Attached files
file | filename |
---|---|
EX-31.1 - Ecologix Resource Group, Inc. | v185499_ex31-1.htm |
EX-32.1 - Ecologix Resource Group, Inc. | v185499_ex32-1.htm |
United
States
Securities
and Exchange Commission
Washington,
D.C. 20549
Form
10-K
o
|
ANNUAL
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934:
For
the fiscal year ending December 31, 2009
|
o
|
TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934:
For
the transition period from ___________ to
___________.
|
Commission file number:
333-148664
Ecologix
Resource Group. Inc.
(Name of
small business issuer in its charter)
Delaware
|
98-0533882
|
(State
or other jurisdiction of
incorporation
or organization)
|
(I.R.S.
Employer
Identification
No.)
|
9903
Santa Monica Blvd.
Suite
918
Beverly
Hills, CA. 90212
Issuer’s
telephone number: 888-564-4974
Securities
registered under Section 12(b) of the “Exchange Act”
Common Shares, Par Value,
$.0001
(Title of
each Class)
Securities
registered pursuant to Section 12(g) of the Act: None
Indicate
by check mark if the Registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.
o Yes
x No
Indicate
by check mark if the Registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Act.
o Yes
x No
Indicate
by check mark whether the Registrant (1) filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
x Yes
o No
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§229.405 of this chapter) is not contained herein, and will not
be contained, to the best of Registrants’ 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.
o Yes
o No
Indicate
by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See definitions of “large accelerated filer,” “accelerated
filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
(Check one):
Large
accelerated filer
|
o
|
Accelerated
Filer
|
o
|
|
Non-accelerated
filer
|
o
|
Smaller
reporting company
|
x
|
(Do not
check if a smaller reporting company)
Indicate
by check mark whether the Registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
o Yes
x No
The
aggregate market value of the voting stock held by non-affiliates of the
Registrant was approximately $2,644,200 as of May 17, 2010, based on a market
price of $.0068 per share. For purposes of the foregoing computation,
all executive officers, Directors and 5% beneficial owners of the registrant are
deemed to be affiliates. Such determination should not be deemed to
be an admission that such executive officers, Directors or 5% beneficial owners
are, in fact, affiliates of the Registrant.
Indicate
the number of shares outstanding of each of the Registrant’s classes of common
stock, as of the latest practicable date.
The
number of shares of Common Stock outstanding, as of May 17, 2010
was: 512,000,000.
DOCUMENTS
INCORPORATED BY REFERENCE
List
hereunder the following documents if incorporated by reference and the Part of
the Form 10-K (e.g., Part 1, Part II, etc.) into which the document is
incorporated: (1) Any annual report to security holders; (2) Any proxy or
information statement; (3) Any prospectus filed pursuant to Rule 424(b) or (c)
under the Securities Act of 1933. The listed documents should be
clearly described for identification purposes (e.g., annual report to security
holders for the fiscal year December 24, 1980).
None
Ecologix
Resource Group. Inc.
ANNUAL
REPORT ON FORM 10-K
For
Fiscal Year Ended December 31, 2009
INDEX
Page
No
|
|||
PART
I
|
1
|
||
ITEM
1.
|
Description
of Business
|
1
|
|
ITEM
2.
|
Description
of Property
|
4
|
|
ITEM
3.
|
Legal
Proceedings
|
5
|
|
ITEM
4.
|
(Removed
and reserves)
|
5
|
|
PART
II
|
6
|
||
ITEM
5.
|
Market
for Common Equity and Related Stockholder Matters and Issuer Purchase of
Equity Securities
|
6
|
|
ITEM
6.
|
Selected
Financial Data
|
8
|
|
ITEM
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
8
|
|
ITEM
7A.
|
Quantitative
and Qualitative Disclosures About Market Risk.
|
10
|
|
ITEM
8.
|
Financial
Statement and Supplementary Data
|
10
|
|
ITEM
9.
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
|
10
|
|
ITEM
9A.
|
Controls
and Procedures
|
11
|
|
ITEM
9B.
|
Other
Information
|
12
|
|
PART
III
|
12
|
||
ITEM
10.
|
Directors,
Executive Officers and Corporate Governance
|
12
|
|
ITEM
11.
|
Executive
Compensation
|
13
|
|
ITEM
12.
|
Security
Ownership of Certain Beneficial Owners and Management
|
13
|
|
ITEM
13.
|
Certain
Relationships and Related Transactions
|
14
|
|
ITEM
14.
|
Principal
Accounting Fees and Services
|
14
|
|
ITEM
15.
|
Exhibits,
Financial Statement Schedules
|
15
|
|
Signatures
|
16
|
i
Ecologix
Resource Group. Inc.
Part
I
USE OF
NAMES
In this
annual report, the terms “Ecologix Resource Group. Inc.”, “Company”, “we”, or
“our”, unless the context otherwise requires, mean Ecologix Resource Group,
Inc.
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This
annual report on Form 10-KSB and other reports that we file with the SEC contain
statements that are considered forward-looking
statements. Forward-looking statements give the Company’s current
expectations, plans, objectives, assumptions or forecasts of future events. All
statements other than statements of current or historical fact contained in this
annual report, including statements regarding the Company’s future financial
position, business strategy, budgets, projected costs and plans and objectives
of management for future operations, are forward-looking statements. In some
cases, you can identify forward-looking statements by terminology such as
“anticipate,” “estimate,” “plans,” “potential,” “projects,” “ongoing,”
“expects,” “management believes,” “we believe,” “we intend,” and similar
expressions. These statements are based on the Company’s current plans and are
subject to risks and uncertainties, and as such the Company’s actual future
activities and results of operations may be materially different from those set
forth in the forward looking statements. Any or all of the forward-looking
statements in this annual report may turn out to be inaccurate and as such, you
should not place undue reliance on these forward-looking
statements. The Company has based these forward-looking statements
largely on its current expectations and projections about future events and
financial trends that it believes may affect its financial condition, results of
operations, business strategy and financial needs. The forward-looking
statements can be affected by inaccurate assumptions or by known or unknown
risks, uncertainties and assumptions due to a number of factors,
including:
·
|
Dependence
on key personnel;
|
·
|
Competitive
factors;
|
·
|
Degree
of success of research and development
programs
|
·
|
The
operation of our business; and
|
·
|
General
economic conditions in the United States, Europe, Africa and
Asia.
|
These
forward-looking statements speak only as of the date on which they are made, and
except to the extent required by federal securities laws, we undertake no
obligation to update any forward-looking statements to reflect events or
circumstances after the date on which the statement is made or to reflect the
occurrence of unanticipated events. In addition, we cannot assess the impact of
each factor on our business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those contained in
any forward-looking statements. All subsequent written and oral forward-looking
statements attributable to the Company or persons acting on its behalf are
expressly qualified in their entirety by the cautionary statements contained in
this annual report.
ABOUT
OUR COMPANY
Ecologix
Resource Group, Inc. (OTCBB:
EXRG) is a natural resource company focused on the harvesting, and
marketing of high quality timber while pursuing the production of alternative
energy solutions. The Company manages a tropical hardwood forest in the Republic
of Cameroon in Central Africa. The Company harvests a variety of species of
hardwood. Ecologix works with the local governments to develop harvesting
standards that are environmentally friendly and will not impact the Company’s
production or increase global warming. Additionally, the Company intends to
produce alternative energy such as ethanol and biodiesel.
1
The
Company was formerly known as Battery Control Corp. and changed its name to
Ecologix Resource Group, Inc. on July 14, 2009. Ecologix Resource Group was
founded in 2007 and is based in Beverly Hills, California. Due to the
overwhelming opportunities regarding our timber business, the Company has
decided hat it is necessary to apply all personnel, finances and other resources
towards the timber operations and discontinue the patented pending technology of
Battery Control Corp.
Ecologix
has successfully partnered with the local tribe council and the central
government of Cameroon to acquire concessions that contain among the richest
types of hardwood in the world.
Ecologix
has secured the rights to 50,000 hectares (124,552 acres) of rainforest in the Massaka / Desoni
region. This area is 325 KM Southeast of Yaoundé, Cameroon. Massaka is a unique
opportunity for Ecologix. While it is a valuable concession for the harvesting
of timber, the land can also be easily converted for the responsible production
of ethanol and biodiesel by creating a biofuel farm. Cameroon has the third
largest biomass potential in Sub Saharan Africa.
Ecologix
is equipped to supply timber to the local market and export products
internationally. Ecologix is working closely with the local and national
governments and hire our management in the areas where we lease the land. Our
timber production standards will provide a global acceptance of environmentally
friendly harvesting practices that will not impact a company's ability to
operate and grow profits or increase the threat of global warming through the
destruction of rainforests around the world.
The
Company’s vision is to become a leading natural resource company in Central
Africa by establishing key infrastructure and workforce development that will
help facilitate the economic development and quality of life of each respective
host country.
We were
incorporated in Delaware on November 7, 2007. On November 19, 2007, the Company
entered into an exclusive worldwide patent sale agreement (the "Patent Transfer
and Sale Agreement ") with Mr. Moshe Averbuch, the original inventor, in
relation to a patent-pending technology (Patent Application Number:
10/707,521).
With the
Company’s implementation and now development of its timber operations in Central
Africa, it has elected to cease pursuing the Patent pending
technology.
From the
Company’s initial procurement of contractual rights respecting land rich in
tropical hardwoods and other natural resources in Central Africa, the Company
has continued to develop its timber business in Cameroon. Operating
through its subsidiary Ecologix Cameroon, the Company has been utilizing leased
land for its timber production. The Company is in the process of acquiring
its own leasehold from the Government on other timberland, and intends in the
near future to undertake its operations on land for which it previously procured
contractual rights. These steps, together with employment of
additional equipment to lower costs of production and transportation, are
expected to allow for continual and rapid growth in revenue, with enhanced
margins.
In
addition to expanding its timber operations in Cameroon, the Company is
exploring initiating operations in other countries. The Company
believes by diversifying geographically, it can accelerate its growth, while
providing the Company with protection against business
interruption.
ABOUT
CAMEROON
Cameroon
has one of the best-endowed primary commodity economies in sub-Saharan Africa.
Still, it faces many of the serious problems facing other underdeveloped
countries, such as stagnating per capita income, a relatively inequitable
distribution of income, a top-heavy civil service, and a generally unfavorable
climate for business enterprise. International oil and cocoa prices have a
significant impact on the economy. Since 1990, the government has embarked on
various IMF and World Bank programs designed to spur business investment,
increase efficiency in agriculture, improve trade, and recapitalize the nation's
banks. The IMF is pressing for more reforms, including increased budget
transparency, privatization, and poverty reduction programs.
The
former French Cameroon and part of British Cameroon merged in 1961 to form the
present country. Cameroon has generally enjoyed stability, which has permitted
the development of agriculture, roads, and railways, as well as a petroleum
industry. Despite a slow movement toward democratic reform, political power
remains firmly in the hands of President Paul Biya.
COMPETITION
The
forest products industry is highly competitive in terms of price and quality.
Wood products are subject to increasing competition from a variety of substitute
products, including non-wood and engineered wood products. In
addition, the
Company is subject to a potential increase in competition from others as
to the forests from which it generates its production and by increased supply in
the domestic and international markets. Any significant increase in competitive
pressures from substitute products or other domestic or foreign producers could
have a material adverse effect on the
Company.
Employees
The
Company as a holding company operates principally through its subsidiary
Ecologix Cameroon. The Company and its subsidiary employ
approximately 35 people.
2
Limited
Operating History
We cannot
guarantee we will be successful in our business operations. Our
business is subject to the risks inherent in the establishment of a new business
enterprise, including limited capital resources and the ability to find and
finance expansion of operations and suitable acquisition
candidates.
We have
no assurance that future financing will be available to the Company on
acceptable terms. If financing is not available on satisfactory
terms, we may be unable to continue, develop or expand our operations and
possibly cease operations totally. Equity financing could result in
additional dilution to shareholders.
Currency
Fluctuations/Inflation
As the
Company’s principal operations are in the Republic of Cameroon and sales are
anticipated in Europe and Asia, the effect of currency fluctuations could affect
the Company’s results of operations. The Company does not presently
hedge its currency.
The
amounts presented in the financial statements do not provide for the effect of
inflation on the Company’s operations or its financial
position. Amounts shown for machinery, equipment and leasehold
improvements and for costs and expenses reflect historical cost and do not
necessarily represent replacement cost.
Provision
for Income Taxes
The
Company has determined that it will more likely than not use any tax net
operating loss carry forward in the current tax year and therefore has taken a
valuation amount equal to 100% of any asset.
Item
1A. Risk Factors
The
Company is subject to a number of factors that could materially affect its
performance. Each of these factors should be carefully
evaluated. These factors include:
Business
and Operating Risks
THE
CYCLICAL NATURE OF OUR BUSINESS COULD ADVERSELY AFFECT OUR RESULTS OF
OPERATIONS
Our
results of operations are affected by the cyclical nature of the economy and the
forest products industry. These activities are, in turn, subject to fluctuations
due to, among other factors:
·
|
Changes
in domestic and international economic
conditions;
|
·
|
Interest
rates;
|
·
|
Population
growth and changing demographics;
|
·
|
Seasonal
weather cycles (e.g., dry summers, wet
winters).
|
Timber
owners generally increase production volumes for logs and wood products during
favorable price environments. Such increased production, however, when coupled
with even modest declines in demand for these products in general, could lead to
oversupply and lower prices.
3
Our
results of operations may also be subject to global economic changes as global
supplies of wood fiber and wood products shift in response to changing economic
conditions. Changes in global economic conditions that could affect our results
of operations include, but are not limited to, new timber supply sources and
changes in currency exchange rates, foreign and domestic interest rates and
foreign and domestic trade policies. In particular, the recent turmoil in the
financial markets and the limited availability of credit is having a negative
financial impact on our customers and their ability to buy our logs and
manufactured forest products.
·
|
General
economic conditions;
|
·
|
Weather
conditions or natural disasters having an adverse effect on our
properties;
|
·
|
Changes
in interest rates;
|
·
|
Impact
of federal, state and local land use and environmental protection
laws;
|
·
|
Our
ability to obtain all land use entitlements and other permits necessary
for our development activities;
|
OUR
ABILITY TO HARVEST TIMBER MAY BE SUBJECT TO LIMITATIONS WHICH COULD ADVERSELY
AFFECT OUR OPERATIONS
Weather
conditions, timber growth cycles, access limitations, availability of contract loggers, and
regulatory requirements associated with the protection of wildlife and water
resources may restrict harvesting of timberlands as may other factors, including
damage by fire, insect infestation, disease, prolonged drought, flooding and
other natural disasters. Changes in global climate conditions could intensify
one or more of these factors. Although damage from such natural causes usually
is localized and affects only a limited percentage of the timber, there can be
no assurance that any damage affecting our timberlands will in fact be so
limited. As is common in the forest products industry, we do not maintain
insurance coverage with respect to damage to our timberlands.
CHANGES
IN TRANSPORTATION AVAILABILITY OR COSTS
Our
business depends on the availability of providers of transportation of wood
products, and is materially affected by the cost of these service providers.
Therefore, an increase in the cost of fuel could negatively impact our financial
results by increasing the cost associated with logging activities and
transportation services, and could also result in an overall reduction in the
availability of these services
Item
1B. Unresolved Staff Comments.
As a
smaller reporting company we are not required to provide the information
required by this item.
Item
2. Properties
The
Company has its mailing address at 9903 Santa Monica Blvd., Suite 918, Beverly
Hills, CA 90212.
The
Company’s subsidiary has an office in Cameroon (Africa).
4
Ecologix
Cameroon has contractual and leasehold rights to continue the development of its
timber operations. The Company believes that it has laid the
foundation for continued access to additional lands in Cameroon and elsewhere to
permit the ongoing expansion of its operations.
Ecologix
has secured the rights to 50,000 hectares (124,552 acres) of rainforest in the
Massaka / Desoni region. This area is 325 KM Southeast of Yaoundé. Massaka is a
unique opportunity for ECOLOGIX. While it is a valuable concession for the
harvesting of timber, the land can also be easily converted for the responsible
production of ethanol and biodiesel by creating a biofuel farm. Cameroon has the
third largest biomass potential in Sub Saharan Africa.
There is
no past, pending or, to our knowledge, threatened litigation or administrative
action which has or is expected by our management to have a material effect upon
our business, financial condition or operations, including any litigation or
action involving our officer, director or other key personnel.
5
PART
II
The
Company’s Common Stock is listed on the Over the Counter Bulletin
Board. From June 27, 2008 until July 13, 2009 the shares of common
stock traded under the symbol “BATY”. From July 14, 2009 the shares
of common stock trade under the symbol “EXRG.”
The
following chart lists the high and low closing bid prices for shares of the
Company’s Common Stock for each quarterly period within the last two fiscal
years. These prices are between dealers and do not include retail
markups, markdowns or other fee and commissions, and may not represent actual
transactions.
Fiscal
Year 2009:
|
High
Bid
|
Low
Bid
|
High
Ask
|
Low
Ask
|
||||||||||||
First
Quarter (1)
|
- 0 - | - 0 - | - 0 - | - 0 - | ||||||||||||
Second
Quarter
|
0.94 | 0.05 | 0.99 | 0.6 | ||||||||||||
Third
Quarter
|
0.93 | 0.1 | 1.03 | 0.52 | ||||||||||||
Fourth
Quarter
|
0.51 | - 0 - | 0.55 | - 0 - |
1 Taking
into effect a stock dividend of 2 for 1 on March 17, 2009
Fiscal
Year 2008:
|
High
Bid
|
Low
Bid
|
High
Ask
|
Low
Ask
|
||||||||||||
First
Quarter
|
- 0 - | - 0 - | - 0 - | - 0 - | ||||||||||||
Second
Quarter
|
1.01 | - 0 - | 1.10 | - 0 - | ||||||||||||
Third
Quarter
|
0.93 | 0.1 | 1.03 | 0.52 | ||||||||||||
Fourth
Quarter (2)
|
0.51 | - 0- | 0.55 | - 0- |
2 Taking
into effect a stock dividend of 5 for 1 on December 3, 2009
Dividend
Policy:
The
Company has never declared or paid cash dividends on its common stock and
anticipate that all future earnings will be retained for development of its
business. The payment of any future dividends will be at the
discretion of the Board of Directors and will depend upon, among other things,
future earnings, capital requirements, the financial condition of the Company
and general business conditions.
Securities
authorized for issuance under equity compensation plans
None
6
General
We are
authorized to issue 2,050,000,000 shares of Common Stock, at a par value $0.0001
per share, consisting of 2,000,000,000 (Two Billion) shares of common stock, par
value of $0.000) and 50,000,000 (Fifty Million) shares of preferred stock, par
value of $0.0001 per shares. As of May 15, 2010, the latest practicable
date, there are 512,000,000 shares of common stock
outstanding.
The
number of record holders of Common Stock as of May 15, 2010 is approximately
380.
Common
Stock
The
holders of Common Stock are entitled to one vote for each share held of record
on all matters to be voted on by stockholders. There is no cumulative
voting with respect to the election of directors, with the result that the
holders of more than 50% of the shares voting for the election of directors can
elect all of the directors then up for election. The holders of
Common Stock are entitled to receive ratably such dividends when, as and if
declared by the Board of Directors out of funds legally available
therefore. In the event we have a liquidation, dissolution or winding
up, the holders of common Stock are entitled to share ratably in all assets
remaining which are available for distribution to them after payment of
liabilities and after provision has been made for each class of stock, if any,
having preference over the common Stock. Holders of shares of Common
Stock, as such, have no conversion, preemptive or other subscription rights, and
there are no redemption provisions applicable to the Common Stock.
Preferred
Stock.
Our certificate of
incorporation authorizes our Board of Directors to issue up to 50,000,000
shares of preferred stock. Upon issuance, our Board of Directors will establish
the preferences and rights for this preferred stock. These preferences and
rights may include the right to elect additional directors. The issuance of
preferred stock could have the effect of delaying or preventing a change in
control of us even if a change in control were in our stockholders’ best
interests
Dividend
Policy
We have
never paid any cash dividends and have no plans to do so in the foreseeable
future. Our future dividend policy will be determined by our Board of Directors
and will depend upon a number of factors, including our financial condition and
performance, our cash needs and expansion plans, income tax consequences and the
restrictions that applicable laws and other arrangements then
impose.
Recent
Sales of Unregistered Securities
During
the fourth quarter for the fiscal year ended December 31, 2009, we have not
issued any unregistered securities.
Liquidation
In the
event of a liquidation of the Company, all stockholders are entitled to a pro
rata distribution after payment of any claims subject to the Certificate of
Designation for the Series B Preferred.
7
Stock
Transfer Agent
We have
engaged Nevada Agency and Trust as our stock transfer agent. Nevada Agency and
Trust is located at 50 West Liberty Street, Reno, Nevada 89501.
As a
smaller reporting company we are not required to provide the information
required by this item.
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operation
Forward-Looking
Information
This
Report contains forward-looking statements within the meaning of the Private
Litigation Reform Act of 1995. Some of the forward-looking statements can be
identified by the use of forward-looking words such as “believes,”“expects,”“may,”“will,”“should,”“seeks,”“approximately,”“intends,”“plans,”“estimates,”“projects,”“strategy,”
or “anticipates,” or
the negative of those words or other comparable terminology. Forward-looking
statements involve inherent risks and uncertainties. A number of important
factors could cause actual results to differ materially from those described in
the forward-looking statements, including those factors described in “Risk Factors”. Some factors
include changes in governmental, legislative and environmental restrictions,
catastrophic losses from fires, floods, windstorms, earthquakes, volcanic
eruptions, insect infestations or diseases, as well as changes in economic
conditions and competition in our domestic and export markets and other factors
described from time to time in our filings with the Securities and Exchange
Commission. In addition, factors that could cause our actual results to differ
from those contemplated by our projected, forecasted, estimated or budgeted
results as reflected in forward-looking statements relating to our operations
and business include, but are not limited to:
·
|
The
failure to meet our expectations with respect to our likely future
performance;
|
·
|
An
unanticipated reduction in the demand for timber products and/or an
unanticipated increase in supply of timber
products;
|
·
|
An
unanticipated reduction in demand for higher and better use timberlands or
non-strategic timberlands
|
It is
likely that if one or more of the risks materializes, or if one or more
assumptions prove to be incorrect, the current expectations of the company and its
management will not be realized.
Certain
statements in this document are forward-looking in nature and relate to trends
and events that may affect the Company’s future financial position and operating
results. The words “expect” “anticipate” and similar words or
expressions are to identify forward-looking statements. These
statements speak only as of the date of the document; those statements are based
on current expectations, are inherently uncertain and should be viewed with
caution. Actual results may differ materially from the
forward-looking statements as a result of many factors, including changes in
economic conditions and other unanticipated events and conditions. It
is not possible to foresee or to identify all such factors. The
Company makes no commitment to update any forward-looking statement or to
disclose any facts, events or circumstances after the date of this document that
may affect the accuracy of any forward-looking statement.
PLAN OF
OPERATIONS
Liquidity,
Capital Resources and Operations:
During
the fiscal year ended December 31, 2009 and fiscal year ended December 31, 2008,
net cash used by operating activities was $1,127,449 and $ 75,098, respectively.
The Company incurred net losses of $ 3,630,262and $80,902 for the fiscal year
ended December 31, 2009 and fiscal year ended December 31, 2008, respectively.
Additionally, at December 31, 2009, the Company had a Stockholders’ (Deficit) of
approximately $2,834,205.
8
Results
of Operations:
For
the fiscal year ended December 31, 2009 versus December 31, 2008
For the
fiscal year ended December 31, 2009, the Company had $128,288 in sales as of
December 31, 2009. The company did not have any sales for the year ended
December 31, 2008
General
and administrative expenses increased by $1,454,184 for the fiscal year ended
December 31, 2009 vs. December 31, 2008. This increase was due to the
increase in professional fees and overall expenses related to the start-up of
the Cameroon subsidiary.
The net
loss increased from $80,902 ($.00 per share) to $3,630,262 ($.01 per share) For
the fiscal year ended December 31, 2009 vs. fiscal year ended December 31, 2008,
respectively. This increase of approximately $3,549,360 was directly
related to the increase in general and administrative expenses explained above
and losses due to derivative transactions.
We have,
in our history, generated limited income from operations, have incurred
substantial expenses and have sustained losses. In addition, we expect to
continue to incur significant operating expenses. As a result, we will need to
generate significant revenues to achieve profitability, which may not occur. We
expect our operating expenses to increase as a result of our planned expansion.
Even if we do achieve profitability, we may be unable to sustain or increase
profitability on a quarterly or annual basis in the future. We expect to have
quarter-to-quarter fluctuations in revenues, expenses, losses and cash flow,
some of which could be significant. Results of operations will depend upon
numerous factors, some beyond our control, including regulatory actions, market
acceptance of our products and services, new products and service introductions,
and competition.
Currency
Fluctuations/Inflation:
The
amounts presented in the financial statements do not provide for the effect of
inflation on the Company’s operations or its financial position. Amounts shown
for machinery, equipment and leasehold improvements and for costs and expenses
reflect historical cost and do not necessarily represent replacement cost. The
net operating losses shown would be greater than reported if the effects of
inflation were reflected either by charging operations with amounts that
represent replacement costs or by using other inflation
adjustments.
Off-Balance
Sheet Arrangements
We do not
have any off-balance sheet arrangements that have or are reasonably likely to
have a current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources that are material to investors.
Financings
On April
9, 2009, the Company entered into a $100,000 Convertible Promissory Note with
Greenburg (“Greenburg” or “Lender”) with an interest rate of 18% per annum. The
convertible promissory note is convertible in whole or in part at the Company's
option into shares of the Company’s common stock (the “Common Stock”) at $0.25
per share. However if the Company is in default of payment, the
Holder may elect to convert, by a written notice of conversion at a $0.25
conversion price less a penalty for the default. Interest shall accrue to and
through the day prior to the date of conversion. The number of shares of Common
Stock issuable upon conversion shall be determined by dividing the sum of the
outstanding principal of this Note being converted plus the accrued and unpaid
interest payable with respect to the principal amount of this Note being
converted by the Conversion Price then in effect. In connection with the above
note the Company issued the lender 1,000,000 warrants with an exercise price of
$0.001 a share. The fair value of the warrants issued in connection with the
convertible debt will be treated as debt discount and amortized over the life of
the convertible note.
On June
29, 2009, the Company entered into a $750,000 Convertible Promissory Note with
Marvin Mermelstein (“Mermelstein” or “Lender”) with an interest rate of 18% per
annum. The convertible promissory note is convertible in whole or in part at the
Company's option into shares of the Company’s common stock (the “Common Stock”)
at $0.25 per share. However if the Company is in default of payment,
the Holder may elect to convert, by a written notice of conversion at a $0.25
conversion price less a penalty for the default. Interest shall accrue to and
through the day prior to the date of conversion. The number of shares of Common
Stock issuable upon conversion shall be determined by dividing the sum of the
outstanding principal of this Note being converted plus the accrued and unpaid
interest payable with respect to the principal amount of this Note being
converted by the Conversion Price then in effect. In connection with the above
note the Company issued the lender 75,000,000 warrants with an exercise price of
$0.001 a share. The fair value of the warrants issued in connection with the
convertible debt will be treated as debt discount and amortized over the life of
the convertible note.
9
On
November 12, 2009, the Company entered into a $100,000 Convertible Promissory
Note with MKM (“MKM” or “Lender”) with an interest rate of 18% per annum. The
convertible promissory note is convertible in whole or in part at the Company's
option into shares of the Company’s common stock (the “Common Stock”) at $0.25
per share. However if the Company is in default of payment, the
Holder may elect to convert, by a written notice of conversion at a $0.25
conversion price less a penalty for the default. Interest shall accrue to and
through the day prior to the date of conversion. The number of shares of Common
Stock issuable upon conversion shall be determined by dividing the sum of the
outstanding principal of this Note being converted plus the accrued and unpaid
interest payable with respect to the principal amount of this Note being
converted by the Conversion Price then in effect. In connection with the above
note the Company issued the lender 1,000,000 warrants with an exercise price of
$0.001 a share. The fair value of the warrants issued in connection with the
convertible debt will be treated as debt discount and amortized over the life of
the convertible note.
On
November 12, 2009, the Company entered into a $25,000 Convertible Promissory
Note with Fuse Management Corporation (“Fuse” or “Lender”) with an interest rate
of 18% per annum. The convertible promissory note is convertible in whole or in
part at the Company's option into shares of the Company’s common stock (the
“Common Stock”) at $0.25 per share. However if the Company is in
default of payment, the Holder may elect to convert, by a written notice of
conversion at a $0.25 conversion price less a penalty for the default. Interest
shall accrue to and through the day prior to the date of conversion. The number
of shares of Common Stock issuable upon conversion shall be determined by
dividing the sum of the outstanding principal of this Note being converted plus
the accrued and unpaid interest payable with respect to the principal amount of
this Note being converted by the Conversion Price then in effect. In connection
with the above note the Company issued the lender 250,000 warrants with an
exercise price of $0.001 a share. The fair value of the warrants issued in
connection with the convertible debt will be treated as debt discount and
amortized over the life of the convertible note.
Item 7A. Quantitative and Qualitative
Disclosures About Market Risk.
Our
international operations have exposure to foreign currency rate risks, primarily
due to fluctuations in the Cameroon Franc (CFA). We historically have not
entered into currency rate hedges with respect to our exposure from operations,
although we may do so in the future.
Some of
our products are sold as commodities and therefore sales prices fluctuate daily
based on market factors over which we have little or no
control.
The
consolidated financial statements listed in Item 15(a) are incorporated herein
by reference and are filed as a part of this report and follow the signature
pages to this Annual Report on Form 10-K on page _____.
Item
9. Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure
On
January 15, 2010, the Registrant’s Independent Auditor, Alan Weinberg, CPA
notified the Registrant that he had resigned as the Independent Auditor for the
Registrant because of the logistical difficulty associated with our Cameroon
subsidiary.
10
Effective
January 15, 2010, Seligson & Giannattasio, LLP., 723 N Broadway, White
Plains, NY 10603, (914) 428-5560 has been retained the independent auditor
of Ecologix Resource Group, Inc., the Registrant, and was retained as
independent auditor of the Company for the fiscal year ending December 31,
2009
Management
of the Company is responsible for the preparation and integrity of the
consolidated financial statements appearing in our annual report on
Form 10-K. The financial statements were prepared in conformity
with generally accepted accounting principles appropriate in the circumstances
and, accordingly, include certain amounts based on our best judgments and
estimates. Financial information in this annual report on
Form 10-K is consistent with that in the financial statements.
Management
of the Company is responsible for establishing and maintaining adequate internal
control over financial reporting as such term is defined in Rules 13a-15(f)
under the Securities Exchange Act of 1934 (“Exchange Act”). The
Company’s internal control over financial reporting is designed to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of the consolidated financial statements. Our internal
control over financial reporting is supported by a program of internal audits
and appropriate reviews by management [, written policies and guidelines,
careful selection and training of qualified personnel and a written Code of
Business Conduct adopted by our Company’s Board of Directors, applicable to all
Company Directors and all officers and employees of our Company and
subsidiaries].
Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements and even when determined to be effective, can
only provide reasonable assurance with respect to financial statement
preparation and presentation. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
Management
assessed the effectiveness of the Company’s internal control over financial
reporting as of December 31, 2009. In making this assessment,
management used the criteria set forth by [the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in Internal Control—Integrated
Framework. Based on our assessment, management believes that
the Company maintained effective internal control over financial reporting as of
December 31, 2008.
Within
the ninety-day period preceding the filing of this report, our management
evaluated the effectiveness of the design and operation of its disclosure
controls and procedures (the “Disclosure Controls”) as of the end of the period
covered by this Form 10-K and (ii) any changes in internal controls over
financial reporting that occurred during the last quarter of our fiscal
year. This evaluation (“Controls Evaluation”) was done under the
supervision and with the participation of management, including the Chief
Executive Officer (“CEO”) and Chief Financial Officer (“CFO”).
Limitations
on the Effectiveness of Controls
A control
system, no matter how well conceived and operated, can provide only reasonable,
no absolute, assurance that the objectives of the control systems are
met. Further, the design of a control system must reflect the fact
that there are resource constraints, and the benefits of controls must be
considered relative to their costs. Because of the inherent
limitations in all control systems, no evaluation of controls can provide
absolute assurance that all control issues and instances of fraud, if any, have
been detected. Because of the inherent limitation in a cost effective
control system, misstatements due to error or fraud may occur and not be
detected. We will conduct periodic evaluations of our internal
controls to enhance, where necessary, our procedures and controls.
Conclusions
Based
upon the Controls Evaluation, the CEO and CFO have concluded that the Disclosure
Controls are effective in reaching a reasonable level of assurance that
management is timely alerted to material information relating to the Company
during the period when its periodic reports are being prepared. In
accord with the U.S. Securities and Exchange Commission’s requirements, the CEO
and CFO conducted an evaluation of the Company’s internal control over financial
reporting (the “Internal Controls”) to determine whether there have been any
changes in Internal Controls that occurred during the quarter which have
materially affected or which are reasonably likely to materially affect Internal
controls. Based on this evaluation, there have been no such changes
in Internal Controls during the last quarter of the period covered by this
report.
11
Item
9b. Other Information
None
Part
III
Directors,
Executive Officers, Promoters and Control Persons; Compliance with Section
16(a) of the Exchange Act.
|
The
following were elected to the Board of Directors, effective March 24,
2009:
Name
|
Age
|
Position
|
||
Jason
Fine
|
Chairman
(Director), Chief Executive Officer, Secretary
|
|||
Dr.
Juan Avila
|
50
|
Director
|
Jason
Fine, Chairman, Chief Executive Officer and Secretary
Mr. Fine
is the Senior Advisor to Ambassador Juan Avila, the Dominican Republic’s
Permanent Mission to the United Nations and Chairman of the American
Teleservices Associations International Committee. The latest company he founded
for which he served as CEO and remains a board member of, The Contact Center
Institute of the Americas (CCI) is recognized as the driving force fueling
investment into the Dominican Republic. Now considered one of the most
attractive locations in the Caribbean and Latin American (CALA) regions for the
Outsourced Contact Center Industry, which has enabled CCI to rapidly begin the
process expanding operations throughout the Dominican Republic and other Latin
American countries. Its parent company Fine Marketing Solutions, which over a
three-year period has secured in excess of $41,000,000 US dollars of outsourcing
contracts, has been selected by the government of Honduras to create and
globally brand this industry for the entire country.
During
his tenure with Accenture and while serving in senior leadership positions with
other companies, Mr. Fine has worked with numerous Fortune 500 organizations
assisting to market, sell and serve their customer bases.
Mr. Fine
graduated with high honors and member of the President’s list from the
University of Iowa with a B.A. in psychology from the University of
Iowa.
Jason
fine has resigned as CEO Effective April 16, 2010 to apply his full efforts
towards his existing business at Fine Marketing Solutions.
Ambassador
Dr. Juan Avila - Director - 50
In 2004
President Lionel Fernandez appointed Ambassador Dr. Juan Avila as the Dominican
Republic’s Permanent Mission to the United Nations. Based in New York City,
Ambassador Avila has spent the past twenty-nine years working in
variety of capacities with the United Nations various NGOs and the with
Government of the Dominican Republic. Since 1988 Ambassador Avila has been
working closely with, WAFUNIF, a UN sponsored organization that is dedicated to
mobilizing UN Alumni and sitting members to influence change throughout the
world. Due to Ambassador Avila’s tenure and deep roots with WAFUNIF he is known
as an expert in comparative and international education issues related to youth;
international migration and reverse transfer of technology; promotion of
technical cooperation among developing countries; special environment and
development projects; educational and institutional research; fund-raising
strategies; administration, strategic planning and management of
non-governmental organizations.
Ambassador
Avila is fluent in English, Russian and Spanish and currently heads the
bilingual program for Fordham University in New York. He has attended
international meetings and conferences around the globe dealing with topics,
which include but are not limited to; economic and social reform, human rights
(WHO), environmental programming and labor organization.
Ambassador
Avila received his PH.D in Philosophy in Education from Fordham University, New
York. Doctor of Philosophy (Ph.D.) in Education, 2000, his Master of
Science in Mathematics from The City College of the City University of New York,
New York and his Master of Science in System Engineering and Bachelor of
Engineering in Computer Science from Kharkov Polytechnic University, Graduate
School of Engineering, USSR
12
Item
11. Executive Compensation
For the
fiscal year ended December 31, 2009, no Officer/Director has been compensated
with salaries or other form of remuneration except as set forth
below:
Shown on
the table below is information on the annual and long-term compensation for
services rendered to the Registrant in all capacities, for the fiscal year
ending December 31, 2009, paid by the Registrant to all individuals serving as
the Registrant's chief executive officer or acting in a similar capacity during
the fiscal year ending December 31, 2009, regardless of compensation level.
During this fiscal year, the Registrant did not pay aggregate compensation to
any executive officer in an amount greater than $100,000.
Annual
Compensation
|
Long
Term Compensation
|
|||||||||||||||||||||||||||||||
Name
|
Title
|
Year
|
Salary
|
Bonus
|
Other
Annual
Compensation
|
Restricted
Stock
Awarded
|
Options/
SARs
(#)
|
LTIP
payouts
($)
|
All
Other
Compensation
|
|||||||||||||||||||||||
Jason
Fine
|
Chairman
(Director)
President,
CEO,
|
2009
|
$ | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
YaffaZwebner
|
Former
Secretary
and Director
|
2009
|
$ | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
NachomKiper
|
Former
Director
and
Secretary
|
2009
|
$ | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Director
Compensation
Our
directors receive no compensation for their services as director, at this time,
other than what has already been paid by the issuance of shares of common
stock.
Director
and Officer Insurance
Item
12. Security Ownership of Certain Beneficial Owners and
Management
The
following table sets forth certain information, as of March 15, 2010, concerning
shares of common stock of the Company, the only class of its securities that are
issued and outstanding, held by (1) each shareholder known by the Registrant to
own beneficially more than five percent of the common stock, (2) each director
of the Registrant, (3) each executive officer of the Registrant, and (4) all
directors and executive officers of the Registrant as a group:
Name
of Beneficial Owner
|
Amount
and Nature of Beneficial Ownership
|
Percentage
of
Shares
Outstanding
|
||||||
Jason
Fine
C/o
The Company
|
1,082,820
|
.002
|
%
|
|||||
Central
African Holdings
KM
271/2 La Calenta
Boca
Chica, Santo Domingo, Dominican Republic
Need
to add new address
|
123,740,000
|
24
|
%
|
|||||
Triumph
Small Cap Fund, Inc.
1000Woodbury
Rd,
Woodbury,
NY
|
48,708,930
|
(1)
|
9.72
|
%
|
||||
Directors
and officers as a group (1 persons)
|
124,822,820
|
24.3
|
%
|
(1)
|
Kenneth
Orr is the President of Triumph Small Cap Fund, Inc and the Control person
for the shares of common stock
held.
|
13
Item
13.
|
Certain
Relationships and Related Transactions, and Director
Independence
|
Transactions
with Related persons
None
Directors
Independence
(a) During
the fiscal year ended December 31, 2009, Dr. Avila, qualified as an independent
director.
(b) The
total number of meetings of the board of directors of the Registrant for the
fiscal year was ____; this amount included telephonic meetings and/or Written
Consents of the board of directors. The Registrant currently has no
formal policy regarding attendance at the annual meeting of security
holders. Currently we have no standing audit or nominating or
compensation committees of the board of directors.
Item
14. Principal Accounting Fees and Services.
Audit
Fees
During
the fiscal year ended December 31, 2009, we paid a total of $40,000 in audit,
audit-related, tax or other fees paid for professional services rendered by the
independent certified public accountant who audited the financial statements of
the Delaware corporation that are filed herewith as those of the
Company. See Item 7, “Financial Statements”, above.
All Other
Fees
During
the fiscal year ended December 31, 2009, the Registrant did not have an audit
committee.
14
ECOLOGIX
RESOURCE GROUP INC.
INDEX
TO FINANCIAL STATEMENTS
DECEMBER
31, 2009 AND 2008
Report
of Registered Independent Auditors
|
F-2
|
|||
Financial
Statements-
|
||||
Balance
Sheets as of December 31, 2009 and 2008
|
F-4 | |||
Consolidated
Statements of Operations for the Years Ended December
31, 2009 and 2008,
|
F-5 | |||
Consolidated
Statement of Stockholders’ (Deficit) for the Years Ended December
31, 2009 and 2008
|
F-6 | |||
Consolidated
Statements of Cash Flows for the Years Ended December 31, 2009 and
2008,
|
F-7 | |||
Notes
to Consolidated Financial Statements
|
F-8 |
F-1
REPORT
OF REGISTERED INDEPENDENT AUDITORS
To the
Board of Directors and Stockholders
of
Ecologix Resource Group, Inc.(formerly Battery Control Corp.):
We have
audited the accompanying balance sheet of Ecologix Resource Group, Inc.
(formerly Battery Control Corp.) (a Delaware corporation in the development
stage) as of December 31, 2008, and the related statements of operations,
stockholders’ equity, and cash flows for year ended December 31, 2008. These
financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We
conducted our audit in accordance with standards of the Public Company
Accounting Oversight Board (United States of America). Those standards require
that we plan and perform the audit 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 financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides 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 Ecologix Resource Group, Inc.
(formerly Battery Control Corp.) as of December 31, 2008, and the results of its
operations and its cash flows for the year ended December 31, 2008, in
conformity with accounting principles generally accepted in the United States of
America.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 2 to the financial
statements, the Company is in the development stage, and has not established any
source of revenue to cover its operating costs. As such, it has incurred an
operating loss since inception. Further, as of December 31, 2008, the cash
resources of the Company were insufficient to meet its planned business
objectives. These and other factors raise substantial doubt about the Company’s
ability to continue as a going concern. Management’s plan regarding these
matters is also described in Note 2 to the financial statements. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Respectfully
submitted,
/s/
Weinberg & Baer LLC
Weinberg
& Baer LLC
Baltimore,
Maryland
January
18, 2009
F-2
REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors and
Stockholders
of Ecologix Resource Group, Inc.
We have
audited the accompanying consolidated balance sheet of Ecologix Resource Group,
Inc. and subsidiary as of December 31, 2009 and the related consolidated
statements of operations, comprehensive income, stockholders’ deficit, and cash
flows for the year then ended. Ecologix Resource Group, 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 audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. 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 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 provides 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 Ecologix
Resource Group, Inc. as of December 31, 2009, and the results of its operations
and its cash flows for the year then ended 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 incurred significant recurring losses. The realization of a
major portion of its assets is dependent upon its ability to meet its future
financing needs and the success of its future operations. These factors raise
substantial doubt about the Company’s ability to continue as a going concern.
The financial statements do not include any adjustments that might result from
this uncertainty.
Seligson
& Giannattasio, LLP
White
Plains, NY
May 14,
2010
F-3
ECOLOGIX
RESOURCE GROUP INC.
CONSOLIDATED
BALANCE SHEETS
AS
OF DECEMBER 31, 2009 AND 2008
2009
|
2008
|
|||||||
ASSETS
|
||||||||
Current
Assets:
|
||||||||
Cash
in bank
|
$
|
9,974
|
$
|
1,381
|
||||
Total
current assets
|
9,974
|
1,381
|
||||||
Other
Assets:
|
||||||||
Property,
plant and equipment, net of depreciation
|
169,592
|
-
|
||||||
Patent,
net of amortization
|
-
|
15,044
|
||||||
Timber
rights, net
|
2,000,000
|
-
|
||||||
Total
other assets
|
2,169,592
|
15,044
|
||||||
Total
Assets
|
$
|
2,179,566
|
$
|
16,425
|
||||
LIABILITIES AND
STOCKHOLDERS' DEFICIT
|
||||||||
Current
Liabilities:
|
||||||||
Accounts
payable
|
$
|
105,532
|
$
|
-
|
||||
Accrued
liabilities
|
239,541
|
8,548
|
||||||
Convertible
Debt
|
312,729
|
|||||||
Derivative
Liability
|
4,049,512
|
|||||||
Loans
from related parties - Directors and stockholders
|
306,457
|
40,463
|
||||||
Total
liabilities
|
5,013,771
|
49,011
|
||||||
Commitments
and Contingencies
|
||||||||
Stockholders'
(Deficit)
|
||||||||
Convertible
preferred stock, par value $.0001 per share, 2,000,000,000
shares authorized; 501,000,000 and 500,000,000 shares issued and
outstanding, respectively
|
100
|
-
|
||||||
Common
stock, par value $.0001 per share, 2,000,000,000 shares authorized;
501,000,000 and 500,000,000 shares issued and outstanding,
respectively
|
50,100
|
50,000
|
||||||
Additional
paid-in capital
|
851,869
|
5,966
|
||||||
Discount
on common stock
|
(2,700
|
)
|
(2,700
|
)
|
||||
Accumulated
other comprehensive (loss) income
|
(17,460
|
)
|
-
|
|||||
Accumulated
Deficit
|
(3,716,114)
|
(85,852)
|
||||||
(Total
stockholders' (deficit)
|
(2,834,205
|
)
|
(32,586
|
)
|
||||
|
||||||||
Total
Liabilities and Stockholders' (Deficit)
|
$
|
2,179,566
|
$
|
16,425
|
The
accompanying notes to consolidated financial statements
are an
integral part of these financial statements.
F-4
ECOLOGIX
RESOURCE GROUP INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS
FOR
THE YEARS ENDED DECEMBER 31, 2009 AND 2008
Year Ended
|
Year Ended
|
|||||||
|
December 31,
|
December 31,
|
||||||
2009
|
2008
|
|||||||
Revenues
|
$
|
128,288
|
$
|
-
|
||||
Expenses:
|
||||||||
General
and administrative
|
595,766
|
-
|
||||||
Salaries
and wages
|
136,000
|
-
|
||||||
Professional
fees
|
258,010
|
60,437
|
||||||
Consulting
|
530,266
|
18,500
|
||||||
Amortization
|
15,044
|
456
|
||||||
Other
|
-
|
1,509
|
||||||
Total
general and administrative expenses
|
1,535,086
|
80,902
|
||||||
(Loss)
from Operations
|
(1,406,798
|
)
|
(80,902
|
)
|
||||
Interest
Expense
|
(291,610
|
)
|
-
|
|||||
Gain
or loss on derivative liability
|
(1,931,854
|
)
|
-
|
|||||
Provision
for income taxes
|
-
|
-
|
||||||
Net
(Loss)
|
$
|
(3,630,262
|
)
|
$
|
(80,902
|
)
|
||
Other
Comprehensive Income
|
||||||||
Foreign
currency translation
|
(17,460
|
)
|
-
|
|||||
Comprehensive
Income
|
(3,647,722)
|
(80,902)
|
||||||
(Loss)
Per Common Share:
|
||||||||
(Loss)
per common share - Basic and Diluted
|
$
|
(.01
|
)
|
$
|
(0.00
|
)
|
||
Weighted
Average Number of Common Shares Outstanding - Basic and
Diluted
|
500,419,178
|
415,616,440
|
The
accompanying notes to consolidated financial statements are
an
integral part of these statements.
F-5
ECOLOGIX
RESOURCE GROUP INC.
CONSOLIDATED
STATEMENT OF STOCKHOLDERS' DEFICIT
FOR
THE YEARS ENDED DECEMBER 31, 2009 AND 2008
Preferred
stock
|
Common
stock
|
Additional
Paid-in
|
Discount
on
Common
|
Accumulated
|
Stock
Subscriptions
|
Other
Comprehensive
|
||||||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Stock
|
Deficit
|
Receivable
|
Income
|
Totals
|
|||||||||||||||||||||||||||||||
Balance
- December 31, 2007
|
- | - | 300,000,000 | $ | 30,000 | $ | (27,000 | ) | $ | (2,700 | ) | $ | (4,950 | ) | $ | (300 | ) | $ | - | $ | (4,950 | ) | ||||||||||||||||||
Stock
subscription payment received
|
- | - | - | - | - | - | - | 300 | - | 300 | ||||||||||||||||||||||||||||||
Common
stock issued
|
- | - | 200,000,000 | 20,000 | 32,966 | - | - | - | - | 52,966 | ||||||||||||||||||||||||||||||
Net
(loss) for the year
|
- | - | - | - | - | - | (80,902 | ) | - | - | (80,902 | ) | ||||||||||||||||||||||||||||
Balance
- December 31, 2008
|
- | - | 500,000,000 | $ | 50,000 | $ | 5,966 | $ | (2,700 | ) | $ | (85,852 | ) | $ | - | $ | - | $ | (32,586 | ) | ||||||||||||||||||||
Common
stock issued for cash
|
- | $ | - | 1,000,000 | $ | 100 | $ | 49,900 | $ | - | $ | - | $ | - | $ | - | $ | 50,000 | ||||||||||||||||||||||
Shareholder
capital contribution (loan forgiven)
|
44,443 | 44,433 | ||||||||||||||||||||||||||||||||||||||
Convertible
preferred stock issued for intangible assets
|
10,000 | 100 | - | - | 751,560 | - | - | - | - | 751,660 | ||||||||||||||||||||||||||||||
Foreign
currency translation
|
- | - | - | - | - | - | - | - | (17,460 | ) | (17,460 | ) | ||||||||||||||||||||||||||||
Net
(loss) for the year
|
- | - | - | - | - | - | (3,630,262 | ) | - | - | (3,530,262 | ) | ||||||||||||||||||||||||||||
Balance
- December 31, 2009
|
10,000 | 100 | 501,000,000 | $ | 50,100 | $ | 851,869 | $ | (2,700 | ) | $ | (3,716,114 | ) | $ | - | $ | (17,460 | ) | (2,834,205 | ) |
The
accompanying notes to consolidated financial statements are
an
integral part of these statements.
F-6
ECOLOGIX
RESOURCE GROUP INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
FOR
THE YEARS ENDED DECEMBER 31, 2009 AND 2008,
Year Ended
|
Year Ended
|
|||||||
|
December 31,
|
December 31,
|
||||||
2009
|
2008
|
|||||||
Operating
Activities:
|
||||||||
Net
(loss)
|
$
|
(3,630,262
|
)
|
$
|
(80,902
|
)
|
||
Adjustments
to reconcile net (loss) to net cash (used in) operating
activities:
|
||||||||
Amortization
and depreciation
|
27,657
|
456
|
||||||
Loss
on derivative liablility
|
1,931,584
|
|||||||
Amortization
of debt discount
|
207,047
|
|||||||
Changes
in net liabilities-
|
||||||||
Accounts
payable
|
105,532
|
-
|
||||||
Accrued
liabilities
|
230,993
|
5,348
|
||||||
Net
Cash Provided by (Used in) Operating Activities
|
(1,127,449)
|
(75,098
|
)
|
|||||
Investing
Activities:
|
||||||||
Purchases
of Property Plant and Equipment
|
(181,935
|
)
|
-
|
|||||
Acquisition
and costs of patent pending
|
-
|
(6,000
|
)
|
|||||
Net
Cash Used in Investing Activities
|
(181,935
|
)
|
(6,000
|
)
|
||||
Financing
Activities:
|
||||||||
Issuance
of common stock
|
50,000
|
80,666
|
||||||
Deferred
offering costs applied
|
-
|
(27,400
|
)
|
|||||
Proceeds
from issuance of notes payable
|
975,000
|
-
|
||||||
Loans
from related parties - Directors and stockholders
|
310,437
|
29,213
|
||||||
Net
Cash Provided by Financing Activities
|
1,335,437
|
82,479
|
||||||
Effect
of Exchange rates on Cash
|
(17,460
|
)
|
-
|
|||||
Net
(Decrease) Increase in Cash
|
8,593
|
1,381
|
||||||
Cash
- Beginning of Period
|
1,381
|
-
|
||||||
Cash
- End of Period
|
$
|
9,974
|
$
|
1,381
|
||||
Supplemental
Disclosure of Cash Flow Information:
|
||||||||
Cash
paid during the period for:
|
||||||||
Interest
|
$
|
44,750
|
$
|
-
|
||||
Noncash
investing and financing activities
|
||||||||
Acquisition
of timber rights through issue of preferred stock
|
$
|
2,000,000
|
$
|
-
|
The
accompanying notes to consolidated financial statements are
an
integral part of these statements.
F-7
ECOLOGIX
RESOURCE GROUP INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Summary of Significant Accounting
Policies
Basis
of Presentation and Organization
Ecologix
Resource Group (“Ecologix” or the “Company”) is a natural resource company
focused on the harvesting, and marketing of high quality timber while pursuing
the production of alternative energy solutions. The Company manages tropical
hardwood forest in the Republic of Cameroon in Central Africa. The Company
harvests a variety of species of hardwood.
The
Company was incorporated under the laws of the State of Delaware on November 7,
2007. The Company was formerly known as Battery Control Corp. and changed its
name to Ecologix Resource Group, Inc. on July 14, 2009. Due to
opportunities regarding our timber business, the Company has decided that it is
necessary to apply all personnel, finances and other resources towards the
timber operations and discontinue the patented pending technology of Battery
Control Corp.
Cash and Cash Equivalents
For
purposes of reporting within the statement of cash flows, the Company considers
all cash on hand, cash accounts not subject to withdrawal restrictions or
penalties, and all highly liquid debt instruments purchased with a maturity of
three months or less to be cash and cash equivalents.
Property,
Plant And Equipment
The
Company depreciates its assets over their estimated useful lives. The estimated
useful lives are 5 years for machinery and equipment, 5 years for furniture and
fixtures and the shorter of the useful life or the life of the lease for
leasehold improvements. Plant and equipment are carried at historical cost and
are depreciated using primarily the straight-line method. Repair and maintenance
expenditures are expensed as incurred.
Timber
Rights
The
Company carried timber rights at historical cost less accumulated amortization.
We capitalized the acquisition costs of the user right and allocated that cost
to the timberland. Amortization of the user right on timberland is primarily
determined using the straight-line method over the life of usage
right.
The
Company reviews the carrying value of its long-lived assets annually or whenever
events or changes in circumstances indicate that the historical-cost carrying
value of an asset may no longer be appropriate. The Company assesses
recoverability of the asset by comparing the undiscounted future net cash flows
expected to result from the asset to its carrying value. If the carrying value
exceeds the undiscounted future net cash flows of the asset, an impairment loss
is measured and recognized. An impairment loss is measured as the difference
between the net book value and the fair value of the long-lived asset. Fair
value is estimated based upon either discounted cash flow analysis or estimated
salvage value.
Revenue
Recognition
The
Company will recognize revenues when delivery of goods or completion of services
has occurred provided there is persuasive evidence of an agreement, acceptance
has been approved by its customers, the fee is fixed or determinable based on
the completion of stated terms and conditions, and collection of any related
receivable is probable.
F-8
Stock
Splits
On
December 1, 2008, the Company implemented a 5 for 1 forward stock split on
its issued and outstanding shares of common stock. On March 24, 2009,
the Company implemented a 2 for 1 forward stock split on its issued and
outstanding shares of common stock. On December 4, 2009, the Company
implemented a 10 for 1 forward stock split on its issued and outstanding shares
of common stock. The accompanying financial statements and related
notes thereto have been adjusted accordingly to reflect the forward stock
splits.
Loss
per Common Share
Basic
loss per share is computed by dividing the net loss attributable to the common
stockholders by the weighted average number of shares of common stock
outstanding during the period. Fully diluted loss per share is computed similar
to basic loss per share except that the denominator is increased to include the
number of additional common shares that would have been outstanding if the
potential common shares had been issued and if the additional common shares were
dilutive. Potentially dilutive financial instruments excluded from the
calculation of loss per share for the period ended December 31, 2009 and 2008
totaled 9,750,000 and none, respectively.
Income
Taxes
The
Company accounts for income taxes using the asset and liability method, which
requires the establishment of deferred tax assets and liabilities for the
temporary differences between the bases of certain assets and liabilities for
income tax and financial reporting purposes. The deferred tax assets and
liabilities are classified according to the financial statement classification
of the assets and liabilities generating the differences.
The
Company maintains a valuation allowance with respect to deferred tax assets. The
Company establishes a valuation allowance based upon the potential likelihood of
realizing the deferred tax asset and taking into consideration the Company’s
financial position and results of operations for the current period. Future
realization of the deferred tax benefit depends on the existence of sufficient
taxable income within the carryforward period under the Federal tax
laws.
Changes
in circumstances, such as the Company generating taxable income, could cause a
change in judgment about the realizability of the related deferred tax asset.
Any change in the valuation allowance will be included in income in the year of
the change in estimate.
Fair
Value of Financial Instruments
The
Company estimates the fair value of financial instruments using the available
market information and valuation methods. Considerable judgment is required in
estimating fair value. Accordingly, the estimates of fair value may not be
indicative of the amounts the Company could realize in a current market
exchange.
Translation
of Foreign Currencies
All
assets and liabilities of foreign subsidiaries are translated into dollars at
the fiscal year-end (current) exchange rates and components of revenue
and expense are translated at average rates for the fiscal year. The resulting
translation adjustments are included in shareholders' equity. Gains and losses
on foreign currency exchange transactions are reflected in the statement of
operations. Net transaction gains and losses credited or charged to “Other
comprehensive income” for the fiscal years ended December 31, 2009 and 2008 were
$17,461 and $0, respectively.
F-9
Impairment
of Long-Lived Assets—Timber Rights
The
Company continually monitors events and changes in circumstances that could
indicate carrying amounts of long-lived assets may not be recoverable. When such
events or changes in circumstances are present, the Company assesses the
recoverability of long-lived assets by determining whether the carrying value of
such assets will be recovered through undiscounted expected
future cash flows. If the total of the future cash flows is less than the
carrying amount of those assets, the Company recognizes an impairment loss based
on the excess of the carrying amount over the fair value of the assets. Assets
to be disposed of are reported at the lower of the carrying amount or the fair
value less costs to sell.
Estimates
The
financial statements are prepared on the basis of accounting principles
generally accepted in the United States. The preparation of financial statements
in conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities as of December 31, 2009 and 2008, and expenses for the period ended
December 31, 2009 and 2008, and. Actual results could differ from those
estimates made by management.
Fiscal
Year End
The
Company has adopted a fiscal year end of December 31.
Recent
Accounting Pronouncements
In
February 2010, FASB issued ASU 2010-9 Subsequent Events (Topic 855) Amendments
to Certain Recognition and Disclosure Requirements ("ASU 2010-9"). ASU 2010-9
amends disclosure requirements within Subtopic 855-10. An entity that is an SEC
filer is not required to disclose the date through which subsequent events have
been evaluated. This change alleviates potential conflicts between Subtopic
855-10 and the SEC's requirements. ASU 2010-9 is effective for interim and
annual periods ending after June 15, 2010. The Company does not expect the
adoption of ASU 2010-09 to have a material impact on its consolidated results of
operations or financial position.
In
January 2010, FASB issued ASU 2010-6 Improving Disclosures about Fair
Measurements ("ASU 2010-6"). ASU 2010-6 provides amendments to subtopic
820-10 that require separate disclosure of significant transfers in and out of
Level 1 and Level 2 fair value measurements and the presentation of
separate information regarding purchases, sales, issuances and settlements for
Level 3 fair value measurements. Additionally, ASU 2010-6 provides
amendments to subtopic 820-10 that clarify existing disclosures about the level
of disaggregation and inputs and valuation techniques. ASU 2010-6 is effective
for financial statements issued for interim and annual periods ending after
December 15, 2010. The Company does not expect the adoption of ASU 2010-06
to have a material impact on its consolidated results of operations or financial
position.
In
January 2010, FASB issued ASU 2010-2 Accounting and Reporting for Decreases in
Ownership of a Subsidiary- a Scope Clarification ("ASU 2010-2"). ASU 2010-2
addresses implementation issues related to the changes in ownership provisions
in the Consolidation—Overall Subtopic (Subtopic 810-10) of the FASB Accounting
Standards Codification, originally issued as FASB Statement No. 160,
Noncontrolling Interests in Consolidated Financial Statements. Subtopic 810-10
establishes the accounting and reporting guidance for noncontrolling interests
and changes in ownership interests of a subsidiary. An entity is required to
deconsolidate a subsidiary when the entity ceases to have a controlling
financial interest in the subsidiary. Upon deconsolidation of a subsidiary, an
entity recognizes a gain or loss on the transaction and measures any retained
investment in the subsidiary at fair value. The gain or loss includes any gain
or loss associated with the difference between the fair value of the retained
investment in the subsidiary and its carrying amount at the date the subsidiary
is deconsolidated. In contrast, an entity is required to account for a decrease
in ownership interest of a subsidiary that does not result in a change of
control of the subsidiary as an equity transaction. ASU 2010-2 is effective
for the Company starting January 3, 2010. The Company does not expect the
adoption of ASU 2010-2 to have a material impact on the Company's consolidated
results of operations or financial position.
F-10
In
December 2009, FASB issued ASU 2009-17 Consolidations (Topic 810) Improvements
to Financial Reporting by Enterprises Involved with Variable Interest Entities
("ASU 2009-17"). ASU 2009-17 amends the FASB ASC for the issuance of FASB
Statement No. 167, Amendments to FASB Interpretation No. 46(R). The
amendments in ASU 2009-17 replace the quantitative-based risks and rewards
calculation for determining which enterprise, if any, has a controlling
financial interest in a variable interest entity with an approach focused on
identifying which enterprise has the power to direct the activities of a
variable interest entity that most significantly impact the entity's economic
performance and (1) the obligation to absorb losses of the entity or
(2) the right to receive benefits from the entity. ASU 2009-17 also
requires additional disclosures about an enterprise's involvement in variable
interest entities. ASU 2009-17 is effective as of the beginning of each
reporting entity's first annual reporting period that begins after
November 15, 2009. The adoption of ASU 2009-17 did not have a material
impact on its consolidated results of operations or financial
position.
In
December 2009, FASB issued ASU 2009-16 Transfers and Servicing (Topic 860)
Accounting for Transfers of Financial Assets ("ASU 2009-16"). ASU 2009-16 amends
the FASB Accounting Standards Codification for the issuance of FASB Statement
No. 166, Accounting for Transfers of Financial Assets—an amendment of FASB
Statement No. 140. The amendments in ASU 2009-16 improve financial
reporting by eliminating the exceptions for qualifying special-purpose entities
from the consolidation guidance and the exception that permitted sale accounting
for certain mortgage securitizations when a transferor has not surrendered
control over the transferred financial assets. In addition, the amendments
require enhanced disclosures about the risks that a transferor continues to be
exposed to because of its continuing involvement in transferred financial
assets. ASU 2009-16 is effective as of the beginning of each reporting entity's
first annual reporting period that begins after November 15,
2009. The adoption of ASU 2009-16 did not have a material impact on
its consolidated results of operations or financial position.
In
October 2009, the Financial Accounting Standards Board (“FASB”) issued new
revenue recognition standards for arrangements with multiple deliverables, where
certain of those deliverables are non-software related. The new standards permit
entities to initially use management’s best estimate of selling price to value
individual deliverables when those deliverables do not have Vendor Specific
Objective Evidence (“VSOE”) of fair value or when third-party evidence is not
available. Additionally, these new standards modify the manner in which the
transaction consideration is allocated across the separately identified
deliverables by no longer permitting the residual method of allocating
arrangement consideration. These new standards are effective for annual periods
ending after June 15, 2010 and early adoption is permitted. The Company is
currently evaluating the impact of adopting this standard, if any, on the
Company’s consolidated financial position, results of operations and cash
flows.
(2) Going Concern
The
accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America, which
contemplate continuation of the Company as a going concern. The Company has not
established sufficient revenue to cover its operating costs, and as such, has
incurred operating losses since inception. Further, as of December 31, 2009, the
cash resources of the Company were insufficient to meet its current business
plan, and the Company had negative working capital. These and other factors
raise substantial doubt about the Company’s ability to continue as a going
concern. The accompanying financial statements do not include any adjustments to
reflect the possible future effects on the recoverability and classification of
assets or the amounts and classification of liabilities that may result from the
possible inability of the Company to continue as a going concern.
(3) Patent
In
November 2007, the Company entered into an Invention Assignment Agreement with
Moshe Averbuch, the inventor, whereby the Company acquired from Moshe Averbuch
all of the right, title and interest in the Invention known as the “Method and
apparatus for battery testing and measuring” for consideration of $12,000. The
patent was approved on April 2, 2008. The historical cost of obtaining the
Invention of $12,000 and legal fees of $3,500 for the patent was capitalized by
the Company as of December 31, 2008. During the year ended December 31, 2009 the
Company decided to discontinue the use of the patent. For the year
ended December 31, 2008 the Company recorded amortization expense of
$456. For the year ended December 31, 2009 the Company recorded
amortization and impairment expense of $15,044.
F-11
(4) Timber
Rights
As of
January 12, 2009 the Company issued convertible preferred shares for timber
rights in the Masaka region of Cameroon. The timber rights were valued at the
fair value of the preferred stock issued for the use of the timber rights . The
balance of the timber rights as of the year ended December 31, 2009 were
$2,000,000.
(5) Property, Plant and
Equipment
The
following is a summary of property and equipment at December 31, 2009, the
company did not have any fixed assets as of December 31, 2008.
2009
|
||||
Plant
and Machinery
|
$
|
181,935
|
||
Less
– Accumulated Deprecition
|
(12,343
|
)
|
||
Total
net Property, Plant and Equipment
|
$
|
169,592
|
Depreciation
expenses for the years ended December 31, 2009 and 2008 were $12,343 and $0
respectively.
(6) Loans from related
parties
As of
December 31, 2008 the Company had loans due to certain stockholders for
$40,463. These loans represented working capital advances and were
unsecured, non-interest bearing, and due on demand. During the year
ended December 31, 2009 these stockholders advanced an additional
$3,980. As of December 31, 2009, these stockholders forgave the loans
and contributed the amount of their loan balance to the Company as additional
paid in capital. During the year ended December 31, 2009 another
stockholder began making loans to the Company for working capital
needs. These loans were unsecured, non-interest bearing and due on
demand. As of December 31, 2009, the balance due to this stockholder was
$166,957.
As of
December 31, 2009, the Company had a payable due to an officer of the Company
for $139,500 which consisted of accrued compensation of $112,500 and
reimbursement for expenses paid by the officer on behalf of the company of
$27,000.
(7)
Convertible Debt
On April
9, 2009, the Company entered into a $100,000 Convertible Promissory Note with
Greenburg (“Greenburg” or “Lender”) with an interest rate of 18% per annum. The
convertible promissory note is convertible in whole or in part at the Company's
option into shares of the Company’s common stock (the “Common Stock”) at $0.25
per share. However if the Company is in default of payment, the
Holder may elect to convert, by a written notice of conversion at a $0.25
conversion price less a penalty for the default. Interest shall accrue to and
through the day prior to the date of conversion. The number of shares of Common
Stock issuable upon conversion shall be determined by dividing the sum of the
outstanding principal of this Note being converted plus the accrued and unpaid
interest payable with respect to the principal amount of this Note being
converted by the Conversion Price then in effect. In connection with the above
note the Company issued the lender 1,000,000 warrants with an exercise price of
$0.001 a share. The fair value of the warrants issued in connection with the
convertible debt will be treated as debt discount and amortized over the life of
the convertible note.
On June
29, 2009, the Company entered into a $750,000 Convertible Promissory Note with
Marvin Mermelstein (“Mermelstein” or “Lender”) with an interest rate of 18% per
annum. The convertible promissory note is convertible in whole or in part at the
Company's option into shares of the Company’s common stock (the “Common Stock”)
at $0.25 per share. However if the Company is in default of payment,
the Holder may elect to convert, by a written notice of conversion at a $0.25
conversion price less a penalty for the default. Interest shall accrue to and
through the day prior to the date of conversion. The number of shares of Common
Stock issuable upon conversion shall be determined by dividing the sum of the
outstanding principal of this Note being converted plus the accrued and unpaid
interest payable with respect to the principal amount of this Note being
converted by the Conversion Price then in effect. In connection with the above
note the Company issued the lender 75,000,000 warrants with an exercise price of
$0.001 a share. The fair value of the warrants issued in connection with the
convertible debt will be treated as debt discount and amortized over the life of
the convertible note.
F-12
On
November 12, 2009, the Company entered into a $100,000 Convertible Promissory
Note with MKM (“MKM” or “Lender”) with an interest rate of 18% per annum. The
convertible promissory note is convertible in whole or in part at the Company's
option into shares of the Company’s common stock (the “Common Stock”) at $0.25
per share. However if the Company is in default of payment, the
Holder may elect to convert, by a written notice of conversion at a $0.25
conversion price less a penalty for the default. Interest shall accrue to and
through the day prior to the date of conversion. The number of shares of Common
Stock issuable upon conversion shall be determined by dividing the sum of the
outstanding principal of this Note being converted plus the accrued and unpaid
interest payable with respect to the principal amount of this Note being
converted by the Conversion Price then in effect. In connection with the above
note the Company issued the lender 1,000,000 warrants with an exercise price of
$0.001 a share. The fair value of the warrants issued in connection with the
convertible debt will be treated as debt discount and amortized over the life of
the convertible note.
On
November 12, 2009, the Company entered into a $25,000 Convertible Promissory
Note with Fuse Management Corporation (“Fuse” or “Lender”) with an interest rate
of 18% per annum. The convertible promissory note is convertible in whole or in
part at the Company's option into shares of the Company’s common stock (the
“Common Stock”) at $0.25 per share. However if the Company is in
default of payment, the Holder may elect to convert, by a written notice of
conversion at a $0.25 conversion price less a penalty for the default. Interest
shall accrue to and through the day prior to the date of conversion. The number
of shares of Common Stock issuable upon conversion shall be determined by
dividing the sum of the outstanding principal of this Note being converted plus
the accrued and unpaid interest payable with respect to the principal amount of
this Note being converted by the Conversion Price then in effect. In connection
with the above note the Company issued the lender 250,000 warrants with an
exercise price of $0.001 a share. The fair value of the warrants issued in
connection with the convertible debt will be treated as debt discount and
amortized over the life of the convertible note.
The
Company evaluated the convertible debt and the warrants under ASC 815 (SFAS 133
"Accounting for Derivatives" and EITF00-19 "Accounting for Derivative Financial
Instruments Indexed to and Potentially Settled in a Company's Own Stock"). The
Company determined the convertible debentures contained an embedded derivative
for the conversion option and the warrants qualified as free standing
derivatives. The conversion option allows for an indeterminate number of shares
to potentially be issued upon conversion. This results the Company being unable
to determine with certainty they will have enough shares available to settle any
and all outstanding common stock equivalent instruments. The Company would be
required to obtain shareholder approval to increase the number of authorized
shares needed to settle those contracts. Because increasing the number of shares
authorized is outside of the Company's control, this results in these
instruments being classified as liabilities under ASC 815 (EITF 00-19 and
derivatives under SFAS 133).
The carrying values of the notes at
December 31, 2009 were determined as follows:
2009
|
||||
Notes
payable to Greenberg due April 9, 2010, interest rate 18%.
|
$ | 100,000 | ||
Notes
payable to Mermelstein due December 29, 2010, interest rate
18%.
|
750,000 | |||
Notes
payable to MKM due November 12, 2010, interest rate 18%.
|
100,000 | |||
Notes
payable to Fuse due November 12, 2010, interest rate 18%.
|
25,000 | |||
975,000 | ||||
(Less)
Debt Discount
|
(662,271 | ) | ||
Convertible
Debt net of discount
|
$ | 312,729 |
(8) Common
Stock
The
Company commenced a capital formation activity to submit a Registration
Statement on Form SB-2 to the Securities and Exchange Commissions (“SEC”) to
register and sell in a self-directed offering 10,000,000 (post forward stock
split) shares of newly issued common stock at an offering price of $0.04 for
proceeds of up to $80,000. The Registration Statement on Form SB-2 was filed
with the SEC on January 15, 2008 and declared effective on March 10, 2008. As of
June 30, 2008, the Company received stock subscriptions for 200,000,000 (post
forward stock split) shares of common stock, par value $0.0001 per share, at an
offering price of $0.0004 (post forward stock split) per share. Total
proceeds, net of offering costs of $27,034, were $52,966.
F-13
(9) Convertible Preferred
Stock
The
Company issued 10,000 convertible preferred shares to Spectra Timber on January
12, 2009 in exchange for timber rights in the Massaka region of Cameroon. The
preferred stock will bear dividends, payable in stock, semi-annually in arrears,
at the rate of five per cent (5%) per annum, beginning June 1, 2011. Each
preferred share is convertible into a common share, subject to the vote of the
preferred share holders, at the option of the holder at any time after January
12, 2021 at the conversion ratio to be determined by multiplying the aggregate
number of preferred shares to be converted times 200 and dividing the product by
the Conversion Price in effect on the applicable Conversion Date. The conversion
ratio is subject to adjustment for events, such as a unit split, unit dividend,
or a specified issuance of units.
The
conversion right of the convertible preferred stock represents an embedded
derivative as defined in ASC 815 (FASB Statement No. 133, Accounting for
Derivative Instruments and Hedging Activities). The Company estimated the fair
value of the embedded derivative to be $1,248,340 on the date of grant which was
reclassified from the initial value ascribed to the convertible preferred stock.
The Company has evaluated the fair value as of December 31, 2009 and has
assessed that value to be $3,918,415. The increase in the value of the
derivative instrument resulted in an unrealized loss of $2,670,075 attributed to
the conversion option Convertible Preferred Stock for the year ended December
31, 2009.
(10) Derivatives
The fair
values and changes in the derivative liabilities for the year ended December 31,
2009 are as follows:
Inception
|
December
31, 2009
|
Gain/(Loss)
|
||||||||||
Derivative
(Warrants)
|
$
|
792,917
|
$
|
94,058
|
$
|
698,858
|
||||||
Embedded
derivative (Convertible Debt)
|
$
|
76,402
|
$
|
37,039
|
$
|
39,363
|
||||||
Embedded
derivative (Conversion Right Preferred)
|
$
|
1,248,340
|
$
|
3,918,415
|
$
|
(2,670,075)
|
||||||
Total
|
$
|
2,117,659
|
$
|
4,049,512
|
$
|
(1,931,853)
|
The
adjustment to fair value for the changes in the derivative liabilities resulted
in a loss for the fiscal year ended December 31, 2009 of $1,931,853. This amount
has been debited to expense, and recorded in “Other income and expense” in the
accompanying consolidated statement of operations.
F-14
(11)
Warrants
Warrant
Transactions for the years ended December 31, 2009 and 2008 are as
follows:
Numbers
of
warrants
|
Weight
Average
Exercise
Price
|
|||||||
Outstanding,
January 1, 2008
|
- | $ | - | |||||
Granted
|
- | - | ||||||
Exercised
|
- | - | ||||||
Expired
|
- | - | ||||||
Outstanding,
December 31, 2008
|
- | - | ||||||
Granted
|
9,750,000 | 0.001 | ||||||
Exercised
|
- | - | ||||||
Expired
|
- | - | ||||||
Outstanding,
December 31, 2009
|
9,750,000 | $ | 0.001 | |||||
Exercisable,
December 31, 2009
|
9,750,000 | $ | 0.001 |
The
provision (benefit) for income taxes for the year ended December 31, 2009 and
2008, was as follows :
2009
|
2008
|
|||||||
Current
Tax Provision:
|
||||||||
Federal-
|
||||||||
Taxable
income
|
$
|
-
|
$
|
-
|
||||
Total
current tax provision
|
$
|
-
|
$
|
-
|
||||
Deferred
Tax Provision:
|
||||||||
Federal-
|
||||||||
Loss
carryforwards
|
$
|
18,607
|
$
|
1,139
|
||||
Change
in valuation allowance
|
(18,607
|
)
|
(1,139
|
)
|
||||
Total
deferred tax provision
|
$
|
-
|
$
|
-
|
F-15
The
Company had deferred income tax assets as of December 31, 2009 and 2008, as
follows:
2009
|
2008
|
|||||||
Loss
carryforwards
|
$
|
19,746
|
$
|
1,139
|
||||
Less
- Valuation allowance
|
(19,746
|
)
|
(1,139
|
)
|
||||
Total
net deferred tax assets
|
$
|
-
|
$
|
-
|
The
Company provided a valuation allowance equal to the deferred income tax assets
for the period ended December 31, 2009, because it is not presently known
whether future taxable income will be sufficient to utilize the loss
carryforwards.
ASC 820,
“Fair Value Measurements and Disclosures,” defines fair value as the exchange
price that would be received for selling an asset or paid to transfer a
liability (an exit price) in the principal or most advantageous market for the
asset or liability in an orderly transaction between market participants on the
measurement date. ASC 820 also establishes a fair value hierarchy which requires
an entity to maximize the use of observable inputs and minimize the use of
unobservable inputs when measuring fair value. The standard describes three
levels of inputs that may be used to measure fair value:
Level 1 — Quoted prices in
active markets for identical assets or liabilities.
Level 2 — Observable inputs
other than Level 1 prices such as quoted prices for similar assets or
liabilities; quoted prices in markets that are not active; or other inputs that
are observable or can be corroborated by observable market data for
substantially the full term of the assets or liabilities.
Level 3 — Unobservable inputs
that are supported by little or no market activity and that are significant to
the fair value of the assets or liabilities.
For the
Company, this statement derivative instruments related to warrants, convertible
debt and the conversion right of convertible preferred shares. The Company
utilizes the market approach to measure fair value for its financial assets and
liabilities. The market approach uses prices and other relevant information
generated by market transactions involving similar assets or
liabilities.
Liabilities
measured at fair value on a recurring basis are summarized below:
Fair
Value Measurements as of December 31, 2009
|
||||||||||||||||
Level
1
|
Level
2
|
Level
3
|
Total
|
|||||||||||||
Description
|
||||||||||||||||
Derivative
(Warrants)
|
$ | $ | 94,058 | $ | $ | 94,058 | ||||||||||
Embedded
derivative (Convertible Debt)
|
37,039 | 37,039 | ||||||||||||||
Embedded
derivative (Conversion Right Preferred)
|
3,918,415 | 3,918,415 | ||||||||||||||
Total
|
$ | - | $ | 4,049,512 | $ | - | $ | 4,049,512 |
The
Company did not have any significant nonfinancial assets or nonfinancial
liabilities that would be recognized or disclosed at fair value on a recurring
basis as of December 31, 2009. Unrealized gains or losses on derivatives
are recorded in “Interest and other expense, net” in the consolidated statement
of operations at each measurement date. See Note 10, Derivatives.
F-16
Part
IV
Item
15. Exhibits, Financial Statement Schedules.
Index
to Exhibits
(a)
|
(1)
|
Financial
Statements
|
|
(2)
|
Financial
statement schedules
|
(3) |
(b)
3.1(1) | Articles of Incorporation of the Company |
3.2 (1) | By-Laws of the Company |
3.3 (1) | Form of Common Stock Certificate of the Company |
10.1
(1)
|
Acquisition of Patent/Technology rights to Battery Control Corporation |
31.1
(2)
|
Certification
of the Chief Executive Officer and Chief Financial/Accounting Officer
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
32.1 (2) | Certification of Chief Executive Officer and Chief Financial/Accounting Officer pursuant to 18 U.S.C. Section 1350, as Adopted, pursuant to section 906 of the Sarbanes-Oxley act of 2002 (2) |
(1)
|
Previously
filed as an exhibit to the Company’s Form SB-2 filed on July 30, 2007 as
amended, and subsequent filings
|
(2)
|
Filed
herewith
|
15
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, Ecologix Resource Group. Inc. has duly caused this Report to be signed on
behalf of the undersigned thereunto duly authorized on May 17,
2010.
Ecologix Resource Group, Inc. | |||
|
By:
|
/s/ Jason Fine | |
Jason
Fine,
Chief
Executive Officer
|
Pursuant
to the requirements of the Securities Exchange Act of 1934, this Report has been
signed by the following persons in the capacities indicated and on March 17,
2010.
Signature
|
Title
|
Date
|
||
/s/
Jason Fine
Jason Fine
|
Chairman
(Director) Chief Executive Officer and Secretary
|
May
17, 2010
|
Signature
|
Title
|
Date
|
||
/s/
Robert Radoff
|
President
|
May17,
2010
|
||
Robert
Radoff
|
Signature
|
Title
|
Date
|
||
/s/
Dr. Juan Avila
|
Director
|
May
17, 2010
|
||
Dr.
Juan Avila
|
16