Attached files
file | filename |
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EX-32 - Bravatek Solutions, Inc. | exh321.htm |
EX-31 - Bravatek Solutions, Inc. | exh312.htm |
EX-32 - Bravatek Solutions, Inc. | exh322.htm |
EX-31 - Bravatek Solutions, Inc. | exh311.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended March 31, 2011
[] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ______________
eCrypt Technologies, Inc.
(Exact name of registrant as specified in its charter)
Colorado | 000-53489 | 32-0201472 | |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification Number) | |
4750 Table Mesa Dr. Boulder CO, 80305 | |||
(Address of principal executive offices) | |||
Registrants telephone number, including area code: 1.866.241.6868 |
Securities registered under Section 12(b) of the Act:
None
Securities registered under Section 12(g) of the Act:
Common Stock, no par value
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act [] Yes [X ] No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the [ ] Yes [ X ] No
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Not Applicable.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated
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filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] | Accelerated filer [ ] |
Non-accelerated filer [ ] (Do not check if a smaller reporting company) | Smaller reporting company [ X ] |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).[ ]Yes [X ] No
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of the last business day of the registrants most recently completed second fiscal quarter. $12,600,461.
As of June 22, 2011, the Company had 134,798,552 shares issued and outstanding.
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PART I
ITEM 1.
BUSINESS.
Overview
eCrypt Technologies, Inc., a Colorado corporation (hereinafter we, us, eCrypt, the Company, or the Registrant"), was incorporated in the State of Colorado, on April 19, 2007. The Company provides encryption services and software which secures the transmission of, storage of, and access to digital information. The Company is currently a development stage Company.
Principal Products
eCrypts primary business focus is on information security solutions which assist individuals and entities in securely transmitting, storing, and accessing information. The Companys business operations are oriented around the development and sale of encryption software and services. To date the Company has earned limited revenue. The Company believes the majority of its revenues will be derived from service subscriptions of both pre-packaged solutions and custom developed solutions for data encryption. Initially, the Companys business operations were also focused on the provision of Managed Communication Network Services (MCNS) and Information Technology (IT) consulting services. However, due to the lack of demand for these services, the Company has discontinued offering MCNS and IT consulting services as part of its business operations.
Currently, eCrypt develops and sells device-based encryption and security software and web-based encryption services for Personal Digital Assistants (PDAs), wireless handheld devices, laptop and desktop computers, pocket computers, cellular phones, smartphones, and other file storage devices. The Company has developed, and is now selling via its eCommerce website, its first product to market, recently renamed eCrypt One on One, encryption software for email on BlackBerry® smartphones; as of March 31, 2011, the Company had earned limited revenue from sales of eCrypt One on One. The Company is also currently in the beta phase of its web-based solution, eCrypt.me, a secure email, and file storage service.
eCrypt is also developing and plans to sell device-based and web-based encryption and security software which protects email, Short Message Service (SMS), peer-to-peer (P2P), PIN-to-PIN, Instant Messaging (IM), Multimedia Message Service (MMS), and voice communications for users on such devices and mobile devices. Additionally, eCrypt is developing and plans to sell device-based secure access interfaces which allow users to conduct financial activities on mobile devices, as well as secure access User Interfaces (UIs) for mobile devices. eCrypt has the ability to customize its device-based and web-based encryption and security solutions, as well as its secure access UIs, for the purpose of securely storing, communicating and accessing information. In addition to the device-based and web-based solutions, eCrypt is also developing and plans to sell appliance-based encryption solutions for securing email and the storage of and access to files stored on servers.
Growth and Development
In furtherance of the Companys business operations, as discussed in more detail below, the Company entered into an OEM License Agreement with Certicom Corp. for the development of eCrypt One on One, and entered into and subsequently renewed a BlackBerry® ISV (Independent Software Vendor) Alliance Agreement with Research In Motion (RIM).
Certicom OEM
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Effective January 31, 2008, eCrypt entered into an OEM License Agreement (the OEM License Agreement) with Certicom Corp., a cryptography company specializing in public key infrastructure implementations, device security, anti-counterfeiting, product authentication, asset management, and fixed-mobile convergence. Pursuant to the OEM License Agreement, eCrypt was granted a worldwide, non-exclusive, non-transferable license to develop a software product which combines eCrypts software with Certicoms software, Security Builder Crypto-C for RIM, Version 3.2, as compiled within the Research in Motion Crypto API (Security Builder). Additionally, through the OEM License Agreement, eCrypt was granted a license to reproduce and use the object code of the libraries, sample code, and other items specifically designated as runtime in Security Builder for distribution purposes. Under the terms of the OEM License Agreement, eCrypt was required to pay Certicom a production fee of $1.00 per unit for each application sold by eCrypt, with an initial $10,000 production fee for the first 10,000 units having been paid upon execution of the OEM License Agreement. The term of the OEM License Agreement was three (3) years. Subsequent to the entry into the OEM License Agreement, on March 24, 2009 Certicom Corp. was acquired by RIM, and consequently all license agreements entered into with Certicom for RIM APIs were dissolved and access to RIMs Crypto APIs is now provided to BlackBerry® Alliance Members free of charge. No further fees or reporting is required.
The foregoing description of the OEM License Agreement does not purport to be complete and is qualified in its entirety by reference to the OEM License Agreement which was filed as Exhibit 10.1 to the Companys Form 10 registration statement filed with the Securities and Exchange Commission on November 11, 2008.
BlackBerry® ISV with RIM
Effective April 2, 2008, eCrypt entered into an initial BlackBerry® Alliance Program Master Alliance Agreement and joined the BlackBerry® Alliance Program with RIM, a leading designer, manufacturer, and marketer of wireless solutions for the worldwide mobile communications market. On February 3, 2010 eCrypt renewed its Membership in the BlackBerry® Alliance Program as an Associate Member for an additional one (1) year term. eCrypt is part of the BlackBerry® Independent Software Vendor (ISV) Alliance Program (the Alliance Program”). The Alliance Program is intended to provide certain support to members who are interested in integrating marketable third party applications for BlackBerry® wireless handheld devices. As a BlackBerry® ISV Alliance Member™, eCrypt receives resources, support and tools from RIM needed to develop and sell software applications for BlackBerry® smartphone users.
On September 23, 2009, RIM launched the new BlackBerry® Alliance Program. The newest addition to the Alliance Program is a paid tiered member system with a rewards program to encourage participation. The new point system offers members points for active involvement in the program. As a members points increase the member is then rewarded with greater access to RIM tools and resources. As an Associate Member the Company is required to achieve 45 Member Points within the membership year. Points can be earned by completing various activities such as attending BlackBerry® events, submitting Case Studies, and promoting its BlackBerry® Alliance Membership.
As an Associate Member, some of the benefits realized by the Company through its participation in the Alliance Program include, but are not limited to: i) access to resources to facilitate the sale of applications and professional services to the BlackBerry® user community; ii) access to BlackBerry® Tools & SDKs (Software Development Kit (aka "devkit") is typically a set of development tools that allows for the creation of applications for a certain software package, software framework, hardware platform, computer system, video game console, operating system, or similar platform); iii) ability to participate in BlackBerry® Web Signals and BlackBerry® Push APIs (Application Programming Interface - applications designed to facilitate interaction between different software programs; An API is implemented by an application, library or operating system to determine their vocabularies and calling conventions, and is used to access their services); iv) access to BlackBerry® Internet Service-B Connectivity; v) free Code Signing Keys for
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Controlled APIs; vi) enhanced access to the Developer Issue Tracker; vii) participation in BlackBerry® Developer Forums; viii) BlackBerry® Developer Newsletter; ix) BlackBerry® Partner Newsletter; x) access to brand guidelines and the use of the BlackBerry® Alliance Associate Member logo; xi) complimentary listing in the BlackBerry® Solutions Catalog; approval for using BlackBerry® in Google® AdWords; xii) ability to produce co-branded sales and marketing collateral; xiii) ability to post online applications to the Mobile Solutions Center a RIM Internal portal for application demos and trials to various RIM channels; xiv) email support for sales related inquiries; and xv) ability to resell Technical Support Services and BlackBerry® Training Services through authorized distributors.
Research and Development
Over the next twelve (12) months, eCrypt plans to continue developing new products and existing product enhancements and strengthening strategic alliances. In particular, eCrypt plans to launch its web-based solution, eCrypt.me, as well as commence the development of additional features for the service. The Company will also commence with the development of device-based User Interfaces for access to eCrypt.me, alternate to using a web-browser. The Company anticipates that it will engage UTest, a professional testing company, in anticipation of the release of eCrypt.me.
Production
All eCrypt solutions are currently developed under the supervision of Brad Lever, Gabriel Rosu and Kasia Zukowska, the initial founders of eCrypt (collectively referred to as the Founders). Solution testing and troubleshooting is carried out by all Founders of the Company. The solutions are then deployed for use and testing by professional and non-professional test groups, who provide feedback to the Company regarding potential problems and issues with the solutions. The Company maintains regular meetings to absorb and address the feedback received from these testing sessions.
Suppliers
eCrypts major suppliers for its recurring business needs include, but are not limited to: i) Research in Motion (RIM); ii) Rogers Wireless; iii) Sharefile; and iv) Stargate Connections Ltd.
Research in Motion - eCrypt is an Associate Member of RIMs BlackBerry® Alliance Program. As part of the BlackBerry Alliance, RIM provides the Company with resources, support and tools necessary to develop and sell innovative, market-driven applications for BlackBerry smartphone users. The term of the Alliance Program is one (1) year. Thereafter, RIM may elect to renew the relationship with eCrypt for successive one-year periods.
Rogers Wireless - Rogers Wireless provides the Company with cellular telephone and wireless data services for the Companys internal operations.
Sharefile - Sharefile provides the Company with secure FTP service, used for the purpose of securely relaying large amounts of data.
Stargate Connections Ltd. - Stargate Connections Ltd. provides the Company with co-location services, commonly referred to as server hosting services, as well as IT network maintenance and management services, and IT support.
Distribution
The Company plans to distribute its solutions globally, in accordance with applicable import and export
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regulations, through a number of distribution channels. The primary method of distribution will be through the Companys eCommerce website at https://shop.ecryptinc.com. The Company will also pursue strategic distribution alliances with service providers, carrier dealers, and software vendors to distribute its solutions. The Company does not currently have any strategic distribution alliance contracts in place. To date the Company has distributed its eCrypt One on One software solely via its eCommerce website.
Customers and Marketing
Customers
To date, the Company has sold limited licenses of its encryption software to customers located globally. Based on market research conducted in May of 2010, the Company estimates that its customers are individuals and entrepreneurs in need of device-based encryption and security software for BlackBerry®smartphones. To date the Company has not sold any subscriptions to its web-based service, eCrypt.me. The Company anticipates that initially its customers for eCrypt.me will be individuals and entrepreneurs in need of affordable and versatile encryption solutions for any or a combination of PDAs, wireless handheld devices, laptop and desktop computers, pocket computers, cellular phones, smartphones, and other file storage devices. Furthermore, the Company anticipates that a majority of its customers will be small to medium sized businesses as these companies traditionally use POP email where their sensitive and confidential communications reside with a service provider. Additionally, within larger organizations we anticipate the sale of our technology to be utilized by management, C-level personnel, human resource departments, and special project groups, where email communications must be kept confidential from internal leakage. We also anticipate sales of our products to consumers who are aware of and concerned about privacy and security risks of the internet and digital communications.
Marketing
Over the next twelve months, the Company anticipates that it will begin commencing a comprehensive marketing campaign with the assistance of Rhino Marketing. The Company anticipates that Rhino Marketing will assist the Company with the establishment of a global marketing campaign which will include social networking, public appearances and speaking engagements, guest appearances on television and radio, community outreach programs such as speaking at schools about online privacy and security, strategic media buys, and podcasts.
The Company anticipates that it will initially make efforts to market its product(s) on the internet, using the Companys website (www.ecryptinc.com), on the companys blog (www.YourPrivacyIsOurBusiness.com), on social networking sites such as Twitter and Facebook, on online marketplaces such as the BlackBerry®App World and Apple App Store, and on technology and security related blogs such as Wired.com and Techvibes.com and SearchSecurity.com. Additionally, the Company will list its software, eCrypt One on One in Research In Motions BlackBerry® Solutions Catalogue, and explore joint marketing opportunities. Additionally the Company will seek to place advertisements in various lifestyle, technology, and business magazines. The Company will also continue to develop its relationship with RIM and engage in cooperative marketing, and also build on relationships previously established at WES (the Wireless Enterprise Smposium) with the major global wireless carriers and other BlackBerry® smartphone resellers.
Competition
eCrypts encryption software, eCrypt One on One, faces direct competition from three primary development companies: i) SAMURAI by BabelSecure; ii) SecureMessage by Cworx; and iii) SecretMail by Link2. Each of the foregoing companies currently offers and sells a software product similar to our product, eCrypt One on One. Although there is no assurance that we will be able to successfully compete with these companies,
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we believe because of eCrypt One on Ones functionality and operations, these products will be able to successfully compete with our competitors.
eCrypts web-based encryption service, eCrypt.me, faces direct competition from two primary sources: i) Hushmail, and ii) GnuPG, the free replacement for PGP. Hushmail currently offers and sells a subscription service similar to our product, eCrypt.me, while GnuPG offers a combination service and software similar to our product, eCrypt.me. Although there is no assurance that we will be able to successfully compete with these organizations, we believe because of eCrypt.mes functionality, versatility, and ease of use that we will be able to successfully compete wit our competitors.
Intellectual Property and Agreements
Trademarks
eCrypt has applied for trademarks with the United States Patent and Trademark Office for each of the following:
1) A stylized version of the eCrypt logo in relation to products and services offered by the Company. The mark consists of the letter e in small circle and a stylized version of the word crypt. The mark appears as follows:
Subsequent to the period ended March 31, 2011, on June 8, 2011 eCrypt received an acceptance of the statement of use for this trademark.
2) A stylized version of the e icon in relation to products and services offered by the Company. The mark consists of the letter e in a small circle. The mark appears as follows:
3) The word mark control is key, without stylization, in relation to products and services offered by the Company. The mark consists only of the words of which it is comprised.
Patents
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eCrypt is currently investigating whether its original processes developed in association with its encryption software, eCrypt One on One are patentable. If the Company determines that its original processes are patentable and that it is in the best interest of the Company to pursue such patents, then the Company will apply for patent protection with the United States Patent and Trademark Office.
Licenses
The research, development and commercialization of encryption software often involves alternative development and optimization routes, which are presented at various stages in the development process. The preferred routes cannot be predicted at the outset of a research and development program because they will depend upon subsequent discoveries and test results. There are numerous third-party patents in our field, and it is possible that to pursue the preferred development route of one or more of our products we will need to obtain a license to a patent, which would decrease the ultimate profitability of the applicable product. If we cannot negotiate a license, we might have to pursue a less desirable development route or terminate the program altogether.
Trade Secrets
The Company also relies on trade secrets, proprietary know-how and continuing technological innovation to develop and maintain a competitive position in our product areas. eCrypt employees and officers must sign a non-disclosure agreement before they are authorized to discuss particulars of the functionality of the Companys software products. All current employees and officers of the Company who are privy to confidential information have signed non-disclosure and non-competition agreements with the Company. Additionally, Gabriel Rosu, the Companys Chief Technology Officer, has signed a Development Consulting Agreement with the Company, pursuant to which eCrypt specifically retains ownership rights to all codes created and developed by Mr. Rosu in the scope of his engagement by the Company. The foregoing description of the Development Consulting Agreement does not purport to be complete and is qualified in its entirety by reference to the Consulting Agreement which was filed as Exhibit 10.6 to Form 8-K filed with the SEC on May 27, 2010.
Environmental Issues
The Companys goods and services, or the production or provision thereof, do not directly impact the environment. Notwithstanding the foregoing, the Company strives to be environmentally friendly in all aspects of its operations.
Governmental Regulations
Encryption Software is classified as a dual-use good, meaning that it can be used by both the general public and the military. Export of such goods is regulated by The Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies (the Wassenaar Arrangement).
The Wassenaar Arrangement was established in order to contribute to regional and international security and stability by promoting transparency and greater responsibility in transfers of conventional arms and dual-use goods and technologies, thus preventing destabilizing accumulations. Participating States seek, through their national policies, to ensure that transfers of these items do not contribute to the development or enhancement of military capabilities which undermine these goals, and are not diverted to support such capabilities.
The Participating States of the Wassenaar Arrangement include: Argentina, Australia, Austria, Belgium, Bulgaria, Canada, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, Malta, Netherlands, New Zealand, Norway, Poland, Portugal, Republic of Korea, Romania, Russian Federation, Slovakia, Slovenia, South Africa, Spain,
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Sweden, Switzerland, Turkey, Ukraine, United Kingdom and United States.
In the United States, the Bureau of Industry and Security (BIS) is responsible for implementing and enforcing the Export Administration Regulations (EAR), which regulate the export and re-export of most commercial items. Encryption software is subject to the EAR and other U.S. law, and may not be exported or re-exported to certain countries (currently Cuba, Iran, North Korea, Sudan and Syria) or to persons or entities prohibited from receiving U.S. exports. Because of this, the Company has applied and has received approval for Mass Market Status Export Authorization from the BIS. Mass Market Status is given to encryption products which have been reviewed and classified by the BIS as exportable under certain rules and regulations, including the mass market encryption rules of the EAR.
On June 11, 2008 eCrypt received a Mass Market Commodity Classification for eCrypt One on One from the United States Department of Commerce; a copy of the Commodity Classification was attached as Exhibit 10.5 to the Form 10 registration statement filed by the Company with the Securities and Exchange Commission on November 11, 2008, and is hereby incorporated by reference. Because the Company has received this Commodity Classification, eCrypt is allowed to export its software to all people, except restricted parties, such as Specially Designated Nationals, Denied Parties, Denied Entities, and any other prohibited end uses and users (such as end uses/users involving the design, development, production or use of WMDs or missiles), and all countries, except embargoed destinations identified in the EAR.
With the assistance of Steptoe & Johnson, eCrypt determined that an export authorization is not required for its web-based encryption service, eCrypt.me.
Employees
The Company does not currently have any full-time employees. Kasia Zukowska has been contracted by the Company to perform administrative duties on behalf of the Company. Gabriel Rosu has been contracted by the Company to perform software development duties and serve as the Chief Technology Officer for the Company. Brad Lever currently serves as the President, Chief Executive Officer, and Chief Financial Officer, and director of the Company without wages or salaries.
Reports to Security Holders
We are subject to the informational requirements of the Securities Exchange Act of 1934 which requires us to file reports, proxy statements and other information with the Securities and Exchange Commission. Such reports, proxy statements and other information may be inspected at public reference facilities of the SEC at 100 F Street, NE, Room 1580, Washington D.C. 20549. Copies of such material can be obtained from the Public Reference Section of the SEC at 100 F Street, NE, Room 1580, Washington, D.C. 20549 at prescribed rates. The public could obtain information on the operation of the public reference room by calling the Securities and Exchange Commission at 1-800-SEC-0330. Because we file documents electronically with the SEC, you may also obtain this information by visiting the SEC's Internet website at http://www.sec.gov.
ITEM 1A.
RISK FACTORS.
Not Applicable.
ITEM 1B.
UNRESOLVED STAFF COMMENTS.
Not Applicable.
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ITEM 2.
PROPERTIES.
The Company does not currently own any real property. Currently the Company runs its business operations at 2129 - 4951 Netarts Hwy W, Tillamook OR, 97141. This space is provided to the Company free of charge by a shareholder of the Company. Such costs are immaterial to the financial statements and, accordingly have not been reflected therein. The Company anticipates that it will explore leasing opportunities for office space during the next twelve months.
The Company utilizes a Canadian-based co-location facility to host its email, service and eCommerce servers. The eCommerce server will serve as the mechanism through which the Company will distribute its software online, for both purchase and evaluation purposes.
eCrypt owns the following internet domain names: ecryptinc.com, ecryptinc.ca, ecryptinc.org, ecryptinc.net, ecryptinc.cc, ecryptinc.mobi, 12thright.com, controliskey.com, ecrypt.me, ecryptforblackberry.com ecryptforblackberry.cc, ecryptforblackberry.mobi, ecryptforblackberry.net, ecryptforblackberry.org, ecryptme.com, privacynowtv.com, privacynow.tv, yourprivacyisourbusiness.com.
ITEM 3.
LEGAL PROCEEDINGS.
The Company is not a party to any significant pending legal proceedings, and no such proceedings are known to be contemplated. No director, officer or affiliate of the Company, and no owner of record or beneficial owner of more than 5.0% of the securities of the Company, or any associate of any such director, officer or security holder is a party adverse to the Company or has a material interest adverse to the Company in reference to pending litigation.
ITEM 4.
(REMOVED AND RESERVED).
PART II
ITEM 5.
MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Market Information
The Companys shares are approved for trading on the OTCBB under the symbol ECRY. The following table sets forth the high and low bid prices of our common stock (USD) for the last two fiscal years and subsequent interim period, as reported by the National Quotation Bureau and represents inter dealer quotations, without retail mark-up, mark-down or commission and may not be reflective of actual transactions:
| (U.S. $) | |
|
|
|
2009 | HIGH | LOW |
Quarter Ended March 31 | $NA | $NA |
Quarter Ended June 30 | $NA | $NA |
Quarter Ended September 30 | $0.1875 | $0.075 |
Quarter Ended December 31 | $1.35 | $0.1875 |
|
|
|
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2010 | HIGH | LOW |
Quarter Ended March 31 | $1.25 | $0.41 |
Quarter Ended June 30 | $0.68 | $0.19 |
Quarter Ended September 30 | $0.34 | $0.01 |
Quarter Ended December 31 | $0.205 | $0.0001 |
|
|
|
2011 | HIGH | LOW |
Quarter Ended March 31 | $0.23 | $0.0001 |
Holders
As of March 31, 2011 there were 134,798,552 shares of common stock issued and outstanding and approximately 16 shareholders of record.
Dividends
The Company has not declared or paid any cash dividends on its common stock during the fiscal years ended March 31, 2011 or 2010. There are no restrictions on the common stock that limit our ability to pay dividends if declared by the Board of Directors and the loan agreements and general security agreements covering the Companys assets do not limit its ability to pay dividends. The holders of common stock are entitled to receive dividends when and if declared by the Board of Directors, out of funds legally available therefore and to share pro-rata in any distribution to the stockholders. Generally, the Company is not able to pay dividends if after payment of the dividends, it would be unable to pay its liabilities as they become due or if the value of the Companys assets, after payment of the liabilities, is less than the aggregate of the Companys liabilities and stated capital of all classes.
ITEM 6.
SELECTED FINANCIAL DATA.
Not Applicable.
ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
SPECIAL NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS
CERTAIN STATEMENTS IN THIS REPORT, INCLUDING STATEMENTS IN THE FOLLOWING DISCUSSION, ARE WHAT ARE KNOWN AS "FORWARD LOOKING STATEMENTS", WHICH ARE BASICALLY STATEMENTS ABOUT THE FUTURE. FOR THAT REASON, THESE STATEMENTS INVOLVE RISK AND UNCERTAINTY SINCE NO ONE CAN ACCURATELY PREDICT THE FUTURE. WORDS SUCH AS "PLANS," "INTENDS," "WILL," "HOPES," "SEEKS," "ANTICIPATES," "EXPECTS "AND THE LIKE OFTEN IDENTIFY SUCH FORWARD LOOKING STATEMENTS, BUT ARE NOT THE ONLY INDICATION THAT A STATEMENT IS A FORWARD LOOKING STATEMENT. SUCH FORWARD LOOKING STATEMENTS INCLUDE STATEMENTS CONCERNING OUR PLANS AND OBJECTIVES WITH RESPECT TO THE PRESENT AND FUTURE OPERATIONS OF THE COMPANY, AND STATEMENTS WHICH EXPRESS OR IMPLY THAT SUCH PRESENT AND FUTURE OPERATIONS WILL OR MAY PRODUCE REVENUES, INCOME OR PROFITS. NUMEROUS FACTORS AND FUTURE EVENTS COULD CAUSE THE COMPANY TO CHANGE SUCH PLANS AND OBJECTIVES OR FAIL TO SUCCESSFULLY IMPLEMENT SUCH PLANS OR ACHIEVE SUCH OBJECTIVES, OR CAUSE SUCH PRESENT AND FUTURE
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OPERATIONS TO FAIL TO PRODUCE REVENUES, INCOME OR PROFITS. THEREFORE, THE READER IS ADVISED THAT THE FOLLOWING DISCUSSION SHOULD BE CONSIDERED IN LIGHT OF THE DISCUSSION OF RISKS AND OTHER FACTORS CONTAINED IN THIS REPORT ON FORM 10-K AND IN THE COMPANY'S OTHER FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. NO STATEMENTS CONTAINED IN THE FOLLOWING DISCUSSION SHOULD BE CONSTRUED AS A GUARANTEE OR ASSURANCE OF FUTURE PERFORMANCE OR FUTURE RESULTS.
Overview & Plan of Operation
eCrypt Technologies, Inc. was incorporated in the State of Colorado on April 19, 2007. The Company provides encryption solutions which secures the transmission of, storage of, and access to digital information. Currently the Company is a developmental stage Company. Over the next twelve (12) months, eCrypt will continue developing new products and existing product enhancements and strengthening strategic alliances. In particular, eCrypt plans to launch its web-based encryption service, eCrypt.me. The Company has also commenced research for development of other security software.
In addition to the foregoing, in an effort to advance the business operations of the Company, over the next twelve (12) months the Company plans to undertake the following actions in the order in which they are listed:
1
complete development of eCrypt.me;
2
commence and complete testing of eCrypt.me;
3
commence distribution of eCrypt.me; and
4
commence and complete development of downloadable User Interfaces for the access to eCrypt.me alternate to using a web browser, for popular wireless device models, including the BlackBerry smartphone, iPhone, and Android.
The foregoing business actions are goals of the Company. There is no assurance that the Company will be able to complete any, or all, of the foregoing actions.
Results of Operations
The following discussion and analysis provides information that we believe is relevant to an assessment and understanding of our results of operation and financial condition for the fiscal year ended March 31, 2011 as compared to the fiscal year ended March 31, 2010. The following discussion should be read in conjunction with the Financial Statements and related Notes appearing elsewhere in this Form 10-K.
Our financial statements are stated in US Dollars and are prepared in accordance with generally accepted accounting principles of the United States (GAAP).
Results of Operation for eCrypt Technologies, Inc. for the Fiscal Year Ended March 31, 2011 Compared to the Fiscal Year Ended March 31, 2010.
Revenue
Revenue. During the fiscal year ended March 31, 2011, the Company had revenues of $1,795 as compared to revenues of $35,073 during the fiscal year ended March 31, 2010, a decrease of $33,278, or approximately 94.8%. The decrease in revenue experienced by the Company was primarily attributable to the fact that the Company experienced a reduction in the revenue generated by its MCNS business operations; as previously noted, the Company has discontinued its MCNS business operations.
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Operating Expenses
Operating Expenses. During the fiscal year ended March 31, 2011, the Company had operating expenses of $675,673 as compared to operating expenses of $216,569 during the fiscal year ended March 31, 2010, an increase of approximately $459,104 or 211.99%. The increase in operating expenses experienced by the Company was primarily attributable to an increase in advertising and promotion, and general and administrative expenses experienced by the Company.
Net Loss
Net Loss. The Company had a net loss of $(693,906) for the fiscal year ended March 31, 2011 as compared to a net loss of $(184,480) for the fiscal year ended March 31, 2010, a change of $509,426 or approximately 276%. The change in net loss experienced by the Company was primarily attributable to an increase in operating expenses experienced by the Company.
Liquidity and Capital Resources
Currently, we have limited operating capital. The Company anticipates that it will require approximately $5,000,000 of working capital to complete all of its desired business activity during the next twelve months. The Company has earned limited revenue from its business operations. Our current capital and our other existing resources will be sufficient only to provide a limited amount of working capital, and, to date, the revenues generated from our business operations have not been sufficient to fund our operations or planned growth. As noted above, we will likely require additional capital to continue to operate our business, and to further expand our business. We may be unable to obtain the additional capital required. Our inability to generate capital or raise additional funds when required will have a negative impact on our operations, business development and financial results.
During the next twelve months, we plan to seek to generate the necessary capital to fund our business operations and complete our desired business activity through sales of our software eCrypt One on One, and subscriptions to our web-based service eCrypt.me. However, as of the period ended March 31, 2011, we have generated limited revenue through sales of eCrypt One on One. If we are unable to generate the necessary capital through the sales of these products, we may conduct a private placement offering to seek to raise the necessary working capital to fund our business operations.
The following discussion outlines the state of our liquidity and capital resources for the fiscal year ended March 31, 2011, compared to the fiscal year ended March 31, 2010:
Total Current Assets & Total Assets
Our audited balance sheet reflects that: i) as of March 31, 2011, we have total current assets of $43,127, as compared to total current assets of $332,366 as of March 31, 2010, a decrease of $289,239, or approximately 87%; and ii) as of March 31, 2011, we have total assets of $55,687, compared to total assets of $352,422 as of March 31, 2010, a decrease of $296,735, or approximately 84%. The decrease in the Companys total current assets and total assets from March 31, 2010 to March 31, 2011 was primarily attributable to the Company using available cash to support its operations.
Cash: As of March 31, 2011, our audited balance sheet reflects that we have cash of $42,417, as compared to $332,256 at March 31, 2010, a decrease of $289,839, or approximately 87%. The decrease in the
- 13 -
Companys cash and short term investments from March 31, 2010 to March 31, 2011 was primarily attributable to the fact that during the period ended March 31, 2010 the Company collected financing proceeds via a private placement offering of the Companys common stock which was used at March 31, 2011 to support its operations.
Total Current Liabilities
As of March 31, 2011, our audited balance sheet reflects that we have total liabilities of $355,469 as compared to total liabilities of $22,048 at March 31, 2010, an increase of $333,421, or approximately 1,512%. The increase in the Companys total liabilities from March 31, 2010 to March 31, 2011 was primarily attributable to the fact that the Company obtained a loan from a related party during the period ended March 31, 2011.
Cash Flow for the Company for the Fiscal Year Ended March 31, 2011 as Compared to the Fiscal Year Months Ended March 31, 2010
Operating Activities During the fiscal year ended March 31, 2011, the net cash used by the Company in operating activities was $603,839, as compared to net cash used in operating activities of $155,071 during the fiscal year ended March 31, 2010, a change of $448,768. The increase in net cash used in operating activities was primarily attributable to an increase in operating expenses of the Company related to advertsing and marketing, stock issued for compensation and interest on a loan from a related party.
Investing Activities During the fiscal year ended March 31, 2011, the net cash used by the Company in investing activities was $1,000, as compared to net cash used in investing activities of $3,742 during the fiscal year ended March 31, 2010, a change of $2,742. The change in net cash used by investing activities was primarily attributable to a decrease in spending on computer equipment and computer software.
Financing Activities During the fiscal year ended March 31, 2011, the net cash provided by financing activities was $315,000, as compared to net cash provided by financing activities of $395,125 during the fiscal year ended March 31, 2010, a decrease of $80,125, or approximately 20%. The change in net cash provided by financing activities was primarily attributable to the fact that the Company did not conduct a private placement during the year ended March 31, 2011. During the fiscal year ended March 31, 2011, the Company obtained loans from a related party totaling $315,000.
Off Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements.
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not Applicable.
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements of the Company required by Article 8 of Regulation S-X are attached to this report.
- 14 -
eCRYPT TECHNOLOGIES, INC.
AUDITED FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED MARCH 31, 2011 and 2010
| Page |
Report of Independent Registered Public Accounting Firm | 16 |
Balance Sheets | 17 |
Statements of Operations | 18 |
Statements of Stockholders Equity(Deficit) | 19-20 |
Statements of Cash Flows | 21-22 |
Notes to Financial Statements | 23 - 31 |
- 15 -
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
eCrypt Technologies, Inc.
We have audited the accompanying balance sheets of eCrypt Technologies, Inc. (A Development Stage Company) as of March 31, 2011 and 2010, and the related statements of operations, stockholders equity, and cash flows for the years then ended and from inception (April 19, 2007) to March 31, 2010 and from inception (April 19, 2007) to March 31, 2011. eCrypt Technologies, Inc management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the companys internal control over the financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of eCrypt Technologies, Inc. (A Development Stage Company) as of March 31, 2011 and 2010, and the results of its operations and its cash flows for the years then ended and from inception (April 19, 2007) to March 31, 2010 and from inception (April 19, 2007) to March 31, 2011 in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations, which raise substantial doubt about its ability to continue as a going concern. Managements plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
De Joya Griffith & Company, LLC
/s/ De Joya Griffith & Company, LLC
Henderson, Nevada
June 29, 2011
2580 Anthem Village Dr., Henderson, NV 89052
Telephone (702) 563-1600 ● Facsimile (702) 920-8049
Member Firm with
Russell Bedford International
- 16 -
eCrypt Technologies, Inc. | |||||||
(A Development Stage Company) | |||||||
BALANCE SHEETS | |||||||
As of March 31, 2011 and March 31, 2010 | |||||||
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| 2011 | 2010 |
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| (Audited) | (Audited) |
| ASSETS |
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| CURRENT ASSETS |
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| Cash |
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| $42,417 | $332,256 | |
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| Prepaid expenses |
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| 710 | 110 | |
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| TOTAL CURRENT ASSETS |
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| 43,127 | 332,366 | |
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| Property and equipment, net |
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| 12,560 | 20,056 | ||
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| OTHER ASSETS |
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| License-net |
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| - | - | |
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| TOTAL OTHER ASSETS |
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| - | - | |
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| TOTAL ASSETS |
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| $55,687 | $352,422 | ||
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| LIABILITIES AND STOCKHOLDERS' EQUITY(DEFICIT) |
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| CURRENT LIABILITIES |
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| Accounts payable and accrued liabilities |
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| $21,044 | $22,048 | |
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| Accrued interest on loan-related party |
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| 19,425 | - | |
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| Loan-related party |
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| 315,000 | - | |
| TOTAL CURRENT LIABILITIES |
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| 355,469 | 22,048 | ||
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| TOTAL LIABILITIES |
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| 355,469 | 22,048 | ||
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| STOCKHOLDERS' EQUITY(DEFICIT) |
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| Preferred stock (10,000,000 Shares Authorized; No Par Value |
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| 0 and 0 shares issued and outstanding as at March 31, 2011 and 2010) |
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| - | - |
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| Common stock (500,000,000 Shares Authorized; Par Value .001; |
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| 134,798,552 and 133,558,671 shares issued and outstanding as at March 31, 2011 and 2010) |
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| 703,220 | 239,470 |
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| Subscription payable |
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| - | 400,000 | |
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| Deficit accumulated during the development stage |
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| (1,003,002) | (309,096) | |
| TOTAL STOCKHOLDERS' EQUITY(DEFICIT) |
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| (299,782) | 330,374 | ||
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| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY(DEFICIT) |
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| $55,687 | $352,422 | ||
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| The accompanying notes are an integral part of these financial statements. |
- 17 -
eCrypt Technologies, Inc. | ||||||||||
(A Development Stage Company) | ||||||||||
STATEMENTS OF OPERATIONS | ||||||||||
For the Years Ended March 31, 2011 and 2010 and from Inception (April 19, 2007) to March 31, 2011 | ||||||||||
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| 2011 | 2010 | Cumulative Amount from Inception (April 19, 2007 to March 31, 2011) |
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| (Audited) | (Audited) | (Audited) |
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| REVENUES |
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| Sales | $1,795 | $35,073 | $94,218 |
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| OPERATING EXPENSES |
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| Amortization and depreciation | 8,496 | 18,873 | 52,992 |
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| Advertisment and promotion | 308,348 | 14,007 | 337,522 |
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| General and administrative | 302,863 | 106,819 | 499,928 |
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| Professional fees | 55,966 | 76,870 | 178,514 |
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| TOTAL OPERATING EXPENSES | 675,673 | 216,569 | 1,068,956 |
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| OPERATING LOSS | (673,878) | (181,496) | (974,738) |
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| OTHER INCOME (EXPENSES) |
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| Interest expense | (20,822) | (4,322) | (32,033) |
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| Gain on sale of fixed asset | - | 600 | 600 |
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| Interest income | 794 | 738 | 3,169 |
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| TOTAL OTHER INCOME (EXPENSES) | (20,028) | (2,984) | (28,264) |
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| NET LOSS | $(693,906) | $(184,480) | $(1,003,002) |
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| Loss per share |
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| Basic | $(0.01) | $(0.00) |
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| WEIGHTED AVERAGE SHARES OUTSTANDING |
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| Basic | 134,540,170 | 133,518,437 |
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| The accompanying notes are an integral part of these financial statements. |
- 18 -
eCrypt Technologies, Inc. |
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(A Development Stage Company) |
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STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) |
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For the Period from Inception (April 19, 2007) to March 31, 2011 |
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(Audited) |
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| Stock | Retained | Total |
No Par Value | Preferred Shares | Common Shares | Subscriptions | Earnings | Stockholders' | ||||
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| Number | Amount | Number | Amount | Payable | (Deficit) | Equity |
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Balance at April 19, 2007 (Date of Inception) | - | $- | - | $- | $- | $- | $- | ||
Shares issued | - | - | 116,015,968 | 55,130 | - | - | 55,130 | ||
Net loss for the period | - | - | - | - | - | (32,505) | (32,505) | ||
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Balance March 31, 2008 | - | $- | 116,015,968 | $55,130 | $- | $(32,505) | $22,625 | ||
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Stock subscriptions | - | - | - | - | 4,875 | - | 4,875 | ||
Shares issued | - | - | 17,502,248 | 151,572 | - | - | 151,572 | ||
Net loss for the period | - | - | - | - | - | (92,111) | (92,111) | ||
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Balance March 31, 2009 | - | $- | 133,518,216 | $206,702 | $4,875 | $(124,616) | $86,961 | ||
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Stock cancelled |
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| (4,875) |
| (4,875) | ||
Stock subscriptions | - | - | - | - | 400,000 | - | 400,000 | ||
Shares issued | - | - | 40,455 | 32,768 | - | - | 32,768 | ||
Net loss for the period | - | - | - | - | - | (184,480) | (184,480) | ||
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Balance March 31, 2010 | - | $- | 133,558,671 | $239,470 | $400,000 | $(309,096) | $330,374 | ||
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Shares issued for cash | - | - | 952,381 | 400,000 | (400,000) | - | - | ||
Shares issued for compensation | - | - | 287,500 | 63,750 | - | - | 63,750 | ||
Net loss for the period | - | - | - | - | - | (693,906) | (693,906) |
- 19 -
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Balance March 31, 2011 | - | $- | 134,798,552 | 703,220 | - | (1,003,002) | (299,782) | ||
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The accompanying notes are an integral part of these financial statements. |
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- 20 -
eCrypt Technologies, Inc. | |||||||
(A Development Stage Company) | |||||||
STATEMENTS OF CASH FLOWS | |||||||
For the Years Ended March 31, 2011 and 2010 and from Inception (April 19, 2007) to March 31, 2011 | |||||||
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| March 31, 2011 | March 31, 2010 | Cumulative Amount from Inception (April 19, 2007 to March 31, 2011) |
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| (Audited) | (Audited) | (Audited) |
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CASH FLOWS FROM OPERATING ACTIVITIES |
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| Net Loss |
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| $(693,906) | $(184,480) | $(1,003,002) | |
| Adjustments for non-cash items: |
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| Amortization and depreciation |
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| 8,496 | 18,873 | 52,992 |
| Changes in operating assets and liabilities: |
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| Accounts payable and accrued liabilities |
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| (1,004) | 18,825 | 21,044 |
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| Stock issued for compensation |
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| 63,750 | - | 63,750 |
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| Interest on loan-related party |
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| 19,425 | 3,833 | 28,395 |
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| Interest receivable |
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| - | - | - |
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| Deferred revenue |
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| - | (15,450) | - |
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| Prepaid expenses |
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| (600) | 3,328 | (710) |
NET CASH USED IN OPERATING ACTIVITIES |
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| (603,839) | (155,071) | (837,531) | ||
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CASH FLOWS FROM INVESTING ACTIVITIES |
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| License |
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| - | - | (10,000) | |
| Computer equipment |
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| - | (2,337) | (11,526) | |
| Computer software |
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| - | (662) | (14,446) | |
| Equipment |
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| (1,000) | (743) | (29,582) | |
NET CASH USED IN INVESTING ACTIVITIES |
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| (1,000) | (3,742) | (65,554) | ||
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CASH FLOWS FROM FINANCING ACTIVITIES |
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| Common stock issuance |
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| - | - | 206,702 | |
| Stock subscriptions |
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| - | 395,125 | 400,000 | |
| Proceeds (payments) from convertible loan-related party |
| - | - | 23,800 | ||
| Proceeds (payments) from loan-related party |
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| 315,000 | - | 315,000 | |
| Paid in capital |
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| - | - | - | |
NET CASH PROVIDED BY FINANCING ACTIVITIES |
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| 315,000 | 395,125 | 945,502 | ||
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (289,839) | 236,312 | 42,417 | ||||
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CASH AND CASH EQUIVALENTS |
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Beginning of year |
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| 332,256 | 95,944 | - | ||
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End of year |
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| $42,417 | $332,256 | $42,417 | ||
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- 21 -
Supplemental disclosures of cash flow information: |
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| Shares issued in settlement of convertible note |
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| $- | $- | $32,768 | |
| Common stock issued to satisfy common stock payable |
| $(400,000) | $- | $(400,000) | ||
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The accompanying notes are an integral part of these financial statements.
- 22 -
eCRYPT TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2011 AND 2010
(AUDITED)
1.
Nature of Operations
eCrypt Technologies Inc., a Colorado corporation (the Company), was incorporated on April 19, 2007. The Company develops and sells encryption software which secures the transmission of, storage of, and access to digital information. Software applications range from device based (for Personal Digital Assistants (PDAs), wireless handheld devices, laptop and desktop computers, pocket computers, cellular phones, smartphones, and other file storage devices), to server-based encryption software for email servers and for file-store server.
2.
Significant Accounting Policies
Basis of Presentation
The financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles of the United States of America (US GAAP).
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that impact the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates.
Uncertainty as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. However, the Company has suffered recurring losses from operations since inception which raises substantial doubt about its ability to continue as a going concern.
The Companys ability to continue as a going concern is dependent upon its ability to generate profitable operations in the future and/or obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has plans to seek additional capital through a private placement and public offering of its common stock. These plans, if successful, will mitigate the factors which raise substantial doubt about the Companys ability to continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.
Cash, Cash Equivalents and Investments
Cash equivalents consist of highly liquid investments with original maturities at the date of purchase of three months or less. Short term investments mature in less than one year from the balance sheet date.
The Company places its cash and short-term investments with financial institutions with high credit quality investments in accordance with its investment policy designed to protect the principal investment. Therefore, the Company believes that its exposure due to concentration of credit risk is minimal and has not experienced credit losses on investments in these instruments to date.
- 23 -
eCRYPT TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2011 AND 2010
(AUDITED)
Property and Equipment
Property and Equipment are stated at cost less accumulated depreciation. Depreciation is calculated using the straight line basis over their estimated useful lives:
Computer equipment | 2 years straight line basis |
Computer software | 1 years straight line basis |
Equipment | 5 years straight line basis |
Revenue Recognition
Product revenue and miscellaneous income are recognized as earned.
Income Taxes
The Company accounts for income taxes as outlined in the Accounting Standards Codification ("ASC") 740 "Income Taxes. Under ASC Topic 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC Topic 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
Comprehensive Income
The Company adopted FASB Accounting Standards Codification 220 Comprehensive Income, which establishes standards for the reporting and display of comprehensive income and its components in the financial statements.
Comprehensive income (loss) is the total of (1) net income (loss) plus (2) all other changes in the net assets arising from non-owner sources, which are referred to as comprehensive income.
The Company has no components of other comprehensive loss. Accordingly, net loss equals comprehensive loss for all periods.
Related Parties
Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or common significant influence.
Financial Instruments
The Companys financial instruments consist of cash and cash equivalents, highly liquid short-term investments, interest receivable, accounts payable and accrued liabilities, stockholder loans and a convertible loan. The Company does not hold or issue financial instruments for trading purposes and does not hold any derivative financial instruments.
- 24 -
eCRYPT TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2011 AND 2010
(AUDITED)
The Companys investment policy is to achieve, in order of importance, the financial objectives of preservation of principal, liquidity and return on investment. Investments are made in U.S. obligations and bank securities provided the obligations are guaranteed or carry ratings appropriate for the policy.
The policy risks are primarily the opportunity cost of the conservative nature of the allowable investments. As the Company is currently in the development stage, the Company has chosen to avoid investments of a trade or speculative nature.
Foreign Currency Translation
The measurement currency of the Company is the U.S. dollar. Transactions in foreign currencies are translated at the exchange rate in effect at the transaction date. Monetary assets and liabilities denominated in other than the measurement currency are translated at the exchange rates in effect at the balance sheet date. The resulting exchange gains and losses are recognized in earnings.
Net Earnings (Loss) per Share
Basic and diluted net loss per share information is presented under the requirements of ASC Topic 260, Earnings per Share. Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding for the period, less shares subject to repurchase. Diluted net loss per share reflects the potential dilution of securities by adding other common stock equivalents, including stock options, shares subject to repurchase, warrants and convertible notes in the weighted-average number of common shares outstanding for a period, if dilutive. The computation of earnings (loss) per share is as follows:
| 2011 |
|
| 2010 |
|
Net loss | $ (693,906) |
|
| $ (184,480) |
|
Weighted-average number of shares outstanding |
|
|
|
|
|
Basic | 134,540,170 |
|
| 133,518,437 |
|
Loss per share |
|
|
|
|
|
Basic | (0.01) |
|
| (0.00) |
|
3.
Recent Accounting Pronouncements
In January 2010, the FASB issued Accounting Standards Update (ASU) 2010-6, Improving Disclosures about Fair Value Measurements. This update requires additional disclosure within the roll forward of activity for assets and liabilities measured at fair value on a recurring basis, including transfers of assets and liabilities between Level 1 and Level 2 of the fair value hierarchy and the separate presentation of purchases, sales, issuances and settlements of assets and liabilities within Level 3 of the fair value hierarchy. In addition, the update requires enhanced disclosures of the valuation techniques and inputs used in the fair value measurements within Levels 2 and 3. The new disclosure requirements are effective for interim and annual periods beginning after December 15, 2009, except for the disclosure of purchases, sales, issuances and settlements of Level 3 measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010. As ASU 2010-6 only requires enhanced disclosures, the Company does not expect that the adoption of this update will have a material effect on its financial statements.
- 25 -
eCRYPT TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2011 AND 2010
(AUDITED)
The Company has evaluated the recent accounting pronouncements through ASU 2011-06 and believes that none of them will have a material effect on the companys financial statements.
4.
Property and Equipment
The components of the Companys equipment are presented below:
|
| 2011 | 2010 | ||
| Cost | Accumulated Depreciation | Net | Accumulated Depreciation | Net |
|
|
|
|
|
|
Computer equipment | $9,812 | $8,982 | $830 | $6,877 | $2,935 |
Computer software | 14,445 | 14,445 | $0 | 13,814 | 631 |
Equipment | 29,581 | 17,851 | $11,730 | 12,091 | 16,490 |
|
|
|
|
|
|
| $53,838 | $41,278 | $12,560 | $32,782 | $20,056 |
Depreciation expense for the years ended March 31, 2010 and 2009 was $8,496 and $12,762, respectively.
Intangibles
The components of the Companys license are presented below:
|
| 2011 | 2010 | ||
| Cost | Accumulated Amortization | Net | Accumulated Amortization | Net |
|
|
|
|
|
|
License | $10,000 | $10,000 | $ - | $10,000 | $10,000 |
|
|
|
|
|
|
| $10,000 | $10,000 | $ - | $10,000 | $10,000 |
Amortization expense for the years ended March 31, 2010 and 2009 was $0 and $6,111, respectively. As at September 23, 2009 the Licenses with Certicom were cancelled by reason of the acquisition of Certicom Corp by Research In Motion. Pursuant to the new program terms, these Licenses are now being provided to BlackBerry Alliance Members free of charge. The Company renewed its BlackBerry Alliance membership with Research In Motion on February 3, 2010.
5.
Stockholders Equity
a)
Authorized:
500,000,000 Common shares with no par value
10,000,000 Preferred shares with no par value issued or outstanding:
- 26 -
eCRYPT TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2011 AND 2010
(AUDITED)
During the year ended March 31, 2008 the Company effected the following stock transactions:
The Company issued a total of 116,015,968 shares of the Companys no par value common stock in exchange for cash of $55,130.
During the year ended March 31, 2009 the Company effected the following stock transactions:
On October 9, 2008, the Company announced a 4:1 forward stock split on its common shares. 33,203,992 common shares were issued for 8,300,998 common shares.
On November 12, 2009, the Board of Directors of the Company consented to and approved a four-for-one forward split of the Companys 33,379,554 issued and outstanding shares of common stock. Pursuant to Rule 10b-17, the Forward Split became effective 10 days following the submission of the required notification forms to FINRA, on November 24, 2009. On the effective date, the Companys transfer agent issued and mailed to the eligible shareholders of record, three additional shares of common stock for each share of common stock held by the shareholder. The forward split resulted in the increase in the number of shares of the Companys common stock issued and outstanding to 133,518,216 while keeping the number of authorized shares the same.
During the year ended March 31, 2009 the Company issued 17,502,248 shares of the Companys no par value common stock in exchange for cash of $151,572.
During the year ended March 31, 2010, the Company effected the following stock transactions:
The Company issued a total of 40,455 shares of the Companys no par value common stock at a conversion rate of $0.81 per share in full and final settlement of a convertible debenture dated July 2, 2007. The shares were issued on March 30, 2010 for total value of $32,768. The loan consisted of principal of $23,800 and interest of $8,969. See Note 7.
During the year ended March 31, 2011, the Company effected the following stock transactions:
On April 19, 2010, eCrypt Technologies, Inc., a Colorado corporation (the Company) conducted a private placement offering, pursuant to which the Company raised $400,000 through the sale of 952,381 Units at a purchase price of $.42 per Unit. Each Unit consisted of one share of common stock and three Warrants: i) one Warrant (Warrant 1) entitles the holder thereof to purchase up to a total of 952,381 shares of the Corporations common stock at a price of $0.42 per share at any time during the period of twenty-four (24) months from the date of closing of the offering; and ii) one Warrant ( Warrant 2) entitles the holder thereof to purchase up to a total of 714,286 shares of the Corporations common stock at a price of $0.56 per share at any time during the period of twenty-four (24) months from the date of closing of the offering; and iii) one Warrant (Warrant 3) entitles the holder thereof to purchase up to a total of 3,809,524 units at purchase price of $0.42 per unit at any time during the period of six (6) months from the date of closing of this offering. Each unit under Warrant 3 consists of one share of common stock and two warrants: one warrant entitles the holder thereof to purchase up to a total of 3,809,524 shares of common stock at a price of $0.42 per share at any time during the period of twenty-four (24) months from the date of purchase of the units under Warrant 3, and one warrant entitles the holder thereof to purchase up to a total of 2,857,142 shares of common stock at a price of $0.56 per share at any time during the period of twenty-four (24) months from the date of closing of the purchase of the units under Warrant 3.
On February 9, 2011, the Company issued 250,000 shares of common stock for director compensation for a value of $52,500. The share price is valued at the adjusted closing price on the date of issue which was
- 27 -
eCRYPT TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2011 AND 2010
(AUDITED)
$.21 per share. The compensation agreement calls for a total of 1,000,000 shares to be issued during a 12 month period.
On February 15, 2011, the Company issued 37,500 shares of common stock for director compensation for a value of $11,250. The share price is valued at the adjusted closing price on the date of issue which was $.30 per share. The compensation agreement calls for a total of 250,000 shares to be issued during a 12 month period.
6.
Stock Subscriptions
The Company issued private placement subscription agreements. The total amount of common shares subscribed for cash as at March 31, 2011 and 2010 is $0 and $400,000, respectively.
| Number of Common shares | Number of preferred shares | Amount |
Balance, April 19, 2007 | - | - | $- |
Shares subscribed for cash | - | - | - |
Balance, March 31, 2008 | - | - | - |
Shares subscribed for cash | - | - | - |
Balance, September 30, 2008 | - | - | - |
Additional shares due to share split 1:4 | - | - | - |
Shares issued | - | - | - |
Shares subscribed for cash | - | - | 4,875 |
Balance, March 31, 2009 | - | - | 4,875 |
Shares subscribed for cash | - | - | 400,000 |
Shares cancelled | - | - | (4,875) |
Balance, March 31, 2010 | - | - | $400,000 |
Shares subscribed issued | - | - | (400,000) |
Balance, March 31, 2011 | - | - | $ - |
7.
Convertible Loan-Related Party
On July 2, 2007, the Company issued a convertible debenture with a face value totaling $23,800. This loan, or any portion, is convertible at any time until paid in full at a rate of 1 common share per $0.001 of the debt converted. The loan bears interest at an annual rate of 12% percent compounded monthly. In accordance with ASC Topic 470 -20 the intrinsic value of the beneficial conversion feature has been valued at $0. Some terms were amended on September 9, 2009 but the conversion price remained the same. The conversion terms were amended on February 26, 2010 to reflect the new conversion price of $0.81per share of common stock, and adding that interest is also convertible.
On March 15, 2010, the Company authorized the issuance of 40,455 of common shares for the share price of $0.81 per share for a convertible debenture dated July 2, 2007. The shares were issued on March 30, 2010 for $32,768 and the conversion of the debenture. The loan consisted of face value of $23,800 and interest of $8,968.
- 28 -
eCRYPT TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2011 AND 2010
(AUDITED)
8.
Warrants
During the period ended March 31, 2009, a total of 182,062 warrants were issued along with 182,062 common stock subscriptions. The exercise price of the warrants was $0.75 per common share. The warrants expired on December 04, 2010.
On April 19, 2010, eCrypt Technologies, Inc., a Colorado corporation (the Company) conducted a private placement offering, pursuant to which the Company raised $400,000 through the sale of 952,381 Units at a purchase price of $.42 per Unit. Each Unit consisted of one share of common stock and three Warrants: i) one Warrant (Warrant 1) entitles the holder thereof to purchase up to a total of 952,381 shares of the Corporations common stock at a price of $0.42 per share at any time during the period of twenty-four (24) months from the date of closing of the offering; and ii) one Warrant ( Warrant 2) entitles the holder thereof to purchase up to a total of 714,286 shares of the Corporations common stock at a price of $0.56 per share at any time during the period of twenty-four (24) months from the date of closing of the offering; and iii) one Warrant (Warrant 3) entitles the holder thereof to purchase up to a total of 3,809,524 units at purchase price of $0.42 per unit at any time during the period of six (6) months from the date of closing of this offering. Each unit under Warrant 3 consists of one share of common stock and two warrants: one warrant entitles the holder thereof to purchase up to a total of 3,809,524 shares of common stock at a price of $0.42 per share at any time during the period of twenty-four (24) months from the date of purchase of the units under Warrant 3, and one warrant entitles the holder thereof to purchase up to a total of 2,857,142 shares of common stock at a price of $0.56 per share at any time during the period of twenty-four (24) months from the date of closing of the purchase of the units under Warrant 3. ). Warrant 3 expired on October 19, 2010.
9.
Income Taxes
The Company has losses carried forward for income tax purposes for March 31, 2011 and 2010. There are no current or deferred tax expenses for the period ended March 31, 2011 or 2010 due to the Companys loss position. The Company has fully reserved for any benefits of these losses. The deferred tax consequences of temporary differences in reporting items for financial statement and income tax purposes are recognized, as appropriate. Realization of the future tax benefits related to the deferred tax assets is dependent on many factors, including the Companys ability to generate taxable income within the net operating loss carryforward period.
Management has considered these factors in reaching its conclusion as to the valuation allowance for financial reporting purposes.
The provision for refundable federal income tax consists of the following:
|
| 2011 |
| 2010 |
Deferred tax asset attributable to: |
|
|
|
|
Current operations |
| $ (351,051) |
| $ (108,184) |
Less: Change in valuation allowance |
| 351,051 |
| 108,184 |
|
|
|
|
|
Net refundable amount |
| $ -- |
| $ -- |
The composition of the Companys deferred tax assets as at March 31, 2011 and 2010 is as follows:
|
| 2011 |
| 2010 |
|
|
|
|
|
Net operating loss carry forward |
| $ (1,003,002) |
| $ (309,096) |
|
|
|
|
|
Statutory federal income tax rate |
| 35% |
| 35% |
Effective income tax rate |
| 0% |
| 0% |
|
|
|
|
|
Deferred tax asset |
| (351,051) |
| (108,184) |
Less: Valuation allowance |
| 351,051 |
| 108,184 |
|
|
|
|
|
Net deferred tax asset |
| $ -- |
| $ -- |
The potential income tax benefit of these losses has been offset by a full valuation allowance. As at March 31, 2011 and March 31, 2010, the Company has an unused operating loss carry-forward balance of approximately $351,051 and $108,184 respectively, which begins to expire in 2027.
10.
Advance-Related Party
During the months of October 2009 through March 2010, the Company acquired a $75,000 advance from a related party. The advance is non-interest bearing and due in six months. As of March 31, 2010, the advance has been paid back in full.
During the month of January 2011, the Company acquired a $100,000 advance from a related party. The advance is non-interest bearing and due in six months. As of March 31, 2011, balance is $100,000.
On May 18, 2010, the Company acquired a $215,000 unsecured note payable from a shareholder. The note bears interest at 10%, compounded annually, matures in two years on May 18, 2012.
11.
Advertising Costs
The Companys policy regarding advertising is to expense advertising when incurred. The Company incurred $308,348 and $14,007 of advertising expense during the years ended March 31, 2011 and 2010.
12.
Subsequent Events
Subsequent to the period ended March 31, 2011, on April 12, 2011, subject to shareholder approval, the Board of Directors of eCrypt Technologies, Inc. (the Company) approved the adoption of the eCrypt Technologies, Inc. Stock Compensation Program (the Program) under which 13,500,000 shares have been reserved for purposes of possible future issuance of incentive stock options, non-qualified stock options, and restricted stock grants to employees, directors and certain key individuals. On April 15, 2011, pursuant to a written consent in lieu of a meeting, a majority of the Companys shareholders approved the Program. The purpose of the Program is to attract and retain key employees, consultants and other persons, and to provide such key individuals with an additional incentive to contribute to the success of the Company. In order to maintain flexibility in the award of stock benefits, the Program constitutes a single omnibus plan, but is composed of three parts. The first part is the Incentive Stock Option Plan (Incentive Option Plan) which provides grants of incentive stock options under Section 422A of the Internal Revenue Code of 1986, as amended. The second part is the Nonqualified Stock Option Plan (Nonqualified Option Plan) which provides grants of nonqualified stock options. The third part is the Restricted Shares Plan (Restricted Plan) which provides grants of restricted shares of Company common stock. The Incentive Option Plan, the Nonqualified Option Plan and the Restricted Plan respectively comprise Plan I, Plan II, and Plan III of the Program. The foregoing description of the Program is qualified in its entirety by reference to the eCrypt Technologies, Inc. Stock Compensation Program which was filed as Exhibit 10.9 to Form 8-K
- 30 -
eCRYPT TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2011 AND 2010
(AUDITED)
filed with the Securities and Exchange Commission on April 20, 2011 and is hereby incorporated by reference.
Subsequent to the period ended March 31, 2011, on June 8, 2011 eCrypt received an acceptance of the statement of use for its trademark, a stylized version of the eCrypt logo in relation to products and services offered by the Company. The mark consists of the letter e in small circle and a stylized version of the word crypt.
- 31 -
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
We have had no disagreements with our accountants required to be disclosed pursuant to Item 304 of Regulation S-K.
ITEM 9A. CONTROLS AND PROCEDURES.
Disclosure Controls and Procedures
The Securities and Exchange Commission defines the term disclosure controls and procedures to mean the company's controls and other procedures of an issuer that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 (the Exchange Act) is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commissions rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the issuers management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. The Company maintains such a system of controls and procedures in an effort to ensure that all information which it is required to disclose in the reports it files under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified under the SEC's rules and forms and that information required to be disclosed is accumulated and communicated to principal executive and principal financial officers to allow timely decisions regarding disclosure.
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are designed to provide reasonable assurance of achieving the objectives of timely alerting them to material information required to be included in our periodic SEC reports and of ensuring that such information is recorded, processed, summarized and reported with the time periods specified. Our chief executive officer and chief financial officer also concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report to provide reasonable assurance of the achievement of these objectives.
Internal Control Over Financial Reporting
The management of the Company is responsible for the preparation of the financial statements and related financial information appearing in this Annual Report on Form 10-K. The financial statements and notes have been prepared in conformity with accounting principles generally accepted in the United States of America. The management of the Company also is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. A company's internal control over financial reporting is defined as a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the issuer are being made only in accordance with authorizations of
- 32 -
management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements.
Management, including the Chief Executive Officer and Chief Financial Officer, does not expect that the Company's internal controls will prevent all error and all fraud. Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable, not absolute, assurance that the objectives of the control system are met and may not prevent or detect misstatements. Further, over time control may become inadequate because of changes in conditions or the degree of compliance with the policies or procedures may deteriorate.
With the participation of the Chief Executive Officer and Chief Financial Officer, our management evaluated the effectiveness of the Company's internal control over financial reporting as of March 31, 2011 based upon the framework in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on that evaluation, our management has concluded that, as of March 31, 2011, the Company's internal control over financial reporting was effective.
This annual report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management's report in this Annual Report on Form 10-K.
There was no significant change in the Company's internal control over financial reporting during the last fiscal quarter, that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.
ITEM 9B. OTHER INFORMATION.
None.
PART III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE.
Directors, Executive Officers and Significant Employees
The following table sets forth, as of March 31, 2011, the respective positions and ages of our directors and executive officers of the Company. Each director has been elected to hold office until the next annual meeting of shareholders and thereafter until his successor is elected. Vacancies in the existing Board of Directors are filled by majority vote of the remaining Directors. There are no agreements or understandings for any officer or director to resign at the request of another person and no officer or director is acting on behalf of or will act at the direction of any other person.
- 33 -
Name | Age | Position | Director or Officer Since |
|
|
|
|
Brad Lever | 36 | Director, Chief Executive Officer, Chief Financial Officer, President | April 2007 |
Gabriel Rosu | 38 | Chief Technology Officer | April 2007 |
Curt Weldon | 63 | Chairman of the Board of Directors | February 9, 2011 |
Jay M. Cohen | 64 | Director | February 15, 2011 |
Biographical Information
Mr. Brad Lever Mr. Brad Lever (Mr. Lever) is 36 years old. Mr. Lever currently serves as Director of the Company, as well as the Companys Chief Executive Officer, Chief Financial Officer, President, Director of Sales and Marketing, and Director of Strategic Alliances and Investor Relations; he has served in these capacities since the Companys inception. Mr. Levers core functionalities are to coordinate team efforts, manage sales and marketing, and aid in the development of services and solutions which cater to the marketplace. In addition to the work that Mr. Lever performs with the Registrant, since 2004, Mr. Lever has worked in enterprise sales for BCE, a telecommunications company, focusing on new acquisitions and providing wireless data solutions. From 2003 to 2004, Mr. Lever was a sales executive with Sophos, Inc., a company that provides anti-virus software solutions to businesses. Mr. Brad Lever is a member of the IAPP (International Association of Privacy Professionals).
Mr. Gabriel Rosu Mr. Gabriel Rosu (Mr. Rosu) is 38 years old. Mr. Rosu is currently the Companys Chief Technology Officer (CTO), a position he has held since the Companys inception. As CTO, Mr. Rosu functions as the Companys lead software developer and eCommerce infrastructure developer. A fully trained Java Architect, Mr. Rosu is versed in software and application design and development, service-oriented architecture, and encryption frameworks. His primary role is to develop and test communications and information security concepts and solutions. In addition to the work Mr. Rosu performs with the Registrant, since March 2008, Mr. Rosu has worked with Telus, a Canadian telecommunications company, as a Frameworks Lead Architect. From 2004 through February 2008, Mr. Rosu worked with Accenture, a global management consulting, technology services and outsourcing company, as a Frameworks Lead Architect, a position in which he was responsible for deliverable planning and tracking as well as resource allocation. From 2001 through 2004, Mr. Rosu was a Senior Software Engineer with Verb Exchange Inc., a digital communications company that provides new media marketing opportunities to advertisers, a position in which he served as a team leader and Java architect.
Congressman Curt Weldon Congressman Curt Weldon (Mr. Weldon) is 63 years old. Congressman Curt Weldon served in the United States Congress for 20 years. When he retired in 2007 he was Vice Chairman of both the Armed Services Committee and the Homeland Security Committee, as well as a Member of the Energy and Environment Sub-Committee. During his tenure in Congress he initiated and Chaired the
- 34 -
US/FSU Energy Parliamentary Relationship, served as Co-Chair of the International Energy Advisory Council and Keynoted a number of International Energy Forums. Mr. Weldon organized and led over 50 bi-partisan Congressional Delegations to 75 nations including the first-ever Congressional Delegations into Libya and North Korea. Prior to his career in elective office as a Mayor, County Commissioner and Member of Congress, Mr. Weldon served as an Educator and University Professor as well as a Director with the INA/CIGNA Corporation at its Corporate Headquarters in Philadelphia. In addition to his work with the Registrant, Mr. Weldon formed and currently serves as CEO of Jenkins Hill International a firm providing International Consulting as well as facilitating International Strategic Relationships. Mr. Weldon has been honored by over 100 professional associations and international organizations.
Honorable Jay M. Cohen, Rear Admiral, USN (ret)- Hon Jay M. Cohen (Mr. Cohen) is a native of New York. He holds a joint Ocean Engineering degree from Massachusetts Institute of Technology and Woods Hole Oceanographic Institution and Master of Science in Marine Engineering and Naval Architecture from MIT. Mr. Cohen was commissioned in 1968 upon graduation from the United States Naval Academy. Mr. Cohens early Navy assignments included service on conventional and nuclear submarines. From 1985 to 1988 Cohen commanded USS HYMAN G. RICKOVER (SSN 709). Following command, he served on the U.S. Atlantic Fleet as a senior member of the Nuclear Propulsion Examining Board, responsible for certifying the safe operation of nuclear powered ships and crews. From 1991 to 1993, Mr. Cohen commanded the submarine tender USS L.Y. SPEAR (AS 36) including a deployment to the Persian Gulf in support of Operation DESERT STORM. After Spear, he reported to the Secretary of the Navy as Deputy Chief of Navy Legislative Affairs. During this assignment, Mr. Cohen was responsible for supervising all Navy Congressional liaison.
Mr. Cohen was promoted to the rank of Rear Admiral in October 1997 and reported to the Joint Staff as Deputy Director for Operations responsible to the President and Department of Defense leaders for strategic weapons release authority. In June 1999, he assumed duties as Director Navy Y2K Project Office responsible for transitioning all Navy computer systems into the new century. In June 2000, Mr. Cohen was promoted in rank and became the 20th Chief of Naval Research. He served during war as the Department of the Navy Chief Technology for the Navy and Marine Corps Science and Technology (S&T) Program (involving basic research to applied technology portfolios and contracting), Mr. Cohen coordinated investments with other U.S. and international S&T providers to rapidly meet war fighter combat needs. After a half year assignment as Chief of Naval Research, Rear Admiral Cohen retired from the Navy on February 1, 2006.
Unanimously confirmed by the US Senate, Mr. Cohen was sworn in as Under Secretary for Science & Technology at the Department of Homeland Security on August 10, 2006. Mr. Cohen resigned from his position as Under Secretary for Science & Technology at the Department of Homeland Security on January 20, 2009. Since leaving government, Rear Admiral Cohen is now a principal in The Chertoff Group, and the CEO of JayMCohen LLC, which is an independent consultant for science and technology in support of domestic and international defense, homeland security and energy issues and solutions.
Family Relationships
None.
Involvement in Certain Legal Proceedings
None of the Registrants officers, directors, promoters or control persons has been involved in the past five (5) years in any of the following:
- 35 -
(1)
Any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
(2)
Any conviction in a criminal proceedings or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
(3)
Being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, or any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or
(4)
Being found by a court of competent jurisdiction (in a civil action), the SEC or the U.S. Commodity Futures Trading Commission to have violated a federal or state securities laws or commodities law, and the judgment has not been reversed, suspended, or vacated.
Directorships
None of the Companys executive officers or directors is a director of any company with a class of equity securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of the Exchange Act or any company registered as an investment company under the Investment Company Act of 1940.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company's officers and directors, and persons who own more than ten percent of a registered class of the Company's equity securities, to file reports of ownership of Form 3 and changes in ownership on Form 4 or Form 5 with the Securities and Exchange Commission. Such officers, directors and 10% stockholders are also required by SEC rules to furnish the Company with copies of all Section 16(a) forms they file. Based solely on its review of the copies of such forms received by it, the Company believes that, during the fiscal year ended March 31, 2011, all Section 16(a) filing requirements applicable to its officers, directors and 10% stockholders were satisfied.
Code of Ethics
The Company has adopted a code of ethics, as required by the rules of the SEC, a copy of the Companys code of ethics was filed as Exhibit 14.1 to Form 10-K for the fiscal year ended March 31, 2010 filed with the Securities and Exchange Commission on July 13, 2010 and is hereby incorporated by reference. The code of ethics applies to all of the Companys senior financial officers. The code of ethics, and any amendments to, or waivers from, the code of ethics, is available in print, at no charge, to any stockholder who requests such information.
ITEM 11.
EXECUTIVE COMPENSATION.
The following table sets forth, for the years indicated, all compensation paid, distributed or accrued for services, including salary and bonus amounts, rendered in all capacities by the Companys chief executive
- 36 -
officer , chief financial officer and all other executive officers who received or are entitled to receive remuneration in excess of $100,000 during the stated periods.
Summary Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-Equity | Non-qualified |
|
|
|
|
|
|
|
| Incentive | Deferred |
|
|
|
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| Stock | Option | Plan | Compensation | All other |
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Name and |
| Salary | Bonus | Award(s) | Award(s) | Compensation | Earnings | Compensation | Total |
Principal Position | Year | ($) | ($) | ($) | ($) | (#) | ($) | ($) | ($) |
Brad Lever, CEO, President | 2011 2010 2009 | $nil $nil $nil | -- -- -- | -- -- -- | -- -- -- | -- -- -- | -- -- -- | -- -- -- | $nil $nil $nil |
Gabriel Rosu, Chief Technology Officer | 2011 2010 2009 | $91,041 $nil $nil | -- -- -- | -- -- -- | -- -- -- | -- -- -- | -- -- -- | $5,936.10 $ 5,742 -- | $96,977.10 $ 5,742 $nil |
Option Grants in Last Fiscal Year
There were no options granted to any of the named executive officers during the fiscal year ended March 31, 2011.
Equity Compensation Plan Information
As disclosed on Form 8-K filed with the Securities and Exchange Commission on April 20, 2011, on April 12, 2011, subject to shareholder approval, the Board of Directors of eCrypt Technologies, Inc. (the Company) approved the adoption of the eCrypt Technologies, Inc. Stock Compensation Program (the Program) under which 13,500,000 shares have been reserved for purposes of possible future issuance of incentive stock options, non-qualified stock options, and restricted stock grants to employees, directors and certain key individuals. On April 15, 2011, pursuant to a written consent in lieu of a meeting, a majority of the Companys shareholders approved the Program. The purpose of the Program is to attract and retain key employees, consultants and other persons, and to provide such key individuals with an additional incentive to contribute to the success of the Company. In order to maintain flexibility in the award of stock benefits, the Program constitutes a single omnibus plan, but is composed of three parts. The first part is the Incentive Stock Option Plan (Incentive Option Plan) which provides grants of incentive stock options under Section 422A of the Internal Revenue Code of 1986, as amended. The second part is the Nonqualified Stock Option Plan (Nonqualified Option Plan) which provides grants of nonqualified stock options. The third part is the Restricted Shares Plan (Restricted Plan) which provides grants of restricted shares of Company common stock. The Incentive Option Plan, the Nonqualified Option Plan and the Restricted Plan respectively comprise Plan I, Plan II, and Plan III of the Program. The foregoing description of the Program is qualified in its entirety by reference to the eCrypt Technologies, Inc. Stock Compensation Program which was filed as Exhibit 10.9 to Form 8-K filed with the Securities and Exchange Commission on April 20, 2011 and is hereby incorporated by reference.
Compensation Agreements
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As disclosed on Form 8-K filed with the SEC on May 27, 2010, on May 26, 2010, the Company entered into a Consulting Agreement (the Consulting Agreement) with Gabriel Rosu setting forth the terms and conditions under which Mr. Rosu will continue to serve as the Chief Technology Officer of the Company. The Consulting Agreement is for a one year term effective April 15, 2010 through April 14, 2011. The Agreement was automatically extend for an additional 1 year term on April 15, 2011. Pursuant to the terms and conditions of the Consulting Agreement, Mr. Rosu will serve as the Chief Technology Officer of the Company. Mr. Rosus primary duties include overseeing all product development of the Companys products, database development for the Company, and website development for the Company. As consideration for his services as the Chief Technology Officer, Mr. Rosu will receive a total of $95,000 during the term of the Consulting Agreement, broken down into monthly payments of $7,916.67. The Consulting Agreement may be terminated at any time in the Companys sole and absolute discretion. In conjunction with the entry into the Consulting Agreement, Mr. Rosu entered into a Confidentiality, Non-Solicitation and Invention Assignment Agreement as an exhibit to the Consulting Agreement for purposes of protecting the Companys intellectual property.
The foregoing description of the Consulting Agreement and the accompanying exhibits does not purport to be complete and is qualified in its entirety by reference to the complete text of the Consulting Agreement and accompanying exhibits, which was filed as Exhibit 10.6 to the Companys current report on Form 8-K with the SEC on May 27, 2010.
Director Compensation
The following table provides summary information concerning compensation awarded to, earned by, or paid to any of our directors for all services rendered to the Company in all capacities for the fiscal year ended March 31, 2011.
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| Change in |
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|
| Fees |
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| Pension |
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| Earned |
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| Non-Equity | Value and |
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| And |
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| Incentive | Non-qualified |
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|
| Paid in | Stock | Option | Plan | Compensation | All other |
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Name and | Cash | Award(s) | Award(s) | Compensation | Earnings | Compensation | Total |
Principal Position | ($) | ($) | ($) | (#) | ($) | ($) | ($) |
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Brad Lever | $nil | -- | -- | -- | -- | -- | $nil |
Curt Weldon | $nil | $52,500(1) | -- | -- | -- | -- | $52,500 |
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|
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Jay Cohen | $nil | $11,250(2) | -- | -- | -- | -- | $11,250 |
(1)
As disclosed on Form 8-K filed with the Securities and Exchange Commission on February 9, 2011, on February 9, 2011, the Board of Directors of eCrypt Technologies, Inc, appointed Curt Weldon to serve as the Chairman of the Companys Board. In conjunction with the Companys appointment of Mr. Weldon, the Company entered into a Director Agreement and a Restricted Shares Agreement which is Exhibit A to the Director Agreement, pursuant to which the Company granted Mr. Weldon 1,000,000 shares of restricted common stock of the Registrant. The foregoing description of the Director Agreement and Restricted Shares Agreement is qualified in its entirety by reference to the Director Agreement and Restricted Shares Agreement which attached as Exhibit 10.7 to the Companys Form 8-K filed with the Securities and Exchange Commission on February 9, 2011.
(2)
As disclosed on Form 8-K filed with the Securities and Exchange Commission on February 15, 2011, on February 15, 2011, the Board of Directors of eCrypt Technologies, Inc, appointed Jay M. Cohen to serve as a director of the the Company. In conjunction with the Companys appointment of Mr. Cohen, the Company entered into a Director Agreement and a Restricted Shares Agreement which is Exhibit A to the Director Agreement, pursuant to which the Company granted Mr. Cohen 150,000 shares of restricted common stock of the Registrant. The foregoing description of the Director Agreement and Restricted Shares Agreement is qualified in its entirety by reference to the Director Agreement and Restricted Shares Agreement attached as Exhibit 10.8 to the Companys report on Form 8-K filed with the Securities and Exchange Commission on February 15, 2011.
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ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
Security Ownership of Certain Beneficial Owners
The following table sets forth, as of March 31, 2011, the ownership of each person known by the Company to be a beneficial owner of 5% or more of its common stock. Except as otherwise noted, each person listed below is a sole beneficial owner of the shares and has sole investment and voting power as to such shares. No person listed below has any options, warrants or other right to acquire additional securities of the Registrant except as may be otherwise noted.
Title of Class | Name and Address | Number of Shares Beneficially Owned | Percent of Class |
Common | Global Capital Partners, LLC PO Box 6560 Pahrump, NV 89041 | 16,040,455 | 11.9% |
Common | Kasia Zukowska 248 256 East 2nd Ave Vancouver, BC V5T 1B7 | 9,600,000 | 7.122% |
Common | Brad Lever 248 - 256 East 2nd Ave Vancouer, BC V5T 1B7 | 32,000,000 | 23.739% |
Common | Gabriel Rosu 7092 Sussex Ave Burnaby, BC V5J 3V3 | 9,600,000 | 7.122% |
Security Ownership of Management
The following table sets forth, as of March 31, 2010, the ownership of each executive officer and director of the Company, and of all executive officers and directors of the Registrant as a group. Except as otherwise noted, each person listed below is a sole beneficial owner of the shares and has sole investment and voting power as to such shares. No person listed below has any options, warrants or other right to acquire additional securities of the Company except as may be otherwise noted.
Title of Class | Name and Address | Number of Shares Beneficially Owned | Percent of Class |
Common | Brad Lever(1) 248 - 256 East 2nd Ave Vancouer, BC V5T 1B7 | 32,000,000 | 24% |
Common | Gabriel Rosu(1) 7092 Sussex Ave Burnaby, BC V5J 3V3 | 9,600,000 | 7% |
Common | Curt Weldon(1) 4687 West Chester Pike Newton Square, PA 19073 | 1,000,000(2) | 0.185% |
Common | Jay Cohen(1) 1111 Army Drive, Apt 406 Arlington, VA 22202 | 150,000(3) | 0.028% |
Common | All Directors and Officers as a Group (4 in total) | 42,750,000 | 31.074% |
(1)
Officer or Director of the Company
(2)
On February 9, 2011, the Curt Weldon was granted 1,000,000 restricted stock shares, of which 250,000 were vested upon grant and 750,000 will vest in three, four month installments, beginning on June 9, 2011, four months after the date of grant, and ending February 9, 2012.
(3)
On February 15, 2011, Jay Cohen was granted 150,000 restricted stock shares, of which 37,500 were vested upon grant and 112,500 will vest in three, four month installments, beginning on June 15, 2011, four months after the date of grant, and ending February 15, 2012.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
Related Transactions
During the months of October 2009 through March 2010, the Company acquired a $75,000 advance from a related party. The advance is non-interest bearing and due in six months. As of March 31, 2010, the advance has been paid back in full.
During the month of January 2011, the Company acquired a $100,000 advance from a related party. The advance is non-interest bearing and due in six months. As of March 31, 2011, balance is $100,000.
On May 18, 2010, the Company acquired a $215,000 unsecured note payable from a shareholder. The note bears interest at 10%, compounded annually, matures in two years on May 18, 2012.
Except for the foregoing, there were no material transactions, or series of similar transactions, during our Companys last fiscal year, or any currently proposed transactions, or series of similar transactions, to which our Company was or is to be a party, in which the amount involved exceeded the lesser of $120,000 or one percent of the average of the small business issuers total assets at year-end for the last three completed fiscal years and in which any director, executive officer or any security holder who is known to us to own of record or beneficially more than five percent of any class of our common stock, or any member of the immediate family of any of the foregoing persons, had an interest.
Director Independence
The NASDAQ Stock Market has instituted director independence guidelines that have been adopted by the Securities & Exchange Commission. These guidelines provide that a director is deemed independent only if the board of directors affirmatively determines that the director has no relationship with the company
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which, in the boards opinion, would interfere with the directors exercise of independent judgment in carrying out his or her responsibilities. Significant stock ownership will not, by itself, preclude a board finding of independence.
For NASDAQ Stock Market listed companies, the director independence rules list six types of disqualifying relationships that preclude an independence filing. The Companys board of directors may not find independent a director who:
1.
is an employee of the company or any parent or subsidiary of the company;
2.
accepts, or who has a family member who accepts, more than $60,000 per year in payments from the company or any parent or subsidiary of the company other than (a) payments from board or committee services; (b) payments arising solely from investments in the companys securities; (c) compensation paid to a family member who is a non-executive employee of the company (d) benefits under a tax qualified retirement plan or non-discretionary compensation; or (e) loans to directors and executive officers permitted under Section 13(k) of the Exchange Act;
3.
is a family member of an individual who is employed as an executive officer by the company or any parent or subsidiary of the company;
4.
is, or has a family member who is, a partner in, or a controlling shareholder or an executive officer of, any organization to which the company made, or from which the company received, payments for property or services that exceed 5% of the recipients consolidated gross revenues for that year, or $200,000, whichever is more, other than (a) payments arising solely from investments in the companys securities or (b) payments under non-discretionary charitable contribution matching programs;
5.
is employed, or who has a family member who is employed, as an executive officer of another company whose compensation committee includes any executive officer of the listed company; or is, or has a family member who is, a current partner of the companys outside auditor, or was a partner or employee of the companys outside auditor who worked on the companys audit.
Based upon the foregoing criteria, our Board of Directors has determined that Brad Lever is not an independent director under these rules as he is also employed by the Company as its Chief Executive Officer, Chief Financial Officer, and President.
ITEM 14.
PRINCIPAL ACCOUNTING FEES AND SERVICES.
Audit Fees
(1)
The aggregate fees billed by De Joya Griffith & Company, LLC, for audit of the Company's annual and interim financial statements were $12,500 for the fiscal year ended March 31, 2011, and $10,000 for the fiscal year ended March 31, 2010.
Audit Related Fees
(2)
De Joya Griffith & Company, LLC did not bill the Company any amounts for assurance and related services that were related to its audit or review of the Companys financial statements during the fiscal years ended 2011 and 2010.
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Tax Fees
(3)
The aggregate fees billed by De Joya Griffith & Company, LLC for tax compliance, advice and planning were $0.00 for the fiscal year ended March 31, 2011 and 2010.
All Other Fees
(4)
De Joya Griffith & Company, LLC did not bill the Company for any products and services other than the foregoing during the fiscal years ended 2011 and 2010.
Audit Committees Pre-approval Policies and Procedures
(5)
The Company does not have an audit committee per se. The current board of directors functions as the audit committee.
PART IV
ITEM 15.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
(a)
Audited Financial Statements for Fiscal Years Ended March 31, 2011 and 2010.
(b)
Exhibits.
3.1 | Articles of Incorporation of eCrypt Technologies, Inc., filed as exhibit to Form 10 filed with the Securities and Exchange Commission on November 11, 2008. |
3.2 | Bylaws of eCrypt Technologies, Inc., filed as exhibit to Form 10 filed with the Securities and Exchange Commission on November 11, 2008.
|
10.1 | OEM License Agreement, dated January 31, 2008 by and between Certicom Corp. and eCrypt Technologies, Inc., filed as exhibit to Form 10 filed with the Securities and Exchange Commission on November 11, 2008. |
10.2 | BlackBerry® Alliance Program Master Alliance Agreement, dated April 2, 2008 by and between Research in Motion Limited and eCrypt Technologies, Inc., filed as exhibit to Form 10 filed with the Securities and Exchange Commission on November 11, 2008. |
10.4 | Software Development Partnership Agreement, dated April 23, 2007 by and between eCrypt Technologies, Inc. and Gabi Rosu., filed as exhibit to Form 10 filed with the Securities and Exchange Commission on November 11, 2008. |
10.5 | Commodity Classification Document., filed as exhibit to Form 10 filed with the Securities and Exchange Commission on November 11, 2008, filed as exhibit to Form 10 filed with the Securities and Exchange Commission on November 11, 2008. |
10.6 | Consulting Agreement and accompanying exhibits dated May 26, 2010 by and between eCrypt Technologies, Inc. and Gabriel Rosu, filed as Exhibit 10.6 to Form 8-K filed with the Securities and Exchange Commission on May 27, 2010. |
10.7 | Director Agreement and Restricted Shares Agreement dated February 15, 2011 by and between eCrypt Technologies, Inc. and Curt Weldon, filed as Exhibit 10.7 to Form 8-K filed with the Securities and Exchange Commission on Februay 9, 2011. |
10.8 | Director Agreement and Restricted Shares Agreement dated February 15, 2011 by and between eCrypt Technologies, Inc. and Jay Cohen, filed as Exhibit 10.8 to Form 8-K filed with the Securities and Exchange Commission on Februay 15, 2011. |
10.9 | eCrypt Technologies, Inc. Stock Compensation Program, filed as Exhibit 10.9 to Form 8-K filed with the Securities and Exchange Commission on April 20, 2011. |
14.1 | Code of Ethics filed as Exhibit 14.1 to Form 10-K filed with the Securities and Exchange Commission on July 13, 2010. |
31.1 | Certifications pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* |
31.2 | Certifications pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* |
32.1 | Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.* |
32.2 | Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.* |
* Filed Herewith
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eCRYPT TECHNOLOGIES, INC.
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 thereunto duly authorized.
By: /S/ Brad Lever
Brad Lever, Chief Executive Officer, Chief Financial Officer, Director
Date: July 1, 2011
In accordance with Section 13 or 15(d) of the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
By: /S/ Brad Lever
Brad Lever, Chief Executive Officer, Chief Financial Officer, Director
Date: July 1, 2011
By: /S/ Jay Cohen
Jay Cohen, Director
Date: July 1, 2011
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