that
are produced annually in the United States, growing at a rate of 5% per annum,
we are targeting a market with enormous growth opportunities for our products.
With our broader line of products, we offer environmentally conscious solutions
in a way that non-diversified bioplastics companies cannot.
 
 The
materials we distribute under our ecoPlasticTM, ecoFoamTM and ecoWrapTM suites are
marketed as a greener and eco-friendly alternative to the conventional plastics
available today. As such, we consider our core market to be the plastics
industry, and all other industries associated with the plastics industry, such
as the vendors who supply plastic parts, components and other raw materials to
plastics manufacturers and retailers who sell to end consumers. To the extent
manufacturers employ the use of plastic materials in their productions
processes, we believe that an opportunity exists for marketing our products to
such vendors and suppliers. In summary, we consider our primary markets to
include, and intend to market our products to, (i) manufacturers of plastic
products (whether plastic parts, components or final products) (ii)
manufacturers who do not necessarily produce plastic products or components but
nonetheless utilize plastic raw materials in their production processes, (iii)
businesses that support the foregoing manufacturers by supplying plastic raw
materials to them, and (iv) retailers who sell plastic products to consumers or
who use plastic products in their operations.
  20
  Opportunities
for Branding
  The
market for branded products and services with attributes of environmental
responsibility and sustainability is an emerging business opportunity. We
believe that manufacturers are positioning products as environmentally
responsible or superior to gain a competitive advantage, as they believe
consumer preferences are shifting with increasing eco-awareness. Over the past
year, we have witnessed a steady increase in the number of major global
companies that have begun to position themselves and their product lines as
being more environmentally responsible. A recent example of this kind of
corporate awareness program includes General Electric’s “Ecomagination,” a
program dedicated to General Electric’s manufacture and introduction into the
marketplace of eco-friendly and eco-conscious product lines.
  We
believe that with increasing “green” awareness on the part of the consumer, such
eco-branding influences consumer behavior in two ways - first, it introduces
“green” as a considered attribute or characteristic of a given product at the
point of sale, and second, it enables consumers to comparison shop based on
“green”. As consumers become more eco-conscious and adjust behavior to reflect
such preferences, we anticipate that manufacturers and service providers will
begin to seek out ways to distinguish themselves based on the “green” attributes
of the products (much in the same manner as General Electric). Therefore, we
view the market for environmentally friendly or “green” branded products as
having stellar business potential for our ecoFoamTM, ecoPlasticTM, ecoWrapTM and
ecoSolutionsTM brands. Co-branding enables our customers to convey environmental
responsibility to their end consumers by referencing our brand with their
product. In addition, we anticipate that such co-branding opportunities will
expand the visibility of our products in the marketplace.
  We are in
current discussions with customers and potential customers in the industries of
toys, shoes, fitness products, shopping bags, flooring, automobiles and retail
regarding the opportunities for branding. We intend to contact companies in
other industries that use plastic materials regarding branding opportunities of
our products as we continue to grow our business.
 
 Customers
  For the
quarter ended March 31, 2009, two customers of our foam products accounted
for approximately ninety-nine percent (99%) of our sales revenues. We have,
however, entered into two licensing agreements related to our customers use of
ecoFoam Ô and
ecoPlastic Ô ,
respectively, and are in the process of talking with several other companies who
have indicated an interest in our new products which will broaden and diversify
our customer base.
  Business
Model
  Our
business model strongly emphasizes costs controls and just-in-time inventory
practices. Our operations department ensures that all raw materials and other
inputs are purchased to fill only firm orders. At no time in the sales cycle is
inventory held unnecessarily. Thus, the probability of us holding excess goods
as inventory is minimized but can exist. We are continually looking for
proprietary materials or relationships to give our company a proprietary
position in order to strengthen our product portfolio.
  Principal
Products
  Generally,
our suite of products and materials can be classified into one of three
categories, which we market under our ecoPlasticTM , ecoFoamTM or ecoWrapTM
brands:
  o Correlative Products .  These products are
next-step solutions, making a big impact on reducing the volume of materials in
production that are more damaging to the environment and personal health
(including exclusion of toxic PVC). Correlative products will perform similarly
to what they replace, but are more environmentally friendly by being readily
recyclable and eco-friendly in their production.
 
 o
Enriched Products .
 These products
provide material performance gains as well as “green” performance. These
products will often be recyclable and gentler on the environment similar to our
Correlative Products, but add benefits such as degradability and significant
enhancements to the production process and final product.
  o
Overall Sustainability
Products .  This category
represents products that improve the overall sustainability of the materials
they are replacing by using technology that builds upon the other two
categories. These advantages include biodegradability, materials made from
renewable resources and a more comprehensive approach to “greening” the supply
chain.
  We
obtain our non-PVC materials from a variety of manufacturers in Asia whom we
believe hold the intellectual property rights in respect of the production of
non-PVC plastics.
  21
  Intellectual
Property
  We
have filed applications with the United States Patent and Trademark Office
(“USPTO”) to register our “ecoPlastic,” “ecoFoam,” and “ecoSolutions”
trademarks, in varying stages of investigation and approval by the USPTO. We are
also the registered owners of 12 Internet domain names.
 
 We do not
currently possess any patentable technology relating to our operations in the
bioplastics and non-PVC plastics markets. However, as we design and implement
our business plan, we may acquire proprietary, protected (protectable)
technology applicable to our operations. If we do acquire such technology, we
presently anticipate that it will be in connection with any acquisitions or
other business combinations in which we may be involved, or through joint
ventures and other collaborative efforts with manufacturers in the non-PVC and
bioplastics industry.
 
 Competition
  The
plastics market is large, with many established players; however, it is
concentrated in the conventional, non-biodegradable petroleum-based segment.
Since our business plan includes offerings of plastic products with a “green”
slant, we believe that our most comparable competitors include players in the
eco-friendly plastics market, including manufacturers, suppliers and providers
of bioplastics and similar plastics product offerings. A few conventional
plastics companies, such as DuPont, have taken steps toward producing plastics
based on renewable resources and with a more eco-friendly slant; such product
offerings by conventional plastics companies fall within our sphere of
competition. We are not aware of any competitors who specialize in supplying
non-PVC plastics in the United States.
  Recent
Developments
 
 None.
  22
 
 Critical
Accounting Policies
  The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported assets, liabilities, sales and expenses
in the accompanying condensed financial statements. The SEC has defined that
critical accounting policies are the ones that are the most important to the
portrayal of the Company’s financial condition and results of operations, and
those that require the most subjective and complex judgments, often employing
the use of estimates about the effect of matters that are inherently uncertain.
On an ongoing basis, management evaluates its estimates, including those related
to revenue recognition, bad debts, impairment of long-lived assets, accrued
liabilities and certain expenses. 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 judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ materially from these estimates under
different assumptions, judgments or conditions. For additional information, see
Part I, Item 1, “Financial Statements – Note 1 – Summary of Business and
Significant Accounting Policies” of this Form 10-Q. Although we believe that our
estimates, assumptions and judgments are reasonable, they are based upon
information presently available. Actual results may differ significantly from
these estimates under different assumptions, judgments or
conditions.
 
 Recent
Accounting Pronouncements
 
 See Note
1 to our condensed financial statements for additional information.
 
 Results
of Operations
  Revenues and Gross Profit.
Our revenues for the quarter ended March 31, 2009 were $117,640, representing a
decrease of approximately $1,642,000 compared to revenues of $1,759,599 for the
quarter ended March 31, 2008. The revenue decrease was due to no sales of wood
flooring products as we have transitioned out of selling these products. Our
repositioning efforts include a revamped business strategy to optimize the
opportunities available in the rapidly growing eco-conscious industries,
specifically targeting replacements for conventional plastics. We will continue
to sell and service existing wood flooring customers, where appropriate, but do
not plan to target new potential wood flooring customers. Our product mix
changed between quarters from approximately 96% revenues from wood flooring and
approximately 4% from foam products (consisting of yoga mats and underlayment
for flooring) in first quarter of 2008 to 100% from foam products (consisting of
yoga mats, ecoFoamÔ
sandals and ecoFoam Ô licensing revenues)
in the first quarter of 2009. The revenue dollar change was a decrease of
approximately $1,681,000 from wood flooring and an increase of approximately
$39,000 from foam products between quarters. As we continue to reposition our
company into selling our ecoPlastic Ô, ecoFoam Ô and ecoWrap Ôlines, we
anticipate product mix fluctuations to continue to occur during
2009.
 
 Our gross
profit for the quarter ended March 31, 2009 was $31,178, representing a decrease
of approximately $352,000 compared to $383,393 for the quarter ended March 31,
2008. Gross profit for the first quarter of 2009 as a percentage of revenues was
26.5% compared to 21.8% for the first quarter of 2008. The dollar decrease in
gross profit resulted from the lower sales for the quarter.  The gross
margin rate increase corresponded to licensing revenues related to the use of
our ecoFoam Ôbrand where there is no offsetting cost of goods sold.
  23
 
 Operating Expenses. Our
selling, general and administrative expenses for the quarter ended March 31,
2009 were $466,533, representing an increase of approximately $40,000 or 9.3%
compared to $426,903 for the quarter ended March 31, 2008. As a percentage of
revenues, selling, general and administrative expenses were 396.6% for the first
quarter of 2009 compared to 24.3% for the first quarter of 2008. Approximately
$181,000 of this increase, an increase of 945.4%, was due to expense for outside
consultants, including cash and non-cash stock based compensation, due to a
higher quantity and value of stock and stock options issued for services under
Statement of Financial Accounting Standard No. 123R (SFAS
123(R)).  Offsetting this increase was a decrease of approximately
$91,000, a decrease of 35.3%, for  lower payroll and benefits expense,
including stock based compensation, from fewer employee positions reduced from
12 to 7.5 full time equivalents and reduced sales commissions due to lower
sales.  Lower expenses occurred in travel of approximately $35,000 or
70.5% as we took fewer trips to Asia, and product samples and postage of
approximately $14,000 or 90.6% as fewer product sample shipments occurred during
the quarter.
 
 Other Expenses. Our other
expenses consist of net interest expense.  For the quarter ended March
31, 2009, other expenses were $109,458, representing an increase of
approximately $10,000 or 10.1% compared to $99,450 for the quarter ended March
31, 2008. This increase was primarily due to additional interest expense
incurred on higher cumulative borrowings provided through loans from our
President and Chief Executive Officer, William Patridge of approximately
$22,000, partially offset by lower interest expense of approximately $11,000 for
amortization of the beneficial conversion feature discount on convertible
promissory notes between the quarters.
 
 Liquidity
and Capital Resources
  As of
March 31, 2009 we had $16,225 in cash and a working capital deficit of $731,849,
as compared with $12,906 in cash at December 31, 2008 and a working capital
deficit of $625,239 and $243,417 in cash at March 31, 2008 and a working capital
deficit of $1,062,338. Cash used to fund operating activities for the first
quarter of 2009 was $181,147 compared to $281,418 for the first quarter of 2008,
representing a decrease of approximately $100,000. This decrease resulted
primarily from lower selling, general and administrative cash expenses and lower
payments on accounts payable, partially offset by lower net sales and gross
profits in 2009.
  Cash
provided by investing activities of $21,788 for the first quarter of 2009 was
approximately $28,000 higher than cash used for investing activities in the
amount of $6,220 for the first quarter of 2008. This increase was due to a sale
of a company automobile this year and no capital additions this year. Cash
provided by financing activities of $162,678 for the first quarter of 2009
decreased by approximately $358,000 compared to $520,300 for the first quarter
of 2008. This decrease was due to last year’s net proceeds raised from the sale
of 4,345,320 shares of our common stock in an offering under Rule 504 of
Regulation D promulgated under the Securities Act of 1933 (as amended) and an
additional private placement common stock sale of 300,000 shares, totaling
combined net proceeds of approximately $568,000. This amount was partially
offset by higher net borrowings on notes payable of approximately $210,000 this
year.
  24
 
 Since our
inception, we have financed our operations primarily through sales of our common
stock, issuance of convertible promissory notes, outside loans, and loans and
convertible debt provided by our President and Chief Executive Officer. We
have no credit lines or facilities as of March 31, 2009, nor have we ever had a
credit facility since our inception.  We anticipate requiring
additional cash to fund our operations in 2009. We anticipate this funding to
come from loans from William Patridge, debt bridge financing or loans of up to
$2,000,000 during the first half of 2009, and additional debt or equity
financing in the second half of 2009 of $2,000,000 to $7,000,000.
Any such sale of common stock or other securities will lead to further dilution
of the equity ownership of existing holders of our common stock. The proceeds
from additional financing anticipated will be required to meet our
current liabilities of $904,433 as of March 31, 2009. Of this amount,
$388,870 is due to William Patridge on June 30, 2009. Our proceeds from
financing will also need to pay non-cancelable lease commitments of $23,851
during 2009, pay down other current liabilities of $491,712 as of March 31, 2009
and to fund our monthly operating activities during 2009.
 
 We
currently have no material commitments for capital expenditures.
 
 Because
of our operating losses and negative cash flows incurred since inception, our
independent auditors have included an explanatory paragraph in its report on our
financial statements for 2008 and 2007 expressing doubt regarding our ability to
continue as a going concern. Our ability to fund our liquidity and working
capital needs in the near future will be dependent upon successful execution of
our current business strategy and repositioning efforts. We will have to obtain
significant additional capital through the sale of additional equity and/or debt
securities, and from other financing activities, such as strategic partnerships,
in order to execute our business plan. The economic downturn and the
current challenges facing the financial markets may make it
difficult for us to raise capital, or to raise capital on
terms acceptable to the Company. Therefore, there is no assurance that
we will obtain any outside financing, or that we will do so on
favorable terms, and no assurance can be given that we will have sufficient
capital available to operate beyond May 2009 or that we will be able to affect
our new business plan in the non-PVC and bioplastics market.
  We have
no off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation
S-K.
  25
 
 ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK .
  Not
applicable.
 
 ITEM
4T. CONTROLS AND PROCEDURES.
  Disclosure
Controls and Procedures
  Our
management, with the participation of the Chief Executive Officer and Chief
Financial Officer, evaluated the effectiveness of the design and operation of
the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e)
and Rule 15d-15(e) of the Securities and Exchange Act of 1934, as amended) as of
the period covered by this quarterly report.  Based upon this
evaluation, management has concluded that the Company’s disclosure controls and
procedures are effective at a reasonable assurance level in ensuring that
information required to be disclosed by us in our reports is recorded,
processed, summarized and reported within the required time periods. The
foregoing conclusion is based, in part, on the fact that we are a small public
company.
  Management’s
Report on Internal Control over Financial Reporting
  Our
management is responsible for establishing and maintaining adequate internal
control over our financial reporting. Internal control over financial reporting
is a process to provide reasonable assurance regarding the reliability of our
financial reporting for external purposes in accordance with accounting
principles generally accepted in the United States. Internal control over
financial reporting includes policies and procedures that: (i) pertain to
maintaining records that in reasonable detail accurately and fairly reflect our
transactions; (ii) provide reasonable assurance that transactions are
recorded as necessary for preparation of our financial statements and that
receipts and expenditures of company assets are made in accordance with
management authorization; (iii) provide reasonable assurance that
unauthorized acquisition, use or disposition of company assets that could have a
material effect on our financial statements would be prevented or detected on a
timely basis; and (iv) such information is accumulated and communicated to our
management, including William Patridge, our Chief Executive Officer, and Jane
Emkes, our Chief Financial Officer, as appropriate, to allow timely decisions
regarding required disclosure. Because of its inherent limitations, internal
control over financial reporting is not intended to provide absolute assurance
that a misstatement of our financial statements would be prevented or
detected.
  For the
quarter ended March 31, 2009, our Chief Executive Officer and Chief Financial
Officer evaluated the effectiveness of our internal controls over financial
reporting pursuant to the Exchange Act Rule 13a-14.  Based on
their evaluation, we have concluded that as of the end of the period covered by
this quarterly report, our internal controls over financial reporting are
effective at a reasonable assurance level in ensuring that information required
to be disclosed by us in our reports is recorded, processed, summarized and
reported within the required time periods. The foregoing conclusion is based, in
part, on the fact that we are a small public company in the development stage of
our new business operations.
  Changes in Internal Controls.
There was no change in our internal control over financial reporting during the
quarter ended March 31, 2009, that has materially affected, or is reasonably
likely to materially affect, our internal control over financial
reporting.
  26
  PART
II
 
 ITEM 1. LEGAL PROCEEDINGS
..
  There
have been no material developments with respect to any of the legal proceedings
described in our previously filed Annual Report on Form 10-K for the fiscal year
ended December 31, 2008.
 
 ITEM 2. UNREGISTERED SALES OF EQUITY
SECURITIES AND USE OF PROCEEDS .
 
 During
the quarter covered by this quarterly report, the Company sold equity securities
and such sales were not registered under the Securities Act of
1933.  For additional details regarding such sales of equity
securities, please refer to the Company’s Current Report on Form 8-K filed with
the Securities and Exchange Commission on April 22, 2009.
 
 ITEM 3. DEFAULTS UPON SENIOR
SECURITIES .
  None.
 
 ITEM 4. SUBMISSION OF MATTERS TO A
VOTE OF SECURITY HOLDERS .
  None.
 
 ITEM
5. OTHER INFORMATION.
 
 None.
  27
  ITEM
      6. EXHIBITS.10.1
                    Convertible
      Promissory Note, dated as of March 31, 2009, issued byecoSolutions
      Intl in favor of William Patridge*31.1
                    Rule
      13a-14(a) Certification, as adopted pursuant to Section 302 of
      theSarbanes-Oxley
      Act of 2002 *31.2
                    Rule
      13a-14(a) Certification, as adopted pursuant to Section 302 of
      theSarbanes-Oxley
      Act of 2002 *32.1
                    Certification
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant
  toSection
      906 of the Sarbanes-Oxley Act of 2002*32.2
                    Certification
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant
  toSection
      906 of the Sarbanes-Oxley Act of
2002*
  *Filed
herewith.
 
 28
  SIGNATURES
  In
accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
  ECOSOLUTIONS
      INTLDate:
      May 14, 2009
                        By:
                        /s/
      William PatridgeWilliam
      Patridge
                          Chief
      Executive
Officer
  29