UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D. C. 20549





FORM 10-K





[X]
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934FOR THE FISCAL YEAR ENDED DECEMBER 31, 2013





Commission File Number: 000-51213





ECOLOCAP SOLUTIONS INC.


(Exact name of registrant as specified in its charter)





NEVADA
36-4668489(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)





1250 S. Grove Ave, Suite 308


Barrington, Illinois 60010


(Address of principal executive offices, including zip code)





866-479-7041


(Registrant’s telephone number, including area code)





Securities registered pursuant to Section 12(b) of the Act:
Securities registered pursuant to Section 12(g) of the Act:None
Common Stock





Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES [   ]     NO [X]





Indicate by check mark if the registrant is required to file reports pursuant to Section 13 or Section 15(d) of the Act: YES [X]      NO [   ]





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 [   ]





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





Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.[   ]





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





Large Accelerated Filer
[   ]
Accelerated Filer
[   ]Non-accelerated Filer(Do not check if a smaller reporting company)
[   ]
Smaller Reporting Company
[X]





Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES [   ]     NO [X]





State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter - June 30, 2013: $1,048,037.





As of April 13, 2014, 6,865,010,372 shares of the registrant’s common stock were outstanding.








TABLE OF CONTENTS





PagePART IItem 1.
Business.
3Item 1A.
Risk Factors.
6Item 1B.
Unresolved Staff Comments.
6Item 2.
Properties.
6Item 3.
Legal Proceedings.
6Item 4.
Mine Safety Disclosures.
7PART IIItem 5.
Market for the Registrant’s Common Equity, Related Stockholders Matters and Issuer

Purchases of Equity Securities.
7Item 6.
Selected Financial Data.
9Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operation.
9Item 7A.
Quantitative and Qualitative Disclosures About Market Risk.
12Item 8.
Financial Statements and Supplementary Data.
12Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
27Item 9A.
Controls and Procedures.
27Item 9B.
Other Information.
28PART IIIItem 10.
Directors, Executive Officers and Corporate Governance.
36Item 11.
Executive Compensation.
38Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related

Stockholder Matters.
40Item 13.
Certain Relationships and Related Transactions, and Director Independence.
42Item 14.
Principal Accountant Fees and Services.
42PART IVItem 15.
Exhibits and Financial Statement Schedules.
43Signatures
45Exhibit Index
46








-2-


PART I.





ITEM 1.          BUSINESS.





EcoloCap Solutions Inc. is an integrated and complementary network of environmentally focused technology companies that utilize advanced nanotechnology to design, develop, manufacture and sell cleaner alternative energy products. We bring together the technology, engineering, and operational management for the successful development of environmentally significant products and projects.





We plan to develop economically feasible renewable energy.





History of the Business





We were incorporated in the State of Nevada on March 18, 2004, as Cygni Systems Corporation. We were originally formed with the intent of raising funds and entering into business as a software design company. From the date of our incorporation until June 17, 2005, we were in the development stage of online and network security management software and online and network security consulting services.





A change of control occurred on June 17, 2005. On August 19, 2005, we entered into and closed a Share Exchange Agreement (the “XL Share Exchange Agreement”) with XL Generation AG. Pursuant to the terms of the XL Share Exchange Agreement, we acquired all of the issued and outstanding shares of common stock of XL Generation AG. On August 23, 2005, we filed a Certificate of Amendment with the State of Nevada, changing our name to “XL Generation International Inc.”





XL Generation was the holding company of a Swiss entity, XL Generation AG, which was the marketer of an artificial sport surface called “XL Turf.” We aspired to become a leading global force in the artificial turf and flooring markets by building both the strength of the XL brand and strategic partnerships with key regional turf and flooring providers. Due to market and other conditions,our board of directors decided that it was in our best interest to initiate a complete and total withdrawal from the artificial flooring sector, artificial turf and all related business.





Following our withdrawal from the artificial flooring sector, artificial turf and all related business and after identifying new business opportunities, we changed our name from “XL Generation International Inc.” to “Ecolocap Solutions Inc.”





On November 13, 2007, we filed a Certificate of Amendment with the State of Nevada, changing our name to “EcoloCap Solutions Inc.” Our shares of common stock are traded on the Bulletin Board operated by the Financial Industry Regulatory Authority under the symbol ECOS.





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





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





On November 4, 2010, the Company transferred all of its shares of Ecolocap Solutions (Canada) Inc. to DT Crystal Holdings Ltd in exchange of the reduction of $100,000 of its debts.


-3-





Our Business





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





MBT M-Fuel





EcoloCap Solutions Inc., through its subsidiary Micro Bubble Technologies Inc. (MBT), developed and manufactures M-Fuel, an innovative emulsion fuel that far exceeds all conventional fuels’ costs and efficiencies. This environmentally-friendly and economical product is designed to offer fully scalable and customizable fuel solutions that will increase efficiency, lower operating costs, and reduce emissions. M -Fuel is an emulsion of 60% heavy oil, 38%, and a 2% stabilizing additive for external combustion engines and 70% heavy oil, 28% water and 2% stabilizing additive. The production of M-Fuel takes place in our Nano Processing Units (NPU), a self contained device that is sized for output. The NPU’s can be configured to operate in conjunction with an engine or burner to sully M-Fuel on demand, or pre-manufactured for delivery. Independent tests conducted in the US, Korea and Australia demonstrate M-Fuels unique burning process facilitates increased efficiency, resulting in average reduced NOx emissions by 60%, particulate emissions by 98% reduces fuel consumption by 30% to 40%%, and cut costs by up to 20%.





The Clean Air Act specifies that any emulsion diesel fuel that has 14% or greater water is eligible for a 19.7% rebate on the fuel tax. The end user of M-Fuel may in some cases, save money on prices for diesel.





Nano Li Battery





Independent tests have demonstrated that the Nano Li battery utilizing new anode and cathode technologies and only requiring 10% by weight Li is the least expensive and highest Whr/Kg of any comparable type battery at 25% of the cost/KwHr. Independent tests





Volumetric energy density
Wh/l
496.29Mass
Kg
5.45Mass energy density
Wh/Kg
215.80Watt power density
W/kgVoltage
V
4.20





NPW Machine





NPW Series biodiesel processing machines will allow customers to utilize cheaper waste feedstock (high free fatty acid organic oils such as trap grease, beef tallow, chicken fat, algae), reduce production cost /gallon, and produce biodiesel exceeding all ASTM specs. Most equipment providers must first approve feedstock to ensure biodiesel quality. We do not need to approve the biodiesel feedstock and there is no limit on the degree of waste oil that can be processed (up to 99.2% FFA Feedstock). A secondary process is recovers glycerin as a production by product. We also have an additional Glycerin Refining Machine that can make several grades of glycerin to meet applications designated by the customer.





Our Current Operations





Ecolocap sold its first NPU system in 2010 and is presently undergoing contract negotiations for multiple installations.








-4-





The Nano Li Battery promise to change the panorama of the energy storage market in the near-term by offering superior performance compared to existing lithium-ion batteries and greatly reduced prices. Several industries, including the telecommunications industry, have been receptive with either substantial orders or serious demonstrations of interest. We have signed MOU’s for production facilities in Vietnam and Holland.





MBT has also developed a new process that blends non-miscible liquids (oil and water) on a submicron level in order to create a new non-emulsified fuel product that it calls EM-Fuel. Tests conducted in the City of Brisbane, Australia have verified all claims to emissions and savings. We are in the process of signing a distribution contract for M-Fuel in Australia and New Zealand. Additionally, contracts are under negotiation for a large power plant in Chile and possible implementation of M-Fuel in the Ukraine.





Given the turmoil in the Mideast M-Fuel is being evaluated by African and Caribbean nations where the diesel is the main source of power generation as the immediate way to reduce costs, and as an ancillary benefit is the reduction of emission.





In December 2010, MBT announced that it has signed an agreement with Triad Constructors, Inc. to utilize Triad for the sales, distribution, installation and commissioning of the new NPW biodiesel processing units sold.





In April 2011, MBT announced the execution of a purchase agreement with Empresas Energy Partners Chile Generadora de Energia LTDA (EPC) for the shipment of an NPU-10 series fuel emulsion plant to Degan, Chile to produce M-Fuel for 30-45 days starting the first week of may. Upon successful completion of the testing an additional three NPU-60 fuel emulsion plants will be purchased to provide fuel for the entire 40 megawatt station. EPC estimates their demand for M-Fuel will facilitate the need for a minimum of 36 NPU-60 fuel emulsions.





In May 2011, MBT announced that it has signed a distribution agreement with Nano-Tech Industries Pty Ltd, of Acacia Ridge, Australia, to distribute all of its products in Australia, New Zealand and the Pacific Islands.





In July 2011, MBT shipped to Empresas Energy Partners Chile Generadora de Energia LTDA (EPC), for testing purpose, an NPU-10 series fuel emulsion plant to Degan, Chile to produce M-Fuel.





In 2012, Michael Siegel CEO and Jeung Kwak, Chairman have travelled to Ukraine to meet with the Ministry of Energy and Coal. They have presented the non-emulsified fuel product M-Fuel.





In 2012, we have sent samples to Great Britain and Ireland for testing in furnace applications.





Our Vision





EcoloCap brings together the innovation, engineering, and industry knowledge to create products that have a significant—constructive and quantifiable—impact on the environment, while cost-effectively enhancing intrinsic performance characteristics. With these ground-breaking alternative energy products, EcoloCap is uniquely positioned to unleash the power of nanotechnology and revolutionize the world largest markets.





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





·
On-Road Transportation: EV/PHEV, trucks, buses, public fleets, mass transit fleets, private fleets


·
Off-Road Transportation: marine engines, locomotives, construction equipment


·
Power Generation: cell towers, data centers, apartments complexes, hospitals, universities


-5-





·
Grid Stabilization: utilities, energy services, systems operators, merchant operators, municipalities


·
Industrial: power plants, manufacturing plants, boilers, furnaces, turbines, driers, kilns


·
Government: military, defense contractors, systems integrators, aerospace, propulsion systems





Regulation





The MBT batteries will be undergoing full destructive testing and should be completed by the end of the 3rd quarter. At the present time the only regulations that may affect the MBT Nano Li battery is the transportation by passenger plane. Once destruction testing demonstrates the safety of the batteries they should be allowed to be transported passenger plane.





We will be seeking final approval by the EPA for the M-Fuel additive.





Competition





There are many battery manufactures and types of batteries. The battery market is defined by the mission and cost. To date there is no direct comparison for our batteries and we plan to initially impact the mission sensitive projects.





The M-Fuel technology is unique and is superior to any type of emulsion fuel at reduced selling process than the pre-processed fuel. In our process we recover the free SOx and NOx present in fuel before processing. No other emulsion process eliminates heavy metals, S and N from the fuel prior to processing of the fuel. This process will also be marketed as a standalone process for the elimination of Sulphur from fuel oil.





The bio-diesel processing system makes diesel biodiesel from wasted fats. The MBT process is superior to competing process and at 25% of the cost. The MBT process is the only process that produces 99% pure glycerine by product.





The markets in which we do business are highly competitive. In the market in which we operate, there are many competitors, some of which are significantly larger, have access to much more important resources or capital than us, or have established reputations among potential customers.








ITEM 1A.       RISK FACTORS.





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








ITEM 1B.       UNRESOLVED STAFF COMMENTS.





None.








ITEM 2.          PROPERTIES.





We do not own any real estate. We do not plan on investing in real estate in the near future. We are currently renting office space in Barrington IL on a month to month basis for $2,001 per month. The Company believes that its current office facilities will not be sufficient for the foreseeable future.








ITEM 3.          LEGAL PROCEEDINGS.





We are not presently a party to any litigation.


-6-





ITEM 4.          MINE SAFETY DISCLOSURES.





None.








PART II








ITEM 5.
MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.





Market Information





Our shares of common stock are traded on the Bulletin Board operated by the Financial Industry Regulatory Authority (FINRA) under the symbol “ECOS”.





The following table sets forth for the periods indicated the high and low close prices for the Common Shares in U.S. Dollars. These quotations reflect only inter dealer prices, without retail mark up, mark down or commissions and may not represent actual transactions.





2013

High

LowDecember 31, 2013
$
0.0015
$
0.0001September 30,2013
$
0.0007
$
0.0001June 30, 2013
$
0.0028
$
0.0004March 31, 2013
$
0.011
$
0.00142012

High

LowDecember 31, 2012
$
0.030
$
0.004September 30,2012
$
0.030
$
0.004June 30, 2012
$
0.033
$
0.004March 31, 2012
$
0.045
$
0.003





Holders





As of March 31, 2014, we had sixty-two stockholders of record.





Dividends





We have never declared or paid cash dividends. There are currently no restrictions which limit our ability to pay dividends in the future.





Securities authorized for issuance under equity compensation plans





On March 31, 2008, we filed a new Equity Incentive Plan (the “Plan”), effective as of March 31, 2008. On March 30, 2006, we adopted the 2006 Equity Incentive Plan (the “Plan”), effective as of March 24, 2006. Under the Plan, we may issue options, stock appreciation rights, restricted shares, deferred shares or performance shares. The maximum number of such shares of our common stock that may be issued under the Plan is 2,000,000 shares. Our officers, directors, employees and consultants, as well as those of our subsidiaries, may participate in the Plan, as our Compensation Committee may deem to be advisable and in our best interests. No one individual may be awarded options to purchase more than 500,000 shares in any one fiscal year. No one individual may be granted more than 250,000 shares in any one fiscal year. The terms and conditions of each grant shall be as set forth in an award agreement approved by the Compensation Committee.





-7-





Equity Compensation Plan Information





Plan category
Number of securities

issued upon exercise of

outstanding options,

warrants and rights
Weighted-average

exercise price of

outstanding options,

warrants and rights
Number of securities remaining

available for future issuance

under equity compensation plans

(excluding securities reflected in

column (a))(a)
(b)
(c)Equity compensation plans approved by

security holders
n/a
n/a
n/aEquity compensation plans not approved by security holders
365,000
1.04
1,040,000Total
365,000
1.04
1,040,000





Registration Statement





On November 17, 2010, a Registration Statement on Form S-8 (the “Registration Statement”) was filed by Ecolocap Solutions, Inc., a Nevada corporation (the “Company” or the “Registrant”), and the Ecolocap Solutions Inc. 2010 Non-Qualified Stock Option Plan (the “Plan”) relating to 10,000,000 shares of its Common Stock, par value $0.001 per share (the “Common Stock”), to be offered and sold to accounts of eligible persons of the Company under the Plan.





As of December 31, 2013, 10,000,000 shares of common stock have been issued pursuant to this Offering, in compensation for services.





Recent Sales of Unregistered Securities





None.





Purchases of Equity Securities by the Company and Affiliated Purchasers





None.





Section 15(g) of the Securities Exchange Act of 1934





Our company’s shares are covered by Section 15(g) of the Securities Exchange Act of 1934, as amended that imposes additional sales practice requirements on broker/dealers who sell such securities to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouses). For transactions covered by the Rule, the broker/dealer must make a special suitability determination for the purchase and have received the purchaser’s written agreement to the transaction prior to the sale. Consequently, the Rule may affect the ability of broker/dealers to sell our securities and also may affect your ability to sell your shares in the secondary market.





Section 15(g) also imposes additional sales practice requirements on broker/dealers who sell penny securities. These rules require a one page summary of certain essential items. The items include the risk of investing in penny stocks in both public offerings and secondary marketing; terms important to in understanding of the function of the penny stock market, such as “bid” and “offer” quotes, a dealers “spread” and broker/dealer compensation; the broker/dealer compensation, the broker/dealers duties to its customers, including the disclosures required by any other penny stock disclosure rules; the customers rights and remedies in causes of fraud in penny stock transactions; and, the FINRA’s toll free telephone number and the central number of the North American Administrators Association, for information on the disciplinary history of broker/dealers and their associated persons.


-8-





The application of the penny stock rules may affect your ability to resell your shares.








ITEM 6.          SELECTED FINANCIAL DATA.





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








ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.





Operations





The following discussion of the financial condition and results of our operations should be read in conjunction with the financial statements and the related notes thereto included elsewhere in this Annual Report on Form 10-K for the year ended December 31, 2013 (this “Report”). This Report contains certain forward-looking statements and our future operating results could differ materially from those discussed herein. Certain statements contained in this Report, including, without limitation, statements containing the words “believes”, “anticipates,” “expects” and the like, constitute “forward-looking statements”. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. We disclaims any obligation to update any such factors or to announce publicly the results of any revisions of the forward-looking statements contained or incorporated by reference herein to reflect future events or developments.





Business Plan





Ecolocapis negotiating with a factory in Korea that would enable the Company to build 6 NPU and NPW’s machine per month.





Results of Operations





For the Year ended December 31, 2013





Overview





We incurred net losses of $2,024,207 for the year ended December 31, 2013 as compared to a net loss of $1,543,631 for the year ended December 31, 2012. There has been a decrease of $300,000 in research and development expenses, an increase in impairment loss on fixed assets of $302,750 and an increase in interest expenses of $1,671,767 mainly attributable to the interest expense resulting from derivative liabilities.





Development Stage Expenditures





During the year ended December 31, 2013, we recognized Development Stage Expenditures of $3,560,104, an increase of 46% from the year ended December 31, 2012. There has been a decrease of $300,000 in research and development expenses, an increase in impairment loss on fixed assets of $302,750 and an increase in interest expenses of $1,671,767 mainly attributable to the interest expense resulting from derivative liabilities.











-9-





Sales





For the years ended December 31, 2013 and 2012, we recorded no sales. In 2012, we received other revenue of $200,000 representing fees received according to a Standstill Agreement signed by the Company with Fuel Emulsions International Inc. (FEI.





Total Cost and Expenses





During the year ended December 31, 2013, we incurred Total Costs and Expenses of $3,560,104, an increase of 46% from the year ended December 31, 2012. There has been a decrease of $300,000 in research and development expenses, an increase in impairment loss on fixed assets of $302,750 and an increase in interest expenses of $1,673,430 mainly attributable to the interest expense resulting from derivative liabilities.





Selling, General and Administration





During the year ended December 31, 2013, we incurred selling, general and administrative expenses of $689,381, as compared to $1,032,094 for the year ended December 31, 2012 for a decrease of 33%.The decrease resulted from the Board of Directors fees and lower professional fees.





Interest





We calculate interest in accordance with the respective note payable. For the year ended December 31, 2013, we incurred $2,518,828 as compared to $845,398 for the year ended December 31, 2012.The increase is caused by interest expense on increased borrowings and interest expense recorded upon issuance of convertible debt in which the debt discount related to the conversion feature recorded as a derivative exceed the face value of the note.





Liquidity and Capital Resources





At December 31, 2013, we had $1,237 in cash, as opposed to $6,902 in cash at December 31, 2012. Total cash used in operations for the year ended December 31, 2013 was $774,481. As a result of its new business plan, management estimates that cash requirements through the end of the fiscal year ended December 31, 2014 will be between $2.0 million to $5.5 million. As of the date of this Report, we do not have available resources sufficient to cover the expected cash requirements through the end of the first quarter of 2014 or the balance of the year. As a result, there is substantial doubt that we can continue as an ongoing business without obtaining additional financing. Management’s plans for maintaining our operations and continued existence include selling additional equity securities and borrowing additional funds to pay operational expenses. There is no assurance we will be able to generate sufficient cash from operations, sell additional shares of Common Stock or borrow additional funds. Our inability to obtain additional cash could have a material adverse effect on our financial position, results of operations and our ability to continue our existence. If our losses continue and we are unable to secure additional financing, we may ultimately be required to seek protection from creditors under applicable bankruptcy laws.





We had total current assets of $218,218 as of December 31, 2013. This was an increase of $211,308 as compared to current assets of $6,910 as of December 31, 2012. The increase was primarily attributable to an increase in the note receivable.





We had total assets of $218,218 as of December 31, 2013. This was a decrease of 162,621, or 43%, as compared to total assets of $380,839 as of December 31, 2012. The decrease was primarily attributable to an impairment loss on fixed assets.





We had total current liabilities of $4,336,806 as of December 31, 2013. This was an increase of $1,208,193 or 39%, as compared to current liabilities of $3,128,613 as of December 31, 2012. The net increase was attributable to derivative liabilities and note payables stockholders.





-10-





We are party to a lease for our Montreal office (the “Montreal Lease”), at a minimum annual rent of approximately $64,000 per year. The Montreal Lease expires in February 15, 2014. The Company has vacated the premises and according to the lease, a six month rent might have to be paid if the landlord commences a lawsuit against the Company. The rent for the six month period amount has been accrued in the accompanying Financial Statements.





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





This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this Memorandum. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.





We have only had operating losses which raise substantial doubts about our viability to continue our business and our auditors have issued an opinion expressing the uncertainty of our company to continue as a going concern. If we are not able to continue operations, investors could lose their entire investment in our company.





Limited Operating History





We have a history of operating losses, and may continue to incur operating losses. We incurred losses since inception. We had negative working capital as of December 31, 2013 of $4,118,588 (compared with $3,121,703 for the same period last year), and a stockholders’ deficiency of $7,853,391 as of December 31, 2013 (compared with a stockholders’ deficiency of $6,981,489 as of December 31, 2012). These factors, among others raise substantial doubt about our ability to continue as a going concern. As a result of these factors, our auditors have issued an opinion in their audit report for the year ended December 31, 2013 expressing uncertainty about the ability of our Company to continue as a going concern. This means that there is substantial doubt whether we can continue as an ongoing business without additional financing and/or generating profits from our operations.





Contractual Obligations





We were the party to a lease for its Barrington office, at a minimum annual rent of approximately $24,000 per year. The Barrington lease expired in May 2013.





Off Balance Sheet Arrangements





We have no off balance sheet arrangements other than as described above.





We have not entered into any other financial guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.








-11-





ITEM 7A.       QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.





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








ITEM 8.          FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.





IndexREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
F-1Consolidated Balance Sheets
F-2Consolidated Statements of Stockholders’ Equity (Deficiency)
F-3Consolidated Statements of Operations
F-5Consolidated Statement of Cash Flows
F-6Notes to Consolidated Financial Statements
F-7























-12-





Audit opinion














F-1


-13-


ECOLOCAP SOLUTIONS INC.


(A Development Stage Company)


CONSOLIDATED BALANCE SHEETS


December 31, 2013








2013


2012ASSETSCURRENT ASSETSCash

$
1,237


$
6,910Note Receivable


197,037



-Prepaid expenses and sundry current assets


19,944



-TOTAL CURRENT ASSETS


218,218



6,910PROPERTY AND EQUIPMENT, AT COST, LESS

ACCUMULATED DEPRECIATION


-



373,929TOTAL ASSETS

$
218,218


$
380,839LIABILITIES AND STOCKHOLDERS’ DEFICIENCYCURRENT LIABILITIES:Customer deposits


175,000



175,000Notes payable


539,335



551,549Notes payable-stockholders


1,056,859



791,144Derivative liabilities


1,589,616



723,437Accrued expenses and sundry current liabilities related party


32,352



12,829Accrued expenses and sundry current liabilities


943,644



874,654TOTAL CURRENT LIABILITIES

$
4,336,806


$
3,128,613STOCKHOLDERS’ DEFICIENCYCommon stock





$10,000,000,000 shares authorized, par value $0.00001, 2,874,786,512 and

372,410,782 shares, respectively issued and outstanding


28,748



3,724Additional paid in capital


35,427,919



34,799,550Accumulated Deficit


(25,059,593
)


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


(18,250,465
)


(16,725,170
)TOTAL STOCKHOLDERS’ DEFICIENCY- Ecolocap Solutions, Inc.

$
(7,853,391
)

$
(6,981,489
)Less Non-controlling interest


3,734,803



4,233,715TOTAL STOCKHOLDERS’ DEFICIENCY


(4,118,588
)


(2,747,774
)TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIENCY

$
218,218


$
380,839











F-2


-14-


ECOLOCAP SOLUTIONS INC.


(A Development Stage Company)


CONSOLIDATED STATEMENTS OF STOCKHOLDERS (DEFICIENCY)


Stockholders’ Equity








Common stock








DeficitAuthorized








accumulated


Other5,000,000,000


Additional





during


ComprehensiveStockholders




Shares, Par value


paid in


Accumulated


Development


Income





Non-controllingDeficiency

Shares


$0.00001


Capital


Deficit


Stage


(Loss)


Subtotal


interest


Total  January 1, 2007


34,578,268


$
975


$
13,425,882


$
(25,059,593
)


-


$
220,463



(11,412,273
)




$
(11,412,273
)Proceeds from the issuance of Common stock


990,000



10



1,003,390



-







-



1,003,400






1,003,400Stock options










1,372,897















1,372,897






1,372,897Net Income






-



-







6,306,507







6,306,507






6,306,507Other comprehensive Income






















(220,463
)


(220,463
)





(220,463
)December 31, 2007


35,568,268


$
985


$
15,802,169


$
(25,059,593
)


6,306,507


$
-



(2,949,932
)




$
(2,949,932
)Shares issued for settlement of services


4,500,000



45



3,838,955















3,839,000






3,839,000Shares issued following exercise of stock options


25,000



1



249















250






250Proceeds from the issuance of Common stock


250,000



2



74,998



-







-



75,000






75,000Shares issued for settlement of a debt


3,470,471



35



3,137,265















3,137,300






3,137,300Net Loss






-



-







(4,939,044
)






(4,939,044
)





(4,939,044
)December 31, 2008


43,813,739


$
1,067


$
22,853,636


$
(25,059,593
)


1,367,463


$
-



(837,426
)




$
(837,426
)Shares issued following acquisition


54,000,000



540



7,171,460















7,172,000






7,172,000Shares issued for services


1,650,000



17



267,984















268,000






268,000Non-controlling interest pursuant

to acquisition(see Note 2)






























5,643,000



5,643,000Proceeds from the issuance of Common stock


460,923



5



139,995























140,000Net Loss






-



-







(907,051
)






(907,051
)


(68,806
)


(975,857
)December 31, 2009


99,924,662


$
1,628


$
30,433,075


$
(25,059,593
)


460,412


$
-



5,835,523


$
5,574,194



11,409,717Shares issued for services


825,000



8



92,492















92,500







92,500Shares issued for settlement of a debt


15,399,276



84



1,219,502















1,219,586







1,219,586Proceeds from the issuance of Common stock


4,362,154



44



217,956















218,000







218,000Imputed interest on non-interest bearing

stockholders loans










6,116















6,116







6,116Net Loss


















(8,390,200
)






(8,390,200
)


(461,400
)


(8,851,600
)December 31, 2010


120,511,092


$
1,205


$
31,969,701


$
(25,059,593
)


(7,929,788
)

$
-



(1,018,475
)

$
5,112,794



4,094,319Shares issued for services


9,456,414



95



213,984















214,079







214,079Shares issued for settlement of a debt


67,407,978



674



1,865,978















1,866,652







1,866,652Proceeds from the issuance of Common stock


1,657,895



16



68,142















68,158







68,158Imputed interest on non-interest bearing

stockholders loans










16,848















16,848







16,848Net Loss


















(7,517,843
)






(7,517,843
)


(612,987
)


(8,130,830
)December 31, 2011


199,033,379


$
1,990


$
34,134,653


$
(25,059,593
)


(15,447,631
)

$
-



(6,370,581
)

$
4,499,807



(1,870,774
)Shares issued for services


9,363,781



94



99,243















99,337







99,337Shares issued for settlement of a debt


164,013,622



1,640



537,880















539,520







539,520Imputed interest on non-interest bearing

stockholders loans










27,774















27,774







27,774Net Loss


















(1,277,539
)






(1,277,539
)


(266,092
)


(1,543,631
)December 31, 2012


372,410,782


$
3,724


$
34,799,550


$
(25,059,593
)


(16,725,170
)

$
-



(6,981,489
)

$
4,233,715



(2,747,774
)Shares issued for services


15,083,117



151



13,425















13,576







13,576Shares issued for settlement of debts


2,487,292,613



24,873



573,661















598,534







598,534Imputed interest on non-interest bearing

stockholders loans










41,283















41,283







41,283Net Loss


















(1,525,295
)






(1,525,295
)


(498,912
)


(2,024,207
)December 31, 2013


2,874,786,512


$
28,748


$
35,427,919


$
(25,059,593
)


(18,250,465
)

$
-



(7,853,391
)

$
3,734,803



(4,118,588
)











F-3


-15-





ECOLOCAP SOLUTIONS INC.


(A Development Stage Company)


CONSOLIDATED STATEMENTS OF OPERATIONS








Beginning ofdevelopment stage,January 1, 2007,December 31,


December 31,


through2013


2012


December 2013SALES

$
-


$
-


$
469,840Cost of sales


-



-



452,000Gross Profit


-



-



17,840COSTS AND EXPENSES:


-



-



-Selling, general and administrative


689,381



1,032,094



4,896,820Depreciation and amortization


71,180



73,290



991,976Research and development


-



300,000



1,360,278Gain on settlement debts-foreign Subsidiary


-



-



(8,013,125
)Gain on  sale of equipment


-



(209,214
)


(209,214
)Impairment Loss Fixed Assets


302,750



-



302,750Impairment Loss Intangible Assets


-



-



5,499,842Impairment Loss Goodwill


-



-



7,008,721Compensation expense (gain)


(116,925
)


(55,280
)


28,201Stock Based compensation


-



-



5,211,897Debt conversion inducement expense


-



-



820,297Compensation for services


-



-



258,000Gain on derivatives liabilities at market


(1,418,972
)


(242,646
)


(1,661,618
)Payments received under Standstill Agreement


-



(200,000
)


(200,000
)Interest expense-related party


73,635



40,603



114,238Interest expense


2,445,193



804,795



3,815,709Interest income


(22,037
)






(22,037
)Foreign exchange loss (gain)


2



(11
)


(163,427
)TOTAL COSTS AND EXPENSES


2,024,207



1,543,631



20,039,308Net loss from continuing operations

$
(2,024,207
)

$
(1,543,631
)

$
(20,021,468
)Net loss from discontinued operations

$
-


$
-



(185,451
)Gain on Sale of discontinued operations


-



-



48,257Net loss


(2,024,207
)


(1,543,631
)


(20,158,662
)Attributable to:Ecolocap Solutions Inc.

$
(1,525,295
)

$
(1,277,539
)

$
(18,250,465
)Non-controlling interest

$
(498,912
)

$
(266,092
)

$
(1,908,197
)Loss Per ShareContinuing operations

$
(0.00
)


(0.01
)


N/A$
(0.00
)

$
(0.01
)

$
N/AAverage weighted Number of Shares Outstanding


1,141,204,704



288,861,328



N/A


F-4


-16-


ECOLOCAP SOLUTIONS INC.


(A Development Stage Company)


CONSOLIDATED STATEMENTS OF CASH FLOWS








Beginning ofdevelopment stage,December 31,


December 31,


January 1, 2007,

through2013


2012


December 31, 2013Net loss

$
(2,024,207
)

$
(1,543,631
)

$
(20,158,662
)Adjustment to reconcile net loss to net cash used in operating activitiesDepreciation and amortization


71,180



73,290



991,977Imputed interest of shareholders loans


41,283



27,774



92,021Impairment loss fixed assets


302,750



-



302,750Impairment loss intangible assets


-



-



5,499,842Impairment loss goodwill


-



-



7,008,721Gain on sale of equipment


-



(209,214
)


(209,214
)Compensation (gain) expense


(116,925
)


(55,280
)


28,201Debt conversion inducement expense


-



-



820,297Issuance of common stock for services


-



-



3,269,600Stock based compensation


-



-



5,211,897Interest loans conversion


-



46,194



46,194Gain on derivatives liabilities at market


(1,418,972
)


(242,646
)


(1,661,618
)Interest expense on derivatives


2,140,875



685,517



2,826,392Unrealized foreign exchange










(220,463
)Changes in operating assets and liabilitiesPrepaid expenses and sundry current assets


(19,944
)


4,863



21,401Deposit on machinery


-



175,000



545,400Customer deposit


-



(323,772
)


(279,940
)Accrued expenses and sundry current liabilities


249,479



(38,801
)


(1,750,497
)Net cash provided by (used in) operating activities

$
(774,481
)

$
(1,400,706
)

$
2,384,299Investing activitiesDisposition of property and equipment


-



330,000



359,352Cash acquired during acquisition


-



-



38,115Acquisitions of property and equipment


-



(175,000
)


(695,355
)Net cash provided by (used in) investing activities

$
-


$
155,000


$
(297,888
)Financing activitiesNote receivable


(197, 037
)


-



(197,037
)Stock payable


-



-



(1,000,000
)Issuance of common stock


-



-



471,010Sale of common stock










1,003,400Proceeds of loans payable


527,800



654,500



1,333,890Proceeds of loans from shareholder


438,045



595,634



(3,825,044
)Net cash provided by (used in) financing activities

$
768,808


$
1,250,134


$
(2,213,781
)Increase (decrease) in cash


(5,673
)


4,428



(127,370
)Cash- beginning of year


6,910



2,482



128,607Cash - end of year

$
1,237


$
6,910


$
1,237Supplemental Disclosure of Cash Flow informationNon cash items:Conversion of debt to Equity


-



-



820,297Conversion of current liabilities to common stock


160,966



-



160,966Conversion of notes payable to common stock


280,230



-



280,230Debt discount in notes payable


259,784



-



259,784Conversion of notes payable stockholders to common stock


287,838



-



287,838Debt discount in notes payable stockholders


(115,508
)


-



(115,508
)Interest loans conversion


-



46,194


F-5


-17-


ECOLOCAP SOLUTIONS INC.


(A Development Stage Company)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS








NOTE 1 – NATURE OF BUSINESS





The Company was an active business from 2005 through 2006 and was involved in the artificial sport surface. From 2007 through September 2010, the Company was looking for new business and commenced the Carbon Credits (CER’S) business. In the 2009, the Company acquired a participation in Micro Bubble Technologies Inc. and became an integrated and complementary network of environmentally focused technology company. The Company currently has operations but limited revenues and, in accordance with the relevant authoritive guidance is considered a Development Stage Enterprise. As a development stage enterprise, the Company discloses the deficit accumulated during the development stage and the cumulative statements of operations and cash flows from January 1, 2007 to the current balance sheet date.





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





MBT M-Fuel





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





MBT -Batteries





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








NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





PRINCIPLES OF CONSOLIDATION





The consolidated financial statements include the accounts of the Company and its subsidiary Micro Bubble Technologies Inc. (see Note 15). All significant inter-company accounts and transactions have been eliminated.


F-6


-18-


CASH





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





FAIR VALUE OF FINANCIAL INSTRUMENTS





The Company adopted the provisions of ASC Topic 820, “Fair Value Measurements and Disclosures”, which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements.





The estimated fair value of certain financial instruments, including cash and cash equivalents, deposits, prepaid expenses, notes payable, and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments.





MC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. MC 820 describes three levels of inputs that may be used to measure fair value:





-
level l - quoted prices in active markets for Identical assets or liabilities-
level 2 - quoted prices for similar assets and liabilities in active markets or inputs that are observable-
level 3 - inputs that are unobservable (for example cash flow modeling inputs based on assumptions)





The carrying amounts of cash, accounts payable, and accrued liabilities approximate fair value due to the short-term nature of these instruments. The carrying amounts of our short term credit obligations approximate fair value because the effective yields on these obligations, which include contractual interest rates taken together with other features such as concurrent issuance of warrants, are comparable to rates of returns for instruments of similar credit risk.





INCOME TAXES





We use the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.





ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented.





USE OF ESTIMATES





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





F-7


-19-





REVENUE RECOGNITION





The Company’s business plan is to sell machinery used to prepare M-fuel. The machinery is manufactured for the Company by a third-party in Korea. Revenue is recognized when the following conditions are satisfied:





i)
persuasive evidence that an agreement exists;


ii)
the risks and rewards of ownership pass to the purchaser including delivery of the product;


iii)
the selling price is fixed and determinable; or,


iv)
collectively is reasonably assured.





CONVERTIBLE INSTRUMENTS





We evaluate and account for conversion options embedded in convertible instruments in accordance with ASC 815 “Derivatives and Hedging Activities”.





Applicable GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.





We account for convertible instruments (when we have determined that the embedded conversion options should not be bifurcated from their host instruments) as follows: We record when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption.





LOSS PER COMMON SHARE





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





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





STOCK BASED COMPENSATION





We recognize compensation expense for stock-based compensation in accordance with ASC Topic 718. For employee stock-based awards, we calculate the fair value of the award on the date of grant using the Black-Scholes method for stock options and the quoted price of our common stock for unrestricted shares; the expense is recognized over the service period for awards expected to vest. For non-employee stock-based awards, we calculate the fair value of the award on the date of grant in the same manner as employee awards, however, the awards are revalued at the end of each reporting period and the pro rata compensation expense is adjusted accordingly until such time the nonemployee award is fully vested, at which time the total compensation recognized to date equals the fair value of the stock-based award as calculated on the measurement date, which is the date at which the award recipient’s performance is complete. The estimation of stock-based awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from original estimates, such amounts are recorded as a cumulative adjustment in the period estimates are revised. We consider many factors when estimating expected forfeitures, including types of awards, employee class, and historical experience.





F-8


-20-





LONG-LIVED ASSETS





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





Impairment:





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





During the year ended December 31, 2013, we recorded a fixed assets impairment loss of $302,750.This impairment loss relates to our testing equipment as our management has adjusted downward the carrying value of our testing equipment because the equipment has not been generated the income over the past year.





PROPERTY AND EQUIPMENT AND DEPRECIATION POLICY





Property and equipment are recorded at cost. Depreciation is provided for in amounts sufficient to amortize the costs of the related assets over their estimated useful lives on the straight-line basis over the estimated useful life of the asset ranging from 3 to 7 years.





RESEARCH AND DEVELOPMENT





Research and development costs are charged to expense as incurred. For the year ended 2013 and 2012 the amounts charged to research and development expenses was $0 and $300,000.








NOTE 3 – GOING CONCERN





The Company’s consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities and commitments in the normal course of business. The Company incurred a net loss of $2,024,207 for the year ended December 31, 2013.The Company has negative working capital of $4,118,588 at December 31, 2013 and a stockholders’ deficiency of $4,118,588 at December 31, 2013. These factors among others raise substantial doubt about the Company’s ability to continue as a going concern.








F-9


-21-





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





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





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





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





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








NOTE-4 - NOTE RECEIVABLE





On December 17, 2013, the Company signed a receivable note with a KMBT, a manufacturer of machinery, in the aggregate amount of $285,000, at an interest rate of eight percent (8%) per annum. The drawdown notes can be prepaid upon five days notice and is payable nine months following its issuance. The amount receivable from KMBT at December 31, 2013, is shown net of the remaining unearned interest of $87,963 resulting in a balance of $197,037.








NOTE 5 – PROPERTY & EQUIPMENT





December 31


December 31,2013


2012Testing equipment

$
493,000


$
493,000Computer equipment


11,654



11,654Furniture & fixtures


12,701



12,701$
517,355


$
517,355Less: accumulated depreciation


214,605



143,426Less: accumulated impairment loss


302,750



-Balance December 31, 2013

$
-


$
373,929








NOTE 6 – ACCRUED EXPENSES AND SUNDRY CURRENT LIABILITIES





Accrued expenses consisted of the following at December 31:





2013


2012Accrued interest

$
103,405


$
46,351Accrued interest-related party


32,352



12,829Accrued compensation


302,861



201,346Accounts payable


240,000



268,500Accrued operating expenses


297,378



358,457$
975,996


$
887,483





F-10


-22-





NOTE 7 – NOTE PAYABLE





During the years ended December 31, 2013 and 2012, the Company received the proceeds of various loans which are convertible at amounts ranging from 50% to 60% of the market price of the common shares of the Company at the time of conversion and bear interest at 8% per annum.  The amounts received during the year ended December 31, 2013 and 2012 are $521,483 and $654,500, respectively.





The convertible feature of these loans, due to their potential settlement in an indeterminable number of shares of the Company’s common stock has been identified as a derivative.  The derivative component is fair value at the date of issuance of the obligation and this amount is allocated between the derivative and the underlying obligation.  The difference is recorded as a debt discount and amortized over the life of the debt.





During these same periods, other convertible debts were converted into common shares of the Company.  During the year ended December 31, 2013, total loan conversions of $280,230 plus accrued interests of $22,384 were made into 1,254,144,984 shares respectively and there was no conversion in 2012.





A summary of the amounts outstanding as of December 31, 2013 and 2012 is as follows:





Loans


Debt discount


Balance

December 31,


Balance

December 31,2013


2013


2013


2012Tonaquint

$
480,062


$
(362,735
)

$
117,327


$
42,916Redwood Management, LLC


372,992



-



372,992



496,000AES Capital Corp.


24,016



-



24,016



5,133JMJ Financial


25,000



-



25,000



7,500$
902,070


$
(362,735
)

$
539,335


$
551,549





NOTE 8 – PAYABLE – STOCKHOLDERS





In 2013, the Company received $266,179 in loans from stockholders. The amount owed to stockholders at December 31, 2013 is $966,638. These loans are non interest bearing but interest is being imputed at 5.00% per annum and are payable on demand.





In 2013, the Company paid net loans to Hanscom K. Inc. in the amount of $2,164. The amount owed to Hanscom K. Inc. at December 31, 2013 is $31,080. These loans are non-interest bearing and are payable on demand.





During 2013, the Company did not receive any loans from RCO Group Inc. The amount owed to RCO Group Inc. at December 31, 2013 is $28,500. These loans are non-interest bearing and are payable on demand.





During the years ended December 31, 2013 and 2012, the Company received the proceeds of various loans which are convertible at amounts ranging from 50% to 60% of the market price of the common shares of the Company at the time of conversion and bear interest at 8% per annum.  The amounts received during the year ended December 31, 2013 and 2012 are $174,532 and $386,500, respectively.





The convertible feature of these loans, due to their potential settlement in an indeterminable number of shares of the Company’s common stock has been identified as a derivative.  The derivative component is fair valued at the date of issuance of the obligation and this amount is allocated between the derivative and the underlying obligation.  The difference is recorded as a debt discount and amortized over the life of the debt.





During these same periods, other convertible debts were converted into common shares of the Company.  During the year ended December 31, 2013 and 2012, total loan conversions of $287,838 plus accrued interests of $8,082 and $224,446 plus accrued interests of $8,500 were made into 1,233,147,629 and 79,266,787 shares respectively.


F-11


-23-





A summary of the amounts outstanding as of December 31, 2013 and 2012 is as follows:





Loans


Debt discount


Balance

December 31,


Balance

December 31,2013


2013


2013


2012Asher Enterprises Inc

$
67,400


$
(43,052
)

$
24,348


$
39,189AGS Capital Group LLC


19,055



(19,055
)


-



10,250Panache Capital LLC


6,293



-



6,293



6,500Stockholders


966,638



-



966,638



673,459Hanscom K. Inc.


31,080



-



31,080



33,246RCO Group Inc.


28,500



-



28,500



28,500$
1,118,966


$
(62,107
)

$
1,056,859


$
791,144








NOTE 9 – DERIVATIVE LIABILITIES





During the years ended December 31, 2013 and 2012, the Company recorded various derivative liabilities associated with the convertible debts discussed in Notes 7 and 8. The Company computes the value of the derivative liability at the issuance of the related obligation using the Black Scholes Method using a risk free rate of 0.14%, volatility rates ranging between 228.63% and 292.00% and a forfeiture rate of 0.00%.  The derivative liability at December 31, 2013 and 2012 is as follows:





2013


2012Asher Enterprises Inc

$
125,853


$
338,822Tonaquint


996,669



133,627AES Capital Corp.


14,350



34,404AGS Capital Group LLC


30,553



102,155JMJ Financial


42,904



49,868Panache Capital LLC


6,293



64,561Redwood Management, LLC


372,994



-Total

$
1,589,616


$
723,437








NOTE 10 – CAPITAL STOCK





The Company is authorized to issue 10,000,000,000 shares of common stock (par value $0.0001) of which 2,874,786,512 were issued and outstanding as of December 31, 2013.





During 2013, the following convertible debt owners converted loans plus accrued interests into common shares of the Company





Loans


Interests


Common sharesconverted


converted


Of the CompanyAsher Enterprises Inc (note 8)

$
182,100


$
7,600


$
980,849,505Tonaquint (note 7)


125,572



19,074



810,853,139AES Capital Corp. (note 7)


6,650







133,000,000AGS Capital Group LLC (note 8)


71,123



482



216,298,124JMJ Financial (note 7)


25,000



3,310



79,000,000Panache Capital LLC (note 8)


33,615







36,000,000Redwood Management, LLC (note 7)


123,008



-



231,291,845Total

$
567,068


$
30,166


$
2,487,292,613





F-12


-24-





NOTE 11 – INCOME TAXES





The Company recognizes deferred income tax liabilities and assets for the expected future tax consequences of events that have been recognized in the financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the differences between the financial statement carrying amounts and the tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial statement and income tax purposes under enacted tax laws and rates.





The tax effects of temporary differences that give rise to deferred tax assets are presented below:





December 31


December 31,2013


2012Statutory tax rate


34.0
%


34.0
%Net operating loss carryforwards


(34.0
%)


(34.0
%)Income tax provision


0
%


0
%








Components of the Company’s deferred tax liabilities and assets are as follows:





December 31


December 31,2013


2012Deferred tax asset

$
10,330,940


$
8,585,927Valuation allowance


10,330,940
)


8,585,927Deferred tax asset net of valuation allowance

$
-


$
-Changes in valuation allowance

$
0


$
0





The income tax provision (benefit) consists of the following:





December 31


December 31,2013


2012Federal:Current

$
-


$
-Deferred


0



0State and local:Current


-



-Deferred


0



00



0Change in valuation allowance


0



0Income tax provision (benefit)

$
-


$
-





The Company’s federal and state income tax returns for the tax years 2010 and forward remain subject to examination.





F-13


-25-





NOTE 12 –STANDSTILL AGREEMENT





The other incomes were generated by fees received according to Standstill Agreements signed by the Company with Fuel Emulsions International Inc. (FEI). The Company signed a first Standstill Agreement that gave FEI the exclusivity to negotiate with potential investors and third party customers with respect to the sale of fuel emulsion technology and associated additives According to the Standstill Agreement, FEI had to pay two instalments of $50,000 (January 20 and February 10, 2012) to keep its negotiation exclusivity on the M-Fuel technology. After the expiration of the first Standstill Agreement on February 29, 2012, the Company signed a second Standstill Agreement that expired on March 31, 2012. According to the second Standstill Agreement, FEI had to pay two instalments of $50,000 (February 29 and March 15, 2012) to keep its negotiation exclusivity on the M-Fuel technology.








NOTE 13 – DISCONTINUED OPERATIONS





On November 4, 2010, the Company transferred all of its shares of Ecolocap Solutions (Canada) Inc. to DT Crystal Holdings Ltd in exchange of the reduction of $100,000 of its debts.








NOTE 14 – COMMITMENTS AND CONTINGENCIES





The Company is a party to a lease for its Montreal office, at a minimum annual rental of approximately $64,000 per year. The Company has vacated the premises and according to the lease, a six month rent might have to be paid if the landlord intends a lawsuit against the Company. The six month rent amount has been accrued in the accompanying Financial Statements.





The Company was party to a lease for its Barrington office, at a minimum annual rent of approximately $24,000 per year. The Barrington lease expired in May 2013 and the Company remains in these premises on a month to month basis. The rent expense charged to operations for the year ended December 31, 2013 and 2012 was $26,012 and $22,792, respectively.








NOTE 15 – RELATED PARTY TRANSACTIONS





In 2013, the Company received loans from stockholders in the amount of $266,179. These loans carry an interest of 5.00% and are payable on demand.





For the years ended December 31, 2013 and 2012, interest paid to related party totaled $76,635 and $40,603.








NOTE 16 – SUBSEQUENT EVENTS





During the first quarter of 2014, the following convertible debt owners converted loans plus accrued interests into common shares of the Company





Loans


Interests


Common sharesconverted


converted


Of the CompanyAsher Enterprises Inc (note 7)

$
34,200


$
1,100


$
706,000,000Tonaquint (note 6)


78,041



-



1,046,183,334AES Capital Corp. (note 6)


24,016



5,949



599,292,800AGS Capital Group LLC (note 7)


30,302



543



840,956,240JMJ Financial (note 6)


25,000



5,096



633,605,263Panache Capital LLC (note 7)


6,293



1,100



164,186,223Redwood Management, LLC (note 6)


-



-



-Total

$
197,852


$
13,788


$
3,990,223,860


F-14


-26-





ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.





There have been no disagreements on accounting and financial disclosures from the inception of our company through the date of this Form 10-K. Our financial statements for the period from inception to December 31, 2013, included in this report have been audited by Paritz & Company, PA, as set forth in this annual report.








ITEM 9A.       CONTROLS AND PROCEDURES.





Management’s Report on Internal Control over Financial Reporting





Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the company’s principal executive and principal financial officers and effected by the company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk. As of December 31, 2013, management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and SEC guidance on conducting such assessments. Based on that evaluation, they concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of US GAAP rules as more fully described below. This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses. The matter involving internal controls and procedures that our management considered to be a material weakness under the standards of the Public Company Accounting Oversight Board was the lack of a functioning audit committee, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures. The aforementioned material weaknesses were identified by our management in connection with the review of our financial statements for the year ended December 31, 2013.





Management believes that the material weakness set forth above did not have an effect on our financial results. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.





This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only the management’s report in this annual report.





-
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;


-27-





-
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and





-
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.





CEO and CFO Certifications





Appearing immediately following the Signatures section of this report there are Certifications of the CEO and the CFO. The Certifications are required in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 (the Section 302 Certifications). This Item of this report, which you are currently reading is the information concerning the Evaluation referred to in the Section 302 Certifications and this information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.





Changes in Internal Control over Financial Reporting





There were no changes in our internal control over financial reporting during the quarter ended December 31, 2013 that have affected, or are reasonably likely to affect, our internal control over financial reporting.








ITEM 9B.       OTHER INFORMATION.





On January 7, 2013, we issued 14,000,000 numbers of shares to AGS Capital Group LLC in consideration of the conversion of $23,000 in debt owed to AGS Capital Group LLC in exchange for 14,000,000 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. AGS Capital Group LLC was furnished with the same information that could be found in a Form S-1 registration statement and AGS Capital Group LLC was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On January 8, 2013, we issued 17,500,000 numbers of shares to Panache Capital LLC in consideration of the conversion of $23,625 in debt owed to Panache Capital LLC in exchange for 17,500,000 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Panache Capital LLC was furnished with the same information that could be found in a Form S-1 registration statement and Panache Capital LLC was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On January 18, 2013, we issued 8,333,333 numbers of shares to Asher Enterprises Inc. in consideration of the conversion of $15,000 in debt owed to Asher Enterprises in exchange for 8,333,333 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Asher Enterprises Inc. was furnished with the same information that could be found in a Form S-1 registration statement and Asher Enterprises Inc. was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On January 18, 2013, we issued 3,578,947 numbers of shares to Asher Enterprises Inc. in consideration of the conversion of $5,500 in debt owed plus $1,300 of interests to Asher Enterprises in exchange for 3,578,947 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Asher Enterprises Inc. was furnished with the same information that could be found in a Form S-1 registration statement and Asher Enterprises Inc. was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





-28-





On February 4, 2013, we issued 14,285,714 numbers of shares to Redwood Management, LLC in consideration of the conversion of $25,000 in debt owed to Redwood Management, LLC in exchange for 14,285,714 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Redwood Management, LLC was furnished with the same information that could be found in a Form S-1 registration statement and Redwood Management, LLC was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On February 6, 2013, we issued 9,894,737 numbers of shares to Asher Enterprises Inc. in consideration of the conversion of $17,500 in debt owed plus $1,300 of interests to Asher Enterprises in exchange for 9,894,737 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Asher Enterprises Inc. was furnished with the same information that could be found in a Form S-1 registration statement and Asher Enterprises Inc. was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On February 13, 2013, we issued 42,765,916 numbers of shares to AGS Capital Group LLC in consideration of the conversion of $40,146 in debt owed plus $482 of interests AGS Capital Group LLC in exchange for 42,765,916 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. AGS Capital Group LLC was furnished with the same information that could be found in a Form S-1 registration statement and AGS Capital Group LLC was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On February 14, 2013, we issued 22,222,222 numbers of shares to Redwood Management, LLC in consideration of the conversion of $20,000 in debt owed to Redwood Management, LLC in exchange for 22,222,222 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Redwood Management, LLC was furnished with the same information that could be found in a Form S-1 registration statement and Redwood Management, LLC was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On February 21, 2013, we issued 11,538,426 numbers of shares to Asher Enterprises Inc. in consideration of the conversion of $15,000 in debt owed to Asher Enterprises in exchange for 11,538,426 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Asher Enterprises Inc. was furnished with the same information that could be found in a Form S-1 registration statement and Asher Enterprises Inc. was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On February 26, 2013, we issued 18,518,518 numbers of shares to Redwood Management, LLC in consideration of the conversion of $25,000 in debt owed to Redwood Management, LLC in exchange for 18,518,518 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Redwood Management, LLC was furnished with the same information that could be found in a Form S-1 registration statement and Redwood Management, LLC was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On March 1, 2013, we issued 10,000,000 numbers of shares to Asher Enterprises Inc. in consideration of the conversion of $12,000 in debt owed to Asher Enterprises in exchange for 10,000,000 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Asher Enterprises Inc. was furnished with the same information that could be found in a Form S-1 registration statement and Asher Enterprises Inc. was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.


-29-





On March 13, 2013, we issued 16,666,666 numbers of shares to Redwood Management, LLC in consideration of the conversion of $12,500 in debt owed to Redwood Management, LLC in exchange for 16,666,666 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Redwood Management, LLC was furnished with the same information that could be found in a Form S-1 registration statement and Redwood Management, LLC was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On March 14, 2013, we issued 12,903,226 numbers of shares to Asher Enterprises Inc. in consideration of the conversion of $10,500 in debt owed plus $1,500 of interests to Asher Enterprises in exchange for 12,903,226 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Asher Enterprises Inc. was furnished with the same information that could be found in a Form S-1 registration statement and Asher Enterprises Inc. was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On March 20, 2013, we issued 11,111,111 numbers of shares to Tonaquint Inc. in consideration of the conversion of $10,000 in debt owed to Tonaquint Inc. in exchange for 11,111,111 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Tonaquint Inc.was furnished with the same information that could be found in a Form S-1 registration statement and Tonaquint Inc. was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On March 27, 2013, we issued 15,979,381 numbers of shares to Asher Enterprises Inc. in consideration of the conversion of $15,500 in debt owed to Asher Enterprises in exchange for 15,979,381 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Asher Enterprises Inc. was furnished with the same information that could be found in a Form S-1 registration statement and Asher Enterprises Inc. was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On April 17, 2013, we issued 15,783,133 numbers of shares to Asher Enterprises Inc. in consideration of the conversion of $12,000 in debt owed plus $1,100 of interests to Asher Enterprises in exchange for 15,783,133 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Asher Enterprises Inc. was furnished with the same information that could be found in a Form S-1 registration statement and Asher Enterprises Inc. was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On April 19, 2013, we issued 20,000,000 numbers of shares to JMJ Financial in consideration of the conversion of $11,400 in debt owed to JMJ Financial in exchange for 20,000,000 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. JMJ Financial was furnished with the same information that could be found in a Form S-1 registration statement and JMJ Financial was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On April 19, 2013, we issued 11,395,349 numbers of shares to Tonaquint Inc. in consideration of the conversion of $9,800 in debt owed to Tonaquint Inc. in exchange for 11,395,349 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Tonaquint Inc.  was furnished with the same information that could be found in a Form S-1 registration statement and Tonaquint Inc. was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.








-30-





On April 19, 2013, we issued 22,727,272 numbers of shares to Redwood Management, LLC in consideration of the conversion of $12,500 in debt owed to Redwood Management, LLC in exchange for 22,727,272 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Redwood Management, LLC was furnished with the same information that could be found in a Form S-1 registration statement and Redwood Management, LLC was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On May 1, 2013, we issued 18,500,000 numbers of shares to Panache Capital LLC in consideration of the conversion of $9,900 in debt owed to Panache Capital LLC in exchange for 18,500,000 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Panache Capital LLC was furnished with the same information that could be found in a Form S-1 registration statement and Panache Capital LLC was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On May 3, 2013, we issued 18,629,032 numbers of shares to Tonaquint Inc. in consideration of the conversion of $11,550 in debt owed to Tonaquint Inc. in exchange for 18,629,032 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Tonaquint Inc. was furnished with the same information that could be found in a Form S-1 registration statement and Tonaquint Inc. was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On May 10, 2013, we issued 20,000,000 numbers of shares to JMJ Financial in consideration of the conversion of $9,500 in debt owed to JMJ Financial in exchange for 20,000,000 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. JMJ Financial was furnished with the same information that could be found in a Form S-1 registration statement and JMJ Financial was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On May 10, 2013, we issued 31,818,181 numbers of shares to Redwood Management, LLC in consideration of the conversion of $17,500 in debt owed to Redwood Management, LLC in exchange for 31,818,181 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Redwood Management, LLC was furnished with the same information that could be found in a Form S-1 registration statement and Redwood Management, LLC was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On May 17, 2013, we issued 25,000,000 numbers of shares to Tonaquint Inc. in consideration of the conversion of $15,000 in debt owed to Tonaquint Inc. in exchange for 25,000,000 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Tonaquint Inc. was furnished with the same information that could be found in a Form S-1 registration statement and Tonaquint Inc. was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On June 4, 2013, we issued 44,117,647 numbers of shares to Tonaquint Inc. in consideration of the conversion of $15,000 in debt owed to Tonaquint Inc. in exchange for 44,117,647 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Tonaquint Inc. was furnished with the same information that could be found in a Form S-1 registration statement and Tonaquint Inc. was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





-31-





On June 4, 2013, we issued 39,000,000 numbers of shares to JMJ Financial in consideration of the conversion of $4,100 in debt owed plus $3,310 of interests to JMJ Financial in exchange for 39,000,000 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. JMJ Financial was furnished with the same information that could be found in a Form S-1 registration statement and JMJ Financial was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On June 6, 2013, we issued 9,853,272 numbers of shares to Redwood Management, LLC in consideration of the conversion of $3,448 in debt owed to Redwood Management, LLC in exchange for 9,853,272 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Redwood Management, LLC was furnished with the same information that could be found in a Form S-1 registration statement and Redwood Management, LLC was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On July 8, 2013, we issued 35,200,000 numbers of shares to Asher Enterprises Inc. in consideration of the conversion of $8,800 in debt owed to Asher Enterprises in exchange for 35,200,000 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Asher Enterprises Inc. was furnished with the same information that could be found in a Form S-1 registration statement and Asher Enterprises Inc. was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On July 23, 2013, we issued 25,882,353 numbers of shares to Asher Enterprises Inc. in consideration of the conversion of $4,400 in debt owed to Asher Enterprises in exchange for 25,882,353 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Asher Enterprises Inc. was furnished with the same information that could be found in a Form S-1 registration statement and Asher Enterprises Inc. was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On August 15, 2013, the Company amended its articles of incorporation increasing its authorized shares of common stock from 1,000,000,000 shares of common stock, par value $0.001 per share, to 5,000,000,000 authorized shares of common stock, $0.00001 per share.  A majority of the voting power of the Company approved the increase in compliance with Nevada State law, however, the Company failed to file a preliminary or definitive Schedule 14C Information Statement with the SEC as required by law.





On August 27, 2013, we issued 35,294,118 numbers of shares to Asher Enterprises Inc. in consideration of the conversion of $6,000 in debt owed to Asher Enterprises in exchange for 35,294,118 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Asher Enterprises Inc. was furnished with the same information that could be found in a Form S-1 registration statement and Asher Enterprises Inc. was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On September 6, 2013, we issued 75,833,333 numbers of shares to Tonaquint Inc. in consideration of the conversion of $22,750 in debt owed to Tonaquint Inc. in exchange for 75,833,333 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Tonaquint Inc.was furnished with the same information that could be found in a Form S-1 registration statement and Tonaquint Inc. was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On September 10, 2013, we issued 44,117,647 numbers of shares to Asher Enterprises Inc. in consideration of the conversion of $7,500 in debt owed to Asher Enterprises in exchange for 44,117,647 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Asher Enterprises Inc. was furnished with the same information that could be found in a Form S-1 registration statement and Asher Enterprises Inc. was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





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On September 16, 2013, we issued 12,666,667 numbers of shares to Asher Enterprises Inc. in consideration of the conversion of $800 in debt owed plus $1,100 of interests to Asher Enterprises in exchange for 12,666,667 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Asher Enterprises Inc. was furnished with the same information that could be found in a Form S-1 registration statement and Asher Enterprises Inc. was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On September 16, 2013, we issued 30,666,667 numbers of shares to Asher Enterprises Inc. in consideration of the conversion of $4,600 in debt owed to Asher Enterprises in exchange for 30,666,667 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Asher Enterprises Inc. was furnished with the same information that could be found in a Form S-1 registration statement and Asher Enterprises Inc. was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On September 19, 2013, we issued 46,000,000 numbers of shares to Redwood Management, LLC in consideration of the conversion of $4,600 in debt owed to Redwood Management, LLC in exchange for 46,000,000 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Redwood Management, LLC was furnished with the same information that could be found in a Form S-1 registration statement and Redwood Management, LLC was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On September 27, 2013, we issued 43,750,000 numbers of shares to Asher Enterprises Inc. in consideration of the conversion of $3,500 in debt owed to Asher Enterprises in exchange for 43,750,000 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Asher Enterprises Inc. was furnished with the same information that could be found in a Form S-1 registration statement and Asher Enterprises Inc. was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On October 2, 2013, we issued 89,000,000 numbers of shares to Tonaquint Inc. in consideration of the conversion of $78 in debt owed plus $8,822 of interests to Tonaquint Inc. in exchange for 89,000,000 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Tonaquint Inc.was furnished with the same information that could be found in a Form S-1 registration statement and Tonaquint Inc. was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On October 8, 2013, we issued 49,200,000 numbers of shares to Redwood Management, LLC in consideration of the conversion of $2,460 in debt owed to Redwood Management, LLC in exchange for 49,200,000 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Redwood Management, LLC was furnished with the same information that could be found in a Form S-1 registration statement and Redwood Management, LLC was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On October 15, 2013, we issued 25,000,000 numbers of shares to Asher Enterprises Inc. in consideration of the conversion of $1,500 in debt owed to Asher Enterprises in exchange for 25,000,000 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Asher Enterprises Inc. was furnished with the same information that could be found in a Form S-1 registration statement and Asher Enterprises Inc. was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.








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On October 16, 2013, we issued 69,070,183 numbers of shares to AGS Capital Group LLC in consideration of the conversion of $3,454 in debt owed to AGS Capital Group LLC in exchange for 69,070,183 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. AGS Capital Group LLC was furnished with the same information that could be found in a Form S-1 registration statement and AGS Capital Group LLC was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On October 16, 2013, we issued 43,333,333 numbers of shares to Asher Enterprises Inc. in consideration of the conversion of $2,600 in debt owed to Asher Enterprises in exchange for 43,333,333 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Asher Enterprises Inc. was furnished with the same information that could be found in a Form S-1 registration statement and Asher Enterprises Inc. was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On October 16, 2013, we issued 133,000,000 numbers of shares to AES Capital Group LLC in consideration of the conversion of $6,650 in debt owed to AGS Capital Group LLC in exchange for 133,000,000 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. AGS Capital Group LLC was furnished with the same information that could be found in a Form S-1 registration statement and AGS Capital Group LLC was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On October 17, 2013, we issued 89,100,000 numbers of shares to Tonaquint Inc. in consideration of the conversion of $2,931 in debt owed plus $2,415 of interests to Tonaquint Inc. in exchange for 89,100,000 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Tonaquint Inc.was furnished with the same information that could be found in a Form S-1 registration statement and Tonaquint Inc. was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On October 18, 2013, we issued 68,333,333 numbers of shares to Asher Enterprises Inc. in consideration of the conversion of $4,100 in debt owed to Asher Enterprises in exchange for 68,333,333 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Asher Enterprises Inc. was furnished with the same information that could be found in a Form S-1 registration statement and Asher Enterprises Inc. was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On October 24, 2013, we issued 68,333,333 numbers of shares to Asher Enterprises Inc. in consideration of the conversion of $4,100 in debt owed to Asher Enterprises in exchange for 68,333,333 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Asher Enterprises Inc. was furnished with the same information that could be found in a Form S-1 registration statement and Asher Enterprises Inc. was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On October 25, 2013, we issued 90,462,025 numbers of shares to AGS Capital Group LLC in consideration of the conversion of $4,523 in debt owed to AGS Capital Group LLC in exchange for 90,462,025 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. AGS Capital Group LLC was furnished with the same information that could be found in a Form S-1 registration statement and AGS Capital Group LLC was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On October 31, 2013, we issued 58,260,870 numbers of shares to Asher Enterprises Inc. in consideration of the conversion of $12,100 in debt owed plus $1,300 of interests to Asher Enterprises in exchange for 58,260,870 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Asher Enterprises Inc. was furnished with the same information that could be found in a Form S-1 registration statement and Asher Enterprises Inc. was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.


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On October 31, 2013, we issued 87,500,000 numbers of shares to Tonaquint Inc. in consideration of the conversion of $11,363 in debt owed plus $2,637 of interests to Tonaquint Inc. in exchange for 87,500,000 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Tonaquint Inc.was furnished with the same information that could be found in a Form S-1 registration statement and Tonaquint Inc. was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On November 12, 2013, we issued 138,000,000 numbers of shares to Asher Enterprises Inc. in consideration of the conversion of $6,900 in debt owed to Asher Enterprises in exchange for 138,000,000 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Asher Enterprises Inc. was furnished with the same information that could be found in a Form S-1 registration statement and Asher Enterprises Inc. was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On November 21, 2013, we issued 180,000,000 numbers of shares to Asher Enterprises Inc. in consideration of the conversion of $9,000 in debt owed to Asher Enterprises in exchange for 180,000,000 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Asher Enterprises Inc. was furnished with the same information that could be found in a Form S-1 registration statement and Asher Enterprises Inc. was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On November 21, 2013, we issued 179,166,667 numbers of shares to Tonaquint Inc. in consideration of the conversion of $18,988 in debt owed plus $2,512 of interests to Tonaquint Inc. in exchange for 179,166,667 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Tonaquint Inc.was furnished with the same information that could be found in a Form S-1 registration statement and Tonaquint Inc. was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On December 5, 2013, we issued 84,000,000 numbers of shares to Asher Enterprises Inc. in consideration of the conversion of $4,200 in debt owed to Asher Enterprises in exchange for 84,000,000 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Asher Enterprises Inc. was furnished with the same information that could be found in a Form S-1 registration statement and Asher Enterprises Inc. was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On December 6, 2013, we issued 180,000,000 numbers of shares to Tonaquint Inc. in consideration of the conversion of $8,112 in debt owed plus $2,688 of interests to Tonaquint Inc. in exchange for 180,000,000 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Tonaquint Inc.was furnished with the same information that could be found in a Form S-1 registration statement and Tonaquint Inc. was a “sophisticated investor” as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.





On December 30, 2013, the Company amended its articles of incorporation increasing its authorized shares of common stock from 5,000,000,000 shares of common stock, par value $0.00001 per share, to 10,000,000,000 authorized shares of common stock, $0.00001 per share.  A majority of the voting power of the Company approved the increase in compliance with Nevada State law, however, the Company failed to file a preliminary or definitive Schedule 14C Information Statement with the SEC as required by law.








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PART III








ITEM 10.        DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.





The following table presents information with respect to our officers, directors and significant employees as of the date of this Report:





Name
Age
PositionMichael Siegel
70
Chief Executive OfficerJeung Kwak
67
Chairman, DirectorRobert Egger, Jr.
42
Chief Operating OfficerTri Vu Truong
66
DirectorAlbert Beerli
71
DirectorMichel St-Pierre
51
Acting Chief Financial Officer





Each director serves until our next annual meeting of the stockholders or unless they resign earlier. The Board of Directors elects officers and their terms of office are at the discretion of the Board of Directors.





Each of our directors serves until his or her successor is elected and qualified. Each of our officers is elected by the board of directors to a term of one (1) year and serves until his or her successor is duly elected and qualified, or until he or she is removed from office. At the present time, members of the board of directors are not compensated for their services to the board.





Biographical Information Regarding Officers and Directors





Michael Siegel, Chief Executive Officer and President Studied Electrical Engineering at the University of Illinois in Champaign, Illinois, and following college joined the Marine Corps. He has over 30 years of experience in the technology, real estate and international business operations. On September 10, 2009, Michael Siegel was appointed president and principal executive officer. Mr. Siegel is currently a member of the board of directors.Since May 2008, Mr. Siegel has been president of Micro Bubble Technologies Inc., a Nevada corporation located in Barrington, Illinois. Micro Bubble Technologies Inc. is engaged in the business of manufacturing, marketing, distributing, setting up sub-distributors, and selling products based on nano technologies. He served as President and CEO of International Lottery and Gaming Inc. and Vietnam Telephone Co (Vietelco). From June 1975 to May 2008, Mr. Siegel was president of Siegel Research and Development, Inc., which created gaming, video and other technologies. He was also a general partner in 5 Hotels in the Chicago area. Between 2006 and 2008 Mr. Siegel was president of C Line, Inc.





Robert Egger Jr., Chief Operating Officer.On September 10, 2009, Robert Egger, Jr. was appointed to our board of directors and principal operating officer since July 2008, Mr. Egger has been chief executive officer of Micro Bubble Technologies Inc., our subsidiary corporation, located in Barrington, Illinois. Micro Bubble Technologies Inc. is engaged in the business of manufacturing, marketing, distributing, setting up sub-distributors, and selling products based on nano technologies. From January 2007 to March 2009, Mr. Egger was partner and general manager of the Liquor Outlet located in Davenport, Iowa. The Liquor Outlet is a wholesale liquor distributor in the State of Iowa. From March 1995 to January 2007, Mr. Egger held various positions with Qwest Communications International located in Denver, Colorado. His responsibilities included lineman, switchman and central office technician before being promoted to management in 2000 when he became a manager for network operations in Iowa overseeing occupational union employees. Mr. Egger holds a Bachelor of Science degree in Business Administration, Magna Cum Laude, from St. Ambrose University, Davenport, Iowa.





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Jeung Kwak, Chairman and Director.Since June 16, 2009, Mr. Kwak has been Chairman of Ecolocpa Solutions Inc., Jeung Yeal Kwak has for over 25 years specialized in international trade in Korea, Asia, Russia, India, China and the US. Since 1992, he is President of Hanscom K Inc, specialized in international trade in steel products, including steel castings and fabrications and also concrete forms. In May 2008, he co-founded Micro Bubble Technologies Inc., a Nevada corporation located in Barrington, Illinois. Micro Bubble Technologies Inc. is engaged in the business of manufacturing, marketing, distributing, setting up sub-distributors, and selling products based on nano technologies. He attended Korea University and graduated in 1973 with a degree in Biology. Upon graduation, he immigrated to the United States and began his career in Chicago, Illinois.





Dr. Tri Vu Truong, Chief Executive Officer and President.Dr. Truong has served as a director since February 14, 2008. He was chief executive officer and president of the Company from February 14, 2008 until September 10, 2009. He has worked in the environmental sector since 1970, upon completion of his B. Engineering degree, complemented by a Master’s degree in Chemical Engineering in 1971 and a Ph.D. degree in Civil Engineering with Environmental Option in 1975. His professional career includes the realization of many major scientific and technical studies and projects. Dr. Truong was responsible in 1977 for the creation and operation of the Permits & Inspections Division of the Montreal Urban Community––Environment Department. He has taught several post-graduate courses at the prestigious Universitéé de Montrééal’s ÉÉcole Polytechnique. As President of the Sodexen Environmental Engineering Group since 1981, Dr. Truong has managed numerous major environmental impact projects, including: Comparative study of the environmental impact of dust-palliatives (MTQ 1988, 1989, 1990); Environmental decommissioning of a polystyrene production complex (BASF, 1988-1990); Solid waste management study relating to the closure of the Miron landfill (Montréal, 1988-90), as well as various research & development projects in the area.





Albert Beerli, Director. Mr. Beerli has served as a director of the Company since March 2006. Mr. Beerli is a scientist, having received his Ph.D in chemical engineering in 1969. Since 1988 Mr. Beerli has been the Chief Executive Officer of Zenwex AG in Zug, Switzerland. Zenwex AG provides consulting services on scientific and technical matters.





Michel St-Pierre, Acting Chief Financial Officer. Mr. St-Pierre has served as an officer of the Company since July 2006. Mr. St-Pierre is a registered chartered accountant in Quebec, Canada. Before working for the Company, Mr. St-Pierre has served as Chief Financial Officer of a public shell company, Tiger Renewable Energy Limited (formerly known as Tiger Ethanol International Inc. and Arch Management) since January, 2007 and held positions as the Finance Director (comparable to Corporate Treasurer) at SPB Canada Inc. from 2004-2006, Symbior Technologies Inc. from 2003-2004, and Boulangeries Comas Inc. from 2000-2003.





Compliance with Section 16(a) Of the Securities Exchange Act of 1934





Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers and directors, and persons who beneficially own more than 10% of our equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, directors and greater than 10% shareholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file. Based on our review of the copies of such forms we received, we believe that during the fiscal year ended December 31, 2013 all such filing requirements applicable to our officers and directors were complied with, except for reports by the following persons:





Name and principal position
Number of Late Reports
Transactions Not Timely Known Failures to File aReported
Required FormJeung Kwak
2
2009
Form 3Michael Siegel
2
2010
Form 4Robert Egger Jr.
1
2009
Form 3Michel St-Pierre
4
2011
Form 4________________
1
2010
Form 4





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Audit Committee





We have a separately-designated audit committee of the board. Our audit committee is responsible for: (1) selection and oversight of our independent accountant; (2) establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal controls and auditing matters; (3) establishing procedures for the confidential, anonymous submission by our employees of concerns regarding accounting and auditing matters; (4) engaging outside advisors; and, (5) funding for the outside auditory and any outside advisors engagement by the audit committee. A copy of our audit committee charter is filed as an exhibit to this report. Up to February 25, 2009, our Audit Committee consisted of Lim Ping Wai whom was independent director; the full board has carried out the functions and responsibilities since her resignation.





Compensation Committee





The full board carries out the functions and responsibilities of this committee. This committee acts on behalf of our board of directors to approve compensation arrangements for our management and review the compensation paid to our board of directors. A copy of our Compensation Committee Charter was filed with our last 10KSB on March 31, 2008.





Nominating and Corporate Governance Committee





The full board carries out the functions and responsibilities of the Nominating and Corporate Governance Committee. This committee acts on behalf of our board of directors and generally to identify and recommend nominees for our board and our committees, identify and recommend candidates for senior management, review and recommend to the board, or independently take, action on various company corporate governance issues, receive and respond to certain complaints raised by our employees regarding alleged illegal acts or behavior-related conduct by board members in violation of our Code of Business Conduct and Ethics, supervise our chief financial officer in the context of the Ethics Code and carry-out other assignments as designated by our board. A copy of the Nominating and Corporate Governance Committee was filed with our last 10KSB on March 31, 2008.





Code of Ethics





We adopted a code of ethics on March 26, 2008. We adopted eight Corporate Values (Focus, Respect, Excellence, Accountability, Teamwork, Integrity, Very Open Communications and Enjoying Our Work) to provide a framework for all employees in conducting themselves in their jobs. These policies are not intended to substitute for those Values, but will serve as guidelines in helping employee to conduct our business in accordance with its Values. Compliance requires meeting the spirit, as well as the literal meaning, of the law, the policies and the Values. It is expected that employee will use common sense, good judgment, high ethical standards and integrity in all their business dealings.





As of March 31, 2014, we had five directors. We have adopted those standards for independence contained in the Nasdaq Marketplaces Rules, Rule 4350(d) and Rule 4200(a)(15). Messrs. Siegel, Kwak, Egger, Truong, and Beerli are not independent.








ITEM 11.        EXECUTIVE COMPENSATION.





Compensation of Officers





Option award compensation is the fair value for stock options vested during the period, a notional amount estimated at the date of the grant using the Black-Scholes option-pricing model. The actual value received by the executives may differ materially and adversely from that estimated. A summary of cash and other compensation paid in accordance with management consulting contracts for our Principal Executive Officer and other executives for the most recent two years is as follows:





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Executive Officer Compensation Table


NonqualifiedNon-Equity
DeferredStock
Option
Incentive Plan
Compensation
All OtherName and

Salary
Bonus
Awards
Awards
Compensation
Earnings
Compensation
TotalPrincipal Position
Year
(US$)
(US$)
(US$)
(US$)
(US$)
(US$)
(US$)
(US$)(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)Michael Siegel (2)
2013
120,000
0
0
0
0
0
0
120,000Chief Executive Officer
2012
120,000
0
0
0
0
0
0
120,000and PresidentJohn Kwak, (3)
2013
120,000
0
0
0
0
0
0
120,000Chairman and Director
2012
120,000
0
0
0
0
0
0
120,000Robert Egger Jr. (4)
2012
120,000
0
0
0
0
0
0
120,000Chief Operating Officer
2011
120,000
0
0
0
0
0
0
120,000Michel St-Pierre(5)
2013
20,000
0
0
0
0
0
0
20,000CFO
2012
20,000
0
0
0
0
0
0
20,000





(1)
Prior to the acquisition of XL Generation AG, the Company’s fiscal year ended April 30th. XL Generation AG, our wholly-owned subsidiary, had a fiscal year ending December 31st. Following the acquisition of XL Generation AG, we adopted the fiscal year end of XL Generation AG.(2)
Mr. Siegel has been appointed president and CEO on September 10, 2009.(3)
Mr. Kwak has been appointed Chairman and director on June 16, 2009.(4)
Mr. Egger has been appointed COO on September 10, 2009.(5)
Mr. St-Pierre has been our chief financial officer since July 28, 2006.





Employment Contracts





During the fiscal year ended December 31, 2009, we terminated a Consulting Agreement with Sodexen Inc. (“Sodexen”) pursuant to which, Sodexen was providing the services of its representative, Dr. Tri Vu Truong to serve in the capacity of President and Chief Executive Officer of our company. The “Engagement Period” was for one year.





Other Executive Officers





During 2013, other than those disclosed above, no other employment contracts have been executed by our company for any other executive officer.





Retirement, Resignation or Termination Plans





We sponsor no plan, whether written or verbal, that would provide compensation or benefits of any type to an executive upon retirement, or any plan that would provide payment for retirement, resignation, or termination as a result of a change in control of our company or as a result of a change in the responsibilities of an executive following a change in control of our company.





Directors Compensation





The following table sets forth the compensation paid by us to our directors during our fiscal year ended December 31, 2013. This information includes the dollar value of base salaries, bonus awards and number of stock options granted, and certain other compensation, if any. The compensation discussed addresses all compensation awarded to, earned by, or paid to our named directors.








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Director’s Compensation Table


NonqualifiedNon-Equity
DeferredFees Earned or
Stock
Option
Incentive Plan
Compensation
All OtherPaid in Cash
Awards
Awards
Compensation
Earnings
Compensation
TotalName
(US$)
(US$)
(US$)
(US$)
(US$)
(US$)
(US$)(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)Michael Siegel
0
18,000
0
0
0
0
18,000John Kwak
0
18,000
0
0
0
0
18,000Robert Egger, Jr.
0
18,000
0
0
0
0
18,000Tri Vu Truong
0
18,000
0
0
0
0
18,000Albert Beerli
0
18,000
0
0
0
0
18,000





There are no other stock option plans, retirement, pension, or profit sharing plans for the benefit of our sole director other than as described herein.





Indemnification





Pursuant to the articles of incorporation and bylaws of the corporation, we may indemnify an officer or director who is made a party to any proceeding, including a law suit, because of his position, if he acted in good faith and in a manner he reasonably believed to be in its best interest. In certain cases, we may advance expenses incurred in defending any such proceeding. To the extent that the officer or director is successful on the merits in any such proceeding as to which such person is to be indemnified, we must indemnify him against all expenses incurred, including attorneys fees. With respect to a derivative action, indemnity may be made only for expenses actually and reasonably incurred in defending the proceeding, and if the officer or director is judged liable, only by a court order. The indemnification is intended to be to the fullest extent permitted by the laws of the State of Nevada.





Regarding indemnification for liabilities arising under the Securities Act of 1933 which may be permitted for directors or officers pursuant to the foregoing provisions, we are informed that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy, as expressed in the Act and is therefore unenforceable.








ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.





The following table sets forth certain information regarding the beneficial ownership of our common stock as of the date of this Report by (i) each of our directors, (ii) each of our officers named in the Summary Compensation Table, (iii) each person who is known by us to be the beneficial owner of more than five percent of our outstanding common stock, and (iv) all directors and executive officers as a group. Except as otherwise indicated below, each person named has sole voting and investment power with respect to the shares indicated. The percentage of ownership set forth below reflects each holder’s ownership interest in the 2,874,786,512 shares of our common stock outstanding as of March 31, 2014.








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Amount and Nature of Beneficial Ownership


Name and Address of

Beneficial Owner (1)
Shares

Options/ Warrants
Total

PercentMichael Siegel (2)
24,522,993

0
24,522,993

0.85%Jeung Kwak (3)
30,052,993

0
30,052,993

1.05%Robert Egger Jr. (4)
6,152,993

0
6,152,993

0.21%Tri Vu Truong (5)
4,190,772

0
4,190,772

0.15%Albert Beerli (6)
4,952,993

0
4,952,993

0.17%Michel St-Pierre (7)
7,500,000

600,000
8,100,000

0.26%All executive officers and directors

as a group (6 persons)
77,372,744

600,000
77,972,744

2.69%United Best Technology Limited (5)
3,500,000

0
3,500,000

0.09%Cede & Co (8)
2,603,812,202

0
2,603,812,202

90.57%





(1)
The mailing address for each of the listed individuals is c/o Ecolocap Solutions International Inc., 1250 South Grove Avenue, Suite 308, Barrington, Illinois 60010.(2)
Owner of 5% or more of our common stock. Mr.Siegel, is the President and Chief Executive Officer.(3)
Owner of 5% or more of our common stock. Mr. Kwak, is Chairman of the Board of Directors.(4)
Director. Mr. Egger is the Chief Operating Officer.(5)
Director. Mr. Truong is the President and Chief Executive Officer of United Best Technology Limited.(6)
Director(7)
Chief Financial Officer.(8)
Owner of 5% or more of our common stock.





Equity Incentive Plan





On March 31, 2006, our Board of Directors adopted the 2006 Equity Incentive Plan, which authorizes us to issue options for the purchase of up to 2,000,000 shares of our common stock, pursuant to the terms and conditions set forth therein. The Equity Incentive Plan authorizes the issuance of incentive stock options (ISO) and non-qualified stock options (NQOs) to our employees, directors or consultants.





During the year ended December 31, 2006, we issued 1,455,000 stock options to our officers and directors with an average exercise price of $1.05 per share. Of the stock options issued, 320,000 were vested on September 6, 2006, 150,000 were vested on September 7, 2006, 25,000 were vested on September 15, 2006, 150,000 were vested on December 25, 2006, 660,000 will vest on September 6, 2007 and the balance will vest on September 6, 2008.





These options expired on September 6, 2008 (240,000), September 15, 2008 (25,000), December 25, 2006 (150,000), September 6, 2013 (440,000) and September 6, 2016 (600,000). The options had a fair value of $1,526,989 at the date of grant.





During the month of December 2007, we issued 425,000 stock options to our officers and directors with an average exercise price of $1.25 per share. All of the stock options issued vested on December 12, 2007. The options had a fair value of $530,543 at the date of grant.





As of March 30, 2014, we had one officer eligible to receive options under the Equity Incentive Plan. Options to buy 600,000 shares of common stock were outstanding under the Equity Incentive Plan and 120,000 shares remained available for grants under this plan.





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Outstanding Equity Awards at Fiscal Year End for Named Executives


Equity IncentiveEquity Incentive
Plan Awards:Equity



Market
Plan Awards:
Market orIncentive


Number
Value of
Number of
Payout ValuePlan Awards:


of Shares
Shares or
Unearned
of UnearnedNumber of
Number of
Number of


or Units
Units of
Shares, Units
Shares, UnitsSecurities
Securities
Securities


of Stock
Stock
or Other
or OtherUnderlying
Underlying
Unexercised
Option
Option
That
That
Rights That
Rights ThatUnexercised
Unexercised
Unearned
Exercise
Expiration
Have Not
Have
Have Not
Have NotName
Options(1)
Options
Options
Price
Date
Vested
Vested
Vested
Vested(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)Exercisable
UnexercisableMichel St-Pierre
250,000
0
0
0.01
09-06-2016
0
0
0
0200,000
0
0
0.01
09-06-2016
0
0
0
0150,000
0
0
0.01
09-06-2016
0
0
0
0








ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.





In 2013, the Company received loans from stockholders in the amount of $266,179. These loans carry an interest of 5.00% and are payable on demand.








ITEM 14.        PRINCIPAL ACCOUNTANT FEES AND SERVICES.





(1)        Audit and Audit Related Fees





The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for our audit of annual financial statements and review of financial statements included our Form 10-Qs or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years was:





2013
$
11,185
Paritz & Company, P.A.2012
$
20,228
Paritz & Company, P.A.





(2)        Tax Fees





The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning was:





2013
$
0
Paritz & Company, P.A.2012
$
0
Paritz & Company, P.A.





(3)        All Other Fees





The aggregate fees billed in each of the last two fiscal years for the products and services provided by the principal accountant, other than the services reported in paragraphs (1), (2), and (3) was:





2013
$
0
Paritz & Company, P.A.2012
$
0
Paritz & Company, P.A.





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(4)        Our audit committee’s pre-approval policies and procedures described in paragraph (c)(7)(i) of Rule 2-01 of Regulation S-X were that the audit committee pre-approved all accounting related activities prior to the performance of any services by any accountant or auditor.





(5)        The percentage of hours expended on the principal accountant’s engagement to audit our financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full time, permanent employees was 0%.





Audit Committee Pre-Approval Policies





Our Audit Committee reviewed the audit and non-audit services rendered by Paritz & Company, P.A. during the periods set forth above and concluded that such services were compatible with maintaining the auditors’ independence. All audit and non-audit services performed by our independent accountants are pre-approved by our Audit Committee to assure that such services do not impair the auditors’ independence from us.








PART IV





ITEM 15.        EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.





The following is a complete list of exhibits filed as part of this annual report:


Exhibit

Incorporated by reference
FiledNumber
Document Description
Form
Date
Number
herewith3.1
Articles of Incorporation, as amended.
SB-2
5/28/04
3.13.2
Bylaws.
SB-2
5/28/04
3.23.3
Certificate of Amendment to Articles of Incorporation.
10-QSB
12/30/05
3.33.4
Bylaws, as amended on March 17, 2006.
10-KSB
4/13/06
3.410.1
2006 Equity Incentive Plan.
10-KSB
4/13/06
10.3910.2
Agreement with United Best Technology Limited.
8-K
12/23/08
10.710.3
Escrow Agreement with United Best Technology Limited.
8-K
12/23/08
10.810.4
Standstill Agreement.
8-K
3//12
10.110.5
Second Standstill Agreement.
8-K
3//12
10.214.1
Code of Ethics.
10-KSB
3/31/08
14.131.1
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.



X31.2
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.



X32.1
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Chief Executive Officer.



X




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32.2
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Chief Financial Officer.



X99.1
Audit Committee Charter.
10-KSB
3/31/08
99.199.2
Executive Committee Charter.
10-KSB
3/31/08
99.299.3
Nominating and Corporate Governance Committee Charter.
10-KSB
3/31/08
99.399.4
Stock Option Plan.
10-KSB
3/31/08
99.4

















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SIGNATURES





Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 15th day of April, 2014.





ECOLOCAP SOLUTIONS INC.BY:
MICHAEL SIEGELMichael SiegelPrincipal Executive Officer and PresidentBY:
MICHEL ST-PIERREMichel St-PierrePrincipal Financial Officer and Principal Accounting Officer





Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dated indicated.





Signature
Title
DateMICHAEL SIEGEL
President, Chief Executive Officer, Treasurer,
April 15, 2014Michael Siegel
Chief Financial Officer, and a member of the Board of DirectorsJEUNG KWAK
Director and Chairman of Board of Directors
April 15, 2014Jeung KwakTRI VU TRUONG
Director
April 15, 2014Tri Vu TruongALBERT BEERLI
Director
April 15, 2014Albert Beerli























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EXHBIIT INDEX


Exhibit

Incorporated by reference
FiledNumber
Document Description
Form
Date
Number
herewith3.1
Articles of Incorporation, as amended.
SB-2
5/28/04
3.13.2
Bylaws.
SB-2
5/28/04
3.23.3
Certificate of Amendment to Articles of Incorporation.
10-QSB
12/30/05
3.33.4
Bylaws, as amended on March 17, 2006.
10-KSB
4/13/06
3.410.1
2006 Equity Incentive Plan.
10-KSB
4/13/06
10.3910.2
Agreement with United Best Technology Limited.
8-K
12/23/08
10.710.3
Escrow Agreement with United Best Technology Limited.
8-K
12/23/08
10.810.4
Standstill Agreement.
8-K
3//12
10.110.5
Second Standstill Agreement.
8-K
3//12
10.214.1
Code of Ethics.
10-KSB
3/31/08
14.131.1
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.



X31.2
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.



X32.1
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Chief Executive Officer.



X32.2
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Chief Financial Officer.



X99.1
Audit Committee Charter.
10-KSB
3/31/08
99.199.2
Executive Committee Charter.
10-KSB
3/31/08
99.299.3
Nominating and Corporate Governance Committee Charter.
10-KSB
3/31/08
99.399.4
Stock Option Plan.
10-KSB
3/31/08
99.4


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