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EX-2.1 - ecoTECH Energy Group Inc. | v202179_ex2-1.htm |
EX-3.1 - ecoTECH Energy Group Inc. | v202179_ex3-1.htm |
EX-3.2 - ecoTECH Energy Group Inc. | v202179_ex3-2.htm |
EX-3.3 - ecoTECH Energy Group Inc. | v202179_ex3-3.htm |
EX-99.1 - ecoTECH Energy Group Inc. | v202179_ex99-1.htm |
EX-99.2 - ecoTECH Energy Group Inc. | v202179_ex99-2.htm |
EX-10.1 - ecoTECH Energy Group Inc. | v202179_ex10-1.htm |
EX-10.2 - ecoTECH Energy Group Inc. | v202179_ex10-2.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of
Report (Date of earliest event reported): November 12,
2010
SEA 2 SKY
CORPORATION
(Exact
name of registrant as specified in its charter)
Nevada
|
333-138989
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98-0479847
|
||
(State
or other jurisdiction
|
(Commission
|
(IRS
Employer
|
||
of
incorporation)
|
File
Number)
|
Identification
No.)
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800
Fifth Avenue, Suite 4100, Seattle, WA
|
98104
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Registrant’s
telephone number, including area code: (877)
732-2759
(Former
Name or former Address, if Changed Since Last report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2.below):
¨ Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
¨ Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
¨ Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
¨ Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
Current Report on Form 8-K contains forward-looking statements as that term is
defined in the Private Securities Litigation Reform Act of
1995. These statements relate to anticipated future events, future
results of operations or future financial performance. These
forward-looking statements include, but are not limited to, statements related
to our ability to raise sufficient capital to finance our planned operations,
our ability to develop or market our products, our ability to successfully
compete in the marketplace, and estimates of our cash expenditures for the next
12 to 36 months. In some cases, you can identify forward-looking statements by
terminology such as “may,” “might,” “will,” “should,” “intends,” “expects,”
“plans,” “goals,” “projects,” “anticipates,” “believes,” “estimates,”
“predicts,” “potential,” or “continue” or the negative of these terms or other
comparable terminology.
These
forward-looking statements are only predictions, are uncertain and involve
substantial known and unknown risks, uncertainties and other factors which may
cause our (or our industry’s) actual results, levels of activity or performance
to be materially different from any future results, levels of activity or
performance expressed or implied by these forward-looking statements. The “Risk
Factors” section of this Current Report on Form 8-K sets forth detailed risks,
uncertainties and cautionary statements regarding our business and these
forward-looking statements.
We cannot
guarantee future results, levels of activity or performance. You
should not place undue reliance on these forward-looking statements, which speak
only as of the date that they were made. These cautionary statements
should be considered with any written or oral forward-looking statements that we
may issue in the future. Except as required by applicable law,
including the securities laws of the United States, we do not intend to update
any of the forward-looking statements to conform these statements to reflect
actual results, later events or circumstances or to reflect the occurrence of
unanticipated events.
EXPLANATORY
NOTE
This
Current Report on Form 8-K is being filed in connection with to the acquisition
by the Company of ecoTECH Energy Group (Canada) Inc., and certain related
actions taken by the Company.
This
Current Report on Form 8-K responds to the following items of Form
8-K:
Item
1.01
|
Entry
into a Material Definitive Agreement.
|
|
Item
2.01
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Completion
of Acquisition or Disposition of Assets.
|
|
Item
3.02
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Unregistered
Sales of Equity Securities.
|
|
Item
5.01
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Changes
in Control of Registrant.
|
|
Item
5.02
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Departure
of Directors or Certain Officers; Election of Directors; Appointment of
Certain Officers; Compensatory Arrangements of Certain
Officers.
|
|
Item
5.03
|
Amendments
to Articles of Incorporation or Bylaws; Change in Fiscal
Year.
|
|
Item
9.01
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Financial
Statements and
Exhibits.
|
As used
in this Current Report on Form 8-K and unless otherwise indicated, the terms the
“Company,” “we,” “us,” and “our” refer to Sea 2 Sky Corporation after giving
effect to our acquisition of ecoTECH Energy Group (Canada) Inc., and the related
transactions described below, unless the context requires
otherwise.
Item
1.01 Entry
into a Material Definitive Agreement
On
November 9, 2010, Sea 2 Sky Corporation executed that certain Business
Combination Agreement (the “Agreement’) by and among Sea 2 Sky
Corporation, 7697112 Canada Corp. and ecoTECH Energy Group (Canada) Inc.
(“ecoTECH”) pursuant to which ecoTECH will amalgamate with and into
7697112 Canada Corp., a wholly owned subsidiary of Sea 2 Sky Corporation
(“Subco”) on the terms and conditions set forth under the Agreement whereby each
issued Class A common share of ecoTECH shall be converted into the right to
receive one share of Sea 2 Sky Corporation.
This
description of the Agreement does not purport to be complete and is qualified in
its entirety by reference to the Agreement, which is attached as an exhibit to
this Report and incorporated herein by reference.
1
Item
2.01 Completion
of Acquisition or Disposition of Assets.
The ecoTECH
Acquisition
On
November 12, 2010, we completed the acquisition (the “Acquisition”) of all of
the issued and outstanding shares of ecoTECH Energy Group (Canada) Inc.,
pursuant to the Agreement.
Under the
terms of the Agreement, at closing, each holder of Class A common shares of
ecoTECH received one share of our common stock in exchange for each Class A
common share they held of ecoTECH, requiring the issuance of 110,606,239 shares
of our common stock. ecoTECH then amalgamated with Subco, our wholly owned
subsidiary, resulting in our 100% ownership of ecoTECH.
As a
consequence of our acquisition of ecoTECH, we intend to conduct the business
described under the Section of this Current Report on Form 8-K under the heading
“Item 1.—Business—The Business of ecoTECH” as our sole business.
Upon the
closing of the Acquisition the following persons held the following positions
with our Company:
Name
|
Position with the
Company
|
|
C.
Victor Hall
|
Chief
Executive Officer and a director (Chairman)
|
|
Erik
Odeen
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Chief
Financial Officer and a director
|
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Terry
J. Ferguson
|
Executive
Vice President and a director
|
|
John
Matthews
|
Executive
Vice President and a director
|
|
Anne
Sanders
|
Vice
President and a
director
|
As a
result, on the closing date, beneficial ownership of our common stock was as
follows:
|
·
|
The
holders of ecoTECHacquired in the aggregate beneficial ownership of
approximately 58% of our issued and outstanding common
stock;
|
|
·
|
The
holders of our common stock immediately prior to the consummation of the
Acquisition continued to hold approximately 42% of our issued and
outstanding common stock after the completion of the
Acquisition.
|
A
discussion of the beneficial ownership of our directors, officers and principal
stockholders is set forth below in the section entitled “Item 4.—Security
Ownership of Certain Beneficial Owners and Management” beginning on page 16 of
this Current Report on Form 8-K and is incorporated herein by
reference.
FORM
10 INFORMATION
1.
Business
The
following describes the business of Sea 2 Sky Corporation after giving effect to
the acquisition of ecoTECH. Whenever the terms “our,” “we” “us” and the
“Company” are used herein they refer to Sea 2 Sky Corporation, a Nevada
corporation, together with ecoTECH, our wholly-owned subsidiary, unless the
context otherwise provides.
2
Corporate
Overview and History of SEA 2 SKY Corporation
General
We were
incorporated under the laws of the State of Nevada on November 16, 2005 under
the name “Sea 2 Sky Corporation”. We were initially established
to provide travel related services to tourists in Canada and other
countries. Due to an economic downturn, we abandoned the travel
service business in the first half of fiscal 2009. Accordingly,
results from operations related to the travel business have been reclassified
from current operations to that of discontinued operations. Effective
March 1, 2009, we transitioned our business focus to that of a world-wide
renewable energy provider. Prior to the acquisition of ecoTECH, we
were a development stage company that intended to obtain sources of biomass
supply streams and convert them into green or alternative energy
products.
The
Business of ecoTECH
Overview
ecoTECH
was incorporated under the Canada Business Corporations Act (“CBCA”) on November
28, 2007 under the name “ecoPHASER Energy Corp.” Our name was
changed to “ecoTECH Energy Group (Canada) Inc. on July 1,
2010. On November 12, 2010, ecoTECH was amalgamated with
7697112 Canada Corp., a federally incorporated company that was a wholly owned
subsidiary of Sea 2 Sky Corporation, and as a result of this amalgamation,
ecoTECH is now a wholly owned subsidiary of Sea 2 Sky Corporation. ecoTECH has
no subsidiaries and is not a reporting issuer in any jurisdiction of Canada or
the United States.
ecoTECH
is a development-stage renewable energy company which plans to manufacture
biomass-fuelled power stations that produce renewable and sustainable “green”
energy products.
ecoTECH’s
current executive offices are located at 101-26633 Gloucester Way, Langley, BC
V4W 3S8 and its telephone number is (604) 288-8263.
Industry
Overview
Renewable
Energy Industry
Worldwide
growth in the renewable energy industry is set to reach more than $250 billion
by the year 2017. In 2007, the biofuels market reached $25.4 billion
globally, 40% of which came from the United States. Accordingly, we
believe there is approximately $225 billion of market opportunity in the next
seven years.
In the
United States, it is projected that 250 gigawatts (GW) of new generating
capacity will be required between 2009 and 2035; of this capacity, 37 percent
will come from renewable energy sources. Nonhydro-electric renewable
generation will account for 41 percent of the growth in total electricity
generation from 2008 to 2035. Power generated from biomass, which we
believe is the most renewable energy source in the world, is expected to grow
from 0.9 percent in 2008 to 5.5 percent in 2035. A large portion of
this increase comes from increased co-firing—a process in which biomass is mixed
with coal in coal-firing plants.
The U.S.
Energy Information Administration (“EIA”) projects that over the next 23 years
(by 2035), the role of fossil fuel in providing energy will fall from 84% to
78%, and renewable energy sources will supply in excess of 14% of the nation’s
total consumption.
ecoTECH’s
Business Plan
ecoTECH
plans to manufacture biomass-fuelled combined heat and power (CHP) stations that
produce renewable and sustainable “green” energy products. Over the
past 30 years, ecoTECH’s executives have developed and refined a “proprietary
thermal gasification” technology to create clean-burning waste-to-energy
cogeneration Power Stations. This combined heat and power (CHP) technology
produces: (i) electricity, which can be channeled to utilities and end-users via
the Grid; and (ii) heat which can be used to fuel a torrefied biomass briquette
manufacturing facility, allowing for a “green-fuel” offering and related revenue
stream. ecoTECH will specialize in the development and operation of
CHP Power Stations and intends to build five CHP Power Stations in North
American in the next five to seven years.
3
ecoTECH
intends to strategically position multiple CHP Power Stations in order to:
(i)
reduce the reliance on fossil fuels by providing a sustainable and
environmentally friendly source of energy and fuel products manufactured from
local biomass feedstocks; (ii) meet specific local needs for decentralized
power, while reducing the cost of biomass transportation; (iii) assist
communities meet federal and state renewable energy and reduced emissions
mandates; and, (iv) provide local jobs and community development for the project
communities.
ecoTECH’s
Advantages:
ecoTECH
believes that its proprietary technology; prototype manufacturing equipment, and
access to feedstock resources provide advantages over potential competitors to
meet their objectives.
Proprietary
Technology:
During
the past 30 years, ecoTECH’s executives developed and refined its proprietary
thermal gasification technology to create clean-burning waste-to-energy
cogeneration Power Stations which would provide optimal revenue performance,
correct volumetric fuel flow systems and minimum environmental impact. ecoTECH’s
power stations combine technologies to effectively process and convert biomass
and other feedstocks, under environmentally friendly conditions, into
electricity. ecoTECH’s proprietary design uses multiple fuel stocks and produces
higher mass-to-energy with almost zero harmful emissions to the
environment. Additionally, ecoTECH has acquired the licensing
rights to adjunct technologies (hydroponic harvesting, cold storage, etc.)
which, when requested, can be coupled with the power stations to provide
cost-effective solutions for rural community needs.
Prototype
Equipment:
ecoTECH’s
technology has been developed and fine-tuned via initial prototypes created
through private funding and tested in the Company’s lab facilities in Langley,
BC. ecoTECH is currently in discussions with external engineering firms for
independent testing and feasibility studies. Commercial scale manufacturing
equipment will be constructed upon obtaining additional capital funding through
debt and equity financing. Third party technologies/applications identified for
use by ecoTECH have been tested and currently exist in commercial
environments.
Bio-Mass Resources
ecoTECH
has already established long-term agreements for sources of woody biomass with
land owners; tree farm license (“TFL”) holders; First Nations bands in British
Columbia and Alberta, Canada; and Native Americans in Montana, U.S. Currently,
contracts and/or letters of intent have been secured from two North American
sources which account for multiple-year fiber supply in excess of 1.5 million
tons biomass feedstock per year.
ecoTECH’s
Divisions
ecoTECH
intends to conduct its business through two divisions: (i) CHP Bio
Energy Production Division and (ii) Torrefied Bio-Fuels Manufacturing and
Distribution Division.
CHP Bio-Energy Production
Division
The CHP
Bio-Energy Production division uses biomass-to-energy technology to produce and
provide renewable, clean power directly to the Grid, utility companies, power
brokers, large industrial manufacturers and other end users.
ecoTECH’s
combined heat and power (“CHP”) Bio-Energy Power Station produces heat and power
by converting sustainable (closed or open loop) biomass or similar biomass
through a thermal gasification process into heat (producing virtually zero
harmful emissions), which is then converted into electricity.
ecoTECH
has proprietary thermal power generation technology utilizing several patented
components making it arguably the cleanest and most efficient thermal technology
today. ecoTECH combines its own technology with the proven high quality
technologies of both Turboden (a United Technologies company) and WOW Energies
to transition the heat generated into usable power.
4
During
the electricity generation process, a heat by-product is produced which would
normally be classified as “waste heat”; however, ecoTECH endeavors to utilize
all available energy from these highly efficient units, so the energy in the
by-produced heat is captured and circulated in an ecoTECH Thermax® site heating
high-flow hot oil systems. The oil is transferred in underground pipes at a
temperature of 700o F. (370o C), and is used to heat the airless roasting
chamber in the torrefaction process. Residual energy is used in other site
heating systems before reheat by the ecoPHASER system.
ecoPhaser System
ecoTECH’s
Power Station includes an “ecoPHASER”, which is a Sublimation Reactor and Sonic
Standing Wave Pulsed Burner fuelled by such feedstocks as: coal, lignite,
leonardite, peat, chipped tyres, straw, wood waste, forestry slash, croppings,
coke, bark, sawdust, paper, natural gas, landfill gas, bagasse, presorted
garbage, manure, dried sewage and municipal solid waste. Any and all of the
aforementioned are viable and cost effective fuel feedstocks. The efficiency of
the ecoPHASER allows traditional fuels such as coal or natural gas to be
efficiently processed into electricity, producing emissions well below current
regulatory requirements.
The
ecoPHASER produces a near-zero NOx exhaust, comprising mainly of Nitrogen and
CO2. The inert exhaust gases are piped to the sealed, flow-through drying
tunnel, where the ambient moisture (<35%) wood chips are anaerobically
heat-dried to <10% moisture. The zero-oxygen environment is sustained
throughout the entire process.
Whereas
other processes rely on exothermic oxidation of the material to produce friable
bio-char, our process creates fiber embrittlement from super dehydration and
thermal breakdown without oxygen, so the lift of hydrocarbons associated with
aerobic char production and thermal oxidation of energy components cannot occur.
Therefore, latent energy remains in the wood as it is rendered
friable.
Upon
exiting the roast oven, the flue gas is returned to the ecoPHASER system’s
exhaust stack, whilst the biomass is ground to optimum granule size before
mixing with the lignin binder extracted from wood by our separate Bio-Still™
process, prior to briquetting. The fully roasted chips are ground to an optimum
fuel granule size required by the client power stations and mixed with 1.5% by
weight dried lignin. The mixture is conveyed to an array of briquettors where it
is compressed into the finished product. Most briquettes are 120 mm square
cushion style, but the dies can be changed to suit client
requirements.
CHP Bio-Energy Power
Stations:
A CHP
Bio-Energy Power Station is described as a Waste-to-Energy (W2E), Combined Heat
and Power energy generating facility. It produces both the heat and electricity
in varying combinations, which can be tailored to produce desired amounts of
either. The main structure houses a variable number of modules operating in a
parallel array, each delivering 12MW’s of electrical power and approximately
5MW’s equivalent (15Mbtu) of process and sacrificial heat.
Each
station consists of a traditional two-stage gassifier / burner which utilizes
proven proprietary gasification technology and “off the shelf” boilers and
turbines. The stations are built in 12MW modules (or “Pods”) for simplicity in
expansion and redundancy. This compact and scalable design provides flexibility
for various sized projects.
For a
typical 36MW Power Station: approximately 460 tons of biomass feedstock would be
processed each day (during one eight hour shift) for 260 days per year, and
would yield 130,000 tons fuel – enough electricity to provide 36 megawatts per
hour, 24 hours per day, for 365 days per year (approximately 315 gigawatts per
year). This is enough electricity to power 40,000 homes at average North
American consumption rates.
Delivery of Heat from CHP
Stations:
A 36MW
Power Station produces raw heat energy in the magnitude of 165 GigaJoules (156
Mbtu) per hour, running 24 hours per day for 365 days per year. This equates to
17 MWe (17 megaWatts electricity equivalent) per ecoPHASER x 3, radiated into
the boilers, superheaters, reheaters and economizers – thus converting energy
into steam which turns the multiple stages of turbo-fans that comprise the steam
turbines, which produces mechanical energy to revolve generators to
electro-magnetically generate electricity, resulting in heat and mechanical
losses that are circa 15 Mbtu (roughly 16 GigaJoules) of energy, most of which
is available as high heat energy for use or transportation to a
consumer.
5
The heat
is transported via a piped Thermax® oil medium, that does not boil until over
700oF (371oC), hence no pressure of expansion as in steam systems; so no
leakage, corrosion or burst potential. The insulated transmission pipes are
small bore <55mm (2.2”), pumped at high speed around the circuit, usually 5
feet (1.5m) below ground and very safe. Heat is pumped to take-off points (heat
exchangers/radiators) that may be housed in boilers for steam or hot water
heaters.
Torrefied Bio-Fuels
Manufacturing and Distribution Division
The
Torrefied Bio-Fuels division will manufacture and distribute “green-fuel” via
torrefied briquette plants powered by surplus heat and energy provided by the
CHP Power Stations. Green-fuel is a wood-based “clean fuel” product that has
been torrefied and pelletized, resulting in a highly-condensed wood fuel product
which has roughly equal calorific value as standard coal and can be burned in
the exact same manner but with greatly reduced carbon dioxide (CO2)
emissions. Biomass in general provides a low cost, low risk route to lower
CO2 emissions.
When high volumes are needed, torrified biomass is price competitive with coal
while meeting or exceeding emissions standards and may also provide a revenue
stream through carbon credit gains.
ecoTECH
anticipates that North American markets will further emerge as legislation and
emission standards follow demand from governments and constituents seeking low
carbon dioxide coal replacement products. Based on current pricing models and
additional preliminary diligence discussions with a European utility company, we
anticipate pricing FOB London at $250/ton US. At startup, ecoTECH expects to
produce torrified biomass at a cost of $125/ton for delivery to European
markets. Customers for “green-fuel” biofuels make up two potential groups:
Direct end-users including current coal-fuelled power companies, and commodities
brokers.
Torrefied Briquettes, As
industries transition from coal-fired energy to more earth-friendly
methods,
“green-fuel”
production provides a solution for coal-fired energy manufacturers to
meet mandated percentages of sustainable fuels contents by established
regulatory deadlines. Currently, most coal-fired power generators around the
world do not have a readily available “green” fuel, and the cost of converting /
retrofitting existing combustion systems is often not
practicable. Most of the coal-fired power generators pulverize coal
in ball mills and spray the ground fuel into the combustion zones. When wood in
briquette or pellet form is ground in a ball mill, it forms stubbornly stringy
mats and fibers that clog the system, making it an unfeasible solution for
long-term use. However, when wood is roasted (“torrefied”), it
becomes brittle at a certain temperature and takes on the attributes of coal,
with the exceptions that it provides greater heat energy by weight, is
sustainably renewable, and meets the mandated criteria. ecoTECH intends to use
surplus heat generated by the Power Stations to provide this torrefaction
process to woody biomass, which is then formed into briquettes to be sold at
respectable margins on long-term fuel supply contracts with coal-fired power
stations. This allies our efforts with the existing coal power giants, where
helping them gives access to transmission facilities that would not be afforded
a competitor.
Our
torrefication process offers advantages for parties requiring low carbon dioxide
replacement products, including
|
·
|
No
modifications to firing systems needed; No capital outlay required to burn
the fuel:
|
|
·
|
No
handling or storage modifications needed; can be stored in the coal
piles.
|
|
·
|
Will
not deteriorate in inclement weather. Hydrophobic; hygroscopy actually
less than coal.
|
|
·
|
Even
with old burners, it will produce lower NOx and zero SOx to lower
emissions.
|
|
·
|
Higher
energy content; emissions reduction exceed percentage of briquettes
added.
|
|
·
|
Carbon
Credits: each ton of ecoTECH briquettes that are consumed reduces the
CO2
output by 2.5tons. Depending on the buyer and the prevailing cap
& trade spot at the time, this amounts to a rebate of at least $75 per
ton of briquettes used.
|
Torrefaction
Technology:
Torrefaction
is a scientifically proven method for improving the properties of biomass as a
fuel. Torrefaction is the thermo-chemical treatment of biomass at 200 to 300°C,
carried out under atmospheric conditions and in the absence of oxygen. During
the process the biomass partly decomposes, giving off various types of
volatiles. The final product is the remaining solid, which is often referred to
as torrefied biomass, or torrefied wood when produced from woody
biomass.
6
Typically,
70% of the mass is retained as a solid product, containing approximately 90% of
the initial energy content. The remaining 30% of the mass is converted into
torrefaction gases, but contains only approximately 10% of the energy content of
the biomass. Hence a considerable energy densification can be achieved,
typically by a factor of 1.3 on mass basis. This example points out one of the
fundamental advantages of the process, which is the high transition of the
chemical energy from the feedstock to the torrefied product, while concurrently
the fuel properties are improved
Torrefaction
can potentially be applied to a wide variety of biomass (softwood, hardwood,
herbaceous, wastes) so that the range of biomass feedstock for torrefied wood
briquettes can be greatly increased. ecoTECH plans to apply torrefaction
technology to increase the energy output in biomass products and to provide a
coal-like product with significant environmental advantages.
The
torrefied biomass has also proven to have hydrophobic (resistant to or avoiding
wetting) properties which are welcome during storage. From the pelletization
viewpoint, the implementation of torrefaction within the pelletization process
offers theoretical solutions to the problems encountered with the durability and
biological degradation of wood pellets.
Ancillary
Operations:
To
supplement the CHP Power Stations and torrefied briquette facilities, ecoTECH
intends develop and operate avant-garde greenhouses, indoor food fish
propagation facilities, and cold store facilities that further use by-produced
heat and carbon dioxide from the CHP stations. These projects create adjunct
profitable activities which provide regional production of organic foods, heat
exchange cold storage and other products which are essential elements of our
21st century sustainable way of life. The demand for all of the products and
services we offer is growing with international environmental awareness and the
knowledge of the importance of sustainability across the world. We believe that
our comprehensive approach is unique in the energy sector.
Current
Projects
ecoTECH
is in various stages of three large projects located in both the U.S. and
Canada:
|
1.
|
Ashland
Montana: 36MW/hour biomass-fuelled CHP Power
Station;
|
|
2.
|
McBride,
British Columbia, Canada – Phase I: Power & Heat 5MW
Electricity + 27 GJ/hour process heat CHP Power Station; 4 hectare
Hydronov mixed produce hydroponic greenhouse: Hydranov 4 hectare
aquaculture facility and ecoTECH cold storage technology;
and
|
|
3.
|
McBride,
British Columbia, Canada – Phase II: One additional
biomass-fuelled Power Station, rated at 36MW per hour (at 75%
capacity).
|
Using
local wood waste biomass, each of these projects will provide electricity and
fuel products to multiple communities, with excess energy production available
to external utility companies and energy brokers which can be transferred easily
via the Grid infrastructure.
Employees
Immediately
following the closing of the Acquisition, we had 6 employees, including five
executive officers.
7
Item
1A. Risk
Factors
An
investment in our common stock involves various risks. You should carefully
consider the risk factors set fort below in conjunction with the other
information contained in this report before purchasing our common stock. If any
of the risks discussed in this report actually occur, our business, operating
results, prospects and/or financial condition could be adversely impacted.
This could cause the market price of our common stock to decline and could cause
you to lose all or part of your investment.
Risks
Related to our Business and Our Industry
We have no
operating history on which to evaluate our potential for future success.
We have had no material operations to date. Consequently,
evaluating an investment in us and predicting our future results based upon our
past performance is not possible, particularly with respect to our ability to
develop our products and services, to generate and sustain a revenue base
sufficient to cover operating expenses or to achieve profitability.
Based on our
historical financials, there is uncertainty as to our ability to continue as a
going concern. In the event that we are unable to achieve or
sustain profitability or are otherwise unable to secure additional external
financing, we may not be able to meet our obligations as they come due, raising
substantial doubts as to our ability to continue as a going
concern. Any such inability to continue as a going concern may result
in our security holders losing their entire investment. Our financial
statements, which have been prepared in accordance with generally accepted
accounting principles, contemplate that we will continue as a going concern and
do not contain any adjustments that might result if we were unable to continue
as a going concern. Notwithstanding the foregoing, our cash flow
deficiencies raise substantial doubt as to our ability to continue as a going
concern. Also, changes in our operating plans, our existing and
anticipated working capital needs, the acceleration or modification of our
expansion plans, lower than anticipated revenues, increased expenses, potential
acquisitions or other events may also affect our ability to continue as a going
concern.
We will need
additional financing for which we have no commitments and this may jeopardize
execution of our business plan. We have limited funds,
and such funds may not be adequate to carry out the business plan in the energy
business. Our ultimate success depends upon its ability to raise
additional capital. We have not investigated the availability,
source, or terms that might govern the acquisition of additional capital and
will not do so until it determines a need for additional
financing. If we needs additional capital, it has no assurance that
funds will be available from any source or, if available, that they can be
obtained on terms acceptable to us. If not available, our operations
will be limited to those that can be financed with its modest
capital.
Torrefication
technologies are unproven on a large-scale commercial basis and performance
could fail to meet projections, which could have a detrimental effect on the
long-term capital appreciation of our stock. While wood pellet
production is a mature technology, newer technologies such as torrefaction have
not been built at large commercial scales. The technologies being utilized by us
for alternative energy production from biomass have not been demonstrated on a
commercial scale. All of the tests conducted to date by us with respect to a
specific torrefaction technology have been performed on limited quantities of
feedstocks, and we cannot assure you that the same or similar results could be
obtained at competitive costs on a large-scale commercial basis. We have never
utilized these technologies under the conditions or in the volumes that will be
required to be profitable and cannot predict all of the difficulties that may
arise. It is possible that the technologies, when used, may require further
research, development, design and testing prior to larger-scale
commercialization. Accordingly, we cannot assure you that these technologies
will perform successfully on a large-scale commercial basis or at
all.
Competition from
large producers of torrefied biomass energy products and other competitive
renewable energy products may impact our
profitability. Although we are not aware of any large
commercial operations which convert biomass into energy via the torrefaction
technology, we expect others to follow our lead. In addition,
manufacturers of other sources of alternative energy (from wind, water, sun,
etc.) are considered competitors in our industry. Our proposed torrefaction
plants will compete with all of these competitors at varying
levels.
We will be
impacted by woody biomass supply. Our Torrefied
biomass energy products will be produced from woody biomass, and currently we
have agreements for sufficient woody biomass to accommodate up to two
plants. However, should these resources be affected by weather,
governmental restraints, and other conditions, we might experience a shortage of
raw material which would hinder operations.
8
We may not be
able to obtain the funding to construct and operate our terrified energy plans,
the failure of which could adversely affect our business, operations and
financial condition. Our business plan
depends on the completion of multiple torrefaction plants. Although each
facility will have specific funding requirements, our proposed first plant will
require approximately $100 million to fund. We will be relying on additional
financing, and also funding from such sources as Federal and State grants and
loan guarantee programs. We are currently in discussions with
potential sources of financing but no definitive agreements are in place. If we
cannot achieve the requisite financing or complete the plants as anticipated,
this could adversely affect our business, the results of our operations,
prospects and financial condition.
Risks
Related to Government Regulation and Subsidization
Federal
Regulations concerning grants and tax incentives could expire or change which
could cause an erosion of the competitive strength of the biomass renewable
energy industry. The US Congress
currently provides certain federal tax credits for alternative energy
manufacturers, distributors, and end-users. The current alternative
energy industry and our business initially depend on the continuation of these
credits. The credits have supported a market for renewable energy sources
(specifically biomass) that might disappear without the credits. These credits
may not continue beyond their scheduled expiration date or, if they continue,
the incentives may not be at the same level. The revocation or amendment of any
one or more of these tax incentives could adversely affect the future use of
biomass alternative energy in a material way, and we cannot assure investors
that any of these tax incentives will be continued. The elimination or reduction
of federal tax incentives to the renewable energy industry could have a material
adverse impact on the industry as a whole.
Non-stringent
enforcement of environmental and energy policy regulations may adversely affect
demand for renewable alternative energy sources such as those provided by the
conversion of woody biomass. Our success will depend
in part on effective enforcement of existing environmental and energy policy
regulations. Many of our potential customers are unlikely to switch from the use
of conventional fossil fuels unless compliance with applicable regulatory
requirements leads, directly or indirectly, to the use of
environmentally-friendly alternatives. Both additional regulation and
enforcement of such regulatory provisions are likely to be vigorously opposed by
the entities affected by such requirements. If existing emissions-reducing
standards are weakened, or if governments are not active and effective in
enforcing such standards, our business and results of operations could be
adversely affected. Even if the current trend toward more stringent
emission standards continues, we will depend on the ability of biomass
alternative energy to satisfy these emissions standards more efficiently than
other alternative technologies. Certain standards imposed by regulatory programs
may limit or preclude the use of our products to comply with environmental or
energy requirements. Any decrease in the emission standards or the failure to
enforce existing emission standards and other regulations could result in a
reduced demand for our products. A significant decrease in the demand will
reduce the price of our products, adversely affect our profitability and
decrease the value of your stock.
Our proposed new
torrefication plants will also be subject to federal, state and provincial laws
regarding occupational safety. Risks of substantial
compliance costs and liabilities are inherent in the conversion process leading
to the production of Torrefied biomass energy products. We may be subject to
costs and liabilities related to worker safety and job related injuries, some of
which may be significant. Possible future developments, including stricter
safety laws for workers and other individuals, regulations and enforcement
policies and claims for personal or property damages resulting from operation of
the torrefaction plants could reduce the amount of cash that would otherwise be
available to further enhance our business.
The departure of
our Chief Executive and/or other key personnel could compromise our ability to
execute our strategic plan and may result in additional severance costs to
us. Our
success largely depends on the skills, experience and efforts of our key
personnel, including our Chief Executive Officer and other key
personnel. The loss of these persons, or our failure to retain other
key personnel, would jeopardize our ability to execute our strategic plan and
materially harm our business. In addition, we intend to enter into a
written employment agreement with each of our key executives that can be
terminated at any time by us or the executives.
We will need to
recruit and retain additional qualified personnel to successfully grow our
business. Our future success will depend in part on our
ability to attract and retain qualified operations, marketing and sales
personnel as well as engineers. Inability to attract and retain such
personnel could adversely affect the growth of our business. We
expect to face competition in the recruitment of qualified personnel, and we can
provide no assurance that we will attract or retain such personnel.
We are subject to
management risks. New ventures have substantial inherent risks including,
but not limited to, development, marketing, sales, distribution, human factors
and the coordination of any and all of these
activities. Notwithstanding our due diligence and any pre-planning,
our products and services may encounter unexpected problems in connection with
any of these activities that could not be foreseen or accurately predicted and
which could have a material adverse effect on our business, financial condition
and results of operations.
9
We will incur
increased costs as a result of being a public company, compared to our
historical operations as a private company. As a public
company, we will incur significant legal, accounting and other expenses that
ecoTECH did not incur as a private company. We expect the laws, rules
and regulations governing public companies to increase our legal and financial
compliance costs and to make some activities more time-consuming and
costly. Additionally, with the consummation of the Agreement and the
termination of our status as a shell company, we will incur additional costs
associated with our public company reporting requirements.
We
do not have any independent directors and we have not voluntarily implemented
various corporate governance measures, in the absence of which stockholders may
have more limited protections against interested director transactions,
conflicts of interests and similar matters.
Recent
Federal legislation, including the Sarbanes-Oxley Act of 2002, has resulted in
the adoption of various corporate governance measures designed to promote the
integrity of the corporate management and the securities markets. Some of these
measures have been adopted in response to legal requirements. Others have been
adopted by companies in response to the requirements of national securities
exchanges, such as the NYSE or The NASDAQ Stock Market, on which their
securities are listed. Among the corporate governance measures that are required
under the rules of national securities exchanges are those that address board of
directors’ independence, audit committee oversight, and the adoption of a code
of ethics. Our Board of Directors is comprised of three individuals, two of whom
are also our executive officers and the third of whom is an officer of one of
our significant stockholders. Our executive officers make decisions on all
significant corporate matters such as the approval of terms of the compensation
of our executive officers and the oversight of the accounting
functions.
Although
we have adopted a Code of Ethics and Business Conduct we have not yet adopted
any of these other corporate governance measures and, since our securities are
not yet listed on a national securities exchange, we are not required to do so.
We have not adopted corporate governance measures such as an audit or other
independent committees of our board of directors as we presently do not have any
independent directors. If we expand our board membership in future periods to
include additional independent directors, we may seek to establish an audit and
other committees of our board of directors. It is possible that if our Board of
Directors included independent directors and if we were to adopt some or all of
these corporate governance measures, stockholders would benefit from somewhat
greater assurances that internal corporate decisions were being made by
disinterested directors and that policies had been implemented to define
responsible conduct. For example, in the absence of audit, nominating and
compensation committees comprised of at least a majority of independent
directors, decisions concerning matters such as compensation packages to our
senior officers and recommendations for director nominees may be made by a
majority of directors who have an interest in the outcome of the matters being
decided. Prospective investors should bear in mind our current lack of corporate
governance measures in formulating their investment decisions.
Risks
Related to our Stock
Trading in our
common stock is limited and the price of our common stock may be subject to
substantial volatility. Our common stock is
traded on the OTC Bulletin Board, and therefore the trading volume is more
limited and sporadic than if our common stock were traded on a national stock
exchange such as The Nasdaq Stock Market or the NYSE Amex. Additionally, the
price of our common stock may be volatile as a result of a number of factors,
including, but not limited to, the following:
|
·
|
quarterly
variations in our operating
results;
|
|
·
|
large
purchases or sales of our common
stock;
|
|
·
|
actual
or anticipated announcements of new products or services by us or
competitors;
|
|
·
|
general
conditions in the markets in which we compete;
and
|
|
·
|
economic
and financial conditions.
|
10
“Penny stock”
regulations may impose certain restrictions on the marketability of our
securities. The SEC has adopted regulations which generally
define a “penny stock” to be any equity security that has a price of less than
$5.00 per share or an exercise price of less than $5.00 per share, subject to
certain exceptions (including the issuer of the securities having net tangible
assets (i.e., total
assets less intangible assets and liabilities) in excess of $2,000,000 or
average revenue of at least $6,000,000 for the last three years). As a result,
our common stock could be subject to these rules that impose additional sales
practice requirements on broker-dealers who sell our securities to persons other
than established customers and accredited investors (generally persons with a
net worth in excess of $1,000,000 or annual income exceeding $200,000, or
$300,000 together with their spouse). For transactions covered by
these rules, the broker-dealer must make a special suitability determination for
the purchase of such securities and have received the purchaser’s written
consent to the transaction prior to the purchase. Additionally, for
any transaction involving a “penny stock,” unless exempt, the rules require the
delivery, prior to the transaction, of a risk disclosure document mandated by
the SEC relating to the “penny stock” market. The broker-dealer must
also disclose the commissions payable to both the broker-dealer and the
registered representative, current quotations for the securities and, if the
broker-dealer is the sole market maker, the broker-dealer must disclose this
fact and the broker-dealer’s presumed control over the
market. Finally, monthly statements must be sent disclosing recent
price information for the “penny stock” held in the account and information on
the limited market in “penny stocks.” Consequently, although the
“penny stock” rules do not currently apply to our securities, if these rules do
become applicable in the future, this may restrict the ability of broker-dealers
to sell our securities.
Our officers and
directors collectively own a substantial portion of our outstanding common
stock, and as long as they do, they may be able to control the outcome of
stockholder voting. After giving effect to the transactions
under the Agreement, our officers and directors are collectively the beneficial
owners of approximately 53% of the outstanding shares of our common stock. As
long as our officers and directors collectively own a significant percentage of
our common stock, our other shareholders may generally be unable to affect or
change the management or the direction of our company without the support of our
officers and directors. As a result, some investors may be unwilling to purchase
our common stock. If the demand for our common stock is reduced because our
officers and directors have significant influence over our company, the price of
our common stock could be materially depressed. The officers and directors will
be able to exert significant influence over the outcome of all corporate actions
requiring stockholder approval, including the election of directors, amendments
to our certificate of incorporation and approval of significant corporate
transactions.
Securities
analysts may not cover our common stock and this may have a negative impact on
our common stock’s market price. The trading market for
our common stock may depend on the research and reports that securities analysts
publish about us or our business. We do not have any control over
these analysts. There is no guarantee that securities analysts will
cover our common stock. If securities analysts do not cover our
common stock, the lack of research coverage may adversely affect our common
stock’s market price, if any. If we are covered by securities analysts, and our
stock is downgraded, our stock price would likely decline. If one or
more of these analysts ceases to cover us or fails to publish regularly reports
on us, we could lose visibility in the financial markets, which could cause our
stock price or trading volume to decline.
We may seek to
raise additional funds, finance acquisitions or develop strategic relationships
by issuing capital stock. We have financed our operations, and
we expect to continue to finance our operations, acquisitions and develop
strategic relationships, by issuing equity or convertible debt securities, which
could significantly reduce or dilute the percentage ownership of our existing
stockholders. Furthermore, any newly issued securities could have
rights, preferences and privileges senior to those of our existing
stock. Moreover, any issuances by us of equity securities may be at
or below the prevailing market price of our stock and in any event may have a
dilutive impact on your ownership interest, which could cause the market price
of stock to decline.
We may
also raise additional funds through the incurrence of debt, and the holders of
any debt we may issue would have rights superior to your rights in the event we
are not successful and are forced to seek the protection of the bankruptcy
laws.
We have no
current intention of declaring or paying any cash dividends on our common
stock. We do not plan to declare or pay any cash
dividends on our common stock. Our current policy is to retain all funds and any
earnings for use in the operation and expansion of our business.
11
Item
2. Financial Information
MANAGEMENT’S
DISCUSSION AND ANALYSIS
OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The
information set forth and discussed in this Management’s Discussion and Analysis
of Financial Condition and Results of Operation is derived from: (i) the audited
financial statements of ecoTECH for the period from Inception to December 31,
2009, and the years ended December 31, 2009 and 2008 and the related notes
thereto, which are included as Exhibit 99.1 to this Current Report on Form 8-K;
and (ii) the unaudited financial statements of ecoTECH for the period from
Inception to June 30, 2010, and the interim six (6) month periods ended June 30,
2010 and 2009 and the related notes thereto, which are included as part of
Exhibits 99.1. The following information and discussion should be
read in conjunction with such financial statements and notes
thereto. Additionally, this Management’s Discussion and Analysis of
Financial Condition and Results of Operation contains certain statements that
are not strictly historical and are “forward-looking” statements within the
meaning of the Private Securities Litigation Reform Act of 1995 and involve a
high degree of risk and uncertainty. Actual results may differ
materially from those projected in the forward-looking statements due to other
risks and uncertainties that exist in the Company’s operations, development
efforts and business environment, the other risks and uncertainties described in
the section entitled “Cautionary Note Regarding Forward-Looking Statements” at
the front of this Current Report on Form 8-K, and our “Risk Factors” section
herein. All forward-looking statements included herein are based on
information available to the Company as of the date hereof, and the Company
assumes no obligation to update any such forward-looking statement.
The
separate financial statements of Sea 2 Sky Corporation and the Management’s
Discussion and Analysis of Financial Condition and Results of Operation with
respect to the Sea 2 Sky Corporation’s financial statements are contained in Sea
2 Sky Corporation’s Form 10-Q filed for the period ended May 31, 2010 with the
Securities and Exchange Commission on June 25, 2010, and its Annual Report on
Form 10-K, for the year ended August 31, 2009, filed with the Securities and
Exchange Commission on December 8, 2009. The unaudited pro forma consolidated
financial statements of the Company are contained in Exhibit 99.2 to this
Current Report and are also incorporated by reference into this Current Report
on Form 8-K.
Company
Overview
ecoTECH
was incorporated under the Canada Business Corporations Act on November 28, 2007
under the name “ecoPHASER Energy Corp.” Our name was changed to
“ecoTECH Energy Group (Canada) Inc. on July 1, 2010. ecoTECH is a
development stage renewable energy company which plans to manufacture
biomass-fuelled power stations that produce renewable and sustainable “green”
energy products.
ecoTECH’s
current executive offices are located at 101-26633 Gloucester Way, Langley, BC
V4W 3S8 and our telephone number is (604) 288-8263
Summary
of Critical Accounting Policies
Share-Based
Payments
The
Company accounts for stock issued to employees and directors under ASC 718 –
“Compensation – Stock Compensation”. Under ASC 718, stock-based compensation
cost to employees is measured at the grant date, based on the estimated fair
value of the award, and is recognized as expense over the employee's requisite
vesting period. No stock options are currently
outstanding. The Company measures compensation expense for its
non-employee stock-based compensation under ASC 505 – Equity. The fair value of
the option issued or committed to be issued is used to measure the
transaction. The fair value is measured at the value of the Company’s
common stock on the date that the commitment for performance by the counterparty
has been reached or the counterparty’s performance is complete or the award is
fully vested. The fair value of the equity instrument is charged directly to
stock-based compensation expense and credited to common stock (no par). ecoTECH
is a privately-held company, with no trading history. The fair market
value of the stock used for costing prior stock compensation transactions has
been based on the standard recurring sales price of CAD$0.32 per share, net of
any tax-benefit valued shares. Post-acquisition, the Company
will generally use the closing market price of the stock at grant date for the
valuation of stock issuances to both employees and non-employees.
12
Research and Development
Costs
The
Company accounts for research and development (“R&D”) costs in accordance
with ASC 730, “Accounting for
Research” , which requires that R&D costs be expensed as incurred,
and that each year’s total R&D costs be disclosed in the financial
statements. ASC 730 views the research component of R&D as a
“planned search or critical investigation aimed at discovery of new knowledge”
that could result in a new or improved product, service, process, or technique.
The development component of R&D is translating “research findings or other
knowledge into a plan or design” for a new or improved product, service,
process, or technique. Development includes conceptual formulation, design, and
testing of product alternatives; construction of prototypes and operation of
pilot plants; but not routine alterations to existing products, processes, or
operations. The costs of materials and equipment that will be acquired or
constructed for use when beginning construction of the Company’s power stations
and development of related plant sites will be capitalized classified as
property, plant and equipment and depreciated over their estimated useful
lives. To date, research costs include engineering and environmental
expenses related to the Company's future waste-to-energy facilities, and all
have been expensed when incurred.
Business
Combinations
Effective
January 1, 2009, the Company adopted ASC 805, Business Combinations (“ASC
805”), a updated accounting standard which carries forward the requirements to
account for all business combinations using the acquisition method (formerly
called the purchase method). Under ASC 805, business combination accounting
applies to a wider range of transactions and events, including acquisitions of
some development stage companies, combinations of mutual entities, acquisitions
without the exchange of consideration, or other scenarios in which the acquirer
obtains control of one or more businesses. In general, ASC 805 requires
acquisition-date fair value measurement of identifiable assets acquired,
liabilities assumed, and non-controlling interests in the acquiree. Under ASC
805, the value of the business acquired usually is measured as the sum of the
acquisition-date values (measured at fair value, with a few
exceptions). ASC 805 applies prospectively to business combinations
for which the acquisition date is on or after the beginning of the first annual
reporting period beginning on or after December 15, 2008.
The
business combination of ecoTECH and Sea 2 Sky Corporation was accounted for as a
reverse acquisition with ecoTECH being treated as the acquirer for accounting
purposes. Accordingly, for all periods presented in this Report, the financial
statements of ecoTECH have been adopted as the historical financial statements
of Sea 2 Sky Corporation. The assets and liabilities acquired were
recorded at their fair values at the Acquisition Date. Identified intangible
assets, goodwill and property, plant and equipment are recorded at their
estimated fair values per preliminary valuations and may change based on the
final valuation. The results of operations of the acquired business
have been included in our operating results beginning as of the Acquisition
Date.
Convertible
Debentures
Convertible
debt is accounted for under the guidelines established by ASC 740 “Beneficial
Conversion Features”. The Company records a beneficial conversion feature
(“BCF”) related to the issuance of convertible debt that have conversion
features at fixed or adjustable rates that are in-the-money when issued and
records the fair value of the conversion feature with those instruments. The BCF
for the convertible instruments is recognized and measured by allocating a
portion of the proceeds to the conversion feature, and as a reduction to the
carrying amount of the convertible instrument equal to the intrinsic value of
the conversion features, both of which are credited to common stock. The
Company recognizes that misapplication could materially impact the financial
condition and interest costs associated with such debentures.
Results
of Operations
We had no
revenues from November 28, 2007 (“Inception”) through June 30, 2010.
We incurred $24,550,440 in operating expenses for the period from
Inception through June 30, 2010, of which $21,977,568 was related to stock
compensation costs.
Net cash
used in operating activities for the period from Inception to June 30, 2010, was
approximately $1,420,167, consisting primarily of our operating loss of
$27,455,274 offset by non-cash expenses of $117,894 in depreciation, $21,977,568
of stock compensation expense, $541,131 for accretion of beneficial conversion
feature, $700,535 of loss on extinguishment of convertible debt, financing costs
of $1,389,908 and an increase in accounts payable of $786,657 and accrued
liabilities of $574,537.
Net
cash provided by financing activities for the period from Inception to June 30,
2010, was approximately $1,671,574, which consisted of $140,730 in proceeds from
notes payable from related parties; $280,945 in proceeds from the sale of common
stock; $109,639 in proceeds from the sale of flow-through shares; and $1,137,580
in proceeds from the sale of convertible debentures.
13
The
report of our independent accountants for the fiscal year ended December 31,
2009, states that we have incurred operating losses since inception and require
additional capital to continue operations, and that these conditions raise
substantial doubt about our ability to continue as a going
concern. We believe that, as of the date of this report, in order to
fund our plan of operations over the next 12 months, we will need to fund our
operations and capital requirements from borrowings and/or the sale of
additional debt, equity, or convertible securities. It is possible
that we will be unable to obtain sufficient additional capital through the sale
of our securities as needed.
Plan of
Operations
The
Company intends to strategically position multiple CHP Power Stations in order
to:
•
|
Reduce
the reliance on fossil fuels by providing a sustainable and
environmentally friendly source of energy and fuel products manufactured
from local biomass
feedstocks;
|
•
|
Meet
specific local needs for decentralized power, while reducing the cost of
biomass transportation;
|
•
|
Assist
communities to meet federal and state renewable energy and reduced
emissions mandates; and,
|
•
|
Provide
local jobs and community development for the project
communities.
|
Long-term
markets and goals have been identified for each ecoTECH project, designed to
fulfill corporate, investor and shareholder requirements. These can be
summarized as follows:
Renewable
Energy Production and Sales:
CHP Power Stations are
modular units built in chains to meet specified power needs of the community or
communities. Combined heat and power are produced in variable ratios, depending
on the application. Local fiber availability and transmission bandwidth are two
limiting factors when determining total capacity to construct. Hence, a Power
Station is expandable and flexible to changing environments. Each Power Station
project brings baseline income for two to three decades. Power supply purchase
agreements run from five to thirty years, and we generally expect a return on
investment circa 25%, being unaffected by market trends.
Green Fuel
Production:
Torrefied
Briquettes, “Green-fuel”,
production allows an alternative to coal-fired energy manufacturers in
order to meet renewable energy mandates by established deadlines. When wood is
roasted (“torrefied”), it becomes brittle at a certain temperature and takes on
the attributes of coal, with the exceptions that it provides greater heat energy
by weight, is sustainably renewable, and meets the mandated criteria. ecoTECH
uses surplus heat generated by the Power Stations to provide this torrefaction
process to woody biomass, which is then formed into briquettes to be sold at
respectable margins on long-term fuel supply contracts with coal-fired power
stations. This allies our efforts with the existing coal power giants, where
helping them gives access to transmission facilities that would not be afforded
a competitor. Our projections indicate this business segment offers an return on
investment (ROI) of approximately 20%.
Ancillary
Operations:
Food Production Projects are
interrelated self-contained businesses that can evolve around the Power
Stations, utilizing the surfeit of energy by-products to support local
hydroponic greenhouses and aquaculture fish facilities. These are essentially
franchises from a worldwide developer/operator that employs indigenous
personnel. Food production is an essential service, with profit margins our
management expects from 30-40%, and returns on investment of 23% (hydroponic
greenhouses) and 32% (aquaculture). We have the finest expertise available plus
full local staff training from these renowned specialist
organizations.
During
the following 18 months, the Company plans to fund the construction of its first
CHP Power Station projects in McBride, British Columbia, Canada, through debt
financing and private placement equity funding, obtaining the estimated $160
million in capital required for completion of this two-phase
project. Through proprietary thermal gasification technology, this
plant is expected to create a total of 41 MW/hour of electricity which can be
channeled via the Grid to utilities and end-users; and heat which can be used to
fuel ancillary operations such as large scale (four-hectare) hydroponic
greenhouses, and food fish propagation facilities. The Company has
already secured long-term biomass fuel source agreements to fuel the
plants. Once completed, projected combined revenue is estimated to be
in excess of $106 million annually, with a corresponding return on investment
(“ROI”) of between 26-28%.
Additionally,
the Company is finalizing agreements for its second project, located in Ashland,
Montana, which consists of a 36MW/hour biomass-fuelled CHP Power Station
projected to generate in excess of $42 million of electricity revenue during its
first full year of production. Capital required for this project is
approximately $95 million.
The
Company is currently in the process of securing sources of fiber for fuel-stock
in North America through long-term multiple year contracts and letters of
intent.
14
Off
Balance Sheet Arrangements
At June
30, 2010, the Company did not have any off-balance-sheet
arrangements.
Item
3. Properties
ecoTECH
leases office space in Langley, British Columbia, Canada. The office lease
became effective on April 1, 2008 and is for a term of five years. Basic rent
for the first three years is $4,794 plus G.S.T., due in advance on the first day
of each calendar month. Basic rent for the last two years increases
approximately 7% to $5,113 plus G.S.T. per month. In
addition to basic rent and applicable taxes, ecoTECH is responsible for varying
operating expenses (HVAC, assessments, utilities and service charges, licenses
and permits) as they arise.
15
Item
4. Security
Ownership of Certain Beneficial Owners and Management
The
following table sets forth certain information known to us with respect to the
beneficial ownership (as defined in Instruction 4 to Item 403 of Regulation S-K
under the Securities Exchange Act of 1934) of our common stock immediately
following the completion of the Acquisition by (i) each person who is known by
us to be the beneficial owner of more than 5% of any class of our voting
securities, (ii) each of our directors and named executive officers, and (iii)
all of our executive officers and directors as a group. Except as otherwise
listed below, the address of each person is 800 Fifth Avenue, Suite 4100,
Seattle, WA 98104.
Name And Address
|
Number Of
Shares
Beneficially
Owned (1)
|
Percentage
Owned (2)
|
||||||
5%
Holders:
|
||||||||
Crownwest
Group(3)
|
10,725,000 | 5.61 | % | |||||
Directors
and Officers:
|
||||||||
C.
Victor Hall (4)
|
49,033,929 | 25.6 | % | |||||
Anne
Sanders (4)
|
15,189,732 | 7.94 | ||||||
Erik
Odeen
|
15,075,000 | 7.88 | ||||||
John
Matthews (4)
|
11,189,732 | 2.56 | ||||||
Terence
Ferguson (4)
|
10,689,732 | 5.59 | ||||||
All
directors and officers as a group (5 person)
|
101,178,125 | 52.92 | % |
*Less
than 1%.
(1)
Beneficial ownership is determined in accordance with the rules of the SEC and
generally includes voting or investment power with respect to securities. Shares
of common stock subject to options and warrants which are exercisable or
convertible at or within 60 days of November 12, 2010, the date of the Acquisition are
deemed outstanding for computing the percentage of the person holding such
option or warrant but are not deemed outstanding for computing the percentage of
any other person. The indication herein that shares are beneficially owned is
not an admission on the part of the listed stockholder that he, she or it is or
will be a direct or indirect beneficial owner of those shares.
(2) Based
upon 191,189,478 shares of common stock issued and outstanding immediately
following consummation of the Acquisition.
(3) The
address is 453 Fulham Road, London NW6 England
(4) The
address is 101-26633 Gloucester Way, Langley, BC V4W 3S8.
Item
5. Directors
and Executive Officers
Directors
and Executive Officers
Effective
as of the effective date of the Acquisition the following individuals serve as
the directors and executive officers of the Company. All directors of
the Company hold office until the next annual meeting of shareholders or until
their successors have been elected and qualified. The executive
officers of the Company are appointed by our Board and hold office until their
death, resignation or removal from office. Unless otherwise indicated
below, all officers and directors were elected or appointed on November 12,
2010.
16
NAME
|
AGE
|
POSITION
|
||
Executive
Officers and Directors:
|
||||
C.
Victor Hall
|
65
|
Chairman,
Chief Executive Officer
|
||
Erik
Odeen (1)
|
43
|
Chief
Financial Officer, Treasurer, Secretary and Director
|
||
Terence
J. Ferguson
|
57
|
Executive
Vice President, Business Development and Director
|
||
John
Matthews
|
65
|
Executive
Vice President, Engineering, and Director
|
||
Anne
Sanders
|
52
|
Vice
President, Administration and
Director
|
(1)
|
Mr.
Odeen was appointed as a director on February 23, 2009 and as an officer
on February 26, 2009.
|
Biographical
Information
C. Victor Hall,
Chairman, Chief
Executive Officer. Mr. Hall was appointed as our Chairman and
Chief Executive Officer in connection with the consummation of the
Acquisition. From 2007 until the closing of the Acquisition, Mr. Hall
was employed by ecoTECH as its Chief Executive Officer. From
2001-2007, Mr. Hall was employed as an officer of ecoTECH Waste Management
Systems (1991) Inc.
Erik Odeen, CPA,
CFE, Chief Financial
Officer, Treasurer, Secretary and Director. Mr.
Odeen was appointed to our Board of Directors on February 23, 2009, as Chief
Financial Officer on February 26, 2009 and as Chief Executive Officer on
February 11, 2010. Mr. Odeen resigned from his position as Chief
Executive Officer upon closing of the Acquisition. Mr. Odeen spent
eight years in public accounting; 1989 through 1992 with Deloitte & Touch,
and from 2004 through 2008 with PCAOB-registered McKennon, Wilson & Morgan
(Irvine, CA), where he specialized in managing external audits,
complex accounting issues, SEC Reporting
and Sarbanes-Oxley compliance. Additionally, Mr. Odeen has held
numerous senior-level management positions during his 13-year career with
International Paper Company. Currently, Mr. Odeen resides in Newport Beach,
California, where he operates his consulting practice which provides accounting,
financial management and advisory services to both public and privately-held
company clients. Mr. Odeen is an active member of the American Institute of
Certified Public Accountants (AICPA), the California Society of CPAs (CalCPA),
the Washington Society of CPAs (WSCPA), and the Association of Certified Fraud
Examiners (ACFE). Mr. Odeen, a Certified Public Accountant in
the State of California and Certified Fraud Examiner,
has over 22 years’ experience in manufacturing operations,
financial management, and public accounting. A graduate of Millsaps College, Mr.
Odeen holds a Bachelor of Business Administration with concentrations in
accounting and economics.
Terence J.
Ferguson, Executive
Vice President, Business Development and Director. Mr.
Ferguson was appointed as our Executive Vice President, Business
Development and as a Director in connection with the consummation of the
Acquisition. From 2007 until the closing of the Acquisition, Mr.
Ferguson was employed by ecoTECH as its Executive
Vice-President. From 2001-2007, Mr. Ferguson was employed
by ecoTECH Waste Management Systems (1991) Inc.
John Matthews,
Executive Vice
President, Engineering and Director. Mr. Matthews was
appointed as our Executive Vice President, Engineering and as a Director in
connection with the consummation of the Acquisition. From 2007 until
the closing of the Acquisition, Mr. Matthews was employed by ecoTECH as its
Executive Vice-President. From 2001-2007, Mr. Matthews was employed
as an officer of ecoTECH Waste Management Systems (1991) Inc.
Anne Sanders,
Vice President,
Administration and Director. Ms. Sanders was appointed as
our Vice President, Administration and as a Director in connection with the
consummation of the Acquisition. From 2007 until the closing of the
Acquisition, Ms. Sanders was employed by ecoTECH as its
Vice-President. From 2001-2007, Ms. Sanders was employed as an
officer of ecoTECH Waste Management Systems (1991) Inc.
Involvement
in Certain Legal Proceedings
None of
our directors or executive officers has, during the past five
years:
|
·
|
been
convicted in a criminal proceeding or been subject to a pending criminal
proceeding (excluding traffic violations and other minor
offences);
|
17
|
·
|
been
subject to any order, judgment, or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently
or temporarily enjoining, barring, suspending or otherwise limiting his
involvement in any type of business, securities, futures, commodities or
banking activities; or
|
|
·
|
been
found by a court of competent jurisdiction (in a civil action), the
Securities and Exchange Commission or the Commodity Futures Trading
Commission to have violated a federal or state securities or commodities
law, and the judgment has not been reversed, suspended, or vacated
or
|
|
·
|
has
had any bankruptcy petition filed by or against any business of which he
was a general partner or executive officer, either at the time of the
bankruptcy or within two years prior to that
time.
|
Family
Relationships
There are
no family relationships among the individuals comprising our board of directors,
management and other key personnel.
Board
Committees
The Board
intends to appoint such persons and form such committees as are required to meet
the corporate governance requirements imposed by the national securities
exchanges. Therefore, we intend that a majority of our directors will eventually
be independent directors and at least one director will qualify as an "audit
committee financial expert." Additionally, the Board is expected to appoint an
audit committee, nominating committee and compensation committee, and to adopt
charters relative to each such committee. Until further determination by the
Board, the full Board will undertake the duties of the audit committee,
compensation committee and nominating committee.
Code
of Ethics
We have
formally adopted a written code of ethics that applies to our board of
directors, principal executive officer, principal financial officer and
employees.
18
Item
6. Executive Compensation
The
following table sets forth the compensation paid to ecoTECH’s Chief Executive
Officer and its other executive officers (“Named Executive Officers”) for
services rendered during the years ended December 31, 2009 and 2008, and since
Inception through December 31, 2007.
Summary Compensation
Table
|
Stock
|
Option
|
All Other
|
||||||||||||||||||||||||
Name and Position
|
Year
|
Salary(1)
|
Bonus
|
Awards ($)
|
Awards ($)
|
Compensation
|
Total ($)
|
|||||||||||||||||||
C.
Victor Hall
|
2009
|
$ | 126,762 | (2) | — | $ | 4,176,384 | (3) | — | — | $ | 4,303,146 | (2) | |||||||||||||
Chief
Executive Officer
|
2008
|
$ | 135,950 | (2) | — | — | — | — | $ | 135,950 | (2) | |||||||||||||||
(since
November 28, 2007)
|
2007
|
$ | 24,011 | (2) | — | — | — | — | $ | 24,011 | (2) | |||||||||||||||
Terence
Ferguson
|
2009
|
$ | 84,508 | (4) | — | $ | 783,072 | (5) | — | 11,347 | (6) | $ | 878,927 | (4) | ||||||||||||
Executive
Vice President
|
2008
|
$ | 90,633 | (4) | — | — | — | $ | 8,514 | (6) | $ | 99,147 | (4) | |||||||||||||
(since
November 28, 2007)
|
2007
|
$ | 16,007 | (4) | — | — | $ | 16,007 | (4) | |||||||||||||||||
John
Matthews
|
2009
|
$ | 84,508 | (7) | — | $ | 783,072 | (8) | — | — | $ | 867,580 | (7) | |||||||||||||
Executive
Vice President
|
2008
|
$ | 90,633 | (7) | — | — | — | — | $ | 90,633 | (7) | |||||||||||||||
(since
November 28, 2007)
|
2007
|
$ | 16,007 | (7) | — | — | — | — | $ | 16,007 | (7) | |||||||||||||||
Anne
Sanders
|
2009
|
$ | 84,508 | (9) | — | $ | 1,305,120 | (10) | — | — | $ | 1,389,628 | (9) | |||||||||||||
Vice
President
|
2008
|
$ | 90,633 | (9) | — | — | — | $ | 90,633 | (9) | ||||||||||||||||
(since
November 28, 2007)
|
2007
|
$ | 16,007 | (9) | — | — | — | — | $ | 16,007 | (9) |
(1)
|
Mr.
Hall’s salary during the period above was CAD$12,000 month. Mr.
Ferguson, Mr. Matthews and Ms. Sanders’ salaries during the periods above
was CAD$8,000. The amounts set forth in table have been
adjusted to reflect $US for each such
period.
|
(2)
|
$100,494,
$39,653 and $7,003 has been accrued but not paid for the years ended
December 31, 2009, 2008 and 2007,
respectively.
|
(3)
|
16,000,000
shares of our common stock were issued to Mr. Hall in January
2009. The value represents the compensation costs of stock
issuances for financial reporting purposes for the year under ASC
718.
|
(4)
|
$72,184,
$33,987 and $3,001 has been accrued but not paid for the years ended
December 31, 2009, 2008 and 2007,
respectively.
|
(5)
|
3,000,000
shares of our common stock were issued to Mr. Ferguson in January
2009. The value represents the compensation costs of stock
issuances for financial reporting purposes for the year under ASC
718.
|
(6)
|
Represents
automobile lease payments.
|
(7)
|
$70,467,
$33,987 and $3,001 has been accrued but not paid for the years ended
December 31, 2009, 2008 and 2007,
respectively.
|
(8)
|
3,000,000
shares of our common stock were issued to Mr. Matthews in January
2009. The value represents the compensation costs of stock
issuances for financial reporting purposes for the year under ASC
718.
|
19
(9)
|
$62,765,
$34,931 and $5,002 has been accrued but not paid for the years ended
December 31, 2009, 2008 and 2007,
respectively.
|
(10)
|
5,000,000
shares of our common stock were issued to Ms. Sanders in January
2009. The value represents the compensation costs of stock
issuances for financial reporting purposes for the year under ASC
718.
|
Director
Compensation
None of
ecoTECH’s directors received any compensation for services as directors during
the three (3) most recently completed fiscal years.
Outstanding
Equity Awards at Fiscal-Year End
There
were no outstanding equity awards at the end of ecoTECH’s last fiscal
year.
Potential
Payments upon Termination
None.
Employment
Agreements
We do not
have any employment agreements with any of our executive officers or
directors.
Item
7.
|
Certain
Relationships and Related Transactions and Director
Independence
|
In
connection with the consummation of the Acquisition, we entered into that
certain Business Combination Agreement. The terms of the Business
Combination Agreement is more particularly set forth in the disclosures made
under the heading “Acquisitions” in Item 1.01 of this Current Report on Form
8-K, which disclosures are incorporated herein by reference.
On August
5, 2010, ecoTECH issued 5,400,000 shares of its Class A common shares to Erik
Odeen in satisfaction of $42,000 in consulting services rendered from July 1,
2010 through August 31, 2010. Mr. Odeen is a director and officer of
Sea 2 Sky.
Director
Independence
Our Board
of Directors has determined that none of our directors are “independent” as
defined under the standards set forth in Section 121A of the American Stock
Exchange Company Guide.
Item
8. Legal
Proceedings
Currently,
we are not a party to any legal proceedings, and are not aware of any proceeding
threatened or contemplated against us by any governmental authority or other
party.
Item
9.
|
Market
Price of and Dividends on the Registrant’s Common Equity and Related
Stockholder Matters
|
Market
Information
Our
common stock is traded on the OTC Bulletin Board under the symbol
“SSKY.” The following table shows the high and low bid prices for our
common stock for each quarter since September 1, 2008 as reported by the OTC
Bulletin Board. All share prices have been adjusted to provide for
the 30-1 forward split effected in February 10, 2009. We consider our
stock to be “thinly traded” and any reported sale prices may not be a true
market-based valuation of its stock. Some of the bid quotations from
the OTC Bulletin Board set forth below may reflect inter-dealer prices, without
retail mark-up, mark-down or commission and may not represent actual
transactions.
20
Sale Prices
|
||||||||
High
|
Low
|
|||||||
Fiscal
Year Ended August 31, 2010
|
||||||||
First
Quarter
|
$ | 0.12 | $ | 0.05 | ||||
Second
Quarter
|
0.08 | 0.05 | ||||||
Third
Quarter
|
0.09 | 0.04 | ||||||
Fourth
Quarter
|
0.15 | 0.06 | ||||||
Fiscal
Year Ended August 31, 2009
|
||||||||
First
Quarter
|
$ | 0.00 | $ | 0.00 | ||||
Second
Quarter
|
- | - | ||||||
Third
Quarter
|
0.64 | 0.55 | ||||||
Fourth
Quarter
|
0.65 | 0.07 |
Holders
As of
November 12 2010, Sea 2 Sky Corporation had approximately 173 holders of record
of its common stock after giving effect to the Acquisition.
Dividends
We have
not paid any cash dividends on our common stock, and do not anticipate paying
cash dividends in the foreseeable future. Our current policy is to
retain earnings, if any, to fund operations, and the development and growth of
our business. Any future determination to pay cash dividends will be
at the discretion of our Board and will be dependent upon our financial
condition, operation results, capital requirements, applicable contractual
restrictions including restrictions in loan agreements, restrictions in our
organizational documents, and any other factors that our Board deems
relevant.
Item
10. Recent Sales of Unregistered Securities
Sales
of Unregistered Securities by Sea 2 Sky
Sea 2 Sky
issued 110,606,239 shares of common stock to the former stockholders of ecoTECH
in exchange for 100% of the issued and outstanding shares of capital stock of
ecoTECH
The offer
and sale of the foregoing securities was made solely to either “offshore
investors” as such term is defined under Regulation S of the Securities Act of
1933, as amended and to “accredited investors” and in reliance upon
and pursuant to the exemptions from registration provided by Regulation S,
Regulation D of the Securities Act and Section 4(2) of the Securities
Act.
Sales
of Unregistered Securities by ecoTECH
In
November 2007, ecoTECH issued 13,000,000 shares of its Class A common
shares to 11 founder investors at a nominal price. ecoTECH relied on
an exemption under National Instrument (NI) 45-106.
From
December 2007 through June 30 2010, ecoTECH issued 1,009,065 Class A common
shares to 24 investors for an aggregate purchase price of
$280,945. ecoTECH relied on an exemption under NI
45-106. Proceeds were used for working capital and general corporate
purposes
In
December 2007, ecoTECH issued an aggregate of $177,584 10% convertible
debentures with a conversion price of CAD$0.21 to 20
investors. ecoTECH relied on an exemption under NI
45-106. Proceeds were used for working capital and general corporate
purposes.
21
During
June-July 2008, ecoTECH issued an aggregate of $273,890 10% convertible
debentures with a conversion price of CAD$0.21 to 20
investors. ecoTECH relied on an exemption under NI
45-106. The proceeds were used for working capital and general
corporate purposes.
During
August 2008 through August 2009, ecoTECH issued 230,000 “flow through” shares of
our common stock to six investors at a price of CAD$0.50 per
shares. ecoTECH relied on an exemption under NI
45-106. The proceeds were used for working capital and general
corporate purposes.
During
November 2008, ecoTECH issued 5,474,429 Class A common shares as compensation
under a consulting contract. ecoTECH relied on an exemption under NI
45-106.
During
January 2009, ecoTECH issued 27,000,000 Class A common shares to its
executive officers as compensation. ecoTECH relied on an exemption under NI
45-106.
During
April-June 2009, ecoTECH issued an aggregate of $60,000 10% convertible
debentures with a conversion price of $0.21 to 4 investors. ecoTECH
relied on an exemption under NI 45-106. The proceeds were used for
working capital and general corporate purposes.
During
January 2010, ecoTECH issued 48,000,000 Class A common shares to its executive
officers as compensation. ecoTECH relied on an exemption under NI
45-106.
Form
inception through June 30, 2010, ecoTECH issued 7,978,607 Class A
common shares of our common stock pursuant to conversion of outstanding
convertible debentures. ecoTECH relied on an exemption under NI
45-106.
During
July 2010, ecoTECH issued 393,438 shares of its Class A common shares
to 9 investors at an effective price of $0.31 per share. ecoTECH
relied on an exemption under NI 45-106. The proceeds were used for
working capital and general corporate purposes.
During
August 2010, ecoTECH issued 6,250 shares of its Class A common shares
to 1 investor at an effective price of $0.31 per share. ecoTECH
relied on an exemption under NI 45-106. The proceeds were used for
working capital and general corporate purposes.
During
September 2010, ecoTECH issued 392,188 shares of its Class A common
shares to 10 investors at an effective price of $0.31 per
share. ecoTECH relied on an exemption under NI 45-106. The
proceeds were used for working capital and general corporate
purposes.
During
October 2010, ecoTECH issued 517,813 shares of its Class A common
shares to 9 investors at an effective price of $0.31 per
share. ecoTECH relied on an exemption under NI 45-106. The
proceeds were used for working capital and general corporate
purposes.
On
November 3, 2010, ecoTECH issued 312,500 Class A common shares as payment in
full of a CAD$99,137 promissory note. ecoTECH relied on an exemption under NI
45-106.
On
November 5, 2010, ecoTECH issued 5,400,000 to a consultant as compensation for
consulting services rendered. ecoTECH relied on an exemption under NI
45-106.
22
Item
11. Description of Securities
Sea 2 Sky
Corporation is authorized to issue an aggregate of 225,000,000 shares of common
stock, par value $0.001 per share. As of the effective date of the
Acquisition, 191,189,478 shares of Sea 2 Sky’s common stock was issued and
outstanding.
Common
Stock
All
outstanding shares of Sea 2 Sky’s common stock are of the same class and have
equal rights and attributes.
Voting. The
holders of our common stock are entitled to one (1) vote per share on all
matters submitted to a vote of stockholders of the Company. Our
common stock does not have cumulative voting rights. Persons who hold
a majority of the outstanding shares of our common stock entitled to vote on the
election of directors can elect all of the directors who are eligible for
election.
Dividends. Subject
to the preferential dividend rights and consent rights of any series of
preferred stock that we may from time to time designate, holders of our common
stock are entitled to share equally in dividends, if any, as may be declared
from time to time by our Board out of funds legally available.
Liquidation and
Dissolution. In the event of liquidation, dissolution or
winding up of the Company, subject to the preferential liquidation rights of any
series of preferred stock that we may from time to time designate, the holders
of our common stock are entitled to share ratably in all of our assets remaining
after payment of all liabilities and preferential liquidation
rights.
Item
12. Indemnification of Directors and Officers
Section
145 of the Nevada General Corporation Law provides that a corporation may
indemnify directors and officers as well as other employees and individuals
against expenses including attorneys’ fees, judgments, fines and amounts paid in
settlement in connection with various actions, suits or proceedings, whether
civil, criminal, administrative or investigative other than an action by or in
the right of the corporation, a derivative action, if they acted in good faith
and in a manner they reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, if they had no reasonable cause to believe their conduct was
unlawful. A similar standard is applicable in the case of derivative actions,
except that indemnification only extends to expenses including attorneys’ fees
incurred in connection with the defense or settlement of such actions, and the
statute requires court approval before there can be any indemnification where
the person seeking indemnification has been found liable to the corporation. The
statute provides that it is not exclusive of other indemnification that may be
granted by a corporation’s certificate of incorporation, bylaws, agreement, a
vote of stockholders or disinterested directors or otherwise.
Our
Articles of Incorporation and bylaws provide that it will indemnify
and hold harmless, to the fullest extent permitted by Section 145 of the Nevada
General Corporation Law, as amended from time to time, each person that such
section grants us the power to indemnify.
The
Nevada General Corporation Law permits a corporation to provide in its
certificate of incorporation that a director of the corporation shall not be
personally liable to the corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability
for:
· any
breach of the director’s duty of loyalty to the corporation or its
stockholders;
· acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law;
· payments
of unlawful dividends or unlawful stock repurchases or redemptions;
or
· any
transaction from which the director derived an improper personal
benefit.
23
Our
Articles of Incorporation and bylaws provide that none of our directors or
officers will be personally liable to us or our stockholders for damages for
breach of fiduciary duty as a director or officer involving any act or omission
of any such director or officer; provided, however, that this will not eliminate
or limit any liability for acts or omissions which involve intentional
misconduct, fraud or knowing violation of law or payment of dividends in
violation of the Nevada Revised Statutes . Any repeal or modification of this
provision will be prospective only and will not adversely affect any limitation,
right or protection of a director of our company existing at the time of such
repeal or modification. We have also entered into indemnity
agreements with our officers and directors.
Item
13 Financial
Statements and Supplementary Data
See Item
9.01 and the exhibit index below and the corresponding exhibits, which are
incorporated herein by reference.
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
|
On
May 22, 2009, Sea 2
Sky dismissed Schumacher & Associates, Inc.
the independent accountants previously engaged as the principal accountants to
audit its financial statements. The decision to change accountants was approved
by our Board of Directors.
Also
effective on May 22, 2009, we engaged dbbmckennon, Certified Public
Accountants, as our independent certified public accountants. The decision to
change accountants was approved by Sea 2 Sky’s Board of Directors.
Schumacher
& Associates, Inc. audited our financial statements for our
fiscal years ended August 31, 2008 and 2007. The audit
report of Schumacher & Associates, Inc. on our
financial statements for the fiscal years stated above
(the "Audit Period") did not contain
any adverse opinion or disclaimer of
opinion, nor were they qualified or modified as to
uncertainty, audit scope or accounting principles, other
than reflecting an uncertainty as to the Company's ability to continue as a
going concern. During the Audit Period, and through May 22, 2009, there were no
disagreements with Schumacher & Associates, Inc. on any matter of
accounting principles or practices, financial statement disclosure, or
auditing scope or procedure, which disagreements, if
not resolved to the satisfaction of the
former accountants, would have caused it to make reference
to the subject matter of the disagreements in connection
with its report, and there were no reportable events as
described in Item 304(a)(1)(v) of Regulation S-K.
We
provided a copy of this disclosure to Schumacher & Associates, Inc. and
requested that the former accountants furnish us with a letter
addressed to the Securities and
Exchange Commission stating whether they agree with the
statements made by the Registrant, and, if not, stating the respects in which
they do not agree. A copy of such letter was attached as Exhibit 16.1
to our Current Report on Form 8-K disclosing our change of
accountants.
.
During
the two most recent fiscal years, or
any subsequent interim period prior
to engaging dbb mckennon, we
nor anyone acting on our behalf
consulted with dbb mckennon regarding (i) the application of accounting
principles to a specific completed or contemplated transaction, or (ii) the type
of audit opinion that might be rendered on the
company's financial statements where
either written or oral advice was provided that was an
important factor considered by the company in reaching a decision as
to the accounting, auditing,
or financial reporting issue, or
(iii) any matter that was the subject of a
disagreement with the
company's former accountant on any matter of accounting
principles or practices, financial
statement disclosure, or auditing scope or
procedure, which disagreements, if
not resolved to the satisfaction of the former
accountant, would have caused it to make reference to the subject
matter of the disagreements in connection with its audit report.
Item
15. Financial Statements and Exhibits
See Item
9.01 and the exhibit index below and the corresponding exhibits, which are
incorporated herein by reference.
24
Item
3.02 Unregistered
Sales of Equity Securities.
Reference
is made to the disclosure set forth under the heading “Recent Sales of
Unregistered Securities—Sales of Unregistered
Securities by Sea 2 Sky” in Item 2.01 of this Current Report on Form 8-K, which
disclosure is incorporated herein by reference.
Item
5.01 Changes
in Control of Registrant.
As a
result of the Acquisition, the Company experienced a change in control, with the
former stockholders of ecoTECH acquiring control of the
Company. Reference is made to the disclosures set forth under the
heading “Acquisition” in Item 1.01 and the disclosures set forth in Item 2.01 of
this Current Report on Form 8-K, which disclosures are incorporated herein by
reference.
Item
5.02
|
Departure
of Directors or Principal Officers; Election of Directors; Appointment of
Principal Officers.
|
On the
effective date of the Acquisition, in connection therewith, C. Victor Hall,
Terry Ferguson, John Matthews and Anne Sanders were appointed to the Company’s
Board of Directors to fill vacancies thereunder.
Additionally,
on the effective date of the Acquisition, the Board of Directors appointed (i)
C. Victor Hall as the Company’s Chief Executive Officer; (ii) Terence Ferguson
as Executive Vice President, Business Development; (iii) John Matthews as
Executive Vice President, Engineering and (iv) Anne Sanders as Vice
President, Administration. Erik Odeen resigned his position as Chief
Executive Officer concurrent with the effective date of the
Acquisition.
Reference
is made to the disclosures under the headings “Directors and Executive
Officers,” “Executive Compensation” and “Certain Relationships and Related
Transactions” in Item 2.01 of this Current Report on Form 8-K, which disclosures
are incorporated herein by reference.
Item
5.03
|
Amendments
to Articles of Incorporation or Bylaws; Change in Fiscal
Year.
|
As a
result of the Acquisition described in Items 1.01 and 2.01 of this Current
Report on Form 8-K, on the Closing Date, we adopted the fiscal year end of
ecoTECH, thereby changing our fiscal year end from August 31 to December
31.
Item
9.01
|
Financial
Statements and Exhibits.
|
(a) Financial
Statements of Business Acquired. In accordance with Item 9.01(a), (i)
ecoTECH’s audited financial statements for the period from inception through
December 31, 2009 are filed in this Current Report on Form 8-K as
Exhibit 99.1 and (ii) ecoTECH’s unaudited financial statements for
the three and six month interim periods ended June 30, 2010 are filed in this
Current Report on Form 8-K as Exhibit 99.1.
(b) Pro
Forma Financial Information. In accordance with Item
9.01(b), our unaudited pro forma consolidated financial statements are filed in
this Current Report on Form 8-K as Exhibit 99.2.
(d) Exhibits. The exhibits listed in the
following Exhibit Index are filed as part of this Current Report on Form
8-K.
25
2.1
|
Business
Combination Agreement dated as of November 2010 by and among
Sea 2 Sky Corporation, ecoTECH Energy Group (Canada) Inc. and 7697112
Canada Corp..
|
|
3.1
|
Articles
of ecoTECH Energy Group (Canada) Inc.
|
|
3.2
|
Bylaws
of ecoTECH Energy Group (Canada) Inc.
|
|
3.3
|
Articles
of Amalgamation
|
|
10.1
|
Lease
dated February 29, 2008.
|
|
10.2
|
Buy/Sell
Supply Agreement dated May 7, 2010 between ecoTECH and
Putersultants
|
|
99.1
|
ecoTECH
Energy Group (Canada) Inc. audited financial statements from Inception to
December 31, 2009 and unaudited financial statements for the period ended
June 30, 2010.
|
|
99.2
|
Unaudited
proforma consolidated financial
statements.
|
26
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
Date:
November 12, 2010
|
Sea
2 Sky Corporation
|
|
By:
|
/s/
C. Victor Hall
|
|
Name:
|
C.
Victor Hall
|
|
Title:
|
Chief
Executive
Officer
|