Source: http://www.getfilings.com/sec-filings/130715/eCrypt-Technologies-Inc_10-K/
Timestamp: 2014-04-17 13:56:54
Document Index: 73252371

Matched Legal Cases: ['§232', 'arty\n4', 'arty\n125', 'arty\n553', 'arty\n17', 'arty\n61', 'arty\n23']

eCrypt Technologies, Inc. - FORM 10-K - July 15, 2013
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eCrypt Technologies, Inc. (Exact name of registrant as specified in its charter)
4750 Table Mesa Dr.
Securities registered under Section 12(g) of the Act: Common Stock, no par value Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities 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 past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [X] Yes [ ] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the 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 - 1 -
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.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).[ ]Yes [X ] No
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 the last business day of the registrants most recently completed second fiscal quarter. $3,453,884.
As of July 12, 2013, the Company had 135,811,052 shares issued and outstanding.
eCrypt Technologies, Inc., a Colorado corporation (hereinafter we, us, eCrypt, the Company, or the Registrant"), was incorporated in the State of Colorado, on April 19, 2007. The Company provides encryption services and software which secures the transmission of, storage of, and access to digital information. The Company is currently a development stage Company.
Principal Products eCrypts primary business focus is on information security solutions which assist individuals and entities in securely transmitting, storing, and accessing information. The Companys business operations are oriented around the development and sale of encryption software and services. To date the Company has earned limited revenue. The Company believes the majority of its revenues will be derived from enterprise-level information security software sales. Currently, eCrypt develops and sells server and device-based encryption and security software, as well as web-based encryption services for desktop computers, laptops, smartphones and tablets. The Company has developed, and is now selling via its eCommerce website, its first product to market, eCrypt One on One, encryption software for email on BlackBerry® smartphones; as of March 31, 2013, the Company had earned limited revenue from sales of eCrypt One on One. The Company is also currently selling subscriptions to its web-based solution, eCrypt Me, a secure email, secure file storage, and secure file sharing service. eCrypt is also developing and plans to sell an enterprise-level information security soft-appliance named Ecrypt One which protects email and attachments and helps organziations and governments comply with information security regulations such as HIPAA.
Over the next twelve (12) months, eCrypt plans to continue developing new products and existing product enhancements and strengthening strategic alliances. In particular, eCrypt plans to commence the distribution of an enterprise-level information security soft-appliance, named Ecrypt One.
Production All eCrypt solutions are currently developed under the supervision of Brad Lever, Gabriel Rosu and Kasia Zukowska, the initial founders of eCrypt (collectively referred to as the Founders). Solution testing and troubleshooting is carried out by all Founders of the Company. The solutions are then deployed for use and testing by professional and non-professional test groups, who provide feedback to the Company regarding potential problems and issues with the solutions. The Company maintains regular meetings to absorb and address the feedback received from these testing sessions.
The Company plans to distribute its solutions globally, in accordance with applicable import and export regulations, through a number of distribution channels. The primary method of distribution will be through dedicated in-house sales force. Additional distribution channels will include the Companys eCommerce websites at https://shop.ecryptinc.com, http://ecrypt.me, and others which have not yet been established. - 3 -
The Company will also pursue strategic distribution alliances with data centers, service providers, carrier dealers, and software vendors to distribute its solutions. The Company does not currently have any strategic distribution alliance contracts in place. To date the Company has distributed its eCrypt One on One software solely via its eCommerce website and Ecrypt Me subscriptions via https://ecrypt.me
Customers The Company plans to have products in multiple sectors in both business and consumer markets. To date, the Company has sold limited licenses of its encryption software to customers located globally. The Company has also sold limited subscriptions to its web-based service, eCrypt Me. The Company anticipates that initially its customers for eCrypt Me will be individuals and entrepreneurs in need of affordable and versatile encryption solutions for any or a combination of desktop computers, laptops, smartphones and tablets. Furthermore, the Company anticipates that a majority of its customers will be small to medium sized businesses, especially those in industries affected by data security regulations such as HIPAA. The Company also anticipates sales of its products to consumers who are aware of and concerned about privacy and security risks of the internet and digital communications. For Ecrypt One, its enterprise-level information security soft-appliance, the Company will target fortune 100 and 500 enterprises within the healthcare, financial services, and legal industries, as well as government, military and law enforcement agencies. These organizations have a critical reliance on information security and data integrity, and are subject to numerous stringent information security regulations.
Over the next twelve months, the Company anticipates that it will launch a new brand and brand strategy, and commence a comprehensive marketing campaign through a variety of traditional and non-traditional media. Over the next twelve months, the Company will focus marketing efforts on customer acquisition for Ecrypt One. The Company anticipates that it will market its products on the internet using the Companys website (www.ecryptinc.com), on social networking sites like Facebook and Twitter, and on industry websites, blogs and forums. The Company also intends to leverage the immense influence of the board of directors to access customers. Amongst other activities, Board members will be speakers at events and will feature in publicity.
The Company will also continue developing affinity programs for groups such as the Online Therapy Institute. Competition eCrypts encryption software, eCrypt One on One, faces direct competition from three primary development companies: i) SAMURAI by BabelSecure; ii) SecureMessage by Cworx; and iii) SecretMail by Link2. Each of the foregoing companies currently offers and sells a software product similar to our product, eCrypt One on One. Although there is no assurance that we will be able to successfully compete with these companies, we believe because of eCrypt One on Ones functionality and operations, these products will be able to successfully compete with our competitors. eCrypts web-based encryption service, eCrypt Me, faces direct competition from: i) CryptoHeaven, ii) NeoCertified, iii) Zix Corporation; and, iv) Hushmail. CryptoHeaven currently offers secure email, secure online storage, secure chat, secure web forms, and off-site backup services and NeoCertified currently offers - 4 -
secure email, and secure statements services, both similar to our eCrypt Me service. Zix Corporation provides a secure email and file sharing service, while Hushmail offers a secure email subscription service, both similar to eCrypt Me.
Although there is no assurance that we will be able to successfully compete with these organizations, we believe because of eCrypt Mes functionality, versatility, and ease of use that we will be able to successfully compete with our competitors.
Ecrypt One, the Companys enterprise-level information security soft-appliance is a very unique technology that faces indirect competition from companies such as: i) Symantec Corporation; ii) Voltage Security; iii) Proofpoint Inc; iv) Axway Software; v) Watchguard; and, vi) Zix Corporation.
On April 22, 2013, under the counsel of Steptoe & Johnson, the Company filed a provisional patent application for multiple processes within Ecrypt One, its enterprise-level information security solution soft-appliance. A provisional patent assures confidence of the applications contents for a period of 12 months. It also provides the Company 12 months to continue development and make additional claims. Furthermore, it provides eCrypt 12 months to determine whether or not it is in the Companys best interest to file international patents, it establishes a filing date of April 22, 2013 for all of the aforementioned items.
The research, development and commercialization of encryption software often involves alternative development and optimization routes, which are presented at various stages in the development process. The preferred routes cannot be predicted at the outset of a research and development program because they will depend upon subsequent discoveries and test results. There are numerous third-party patents in our field, and it is possible that to pursue the preferred development route of one or more of our products we will need to obtain a license to a patent, which would decrease the ultimate profitability of the applicable product. If we cannot negotiate a license, we might have to pursue a less desirable development route or terminate the program altogether. Trade Secrets
The Company also relies on trade secrets, proprietary know-how and continuing technological innovation to develop and maintain a competitive position in our product areas. eCrypt employees, consultants and officers must sign a non-disclosure agreement before they are authorized to discuss particulars of the functionality of the Companys software products. All current employees, consultants and officers of the Company who are privy to confidential information have signed non-disclosure and non-competition agreements with the Company. Additionally, Gabriel Rosu, the Companys Chief Technology Officer, has signed a Development Consulting Agreement with the Company, pursuant to which eCrypt specifically retains ownership rights to all codes created and developed by Mr. Rosu in the scope of his engagement by the Company. The foregoing description of the Development Consulting Agreement does not purport to be - 5 -
complete and is qualified in its entirety by reference to the Consulting Agreement which was filed as Exhibit 10.6 to Form 8-K filed with the SEC on May 27, 2010.
The Companys goods and services, or the production or provision thereof, do not directly impact the environment. Notwithstanding the foregoing, the Company strives to be environmentally friendly in all aspects of its operations.
Encryption Software is classified as a dual-use good, meaning that it can be used by both the general public and the military. Export of such goods is regulated by The Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies (the Wassenaar Arrangement).
The Wassenaar Arrangement was established in order to contribute to regional and international security and stability by promoting transparency and greater responsibility in transfers of conventional arms and dual-use goods and technologies, thus preventing destabilizing accumulations. Participating States seek, through their national policies, to ensure that transfers of these items do not contribute to the development or enhancement of military capabilities which undermine these goals, and are not diverted to support such capabilities.
The Participating States of the Wassenaar Arrangement include: Argentina, Australia, Austria, Belgium, Bulgaria, Canada, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, Malta, Netherlands, New Zealand, Norway, Poland, Portugal, Republic of Korea, Romania, Russian Federation, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, Turkey, Ukraine, United Kingdom and United States. In the United States, the Bureau of Industry and Security (BIS) is responsible for implementing and enforcing the Export Administration Regulations (EAR), which regulate the export and re-export of most commercial items. Encryption software is subject to the EAR and other U.S. law, and may not be exported or re-exported to certain countries (currently Cuba, Iran, North Korea, Sudan and Syria) or to persons or entities prohibited from receiving U.S. exports. Because of this, the Company has applied and has received approval for Mass Market Status Export Authorization from the BIS. Mass Market Status is given to encryption products which have been reviewed and classified by the BIS as exportable under certain rules and regulations, including the mass market encryption rules of the EAR. On June 11, 2008 eCrypt received a Mass Market Commodity Classification for eCrypt One on One from the United States Department of Commerce; a copy of the Commodity Classification was attached as Exhibit 10.5 to the Form 10 registration statement filed by the Company with the Securities and Exchange Commission on November 11, 2008, and is hereby incorporated by reference. Because the Company has received this Commodity Classification, eCrypt is allowed to export its software to all people, except restricted parties, such as Specially Designated Nationals, Denied Parties, Denied Entities, and any other prohibited end uses and users (such as end uses/users involving the design, development, production or use of WMDs or missiles), and all countries, except embargoed destinations identified in the EAR.
With the assistance of Steptoe & Johnson, eCrypt determined that an export authorization is not required for its web-based encryption service, eCrypt Me.
The procurement and use of commercially available security solutions by government, and military agencies is controlled through various regulations. In order to provide or sell a service or product to a government or military agency, a vendor or provider must be approved by and listed with the U.S. General Services Administration (GSA). Additionally, military applications also require that products are certified by the - 6 -
National Security Agency. The Company is pursuing such certifications and accrediations. The Company is also working with Steptoe & Johnson to determine other regulatory requirements for Ecrypt One, its enterprise-level information security soft-appliance.
The Company does not currently have any full-time employees. Kasia Zukowska has been contracted by the Company to perform administrative duties on behalf of the Company. Gabriel Rosu has been contracted by the Company to perform software development duties and serve as the Chief Technology Officer for the Company. Chris Neary has been contracted by the Company to serve as the Director of Marketing. Various consultants have been contracted to fulfill software development and web programming duties. Brad Lever currently serves as the President, Chief Executive Officer, and Chief Financial Officer, and director of the Company without wages or salaries.
We are subject to the informational requirements of the Securities Exchange Act of 1934 which requires us to file reports, proxy statements and other information with the Securities and Exchange Commission. Such reports, proxy statements and other information may be inspected at public reference facilities of the SEC at 100 F Street, NE, Room 1580, Washington D.C. 20549. Copies of such material can be obtained from the Public Reference Section of the SEC at 100 F Street, NE, Room 1580, Washington, D.C. 20549 at prescribed rates. The public could obtain information on the operation of the public reference room by calling the Securities and Exchange Commission at 1-800-SEC-0330. Because we file documents electronically with the SEC, you may also obtain this information by visiting the SEC's Internet website at http://www.sec.gov. ITEM 1A. RISK FACTORS.
PROPERTIES. The Company does not currently own any real property. Currently the Company runs its business operations at 2129 - 4951 Netarts Hwy W, Tillamook OR, 97141. This space is provided to the Company free of charge by a shareholder of the Company. Such costs are immaterial to the financial statements and, accordingly have not been reflected therein. The Company anticipates that it will explore leasing opportunities for office space during the next twelve months.
The Company utilizes a Canadian-based co-location facility to host its email, service and eCommerce servers. The eCommerce server will serve as the mechanism through which the Company will distribute its software online, for both purchase and evaluation purposes.
eCrypt owns the following internet domain names: 6REPLY.COM, 6REPLY.INFO, 6SEND.COM, 6SEND.INFO, CONTROLISKEY.COM, ECRYPT.INFO, ECRYPT.IT, ECRYPT.ME, ECRYPT.US, ECRYPTINC.CA, ECRYPTINC.CO, ECRYPTINC.COM, ECRYPTINC.ME, ECRYPTINC.MOBI, ECRYPTINC.NET, ECRYPTINC.ORG, ECRYPTMAIL.COM, ECRYPTMAIL.INFO, - 7 -
ECRYPTME.COM, ECRYPTONE.CA, ECRYPTONE.CO, ECRYPTONE.COM, ECRYPTONE.INFO, ECRYPTONE.ME, ECRYPTONE.MOBI, ECRYPTONE.NET, ECRYPTONE.ORG, PRIVACYNOW.TV, PRIVACYNOWTV.COM, SECUREINFORMATIONXCHANGE.COM, SECUREINFORMATIONXCHANGE.INFO, SECURERELAY.COM, SECURERELAY.INFO, SIXPERSONAL.COM, SIXPERSONAL.INFO, SIXREPLY.COM, SIXREPLY.INFO, SIXSEND.COM, SIXSEND.INFO, SIXSMB.COM, SIXSMB.INFO, YOURPRIVACYISOURBUSINESS.COM.
ITEM 3. LEGAL PROCEEDINGS. The Company is not a party to any significant pending legal proceedings, and no such proceedings are known to be contemplated. No director, officer or affiliate of the Company, and no owner of record or beneficial owner of more than 5.0% of the securities of the Company, or any associate of any such director, officer or security holder is a party adverse to the Company or has a material interest adverse to the Company in reference to pending litigation. ITEM 4. MINE SAFETY DISCLOSURES. Not Applicable.
ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information The Companys shares are approved for trading on the OTCBB under the symbol ECRY. The following table sets forth the high and low bid prices of our common stock (USD) for the last two fiscal years and subsequent interim period, as reported by the National Quotation Bureau and represents inter dealer quotations, without retail mark-up, mark-down or commission and may not be reflective of actual transactions:
Holders As of July 12, 2013, there were 135,811,052 shares of common stock issued and outstanding and approximately 22 shareholders of record. Dividends The Company has not declared or paid any cash dividends on its common stock during the fiscal years ended March 31, 2013 or 2012. There are no restrictions on the common stock that limit our ability to pay dividends if declared by the Board of Directors and the loan agreements and general security agreements covering the Companys assets do not limit its ability to pay dividends. The holders of common stock are entitled to receive dividends when and if declared by the Board of Directors, out of funds legally available therefore and to share pro-rata in any distribution to the stockholders. Generally, the Company is not able to pay dividends if after payment of the dividends, it would be unable to pay its liabilities as they become due or if the value of the Companys assets, after payment of the liabilities, is less than the aggregate of the Companys liabilities and stated capital of all classes.
Not Applicable. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. SPECIAL NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS
CERTAIN STATEMENTS IN THIS REPORT, INCLUDING STATEMENTS IN THE FOLLOWING DISCUSSION, ARE WHAT ARE KNOWN AS "FORWARD LOOKING STATEMENTS", WHICH ARE BASICALLY STATEMENTS ABOUT THE FUTURE. FOR THAT REASON, THESE STATEMENTS INVOLVE RISK AND UNCERTAINTY SINCE NO ONE CAN ACCURATELY PREDICT THE FUTURE. WORDS SUCH AS "PLANS," "INTENDS," "WILL," "HOPES," "SEEKS," "ANTICIPATES," "EXPECTS "AND THE LIKE OFTEN IDENTIFY SUCH FORWARD LOOKING STATEMENTS, BUT ARE NOT THE ONLY INDICATION THAT A STATEMENT IS A FORWARD LOOKING STATEMENT. SUCH FORWARD LOOKING STATEMENTS INCLUDE STATEMENTS CONCERNING OUR PLANS AND OBJECTIVES WITH RESPECT TO THE PRESENT AND FUTURE OPERATIONS OF THE COMPANY, AND STATEMENTS WHICH EXPRESS OR IMPLY THAT SUCH PRESENT AND FUTURE OPERATIONS WILL OR MAY PRODUCE REVENUES, INCOME OR PROFITS. NUMEROUS FACTORS AND FUTURE EVENTS COULD CAUSE THE COMPANY TO CHANGE SUCH PLANS AND OBJECTIVES OR FAIL TO SUCCESSFULLY IMPLEMENT SUCH PLANS OR ACHIEVE SUCH OBJECTIVES, OR CAUSE SUCH PRESENT AND FUTURE OPERATIONS TO FAIL TO PRODUCE REVENUES, INCOME OR PROFITS. THEREFORE, THE READER IS ADVISED THAT THE FOLLOWING DISCUSSION SHOULD BE CONSIDERED IN LIGHT OF THE DISCUSSION OF RISKS AND OTHER FACTORS CONTAINED IN THIS REPORT - 9 -
ON FORM 10-K AND IN THE COMPANY'S OTHER FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. NO STATEMENTS CONTAINED IN THE FOLLOWING DISCUSSION SHOULD BE CONSTRUED AS A GUARANTEE OR ASSURANCE OF FUTURE PERFORMANCE OR FUTURE RESULTS.
eCrypt Technologies, Inc. was incorporated in the State of Colorado on April 19, 2007. The Company provides encryption solutions which secure the transmission of, storage of, and access to digital information. Currently the Company is a developmental stage Company. Over the next twelve (12) months, eCrypt will continue developing new products and existing product enhancements and strengthening strategic alliances. In particular, eCrypt plans to launch a new brand and brand strategy, and commence the distribution of its enterprise-level information security soft-appliance, Ecrypt One.
In addition to the foregoing, in an effort to advance the business operations of the Company, over the next twelve (12) months the Company plans to undertake the following actions in the order in which they are listed: 1
complete user interface designs for Ecrypt One; 2
commence and complete testing of Ecrypt One;
commence distribution of Ecrypt One; The foregoing business actions are goals of the Company. There is no assurance that the Company will be able to complete any, or all, of the foregoing actions.
The following discussion and analysis provides information that we believe is relevant to an assessment and understanding of our results of operation and financial condition for the fiscal year ended March 31, 2013 as compared to the fiscal year ended March 31, 2012. The following discussion should be read in conjunction with the Financial Statements and related Notes appearing elsewhere in this Form 10-K.
Our financial statements are stated in US Dollars and are prepared in accordance with generally accepted accounting principles of the United States (GAAP).
Results of Operation for eCrypt Technologies, Inc. for the Fiscal Year Ended March 31, 2013 Compared to the Fiscal Year Ended March 31, 2012.
Revenue Revenue. During the fiscal year ended March 31, 2013, the Company had revenues of $2,499 as compared to revenues of $2,612 during the fiscal year ended March 31, 2012, a decrease of $113, or approximately 4.3%. The decrease in revenue experienced by the Company was primarily attributable to a fluctuation in software sales and service subscriptions.
Operating Expenses. During the fiscal year ended March 31, 2013, the Company had operating expenses of $523,261 as compared to operating expenses of $653,665 during the fiscal year ended March 31, 2012, a decrease of approximately $130,404 or 19.95%. The decrease in operating expenses experienced by the - 10 -
Company was primarily attributable to a decrease in advertising and promotion expenses, and general and administrative expenses experienced by the Company. Net Loss Net Loss. The Company had a net loss of $(608,715) for the fiscal year ended March 31, 2013 as compared to a net loss of $(696,221) for the fiscal year ended March 31, 2012, a change of $87,506 or approximately 12.57%. The change in net loss experienced by the Company was primarily attributable to a decrease in operating expenses and an increase in interest expenses experienced by the Company. Liquidity and Capital Resources
Currently, we have limited operating capital. The Company anticipates that it will require approximately $7,000,000 of working capital to complete all of its desired business activity during the next twelve months. The Company has earned limited revenue from its business operations. Our current capital and our other existing resources will be sufficient only to provide a limited amount of working capital, and, to date, the revenues generated from our business operations have not been sufficient to fund our operations or planned growth. As noted above, we will likely require additional capital to continue to operate our business, and to further expand our business. We may be unable to obtain the additional capital required. Our inability to generate capital or raise additional funds when required will have a negative impact on our operations, business development and financial results. For the fiscal year ended March 31, 2013 we primarily funded our business operations with the proceeds from related party loans. During the next twelve months, we plan to seek to generate the necessary capital to fund our business operations and complete our desired business activity through sales of our software eCrypt One on One, and subscriptions to our web-based service eCrypt Me. However, as of the period ended March 31, 2013, we have generated limited revenue through sales of eCrypt One on One and subscriptions to eCrypt Me. If we are unable to generate the necessary capital through the sales of these products, we may conduct a private placement offering to seek to raise the necessary working capital to fund our business operations, or continue to rely on related party loans to fund our business operations. The following discussion outlines the state of our liquidity and capital resources for the fiscal year ended March 31, 2013, compared to the fiscal year ended March 31, 2012: Total Current Assets & Total Assets Our audited balance sheet reflects that: i) as of March 31, 2013, we have total current assets of $10,863, as compared to total current assets of $73,197 as of March 31, 2012, a decrease of $62,334, or approximately 85.16%; and ii) as of March 31, 2013, we have total assets of $22,737, compared to total assets of $91,850 as of March 31, 2012, a decrease of $69,113, or approximately 75.246%. The increase in the Companys total current assets and total assets from March 31, 2012 to March 31, 2013 was primarily attributable to a decrease in the Companys cash.
Cash: As of March 31, 2013, our audited balance sheet reflects that we have cash of $10,863, as compared to $73,197 at March 31, 2012, a decrease of $62,334, or approximately 85.16%. The decrease in the Companys cash from March 31, 2012 to March 31, 2013 was primarily attributable to the fact that during the period ended March 31, 2013 the Company used available cash for operational expenses.
Total Current Liabilities & Total Liabilities
As of March 31, 2013, our audited balance sheet reflects that we have total current liabilities of $821,835 as compared to total current liabilities of $291,249 at March 31, 2012, an increase of $530,586, or approximately 182.176%. We have total liabilities of $1,136,514 as compared to total liabilities of $751,787 at March 31, 2012, an increase of $384,727, or approximately 51.175%. The increase in the Companys total liabilities from March 31, 2012 to March 31, 2013 was primarily attributable to the fact that the Company obtained loans from related and third parties during the period ended March 31, 2013.
Cash Flow for the Company for the Fiscal Year Ended March 31, 2013 as Compared to the Fiscal Year Ended March 31, 2012
Operating Activities During the fiscal year ended March 31, 2013, the net cash used by the Company in operating activities was $360,920, as compared to net cash used in operating activities of $291,606 during the fiscal year ended March 31, 2012, a change of $69,314. The increase in net cash used in operating activities was primarily attributable to an increase in stock based compensation, an increase in accounts payable and accrued liabilities, and an increase in interest on loans from related and third parties. Investing Activities During the fiscal year ended March 31, 2013, the net cash used by the Company in investing activities was $1,304, as compared to net cash used in investing activities of $15,578 during the fiscal year ended March 31, 2012, a change of $14,274. The change in net cash used by investing activities was primarily attributable to a decrease in spending on equipment.
Financing Activities During the fiscal year ended March 31, 2013, the net cash provided by financing activities was $299,890, as compared to net cash provided by financing activities of $337,964 during the fiscal year ended March 31, 2012, a decrease of $38,074, or approximately 11.266%. The change in net cash provided by financing activities was primarily attributable to the fact that during the fiscal year ended March 31, 2013, the Company obtained less cash via loans from a third party.
Off Balance Sheet Arrangements The Company does not have any off-balance sheet arrangements.
FOR THE FISCAL YEAR ENDED MARCH 31, 2013 and 2012
15  16 Statements of Operations 17
22  33
Las Vegas, NV New York, NY Pune, India Beijing, China
We have audited the accompanying balance sheets of eCrypt Technologies, Inc., (A Development Stage Company) as of March 31, 2013 and 2012 and the related statements of operations, stockholders deficit, and cash flows for the years then ended and from inception (April 19, 2007) to March 31, 2013. eCrypt Technologies, Inc.s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the companys internal control over the financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of eCrypt Technologies, Inc. (A Development Stage Company) as of March 31, 2013 and 2012 and the result of its operations and its cash flows for the years then ended and from inception (April 19, 2007) to March 31, 2013, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered losses from operations, which raise substantial doubt about its ability to continue as a going concern. Managements plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
March 31, March 31, 2013
$ 10,863 $ 73,197 TOTAL CURRENT ASSETS
10,863 73,197 Property and equipment, net
11,874 18,653 TOTAL ASSETS
$ 22,737 $ 91,850 LIABILITIES AND STOCKHOLDERS' DEFICIT
$ 28,063 $ 16,884 Accounts payable-related party
4,500 17,317 Accrued interest on loan
11,141 - Accrued interest on loan-related party
125,167 42,048 Note payable - related party
553,000 215,000 Note payable
99,964 - TOTAL CURRENT LIABILITIES
821,835 291,249 LONG TERM LIABILITIES
299,890 99,964 Note payable- related party
- 338,000 Accrued interest on loan
14,789 1,065 Accrued interest on loan-related party
- 21,509 TOTAL LONG TERM LIABILITIES
314,679 460,538 TOTAL LIABILITIES
$ 1,136,514 $ 751,787 STOCKHOLDERS' DEFICIT
Preferred stock (10,000,000 Shares Authorized; No Par Value 0 and 0 shares issued and outstanding as at March 31, 2013 and 2012)
- - Common stock (500,000,000 Shares Authorized; No Par Value;
135,811,052 and 135,411,052 shares issued and outstanding as at March 31, 2013 and 2012)
999,536 815,661 Additional paid-in capital
180,000 45,000 Stock subscription payable
14,625 178,625 Deficit accumulated during the development stage
(2,307,938)
(1,699,223)
(1,113,777)
(659,937)
$ 22,737 $ 91,850 The accompanying notes are an integral part of these financial statements.
Cumulative Amount from Inception (April 19, 2007) to March 31, 2013
$ 2,499 $ 2,612 $ 99,329 OPERATING EXPENSES
6,605 9,485 69,082 Advertisment and promotion
4,934 13,565 356,021 General and administrative
458,136 576,979 1,535,043 Professional fees
53,586 53,636 285,736 TOTAL OPERATING EXPENSES
523,261 653,665 2,245,882 OPERATING LOSS
(520,762)
(651,053)
(2,146,553)
(163,706)
- 30 3,199 TOTAL OTHER EXPENSES
(161,385)
$ (608,715)
$ (696,221)
$ (2,307,938)
135,731,292 135,185,164 NET LOSS PER SHARE - BASIC
For the Period from Inception (April 19, 2007) to March 31, 2013
No Par Value Preferred Shares
Balance at April 19, 2007 (Date of Inception)
- $ - - $ - $ - $ - $ - $ - Shares issued
- - 116,015,968 55,130 - - - 55,130 Net loss for the period
- - - - - - (32,505)
- - 116,015,968 55,130 - - (32,505)
22,625 Stock subscriptions
- - - - - 4,875 - 4,875 Shares issued
- - 17,502,248 151,572 - - - 151,572 Net loss for the period
- - - - - - (92,111)
- - 133,518,216 206,702 - 4,875 (124,616)
86,961 Stock cancelled
- 400,000 - 400,000 Shares issued
- - 40,455 32,768 - - - 32,768 Net loss for the period
- - - - - - (184,480)
- - 133,558,671 239,470 - 400,000 (309,096)
330,374 Shares issued for cash
- - 952,381 400,000 - (400,000)
- - Shares issued for compensation
- - 287,500 63,750 - - - 63,750 Net loss for the period
- - - - - - (693,906)
- - 134,798,552 703,220 - - (1,003,002)
- - - - 45,000 - -
45,000 Shares issued for compensation
- - 612,500 112,441 - -
- 112,441 Stock subscription payable
178,625 178,625 Net loss for the period
- - - - - - (696,221)
- - 135,411,052 815,661 45,000 178,625 (1,699,223)
- - - - 135,000 - - 135,000 Shares issued for compensation
- - 362,500 178,625 -
- - Shares issued to director
37,500 5,250 -
5,250 Stock subscription payable
14,625 14,625 Net loss for the period
- - - - - - (608,715)
(608,715)
135,811,052 $ 999,536 $ 180,000 $ 14,625 $ (2,307,938)
$ (1,113,777)
6,605 9,485 69,082 Loss on disposal of equipment
1,478 -
1,478 Stock option based compensation
135,000 45,000 180,000 Stock based compensation
19,875 291,066 374,691 Changes in operating assets and liabilities:
11,179 (4,160)
28,063 Accounts payable-related party
17,317 4,500 Interest on loan
24,865 1,065 25,930 Interest on loan-related party
61,610 44,132 134,137 Prepaid expenses
- 710 - NET CASH USED IN OPERATING ACTIVITIES
(360,920)
(291,606)
(1,490,057)
- (11,526)
- - (14,446)
- - 206,702 Stock subscriptions
- 400,000 Proceeds from convertible loan-related party
23,800 Proceeds from loan
299,890 99,964 399,854 Proceeds from loan-related party
- 238,000 553,000 Paid in capital
299,890 337,964 1,583,356 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
30,780 10,863 CASH AND CASH EQUIVALENTS
73,197 42,417 - End of year
$ 10,863 $ 73,197 $ 10,863 Supplemental disclosures of cash flow information:
Shares issued in settlement of convertible note
$ - $ - $ 32,768
$ 183,875
$ - $ (216,125)
eCrypt Technologies Inc., a Colorado corporation (the Company), was incorporated on April 19, 2007. The Company develops and sells encryption software which secures the transmission of, storage of, and access to digital information. Software applications range from device based (for cellular phones, smartphones, tablets, laptops and desktop computers), to server-based encryption software for email servers and for file-store servers.
Significant Accounting Policies Basis of Presentation
The financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles of the United States of America (US GAAP). In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present fairly the financial position as of March 31, 2013, and the results of operations and cash flows presented herein have been included in the financial statements. The Company has limited operations and in accordance with FASB ASC 915-10, Development Stage Entities, the Company is considered a development stage company. Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that impact the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has suffered recurring losses from operations since inception (April 19, 2007) up to March 31, 2013 of $2,307,938 which raises substantial doubt about its ability to continue as a going concern.
The Companys ability to continue as a going concern is dependent upon its ability to generate profitable operations in the future and/or obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has plans to seek additional capital through a private placement and public offering of its common stock. These plans, if successful, will mitigate the factors which raise substantial doubt about the Companys ability to continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.
Cash equivalents consist of highly liquid investments with original maturities at the date of purchase of three months or less. Short term investments mature in less than one year from the balance sheet date.
The Company places its cash and short-term investments with financial institutions with high credit quality investments in accordance with its investment policy designed to protect the principal investment. Therefore, the Company believes that its exposure due to concentration of credit risk is minimal and has not experienced credit losses on investments in these instruments to date.
Property and Equipment are stated at cost less accumulated depreciation. Depreciation is calculated using the straight line basis over their estimated useful lives:
2 years straight line basis
1 years straight line basis
5 years straight line basis
The Company recognizes revenue and gains when earned and related costs of sales and expenses when incurred. The Company recognizes revenue in accordance with Accounting Standards Codification Section 605-10-599, Revenue Recognition, Overall, SEC Materials ("Section 605-10-599"). Section 605-10-599 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services rendered; (3) the fee is fixed and determinable; and (4) collectability is reasonably assured. Cost of products sold consists of the cost of the purchased goods and labor related to the corresponding sales transaction. When a right of return exists, the Company defers revenues until the right of return expires. The Company recognizes revenue from services at the time the services are completed.
The Company accounts for income taxes as outlined in the Accounting Standards Codification ("ASC") 740 "Income Taxes. Under ASC Topic 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC Topic 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. - 23 -
Stock-Based Compensation The Company accounts for share based payments in accordance with ASC 718, Compensation - Stock Compensation, which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on the grant date fair value of the award. In accordance with ASC 718-10-30-9, Measurement Objective  Fair Value at Grant Date, the Company estimates the fair value of the award using a valuation technique. For this purpose, the Company uses the Black-Scholes option pricing model. The Company believes this model provides the best estimate of fair value due to its ability to incorporate inputs that change over time, such as volatility and interest rates, and to allow for actual exercise behavior of option holders. Compensation cost is recognized over the requisite service period which is generally equal to the vesting period. Upon exercise, shares issued will be newly issued shares from authorized common stock.
The Companys financial instruments consist of cash and cash equivalents, highly liquid short-term investments, accounts payable and accrued liabilities, stockholder loans and third party notes payable. The Company does not hold or issue financial instruments for trading purposes and does not hold any derivative financial instruments.
The Companys investment policy is to achieve, in order of importance, the financial objectives of preservation of principal, liquidity and return on investment. Investments are made in U.S. obligations and bank securities provided the obligations are guaranteed or carry ratings appropriate for the policy.
The policy risks are primarily the opportunity cost of the conservative nature of the allowable investments. As the Company is currently in the development stage, the Company has chosen to avoid investments of a trade or speculative nature. - 24 -
Fair Value of Financial Instruments Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of March 31, 2013 and 2012. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash and accounts payable. Fair values were assumed to approximate carrying values for cash and payables because they are short term in nature and their carrying amounts approximate fair values or they are payable on demand. Level 1: The preferred inputs to valuation efforts are quoted prices in active markets for identical assets or liabilities, with the caveat that the reporting entity must have access to that market. Information at this level is based on direct observations of transactions involving the same assets and liabilities, not assumptions, and thus offers superior reliability. However, relatively few items, especially physical assets, actually trade in active markets. Level 2: FASB acknowledged that active markets for identical assets and liabilities are relatively uncommon and, even when they do exist, they may be too thin to provide reliable information. To deal with this shortage of direct data, the board provided a second level of inputs that can be applied in three situations.
The measurement currency of the Company is the U.S. dollar. Transactions in foreign currencies are translated at the exchange rate in effect at the transaction date. Monetary assets and liabilities denominated in other than the measurement currency are translated at the exchange rates in effect at the balance sheet date. The resulting exchange gains and losses are recognized in earnings.
Basic and diluted net loss per share information is presented under the requirements of ASC Topic 260, Earnings per Share. Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding for the period, less shares subject to repurchase. Diluted net loss per share reflects the potential dilution of securities by adding other common stock equivalents, including stock options, shares subject to repurchase, warrants and convertible notes in the weighted-average number of common shares outstanding for a period, if dilutive. The computation of earnings (loss) per share is as follows: - 25 -
135,731,292
135,185,164
Recent Accounting Pronouncements The Company has adopted all recently issued accounting pronouncements. The adoption of the accounting pronouncements, including those not yet effective, is not anticipated to have a material effect on the financial position or results of operations of the Company.
The components of the Companys equipment are presented below:
Depreciation expense for the years ended March 31, 2013 and 2012 was $6,605 and $9,485, respectively.
500,000,000 Common shares with no par value 10,000,000 Preferred shares with no par value; none issued or outstanding:
During the period from inception (April 19, 2007) through March 31, 2008, the Company effected the following stock transactions:
The Company issued a total of 116,015,968 shares of the Companys no par value common stock in exchange for cash of $55,130.
During the year ended March 31, 2009 the Company effected the following stock transactions:
On October 09, 2008, the Company announced a 4:1 forward stock split on its common shares. 33,203,992 common shares were issued for 8,300,998 common shares.
On November 12, 2009, the Board of Directors of the Company consented to and approved a 4:1 forward split of the Companys 33,379,554 issued and outstanding shares of common stock. Pursuant to Rule 10b-17, the Forward Split became effective 10 days following the submission of the required notification forms to FINRA, on November 24, 2009. On the effective date, the Companys transfer agent issued and mailed to the eligible shareholders of record, three additional shares of common stock for each share of common stock held by the shareholder. The forward split resulted in the increase in the number of shares of the Companys common stock issued and outstanding to 133,518,216 while keeping the number of authorized shares the same. During the year ended March 31, 2009, the Company issued 17,502,248 shares of the Companys no par value common stock in exchange for cash of $151,572.
During the year ended March 31, 2010, the Company effected the following stock transactions:
The Company issued a total of 40,455 shares of the Companys no par value common stock at a conversion rate of $0.81 per share in full and final settlement of a convertible debenture dated July 2, 2007. The shares were issued on March 30, 2010 for total value of $32,769. The loan consisted of principal of $23,800 and interest of $8,969. See Note 6.
During the year ended March 31, 2011, the Company effected the following stock transactions:
On April 19, 2010, the Company entered into a private placement agreement that would offer up to 952,381 units which consists of a subscription agreement and three warrants. Warrant #1 offers the holder to purchase 952,381 shares of the Corporations common stock at a price of $0.42 per share at any time within a twenty four month period from the date of closing. Warrant #2 entitles the holder to purchase a total of 714,286 shares of the Corporations common stock at a price of $0.56 per share at any time within a twenty four month period from the date of closing.
Warrant #3 entitles the holder to purchase up to a total of 3,809,524 units at a price of $0.42 per unit at any time during the six month period from the date of closing of this offering. Each unit under warrant #3 consists of one share of common stock and two warrants. One warrant allows the holder to purchase up to 3,809,524 shares of common stock at a price of $0.42 any time during the period of twenty four months from the date of purchase. The other warrant allows the holder to purchase 2,857,142 shares of common stock at a price of $0.56 per share any time during the twenty four months from the date of closing of the purchase of these units under warrant 3.
On April 22, 2010, the Company issued 952,381 shares of common stock, and three (3) warrants for a total value of $400,000, per the private placement agreement explained above.
On February 9, 2011, the Company issued 250,000 shares of common stock for director compensation for a value of $52,500. The share price is valued at the adjusted closing price on the date of grant which was $0.21 per share. The compensation agreement calls for a total of 1,000,000 shares to be issued during a twelve month period.
On February 15, 2011, the Company issued 37,500 shares of common stock for director compensation for a value of $11,250. The share price is valued at the adjusted closing price on the date of vesting of the shares which was $0.30 per share. The compensation agreement calls for a total of 150,000 shares to be issued during a twelve month period.
On June 23, 2011, the Company issued 250,000 shares of common stock for director compensation for a value of $50,000. The share price is valued at the adjusted closing price on the date of vesting of the shares which was $0.20 per share. The compensation agreement calls for a total of 1,000,000 shares to be issued during a twelve month period.
On June 23, 2011, the Company issued 37,500 shares of common stock for director compensation for a value of $6,941. The share price is valued at the adjusted closing price on the date of vesting of the shares which was $.01851per share. The compensation agreement calls for a total of 150,000 shares to be issued during a twelve month period.
On July 8, 2011, the Company issued 37,500 shares of common stock for director compensation for a value of $7,875. The share price is valued at the adjusted closing price on the date of grant which was $0.21 per share. The compensation agreement calls for a total of 150,000 shares to be issued during a twelve month period.
On October 9, 2011, the Company issued 250,000 shares of common stock for director compensation for a value of $41,250. The share price is valued at the adjusted closing price on the date of vesting of the shares which was $0.165 per share. The compensation agreement calls for a total of 1,000,000 shares to be issued during a twelve month period.
On October 15, 2011, the Company issued 37,500 shares of common stock for director compensation for a value of $6,375. The share price is valued at the adjusted closing price on the date of vesting of the shares which was $.0.17 per share. The compensation agreement calls for a total of 150,000 shares to be issued during a twelve month period.
On November 8, 2011, the Company issued 37,500 shares of common stock for director compensation for a value of $21,000. The share price is valued at the adjusted closing price on the date of vesting of the shares which was $0.56 per share. The compensation agreement calls for a total of 150,000 shares to be issued during a twelve month period.
On February 9, 2012, the Company issued 250,000 shares of common stock for director compensation for a value of $117,500. The share price is valued at the adjusted closing price on the date of vesting of the shares - 28 -
which was $0.47 per share. The compensation agreement calls for a total of 1,000,000 shares to be issued during a twelve month period.
On February 15, 2012, the Company issued 37,500 shares of common stock for director compensation for a value of $22,875. The share price is valued at the adjusted closing price on the date of vesting of the shares which was $.0.61 per share. The compensation agreement calls for a total of 150,000 shares to be issued during a twelve month period.
On February 16, 2012 the company granted a non- qualified stock option to its newly appointed director, Thomas Trkla as compensation for his services. The director is entitled to purchase a total of three hundred thousand (300,000) shares of restricted common stock for a price equal to $0.30 per share (Exercise Price), vested over a ten year period thereafter. The option shall be exercised during the twelve month period. As at March 31, 2012 no options have been vested.
On March 8, 2012, the Company issued 37,500 shares of common stock for director compensation for a value of $17,250. The share price is valued at the adjusted closing price on the date of vesting of the shares which was $0.46 per share. The compensation agreement calls for a total of 150,000 shares to be issued during a twelve month period.
On May 30, 2012, the Company issued 362,500 shares of common stock out of stock payable.
On July 8, 2012, the Company issued 37,500 shares of common stock for director compensation for a value of $8,250. The share price is valued at the adjusted closing price on the date of vesting of the shares which was $0.22 per share. The compensation agreement calls for a total of 150,000 shares to be issued during a twelve month period. These shares were recorded as subscription payable as of March 31, 2013. On September 25, 2012, the Company entered in an agreement to issue 37,500 shares of common stock for director compensation for a value of $5,250. The share price is valued at the adjusted closing price on the date of vesting of the shares which was $0.14 per share. The compensation agreement calls for a total of 150,000 shares to be issued during a twelve month period. These shares were issued on Oct 25, 2012.
On January 25, 2013, the Company authorized to issue 37,500 shares of common stock for director compensation for a value of $6,539. The share price is valued at the adjusted closing price on the date of vesting of the shares which was $0.17 per share. The compensation agreement calls for a total of 150,000 shares to be issued during a twelve month period. These shares were recorded as subscription payable as of March 31, 2013. 6.
There are no warrants outstanding as of March 31, 2013. The 5,476,191 of unexercised warrants issued in the prior year expired on April 19, 2012.
On February 16, 2012 the company granted a non-qualified stock option to its newly appointed director, Thomas Trkla as compensation for his services. The director is entitled to purchase a total of three hundred thousand (300,000) shares of restricted common stock for a price equal to $0.30 per share (Exercise Price), exercisable over a ten-year period thereafter. The option were vested during the twelve month period. As to the total number of Shares with respect to which the Option is granted, the Option was exercisable as follows: (i) 25% of the Option in the aggregate was exercisable upon the mutual execution of the Agreement (ii) 50% of the Option in the aggregate was exercisable on or after the four month anniversary of the Grant Date; (iii) 75% of the Option in the aggregate was exercisable on or after the eight month anniversary of the Grant Date; and (iv) 100% of the Option in the aggregate was exercisable on or after the twelve month anniversary of the Grant Date (the twelve month period commencing on the Grant Date and ending on the twelve month anniversary of the Grant Date being referred to as the Vesting Period). As of March 31, 2013, the director has not exercised any rights. The total fair value of these options at the date of grant was estimated to be $180,000 and was determined using the Black-Scholes option pricing model with an expected life of 10 years, a risk free interest rate of 1.99%, a dividend yield of 0% and expected volatility of 419%. Out of this $180,000 was recorded as stock based compensation expense through March 31, 2013 based on three hundred thousand (300,000) options vested.
Outstanding at as at 4.01.2012
Outstanding as at 3.31.2013
Exercisable at 3.31.2013
Loan-Related Party
The Company issued on January 11, 2012 a $38,000 unsecured note payable to a shareholder. The note bears interest at 10%, compounded annually, matures in two years on January 11, 2014. The Company issued on December 6, 2011 a $20,000 unsecured note payable to a shareholder. The note bears interest at 10%, compounded annually, matures in two years on December 6, 2013. The Company issued on October 19, 2011 a $25,000 unsecured note payable to a shareholder. The note bears interest at 10%, compounded annually, matures in two years on October 19, 2013. The Company issued on September 30, 2011 a $20,000 unsecured note payable to a shareholder. The note bears interest at 10%, compounded annually, matures in two years on September 30, 2013. - 30 -
The Company issued on September 2, 2011 a $20,000 unsecured note payable to a shareholder. The note bears interest at 10%, compounded annually, matures in two years on September 2, 2013. The Company issued on August 5, 2011 a $24,000 unsecured note payable to a shareholder. The note bears interest at 10%, compounded annually, matures in two years on August 5, 2013. The Company issued on July 7, 2011 a $40,000 unsecured note payable to a shareholder. The note bears interest at 10%, compounded annually, matures in two years on July 7, 2013. The Company issued on May 9, 2011 a $36,000 unsecured note payable to a shareholder. The note bears interest at 10%, compounded annually, matures in two years on May 9, 2013. The Company issued on April 29, 2011 a $15,000 unsecured note payable to a shareholder. The note bears interest at 10%, compounded annually, matures in two years on April 29, 2013. The Company acquired a $100,000 advance during the month of January 2011 from shareholder. The advance was unsecured, non-interest bearing and due in six months. On June 24, 2011 the loan was modified to bear interest at 10%, compounded annually, and extended to mature in two years on June 24, 2013.
The Company issued on May 18, 2010 a $215,000 unsecured note payable to a shareholder. The note bears interest at 10%, compounded annually, matures in two years on May 18, 2012. 9. Note Payable The Company issued on February 21, 2012 a $99,964 unsecured note payable to a third party. The note bears interest at 10%, compounded annually, matures in two years on February 21, 2014. The Company issued on June 13, 2012 a $99,970 unsecured note payable to a third party. The note bears interest at 10%, compounded annually, matures in two years on June 13, 2014. The Company issued on September 27, 2012 a $49,980 unsecured note payable to a third party. The note bears interest at 10%, compounded annually, matures in two years on September 27, 2014. The Company issued on October 5, 2012 a $49,980 unsecured note payable to a third party. The note bears interest at 10%, compounded annually, matures in two years on October 5, 2014.
The Company issued on December 18, 2012 a $49,980 unsecured note payable to a third party. The note bears interest at 10%, compounded annually, matures in two years on December 18, 2014.
The Company issued on February 26, 2013 a $49,980 unsecured note payable to a third party. The note bears interest at 10%, compounded annually, matures in two years on February 26, 2015.
Interest expense for the years ended March 31, 2013, and 2012, was $86,475 and $45,198, respectively.
The Companys policy regarding advertising is to expense advertising when incurred. The Company incurred $4,934 and $13,565 of advertising expense during the years ended March 31, 2013, and 2012, respectively.
Stock Compensation Program
On April 12, 2011, subject to shareholder approval, the Board of Directors of eCrypt Technologies, Inc. (the Company) approved the adoption of the eCrypt Technologies, Inc. Stock Compensation Program (the Program) under which 13,500,000 shares have been reserved for purposes of possible future issuance of incentive stock options, non-qualified stock options, and restricted stock grants to employees, directors and certain key individuals. On April 15, 2011, pursuant to a written consent in lieu of a meeting, a majority of the Companys shareholders approved the Program. The purpose of the Program is to attract and retain key employees, consultants and other persons, and to provide such key individuals with an additional incentive to contribute to the success of the Company. In order to maintain flexibility in the award of stock benefits, the Program constitutes a single omnibus plan, but is composed of three parts. The first part is the Incentive Stock Option Plan (Incentive Option Plan) which provides grants of incentive stock options under Section 422A of the Internal Revenue Code of 1986, as amended. The second part is the Nonqualified Stock Option Plan (Nonqualified Option Plan) which provides grants of nonqualified stock options. The third part is the Restricted Shares Plan (Restricted Plan) which provides grants of restricted shares of Company common stock. The Incentive Option Plan, the Nonqualified Option Plan and the Restricted Plan respectively comprise Plan I, Plan II, and Plan III of the Program. 12.
The Company has losses carried forward for income tax purposes for March 31, 2013 and 2012. There are no current or deferred tax expenses for the period ended March 31, 2013 or 2012 due to the Companys loss position. The Company has fully reserved for any benefits of these losses. The deferred tax consequences of temporary differences in reporting items for financial statement and income tax purposes are recognized, as appropriate. Realization of the future tax benefits related to the deferred tax assets is dependent on many factors, including the Companys ability to generate taxable income within the net operating loss carryforward period. Management has considered these factors in reaching its conclusion as to the valuation allowance for financial reporting purposes.
$ (614,549)
$ (454,792)
454,792 Net refundable amount
The composition of the Companys deferred tax assets as at March 31, 2011 and 2010 is as follows:
$ (1,755,855)
$ (1,299,407)
(614,549)
454,792)
The potential income tax benefit of these losses has been offset by a full valuation allowance. As at March 31, 2013 and March 31, 2012, the Company has an unused operating loss carry-forward balance of approximately $1,755,855 and $1,299,407 respectively, which begins to expire in 2027.
On April 22, 2013 the Company filed a provisional patent application for multiple processes within Ecrypt One an enterprise level email and encryption system software. A provisional application provides the Company: i) confidentiality of the subject matters as it is not published or reviewed; ii) twelve months to make additional claims on the original application; iii) twelve months to determine whther or not it is in the best interest of the Company to file international patents; and iv) it established April 22, 2013 as the filing date for ll of the aforementioned activities.
On July 5, 2013, the Company executed an Amendement to the Consulting agreement entered into with Gabriel Rosu on May 23, 2010. The Amendement is effective June 1, 2012 and modifies the terms of the engagement to remove the requirement for Mr. Rosu to work a minimum of 160 hours per month. It also modified Mr. Rosus compensation from $95,000 per year, to $60 per hour.
We have had no disagreements with our accountants required to be disclosed pursuant to Item 304 of Regulation S-K. ITEM 9A. CONTROLS AND PROCEDURES.
The Securities and Exchange Commission defines the term disclosure controls and procedures to mean the company's controls and other procedures of an issuer that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 (the Exchange Act) is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commissions rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the issuers management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. The Company maintains such a system of controls and procedures in an effort to ensure that all information which it is required to disclose in the reports it files under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified under the SEC's rules and forms and that information required to be disclosed is accumulated and communicated to principal executive and principal financial officers to allow timely decisions regarding disclosure. As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are designed to provide reasonable assurance of achieving the objectives of timely alerting them to material information required to be included in our periodic SEC reports and of ensuring that such information is recorded, processed, summarized and reported with the time periods specified. Our chief executive officer and chief financial officer also concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this report to provide reasonable assurance of the achievement of these objectives. Internal Control Over Financial Reporting
The management of the Company is responsible for the preparation of the financial statements and related financial information appearing in this Annual Report on Form 10-K. The financial statements and notes have been prepared in conformity with accounting principles generally accepted in the United States of America. The management of the Company also is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. A company's internal control over financial reporting is defined as a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that - 34 -
receipts and expenditures of the issuer are being made only in accordance with authorizations of management and directors of the Company; and (3) 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.
Management, including the Chief Executive Officer and Chief Financial Officer, does not expect that the Company's internal controls will prevent all error and all fraud. Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable, not absolute, assurance that the objectives of the control system are met and may not prevent or detect misstatements. Further, over time control may become inadequate because of changes in conditions or the degree of compliance with the policies or procedures may deteriorate.
With the participation of the Chief Executive Officer and Chief Financial Officer, our management evaluated the effectiveness of the Company's internal control over financial reporting as of March 31, 2013 based upon the framework in Internal Control -Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on that evaluation, our management has concluded that, as of March 31, 2013, the Company's internal control over financial reporting contained a material weakness due to a failure by the Company to properly record and value stock transactions relating to stock options issued by the Company, and as a result of such material weakness, our internal controls over financial reporting were not effective as of March 31, 2013. To remediate the weakness in our internal controls over financial reporting, we intend to: i) reconcile stock issuance transactions against the agreements underlying such stock issuance transactions to ensure that equity issuances are properly accounted for; and ii) implement a review board to review the stock issuance transactions to ensure that they are properly valued and accounted for.
There was no significant change in the Company's internal control over financial reporting during the last fiscal quarter, that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. ITEM 9B. OTHER INFORMATION.
Directors, Executive Officers and Significant Employees The following table sets forth, as of March 31, 2013, the respective positions and ages of our directors and executive officers of the Company. Each director has been elected to hold office until the next annual meeting of shareholders and thereafter until his successor is elected. Vacancies in the existing Board of Directors are filled by majority vote of the remaining Directors. There are no agreements or understandings for any officer or director to resign at the request of another person and no officer or director is acting on - 35 -
behalf of or will act at the direction of any other person. Name
Director, Chief Executive Officer, Chief Financial Officer, President
Thomas N. Trkla
Mr. Brad Lever  Mr. Brad Lever (Mr. Lever) is 37 years old. Mr. Lever currently serves as Director of the Company, as well as the Companys Chief Executive Officer, Chief Financial Officer, President, Director of Sales and Marketing, and Director of Strategic Alliances and Investor Relations; he has served in these capacities since the Companys inception. Mr. Levers core functionalities are to coordinate team efforts, manage sales and marketing, and aid in the development of services and solutions which cater to the marketplace. In addition to the work that Mr. Lever performs with the Registrant, since 2004, Mr. Lever has worked in enterprise sales for BCE, a telecommunications company, focusing on new acquisitions and providing wireless data solutions. From 2003 to 2004, Mr. Lever was a sales executive with Sophos, Inc., a company that provides anti-virus software solutions to businesses. Mr. Brad Lever is a member of the IAPP (International Association of Privacy Professionals).
Mr. Gabriel Rosu  Mr. Gabriel Rosu (Mr. Rosu) is 39 years old. Mr. Rosu is currently the Companys Chief Technology Officer (CTO), a position he has held since the Companys inception. As CTO, Mr. Rosu functions as the Companys lead software developer and eCommerce infrastructure developer. A fully trained Java Architect, Mr. Rosu is versed in software and application design and development, service-oriented architecture, and encryption frameworks. His primary role is to develop and test communications and information security concepts and solutions. In addition to the work Mr. Rosu performs with the Registrant, since March 2008, Mr. Rosu has worked with Telus, a Canadian telecommunications - 36 -
company, as a Frameworks Lead Architect. From 2004 through February 2008, Mr. Rosu worked with Accenture, a global management consulting, technology services and outsourcing company, as a Frameworks Lead Architect, a position in which he was responsible for deliverable planning and tracking as well as resource allocation. From 2001 through 2004, Mr. Rosu was a Senior Software Engineer with Verb Exchange Inc., a digital communications company that provides new media marketing opportunities to advertisers, a position in which he served as a team leader and Java architect.
Congressman Curt Weldon  Congressman Curt Weldon (Mr. Weldon) is 64 years old. Congressman Curt Weldon served in the United States Congress for 20 years. When he retired in 2007 he was Vice Chairman of both the Armed Services Committee and the Homeland Security Committee, as well as a Member of the Energy and Environment Sub-Committee. During his tenure in Congress he initiated and Chaired the US/FSU Energy Parliamentary Relationship, served as Co-Chair of the International Energy Advisory Council and Keynoted a number of International Energy Forums. Mr. Weldon organized and led over 50 bi-partisan Congressional Delegations to 75 nations including the first-ever Congressional Delegations into Libya and North Korea. Prior to his career in elective office as a Mayor, County Commissioner and Member of Congress, Mr. Weldon served as an Educator and University Professor as well as a Director with the INA/CIGNA Corporation at its Corporate Headquarters in Philadelphia. In addition to his work with the Registrant, Mr. Weldon formed and currently serves as CEO of Jenkins Hill International  a firm providing International Consulting as well as facilitating International Strategic Relationships. Mr. Weldon has been honored by over 100 professional associations and international organizations.
Honorable Jay M. Cohen, Rear Admiral, USN (ret)- Hon Jay M. Cohen (Mr. Cohen) is a native of New York. He holds a joint Ocean Engineering degree from Massachusetts Institute of Technology and Woods Hole Oceanographic Institution and Master of Science in Marine Engineering and Naval Architecture from MIT. Mr. Cohen was commissioned in 1968 upon graduation from the United States Naval Academy. Mr. Cohens early Navy assignments included service on conventional and nuclear submarines. From 1985 to 1988 Cohen commanded USS HYMAN G. RICKOVER (SSN 709). Following command, he served on the U.S. Atlantic Fleet as a senior member of the Nuclear Propulsion Examining Board, responsible for certifying the safe operation of nuclear powered ships and crews. From 1991 to 1993, Mr. Cohen commanded the submarine tender USS L.Y. SPEAR (AS 36) including a deployment to the Persian Gulf in support of Operation DESERT STORM. After Spear, he reported to the Secretary of the Navy as Deputy Chief of Navy Legislative Affairs. During this assignment, Mr. Cohen was responsible for supervising all Navy Congressional liaison.
Unanimously confirmed by the US Senate, Mr. Cohen was sworn in as Under Secretary for Science & Technology at the Department of Homeland Security on August 10, 2006. Mr. Cohen resigned from his position as Under Secretary for Science & Technology at the Department of Homeland Security on January 20, 2009. Since leaving government, Rear Admiral Cohen is now a principal in The Chertoff Group, and the - 37 -
CEO of JayMCohen LLC, which is an independent consultant for science and technology in support of domestic and international defense, homeland security and energy issues and solutions.
Dr. Erik G. Mettala: Dr. Erik G. Mettala serves as the Cyber Chief Scientist in Battelle Memorial Institutes National Security Global Business since April 2011, and is responsible for strategic research and development planning, and research and development for Battelles Cyber Innovation Unit. Prior to joining Battelle, he was the Chief Scientist in SPARTAs National Security Systems Sector in Columbia, MD, responsible for the strategic technology planning and research for SPARTAs intelligence, computer network operations, and information assurance business areas from April 2005 to June 2007. Dr. Mettala led McAfee Research from April 2003 to April 2005, which was acquired by SPARTA in April, 2005. As the Vice President and Director of McAfee Research in Rockville, MD, he managed the strategic technology research for McAfee, including R&D business development and laboratory efforts in Rockville, MD; Herndon, VA; Los Angeles, CA; and Santa Clara, CA. Under his direction, McAfee Research focused on high risk research addressing the needs of McAfee product lines including anti-virus, anti-spam, host-based and network-based intrusion prevention, and in cooperation with U.S. Government agencies, directed the development of solutions to many of the pressing and difficult problems in information assurance, intrusion prevention, remediation, and network security. In June of 2012 Dr. Mettala was inducted into the Information Systems Security Association (ISSA) International Hall of Fame.
Mr. Thomas N. Trkla: Mr. Trkla founded Brookwood and its affiliated companies in late 1992. In his capacity as Chairman and Chief Executive Officer, he directs all aspects of Brookwood's businesses including managing Brookwood's operations, formulating and implementing Brookwood's investment and disposition strategies and evaluating, structuring and capitalizing the Company's real estate and private corporate investments. Prior to founding Brookwood, Mr. Trkla was a senior executive with Winthrop Securities Co., Inc, a wholly-owned subsidiary of Winthrop Financial Associates, a Boston-based real estate investment and management firm, which at the time, was one of the largest privately-held real estate investment firms in the United States. Before Winthrop, Mr. Trkla was a Vice President at The Boston Company Real Estate Counsel, Inc., one of the first real estate investment advisors to large public and private tax-exempt pension plan sponsors in the U.S. Mr. Trkla serves as director of the Massachusetts Campaign for Children, a non-profit statewide child advocacy organization, Director of the Princeton Association of New England (PANE) and is a member of the Urban Land Institute where he currently serves on the Small Scale Development Council  Silver Flight.
Mr. Trkla is a frequent speaker on trends in the United States commercial real estate markets and on core, value-added and opportunistic investment strategies. In the past several years, he has spoken at the Urban Land Institute spring and fall meetings, at the 2010 Andes Investment Summit in Bogota, Colombia, the National Conference of State Tax Judges, the New York State Society of CPAs and the 2010 and 2011 Real Estate Symposia presented by Northern Trust and RSM McGladrey. Mr. Trkla is a 1981 graduate of Princeton University and in 1984 received a Master of Management degree from the J.L. Kellogg Graduate School of Management at Northwestern University. In 2004, Mr. Trkla completed the Oxford Strategic Leadership Programme at the University of Oxford's Saïd Business School. Mr. Trkla is currently reading for his Doctor of Philosophy degree (DPhil) at Kellogg College at the University of Oxford. Matthew Johnson: A 16-year veteran of the United States Air Force Office of Special Investigations, - 38 -
Matthew Johnson has 15 years of experience working for the Department of Defense and Intelligence Community. A recognized Subject Matter Expert in the areas of Computer Network Attack, Computer Network Defense, Mission Assurance, Secure-Computing, Cryptoanalysis Reverse-Engineering, and related-accreditation and testing, Mr. Johnson supports several technical investment review boards for the Federally Funded Research and Development Centers, and University Applied Research Centers. In these efforts Mr. Johnson advises on technology investments, development timelines, and fielding Concepts of Operations to the intended user communities. In addition to a B.S. in Statistical Sciences from the Air Force Academy in Colorado Springs, CO. and a M.S. in Information Assurance from Norwich University in Northfield, VT., Mr. Johnson holds numerous cyber-related certifications and has held a TS/SCI clearance with Counterintelligence polygraph since 1998. Family Relationships None.
To the best of its knowledge, the Companys directors and executive officers were not involved in any legal proceedings during the last ten years as described in Item 401(f) of Regulation S-K.
None of the Companys executive officers or directors is a director of any company with a class of equity securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of the Exchange Act or any company registered as an investment company under the Investment Company Act of 1940.
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company's officers and directors, and persons who own more than ten percent of a registered class of the Company's equity securities, to file reports of ownership of Form 3 and changes in ownership on Form 4 or Form 5 with the Securities and Exchange Commission. Such officers, directors and 10% stockholders are also required by SEC rules to furnish the Company with copies of all Section 16(a) forms they file. Based solely on its review of the copies of such forms received by it, the Company believes that, during the fiscal year ended March 31, 2013, all Section 16(a) filing requirements applicable to its officers, directors and 10% stockholders were satisfied. Code of Ethics
The Company has adopted a code of ethics, as required by the rules of the SEC, a copy of the Companys code of ethics was filed as Exhibit 14.1 to Form 10-K for the fiscal year ended March 31, 2010 filed with the Securities and Exchange Commission on July 13, 2010 and is hereby incorporated by reference. The code of ethics applies to all of the Companys senior financial officers. The code of ethics, and any amendments to, or waivers from, the code of ethics, is available in print, at no charge, to any stockholder who requests such information.
sets forth, for the years indicated, all compensation paid, distributed or accrued for services, including salary and bonus amounts, rendered in all capacities by the Companys chief executive officer
and all other executive officers who received or are entitled to receive remuneration in excess of $100,000 during the stated periods.
Brad Lever, CEO, President 2013
Gabriel Rosu,
$23,076.67
$5521.82
-- $23,076.67
$101,321.86
$96,977.10
There were no options granted to any of the named executive officers during the fiscal year ended March 31, 2013. Equity Compensation Plan Information As disclosed on Form 8-K filed with the Securities and Exchange Commission on April 20, 2011, on April 12, 2011, subject to shareholder approval, the Board of Directors of eCrypt Technologies, Inc. (the Company) approved the adoption of the eCrypt Technologies, Inc. Stock Compensation Program (the Program) under which 13,500,000 shares have been reserved for purposes of possible future issuance of incentive stock options, non-qualified stock options, and restricted stock grants to employees, directors and certain key individuals. On April 15, 2011, pursuant to a written consent in lieu of a meeting, a majority of the Companys shareholders approved the Program. The purpose of the Program is to attract and retain key employees, consultants and other persons, and to provide such key individuals with an additional incentive to contribute to the success of the Company. In order to maintain flexibility in the award of stock benefits, the Program constitutes a single omnibus plan, but is composed of three parts. The first part is the Incentive Stock Option Plan (Incentive Option Plan) which provides grants of incentive stock options under Section 422A of the Internal Revenue Code of 1986, as amended. The second part is the Nonqualified Stock Option Plan (Nonqualified Option Plan) which provides grants of nonqualified stock options. The third part is the Restricted Shares Plan (Restricted Plan) which provides grants of restricted shares of Company - 40 -
common stock. The Incentive Option Plan, the Nonqualified Option Plan and the Restricted Plan respectively comprise Plan I, Plan II, and Plan III of the Program. The foregoing description of the Program is qualified in its entirety by reference to the eCrypt Technologies, Inc. Stock Compensation Program which was filed as Exhibit 10.9 to Form 8-K filed with the Securities and Exchange Commission on April 20, 2011 and is hereby incorporated by reference.
As disclosed on Forms 8-K filed with the SEC on May 27, 2010 and July 9, 2013, on May 26, 2010 and July 5, 2013, the Company entered into and subsequently amended a Consulting Agreement (the Consulting Agreement) with Gabriel Rosu setting forth the terms and conditions under which Mr. Rosu serves as the Chief Technology Officer of the Company. The Consulting Agreement is for one year terms. The current term of the Consulting Agreement commenced effective April 15, 2012 and continues until April 14, 2014. .
Pursuant to the terms and conditions of the Consulting Agreement and the Amendement, Mr. Rosu serves as the Chief Technology Officer of the Company. Mr. Rosus primary duties include overseeing all product development of the Companys products, database development for the Company, and website development for the Company. As consideration for his services as the Chief Technology Officer, Mr. Rosu receives US$60 per hour for time that he works for the Company. The Consulting Agreement may be terminated at any time in the Companys sole and absolute discretion. In conjunction with the entry into the Consulting Agreement, Mr. Rosu entered into a Confidentiality, Non-Solicitation and Invention Assignment Agreement as an exhibit to the Consulting Agreement for purposes of protecting the Companys intellectual property.
The foregoing description of the Consulting Agreement, the amendment thereto and the accompanying exhibits does not purport to be complete and is qualified in its entirety by reference to the complete text of the Consulting Agreement and accompanying exhibits, which were filed as Exhibit 10.6 to the Companys current report on Form 8-K with the SEC on May 27, 2010, and Exhibit 10.10 to the Companys current report on Form 8-K with the SEC on July 9, 2013. Director Compensation
The following table provides summary information concerning compensation awarded to, earned by, or paid to any of our directors for all services rendered to the Company in all capacities for the fiscal year ended March 31, 2013. Change in
$8,250 (1)
Thmas Trkla
$11,789 (2)
As disclosed on Form 8-K filed with the Securities and Exchange Commission on July 11, 2011, on July 5, 2011, the Board of Directors of eCrypt Technologies, Inc, appointed Dr. Erik G. Mettala to serve as a director of the the Company. In conjunction with the Companys appointment of Dr. Mettala, the Company entered into a Director Agreement and a Restricted Shares Agreement which is Exhibit A to the Director Agreement, pursuant to which the Company granted Dr. Mettala 150,000 shares of restricted common stock of the Registrant. The foregoing description of the Director Agreement and Restricted Shares Agreement is qualified in its entirety by reference to the Director Agreement and Restricted Shares Agreement attached as Exhibit 10.8 to the Companys report on Form 8-K filed with the Securities and Exchange Commission on July 11, 2011.
As disclosed on Form 8-K filed with the Securities and Exchange Commission on September 27, 2012, on September 14, 2012 the Board of Directors of eCrypt Technologies, Inc, appointed Matthew Johnson to serve as a director of the the Company. In conjunction with the Companys appointment of Mr. Johnson, the Company entered into a Director Agreement and a Restricted Shares Agreement which is Exhibit A to the Director Agreement, pursuant to which the Company granted Mr. Johnson 150,000 shares of restricted common stock of the Registrant. The foregoing description of the Director Agreement and Restricted Shares Agreement is qualified in its entirety by reference to the Director Agreement and Restricted Shares Agreement attached as Exhibit 10.8 to the Companys report on Form 8-K filed with the Securities and Exchange Commission on September 27, 2012.
As disclosed on Form 8-K filed with the Securities and Exchange Commission on April 20, 2011, on April 12, 2011, subject to shareholder approval, the Board of Directors of eCrypt Technologies, Inc. (the Company) approved the adoption of the eCrypt Technologies, Inc. Stock Compensation Program (the Program) under which 13,500,000 shares have been reserved for purposes of possible future issuance of incentive stock options, non-qualified stock options, and restricted stock grants to employees, directors and certain key individuals. On April 15, 2011, pursuant to a written consent in lieu of a meeting, a majority of the Companys shareholders approved the Program. The purpose of the Program is to attract and retain key employees, consultants and other persons, and to provide such key individuals with an additional incentive to contribute to the success of the Company. In order to maintain flexibility in the award of stock benefits, the Program constitutes a single omnibus plan, but is composed of three parts. The first part is the Incentive Stock Option Plan (Incentive Option Plan) which provides grants of incentive stock options under Section 422A of the Internal Revenue Code of 1986, as amended. The second part is the Nonqualified Stock Option Plan (Nonqualified Option Plan) which provides grants of nonqualified stock options. The third part is the Restricted Shares Plan (Restricted Plan) which provides grants of restricted shares of Company common stock. The Incentive Option Plan, the Nonqualified Option Plan and the Restricted Plan respectively comprise Plan I, Plan II, and Plan III of the Program. The foregoing description of the Program is qualified in its entirety by reference to the eCrypt Technologies, Inc. Stock Compensation Program which was filed as Exhibit 10.9 to Form 8-K filed with the Securities and Exchange Commission on April 20, 2011. The chart below identifies information with respect to the Stock Compensation Plan:
Number of securities remaining available for future issuances under equity compensation plans (excluding securities reflected in column) Plan category
The following table sets forth, as of July 12, 2013, the ownership of each person known by the Company to be a beneficial owner of 5% or more of its common stock. Except as otherwise noted, each person listed below is a sole beneficial owner of the shares and has sole investment and voting power as to such shares. No person listed below has any options, warrants or other right to acquire additional securities of the Registrant except as may be otherwise noted.
Global Capital Partners, LLC
16,040,455
Common Kasia Zukowska
2129 - 4951 Netarts Hwy W
The following table sets forth, as of July 12, 2013, the ownership of each executive officer and director of the Company, and of all executive officers and directors of the Registrant as a group. Except as otherwise noted, each person listed below is a sole beneficial owner of the shares and has sole investment and voting power - 43 -
as to such shares. No person listed below has any options, warrants or other right to acquire additional securities of the Company except as may be otherwise noted.
Brad Lever(1)
2129-4951 Netarts Hwy W
Tillamook, OR 97141 32,000,000
23.562%
Gabriel Rosu(1)
Curt Weldon(1) 2129-4951 Netarts Hwy W
Jay Cohen(1) 2129-4951 Netarts Hwy W
Tillamook, OR 97141 150,000(3)
Erik Mettala(1)
Thomas N. Trkla(1)
All Directors and Officers as a Group (7 in total)
31.919%
On February 9, 2011, the Curt Weldon was granted 1,000,000 restricted stock shares, of which 250,000 were vested upon grant and 750,000 will vest in three, four month installments, beginning on June 9, 2011, four months after the date of grant, and ending February 9, 2012. (3)
On February 15, 2011, Jay Cohen was granted 150,000 restricted stock shares, of which 37,500 were vested upon grant and 112,500 will vest in three, four month installments, beginning on June 15, 2011, four months after the date of grant, and ending February 15, 2012.
On July 8, 2011, Erik Mettala was granted 150,000 restricted stock shares, of which 37,500 were vested upon grant and 112,500 will vest in three, four month installments, beginning on November 8, 2011, four months after the date of grant, and ending July 8, 2012. (5)
On February 15, 2012, Mr. Trkla was granted the option to purchase up to 300,000 shares of restricted common stock of the Company at the exercise price of $0.30 per Share.
On September 25, 2012, Matthew Johnson was granted 150,000 restricted stock shares, of which 37,500 were vested upon grant and 112,500 will vest in three, four month installments, beginning on January 25, 2012, four months after the date of grant, and ending September 25, 2013. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
During the months of October 2009 through March 2010, the Company received a $75,000 advance from a related party. The advance is non-interest bearing and due in six months. As of March 31, 2010, the advance has been paid back in full.
During the month of January 2011, the Company received a $100,000 advance from a related party. The advance was unsecured, non-interest bearing and due in six months. On June 24, 2011 the loan was modified to bear interest at 10%, compounded annually, and extended to mature in two years on June 24, 2013.
On May 18, 2010, the Company issued a $215,000 unsecured note payable to a shareholder. The note bears interest at 10%, compounded annually, matures in two years on May 18, 2012.
On April 29, 2011 the Company issued $15,000 unsecured note payable to a shareholder. The note bears interest at 10%, compounded annually, matures in two years on April 29, 2013. On May 9, 2011 the Company issued a $36,000 unsecured note payable to a shareholder. The note bears interest at 10%, compounded annually, matures in two years on May 9, 2013. On July 7, 2011 the Company issued a $40,000 unsecured note payable to a shareholder. The note bears interest at 10%, compounded annually, matures in two years on July 7, 2013. On August 5, 2011 the Company issued $24,000 unsecured note payable to a shareholder. The note bears interest at 10%, compounded annually, matures in two years on August 5, 2013. On September 2, 2011 the Company issued a $20,000 unsecured note payable to a shareholder. The note bears interest at 10%, compounded annually, matures in two years on September 2, 2013. On September 30, 2011 the Company issued a $20,000 unsecured note payable to a shareholder. The note bears interest at 10%, compounded annually, matures in two years on September 30, 2013. On October 19, 2011 the Company issued a $25,000 unsecured note payable to a shareholder. The note bears interest at 10%, compounded annually, matures in two years on October 19, 2013. On December 6, 2011 the Company issued a $20,000 unsecured note payable to a shareholder. The note bears interest at 10%, compounded annually, matures in two years on December 6, 2013. On January 11, 2012 the Company issued a $38,000 unsecured note payable to a shareholder. The note bears interest at 10%, compounded annually, matures in two years on January 11, 2014.
Except for the foregoing, there were no material transactions, or series of similar transactions, during our Companys last fiscal year, or any currently proposed transactions, or series of similar transactions, to which - 45 -
our Company was or is to be a party, in which the amount involved exceeded the lesser of $120,000 or one percent of the average of the small business issuers total assets at year-end for the last three completed fiscal years and in which any director, executive officer or any security holder who is known to us to own of record or beneficially more than five percent of any class of our common stock, or any member of the immediate family of any of the foregoing persons, had an interest.
is a family member of an individual who is employed as an executive officer by the company or any parent or subsidiary of the company; 4.
is employed, or who has a family member who is employed, as an executive officer of another company whose compensation committee includes any executive officer of the listed company; or is, or has a family member who is, a current partner of the companys outside auditor, or was a partner or employee of the companys outside auditor who worked on the companys audit.
Based upon the foregoing criteria, our Board of Directors has determined that Brad Lever is not an independent director under these rules as he is also employed by the Company as its Chief Executive Officer, Chief Financial Officer, and President.
The aggregate fees billed by De Joya Griffith & Company, LLC, for audit of the Company's annual and interim financial statements were $ 20,000 for the fiscal year ended March 31, 2013, and $ 20,200 for the fiscal year ended March 31, 2012.
Audit Related Fees (2) De Joya Griffith & Company, LLC did not bill the Company any amounts for assurance and related services that were related to its audit or review of the Companys financial statements during the fiscal years ended 2013 and 2012.
The aggregate fees billed by De Joya Griffith & Company, LLC for tax compliance, advice and planning were $0.00 for the fiscal year ended March 31, 2013 and 2012.
(4) De Joya Griffith & Company, LLC did not bill the Company for any products and services other than the foregoing during the fiscal years ended 2013 and 2012.
(5) The Company does not have an audit committee per se. The current board of directors functions as the audit committee. - 47 -
Audited Financial Statements for Fiscal Years Ended March 31, 2013 and 2012.
Articles of Incorporation of eCrypt Technologies, Inc., filed as exhibit to Form 10 filed with the Securities and Exchange Commission on November 11, 2008.
Bylaws of eCrypt Technologies, Inc., filed as exhibit to Form 10 filed with the Securities and Exchange Commission on November 11, 2008.
OEM License Agreement, dated January 31, 2008 by and between Certicom Corp. and eCrypt Technologies, Inc., filed as exhibit to Form 10 filed with the Securities and Exchange Commission on November 11, 2008.
BlackBerry® Alliance Program  Master Alliance Agreement, dated April 2, 2008 by and between Research in Motion Limited and eCrypt Technologies, Inc., filed as exhibit to Form 10 filed with the Securities and Exchange Commission on November 11, 2008.
Software Development Partnership Agreement, dated April 23, 2007 by and between eCrypt Technologies, Inc. and Gabi Rosu., filed as exhibit to Form 10 filed with the Securities and Exchange Commission on November 11, 2008.
Commodity Classification Document., filed as exhibit to Form 10 filed with the Securities and Exchange Commission on November 11, 2008, filed as exhibit to Form 10 filed with the Securities and Exchange Commission on November 11, 2008.
Consulting Agreement and accompanying exhibits dated May 26, 2010 by and between eCrypt Technologies, Inc. and Gabriel Rosu, filed as Exhibit 10.6 to Form 8-K filed with the Securities and Exchange Commission on May 27, 2010.
Director Agreement and Restricted Shares Agreement dated February 15, 2011 by and between eCrypt Technologies, Inc. and Curt Weldon, filed as Exhibit 10.7 to Form 8-K filed with the Securities and Exchange Commission on Februay 9, 2011.
Director Agreement and Restricted Shares Agreement dated February 15, 2011 by and between eCrypt Technologies, Inc. and Jay Cohen, filed as Exhibit 10.8 to Form 8-K filed with the Securities and Exchange Commission on Februay 15, 2011.
eCrypt Technologies, Inc. Stock Compensation Program, filed as Exhibit 10.9 to Form 8-K filed with the Securities and Exchange Commission on April 20, 2011.
Director Agreement and Nonqualified Stock Option Agreement dated February 16, 2012 by and between eCrypt Technologies, Inc. and Thomas Trkla.
Amended Consulting Agreement and accompanying exhibit dated July 5, 2013, effective June 1, 2012, by and between eCrypt Technologies, Inc. and Gabriel Rosu.
Code of Ethics filed as Exhibit 14.1 to Form 10-K filed with the Securities and Exchange Commission on July 13, 2010.
SCH XBRL Schema Document.*
INS XBRL Instance Document.*
CAL XBRL Taxonomy Extension Calculation Linkbase Document.*
LAB XBRL Taxonomy Extension Label Linkbase Document.*
PRE XBRL Taxonomy Extension Presentation Linkbase Document.*
DEF XBRL Taxonomy Extension Definition Linkbase Document.*
Brad Lever, Chief Executive Officer, Chief Financial Officer, Director
By: /S/ Jay Cohen
Jay Cohen, Director
By: /S/ Erik Mettala
Erik Mettala, Director
By: /S/ Tom Trkla
Tom Trkla, Director
By: /S/ Matt Johnson
By: /S/ Curt Weldon
Curt Weldon, Chairman
eCrypt Technologies, Inc. Reports