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EX-31.2 - CERTIFICATION PURSUANT TO RULE 13A-14 OR 15D-14 OF THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 SIGNED BY THE PRINCIPAL FINANCIAL OFFICER - PetLife Pharmaceuticals, Inc.ex31-2.htm
EX-31.1 - CERTIFICATION PURSUANT TO RULE 13A-14 OR 15D-14 OF THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 SIGNED BY THE PRINCIPAL EXECUTIVE OFFICER - PetLife Pharmaceuticals, Inc.ex31-1.htm
EX-32.2 - CERTIFICATION REQUIRED BY 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 SIGNED BY CHIEF FINANCIAL OFFICER - PetLife Pharmaceuticals, Inc.ex32-2.htm
EX-32.1 - CERTIFICATION REQUIRED BY 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 SIGNED BY PRINCIPAL EXECUTIVE OFFICER - PetLife Pharmaceuticals, Inc.ex32-1.htm


UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
     
þ
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended May 31, 2012
     
o
 
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
Commission file number:  000-52445
 
ECO VENTURES GROUP, INC.
(Name of registrant as specified in its charter)
     
Nevada
 
33-1133537
(State or other jurisdiction of
 
(I.R.S. Employer
incorporation or organization)
 
Identification No.)
 
7432 State Road 50, Suite 101
Groveland, FL
   
   
34736
(Address of principal executive offices)
 
(Zip Code)
     
 
(352) 557-4830
 (Registrant’s telephone number, including area code)
 
 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  þ   No  o
 
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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes   o   No  x
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
  
       
Large accelerated filer
 o
Accelerated filer
 o
Non-accelerated filer
 o    (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 o No x

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class
  
Shares Outstanding at July 16, 2012
 
Common Stock, $0.001 Par Value
  
 
2,250,626

 
 

 

 ECO VENTURES GROUP, INC.
 (a development stage company)
INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


         
 
 
PART I
 
Financial Information
Page
Number
         
   
Item 1.
Financial Statements (unaudited)
 
         
     
Condensed Consolidated Balance Sheets – May 31, 2012 (Unaudited) and August 31, 2011
3
         
     
Unaudited Condensed Consolidated Statements of Operations – Three and Nine Months Ended May 31, 2012; Three Months and the Period from November 9, 2010 (date of inception) through May 31, 2011 and for the period from November 9, 2010 (date of inception) through May 31, 2012
 
4
         
     
Unaudited Condensed Consolidated Statement of Equity (Deficit)-  Nine Months Ended May 31, 2012
5
         
     
Unaudited Condensed Consolidated Statements of Cash Flows – Nine Months Ended May 31, 2012; For the period from November 9, 2010 (date of inception) through May 31, 2011 and For the period from November 9, 2010 (date of inception) through May 31, 2012
 
6
         
     
Notes to Unaudited Condensed Consolidated Financial Statements
7
         
   
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
14
         
   
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
23
         
   
Item 4.
Controls and Procedures
23
         
 
PART II
Other Information
 
       
   
Item 1
Legal Proceedings
24
         
   
Item 1A.
Risk Factors
24
         
   
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
24
         
   
Item 3.
Defaults Upon Senior Securities
24
         
   
Item 4.
Mine Safety Disclosures
24
         
   
Item 5
Other Information
24
         
   
Item 6.
Exhibits
25
         
 
SIGNATURES
26

 
 

 

ECO VENTURES GROUP, INC.
(formerly Modern Renewable Technologies, Inc.)
(A Development Stage Company)
Condensed Consolidated Balance Sheets

Assets
           
   
May 31,
   
August 31,
 
   
2012
(unaudited)
   
2011
 
             
Current assets:
           
Cash
  $ 333     $ 55,907  
Deposits
    10,000       10,000  
Total current assets
    10,333       65,907  
                 
Property, plant and equipment
    766,367       729,396  
                 
Total assets
  $ 776,700     $ 795,303  
                 
Liabilities and Equity (Deficit)
               
                 
Current liabilities:
               
Accounts payable and accrued expenses
  $ 610,016     $ 148,983  
Notes payable, related parties
    126,805       265,474  
Advances, related parties
    319,646       48,604  
                 
Total current liabilities
    1,056,467       463,061  
                 
Commitments and contingencies
    -       -  
                 
(Deficit) Equity:
               
Preferred stock, $0.001 par value; 100,000,000 shares authorized
               
Series A cumulative convertible preferred stock, $0.001 par value; 4,000,000 shares designated, 75,000 shares issued and outstanding as of May 31, 2012 and August 31, 2011
    75       75  
Series B cumulative convertible preferred stock, $0.001 par value; 6,120,800 shares designated, 20,000 and Nil shares issued and outstanding as of May 31,2012 and August 31, 2011, respectively
    20       -  
Common stock, $0.001 par value; 750,000,000 shares authorized, 2,250,591 and 1,959,888 shares issued as of May 31, 2012 and August 31, 2011, respectively and 2,155,591 and 1,959,888 shares outstanding as of May 31, 2012 and August 31, 2011, respectively
    2,251       1,960  
Preferred stock subscription
    100,000       100,000  
Additional paid-in capital
    1,485,010       1,002,643  
Deficit accumulated during development stage
    (1,602,555 )     (797,109 )
Total Eco Ventures Group, Inc. Stockholders' (Deficit) Equity
    (15,199 )     307,569  
Non controlling interest
    (264,568 )     24,673  
Total (deficit) equity
    (279,767 )     332,242  
                 
Total liabilities and (deficit) equity
  $ 776,700     $ 795,303  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
 
 
3

 

ECO VENTURES GROUP, INC.
(formerly Modern Renewable Technologies, Inc.)
(A Development Stage Company)
Condensed Consolidated Statements of Operations (unaudited)

   
For the Three Months Ended
May 31,
   
For the Nine
Months
Ended May
31,
   
For the
 period from
date of
inception
 (November 9,
2010)
Through May
31,
     
For the Period
from date of
inception
 (November 9,
2010)
Through May
31, 2012
 
   
2012
   
2011
   
2012
   
2011
   
 
 
                               
                               
                               
Operating expenses
   $ 47,848      $ -      $ 159,974      $ -      $ 215,997  
General and administrative expenses
    172,092       -       914,611       -       1,745,205  
                                         
Loss from operations
    (219,940 )     -       (1,074,585 )     -       (1,961,202 )
                                         
Other income(expense)
                                       
                                         
     Debt forgiveness income
    -       -       -       -       261,793  
     Interest expense
    (8,948 )     -       (20,102 )     -       (25,339 )
 
                                       
Total other income(expense)
    (8,948 )     -       (20,102 )     -       236,454  
                                         
Net loss
    (228,888 )     -       (1,094,687 )     -       (1,724,748 )
                                         
Less: Net loss attributable to non controlling interest
    65,877       -       289,241       -       452,893  
                                         
Net loss attributable to Eco Ventures Group, Inc. common shareholders
  $ (163,011 )   $ -     $ (805,446 )   $ -     $ (1,271,855 )
                                         
Weighted average common shares outstanding – basic and diluted
    803,198       231       723,427       231          
                                         
Net loss per share - basic and diluted
  $ (0.20 )   $ -     $ (1.11 )   $ -          

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
 
 
4

 
 
ECO VENTURES GROUP, INC.
(formerly Modern Renewable Technologies, Inc.)
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENT OF EQUITY (DEFICIT)
NINE MONTHS ENDED MAY 31, 2012
(unaudited)
 
   
Preferred shares
             
Additional
   
Deficit
Accumulated
         
Non
       
   
Series A preferred stock
   
Series B preferred stock
   
Common shares
   
Preferred shares subscribed
   
Paid in
   
Development
         
Controlling
   
Total
 
   
Shares
   
Amount
   
Shares
   
Amount
   
Shares
   
Amount
   
Shares
   
Amount
   
Capital
   
Stage
   
Total
   
Interest
   
Equity (Deficit)
 
Balance, September 1, 2011, as adjusted for reverse stock split
   
75,000
   
$
75
     
-
   
$
-
     
1,959,888
   
$
1,960
     
40,000
   
$
100,000
   
$
1,002,644
   
$
(797,109
)
 
$
307,569
   
$
24,673
   
$
332,242
 
Sale of Series B preferred stock in October 2011 at $2.50 per share
   
-
     
-
     
20,000
     
20
     
-
     
-
     
-
     
-
     
49,980
     
-
     
50,000
     
-
     
50,000
 
Common stock issued in November 2011 held in escrow at par value
   
-
     
-
     
-
     
-
     
95,000
     
95
     
-
     
-
     
(95
)
   
-
     
-
     
-
     
-
 
Common stock issued in November 2011 for officer compensation at $3.60 per share
   
-
     
-
     
-
     
-
     
1,250
     
1
     
-
     
-
     
4,499
     
-
     
4,500
     
-
     
4,500
 
Common stock issued in January 2012 in settlement of notes payable at $1.60 per share
   
-
     
-
     
-
     
-
     
20,000
     
20
     
-
     
-
     
31,980
     
-
     
32,000
     
-
     
32,000
 
Common stock issued in February 2012 in settlement of notes payable at $1.60 per share
   
-
     
-
     
-
     
-
     
62,961
     
63
     
-
     
-
     
100,674
     
-
     
100,737
     
-
     
100,737
 
                                                                                                         
                                                                                                         
                                                                                                         
Common stock issued in March 2012 in settlement of notes payable at $1.60 per share
   
-
     
-
     
-
     
-
     
100,242
     
100
     
-
     
-
     
160,286
     
-
     
160,387
     
-
     
160,387
 
Common stock issued in April 2012 for officers compensation at $0.80 per share
   
-
     
-
     
-
     
-
     
11,250
     
11
     
-
     
-
     
8,989
     
-
     
9,000
     
-
     
9,000
 
Stock based compensation
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
126,053
     
-
     
126,053
     
-
     
126,053
 
Net loss
   
-
     
-
     
-
     
-
     
-
     
-
     
-
             
-
     
(805,446
)
   
(805,446
)
   
(289,241
)
   
(1,094,687
)
Balance, May 31, 2012
   
75,000
   
$
75
     
20,000
   
$
20
     
2,250,591
   
$
2,251
     
40,000
   
$
100,000
   
$
1,485,010
   
$
(1,602,555
)
 
$
(15,199
)
 
$
(264,568
)
 
$
(279,768)
 
 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 
5

 

ECO VENTURES GROUP, INC.
(formerly Modern Renewable Technologies, Inc.)
(A Development Stage Company)
Condensed Consolidated Statement of Cash Flows
(unaudited)


   
Nine Months
Ended May 31,
2012
   
For the period
from date of
inception
 (November 9,
2010)
 Through May
31, 2011
   
For the period
from date of
inception
(November 9,
2010) Through
May 31, 2012
 
                   
 Cash flows from operating activities:
                 
Net loss
  $ (1,094,687 )  $  -     $ (1,724,748 )
                       
Adjustments to reconcile net loss to net cash used in operating activities:
                     
Stock based compensation
    139,552      -       (484,969
Gain on forgiveness of debt
    -      -       (261,793 )
Operating expenses paid by related party on behalf of the Company in exchange for notes payable
    86,856      -       352,330  
Expenses paid by related party
    57,392      -       57,392  
Changes in operating assets and liabilities:
                     
Deposits
    -      -       (10,000 )
Accounts payable and accrued expenses
    461,033      -       610,945  
                       
Net cash used in operating activities
    (349,854 )    -       (490,905 )
                       
Cash flows from investing activities:
                     
                       
Purchase of property and equipment
    (36,971 )    -       (206,367 )
                       
Net cash used in investing activities
    (36,971 )    -       (206,367 )
                       
Cash flows from financing activities:
                     
Proceeds from the sale of Series A preferred stock
    -      -       250,000  
Proceeds from the sale of Series B preferred stock
    50,000      -       50,000  
Proceeds from advances, related parties
    213,651      -       262,255  
Proceeds from notes payable, related parties
    67,600      -       67,600  
Contributed capital by majority owned subsidiary
    -      250       67,750  
                         
Net cash provided by financing activities
    331,251       250       697,605  
                         
Net (decrease) increase in cash and cash equivalents
    (55,574 )     250       -  
Cash and cash equivalents, beginning of period
  $ 55,907      $       $ -  
Cash and cash equivalents, end of period
  $ 333      $ 250     $ 333  
                         
Supplemental disclosures of cash flow information:
                       
Cash paid during the period for:
                       
Interest
  $ -     $ -     $ -  
Income Taxes
  $ -     $ -     $ -  
Non-cash investing and financing activities:
                       
Property, plant and equipment acquired by certain investors as capital contribution
  $ -     $ -     $ 560,000  
Common stock issued in settlement of notes
  $ 293,123     $ -     $ 293,123  
Notes payable issued in exchange for expenses paid by related parties
  $ 86,856     $ -     $ 352,330  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 
6

 

ECO VENTURES GROUP, INC.
 (formerly Modern Renewable Technologies, Inc.)
(a development stage company)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2012

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting policies applied in the presentation of the accompanying unaudited condensed consolidated financial statements follows:

General

The accompanying unaudited condensed consolidated financial statements of Eco Ventures Group, Inc., (the “Company”), have been prepared in accordance with the rules and regulations (S-X) of the Securities and Exchange Commission (the "SEC") and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  The results from operations for the nine month period ended May 31, 2012 are not necessarily indicative of the results that may be expected for the year ending August 31, 2012. The unaudited condensed consolidated financial statements should be read in conjunction with the August 31, 2011 consolidated  financial statements and footnotes thereto included in the Company's SEC Form 10-K filed on December 2, 2011.
 
Basis and business presentation

Eco Ventures Group, Inc. (“EVG” or the “Registrant”), a public traded and holding company of our planned expanding lines of business, formerly known as Modern Renewable Technologies, Inc., was incorporated under the laws of the State of Nevada in April 2002.  In connection with the consummation of the reverse merger transaction on June 1, 2011 with Eco Ventures Group, Inc., a Florida corporation (“Eco Ventures – Florida”) formed on November 9, 2010 (date of inception), the accounting acquirer (see below), EVG changed its name to Eco Ventures Group, Inc., a Nevada corporation.  The historical financial statements are those of Eco Ventures – Florida, the accounting acquirer, immediately following the consummation of the reverse merger.  All references that refer to (the “Company” or “Eco Ventures Group” or "EVG" or “we” or “us” or “our”) are to Eco Ventures Group, Inc., the Registrant and its wholly and or majority owned subsidiaries unless otherwise differentiated, Eco Ventures Group, Inc., a Florida formed corporation.  We are in the development stage, as defined by Accounting Standards Codification subtopic 915-10, Development Stage Entities ("ASC 915-10") and specialize in the planned extraction of precious metals from ore bodies and reclaimed mine tailings and also will focus on the production of advanced biodiesel from recovered cooking oils and oil rich plants. We have not generated any revenues to date, have incurred expenses and has sustained losses since November 9, 2010 (date of inception).  Consequently, our operations are subject to all the risks inherent in the establishment of a new business enterprise.  For the period from November 9, 2010 (date of inception) through May 31, 2012, we have accumulated a deficit through its development stage of $1,602,555.

The unaudited condensed consolidated financial statements include the accounts of the Company and its majority owned subsidiary, Eco Ventures - Florida.  All significant intercompany balances and transactions have been eliminated in consolidation.
 
Reverse Merger and Corporate Restructure

On May 27, 2011, the Registrant entered into a material definitive agreement for the acquisition of 70% of the capital stock of Eco Ventures Group, Inc., a Florida corporation (“Eco Ventures – Florida”).  The acquisition was completed on June 1, 2011 through issuance of 1,537,500 (including 125,000 shares issued to consultants and 95,000 shares issued to officers)  shares of Common Stock of the Company in exchange for 467 Shares of Eco Ventures - Florida in a tax-free share exchange. A total of 422,158 shares of Common Stock of the Registrant were issued to Holders of the Registrant’s outstanding Convertible Debentures.  Upon the conversion of all such Convertible Debentures, the Registrant had a total of 1,959,888 Shares of Common Stock issued and outstanding.

As a condition of the reverse merger transaction, the name of the Registrant was changed to “Eco Ventures Group, Inc.”, a Nevada corporation and the Registrant’s OTC trading symbol has been changed to “EVGI”. The transaction is accounted for in substance as a reverse acquisition of the Registrant by Eco Ventures – Florida since the stockholders of Eco Ventures – Florida owned a majority of the Company’s voting power immediately following the merger transaction and Eco Ventures – Florida’s management has assumed operational, management and governance control in accordance with the terms of the Shareholder Agreement dated May 20, 2011.  For accounting purposes, Eco Ventures – Florida is the accounting acquirer and or the surviving entity.  Accordingly, the historical financial statements are those of Eco Ventures – Florida, the accounting acquirer, immediately following the consummation of the reverse merger.  The Company did not recognize goodwill or any intangible assets in connection with this transaction.

 
7

 

ECO VENTURES GROUP, INC.
 (formerly Modern Renewable Technologies, Inc.)
(a development stage company)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2012
 
 
Estimates

The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures.  Accordingly, actual results could differ from those estimates.

Revenue Recognition

The Company will recognize revenue in accordance with Accounting Standards Codification subtopic 605-10, Revenue Recognition (“ASC 605-10”) which requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management's judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded.

ASC 605-10 incorporates Accounting Standards Codification subtopic 605-25, Multiple-Element Arraignments (“ASC 605-25”). ASC 605-25 addresses accounting for arrangements that may involve the delivery or performance of multiple products, services and/or rights to use assets. The effect of implementing 605-25 on the Company's financial position and results of operations was not significant.

Cash and Cash Equivalents

The Company considers cash to consist of cash on hand and temporary investments having an original maturity of 90 days or less that are readily convertible into cash.
 
Property and Equipment

Property and equipment are stated at cost. When retired or otherwise disposed, the related carrying value and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized from disposition, is reflected in earnings. For financial statement purposes, property and equipment are recorded at cost and depreciated using the straight-line method over their estimated useful lives of 3 to 5 years.  As of May 31, 2012, all acquired property and equipment has yet to be placed in service, therefore no depreciation was recorded for the period from November 9, 2010 (date of inception) through May 31, 2012.

Long-Lived Assets
 
The Company follows FASB ASC 360-10-15-3, “Impairment or Disposal of Long-lived Assets,” which established a “primary asset” approach to determine the cash flow estimation period for a group of assets and liabilities that represents the unit of accounting for a long-lived asset to be held and used.  Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset.  Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.  
 
Income Taxes

The Company has adopted Accounting Standards Codification subtopic 740-10, Income Taxes (“ASC 740-10”) which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statement or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.  Temporary differences between taxable income reported for financial reporting purposes and income tax purposes consist primarily of timing differences such as deferred officers’ compensation and stock based compensation accounting.

 
8

 

ECO VENTURES GROUP, INC.
 (formerly Modern Renewable Technologies, Inc.)
(a development stage company)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2012


Net Loss per Common Share, basic and diluted

The Company has adopted Accounting Standards Codification subtopic 260-10, Earnings Per Share (“ASC 260-10”) specifying the computation, presentation and disclosure requirements of earnings per share information.  Basic loss per share has been calculated based upon the weighted average number of common shares outstanding.  The Company excluded 113,400 shares of common stock equivalents that would be issuable upon conversion of the Series A and Series B preferred stock from the shares used to calculate diluted loss per share as their inclusion would be anti-dilutive or reduce net loss per share for the three and nine months periods ended May 31, 2012.
   
Stock based compensation

The Company follows Accounting Standards Codification subtopic 718-10, Compensation (“ASC 718-10”) which requires that all share-based payments to both employees and non employees be recognized in the income statement based on their fair values.  

As of May 31, 2012, the Company has accrued an aggregate of 23,751 common shares due to Randal Lanham and Paul Smith, the Company's Chief Executive Officer and Chief Financial Officer on a fifty/fifty basis.  The valuation of the common shares were based on the underlying market value the common stock at the date of vesting

Concentrations of Credit Risk

Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, consist primarily of cash, cash equivalents and accounts payable and accrued expenses. The Company places its cash and temporary cash investments with high credit quality institutions.  At times, such investments may be in excess of the FDIC insurance limit.

Research and Development

The Company accounts for research and development costs in accordance with Accounting Standards Codification subtopic 730-10, Research and Development (“ASC 730-10”). Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred.  Third-party research and development costs are expensed when the contracted work has been performed or as milestone results have been achieved as defined under the applicable agreement. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred. The Company did not incur any research and development expenses for the period from November 9, 2010 (date of inception) through May 31, 2012. 

Reliance on Key Personnel and Consultants
 
The Company has 2 full-time employees and no part-time employees.  Additionally, the Company has consultants performing various specialized services.  The Company is heavily dependent on the continued active participation of these current executive officers, employees and key consultants. The loss of any of the senior management or key consultants could significantly and negatively impact the business until adequate replacements can be identified and put in place.

Fair Value

Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”) requires disclosure of the fair value of certain financial instruments. The carrying amount reported in the unaudited condensed consolidated balance sheet for accounts payable and accrued expenses, advances and notes payable approximates fair value because of the immediate or short-term maturity of these financial instruments.
 
 
9

 
 
ECO VENTURES GROUP, INC.
 (formerly Modern Renewable Technologies, Inc.)
(a development stage company)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2012

Reclassification

Certain reclassifications have been made to prior periods' data to conform to the current period's presentation.  These reclassifications had no effect on reported income or losses.

Recent Accounting Pronouncements

There were various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company's consolidated financial position, results of operations or cash flows.
 
 NOTE 2 – GOING CONCERN MATTERS

The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying unaudited condensed consolidated financial statements from November 9, 2010 (date of inception) through May 31, 2012, the Company incurred deficit accumulated during development stage of $1,602,555, used $349,854 in cash for operating activities and had a negative working capital (current liabilities exceeded current assets) of $1,046,134 as of May 31, 2012. In addition, the Company is in a development stage, has yet to commercialize its planned business and has not generated any revenues since inception.  Operations of the mineral processing facility is sporadic due to the lack of a continuous financing source.  These factors among others may indicate that the Company will be unable to continue as a going concern for a reasonable period of time.
 
The Company’s existence is dependent upon management’s ability to develop profitable operations and or upon obtaining additional financing to carry out its planned business. Management is devoting substantially all of its efforts to the commercialization of its planned product and processes, as well as raising additional debt or equity financing in order to accelerate the development and commercialization of additional products. There can be no assurance that the Company’s commercialization or financing efforts will result in profitable operations or the resolution of the Company’s liquidity problems.

There can be no assurance that any additional financings will be available to the Company on satisfactory terms and conditions, if at all.  In the event the Company is unable to continue as a going concern, it may elect or required to seek protection from its creditors by filing a voluntary petition in bankruptcy or many be subject to an involuntary petition in bankruptcy.  To date, management has not considered this alternative, nor does management view it as a likely occurrence.

The accompanying unaudited condensed consolidated statements do not include any adjustments relating to the recoverability of assets and classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.

NOTE 3 – PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment as of May 31, 2012 and August 31, 2011 are comprised of the following:

   
May 31, 2012
(unaudited)
   
August 31, 2011
 
Office furniture and fixtures
 
$
1,667
   
$
542
 
Equipment
   
149,214
     
149,214
 
Leasehold improvements
   
19,640
     
19,640
 
Construction in process
   
595,846
     
560,000
 
Total property, plant and equipment
 
$
766,367
   
$
729,396
 

As of May 31, 2012, the Company is currently in the assembly and testing mode, not in operations.  Therefore no depreciation was recorded for the period from November 9, 2010 (date of inception) through May 31, 2012.

 
10

 

ECO VENTURES GROUP, INC.
 (formerly Modern Renewable Technologies, Inc.)
(a development stage company)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2012

During the period from November 9, 2010 (date of inception) through May 31, 2012, the Company received property and equipment from three investors at a fair value of $560,000. The transaction was recorded as a capital contribution.

NOTE 4 – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities as of May 31, 2012 and August 31, 2011 are comprised of the following:

   
May 31,
2012
(unaudited)
   
August 31, 2011
 
Accounts payable
 
$
254,819
   
$
39,921
 
Accrued interest
   
25,339
     
5,236
 
Accrued compensation
   
329,858
     
103,826
 
Total accounts payable and accrued liabilities
 
$
610,016
   
$
148,983
 

NOTE 5 – NOTES PAYABLE, RELATED PARTIES

Notes payable as of May 31, 2012 and August 31, 2011 are comprised of the following:

   
May 31, 2012
(unaudited)
   
August 31, 2011
 
Notes payable,  8% per annum, due on demand, unsecured, in default
 
$
4,349
   
$
265,474
 
Note payable, 8% per annum, due on demand, unsecured
   
48,243
     
-
 
Note payable, 8% per annum, due on demand, unsecured
   
23,821
       
-
Note payable, 8% per annum, due on demand, unsecured
   
34,075
       
-
Note payable, 8% per annum, due on demand, unsecured
   
16,317
     
-
 
  Total
 
$
126,805
   
$
265,474
 

From November 9, 2010 (date of inception) through August 31, 2011, the Company issued two notes in the aggregate of $265,474 in exchange for operating expenses paid on behalf of the Company by two shareholders of its majority owned subsidiary.  The notes bear an 8% per annum interest rate, unsecured and are due on demand. During the nine months ended May 31, 2012, the Company issued an aggregate of 183,203 shares of common stock, valued at $1.60 per share in settlement of $293,124 of the outstanding notes payable.

During the nine months ended May 31, 2012, the Company issued four notes totaling $122,456 in exchange for operating funds provided by a shareholder of its majority owned subsidiary.  The note bears an 8% per annum interest rate, unsecured and are due on demand.

NOTE 6 – STOCKHOLDERS' EQUITY

Preferred Stock

The Company is authorized to issue 100,000,000 shares of preferred stock with a par value of $0.001 per share.  The Company's preferred stock may be divided into such series as may be established by the Board of Directors. The Board of Directors may fix and determine the relative rights and preferences of the shares of any series established.

 
11

 
 
ECO VENTURES GROUP, INC.
 (formerly Modern Renewable Technologies, Inc.)
(a development stage company)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2012

Series A Cumulative Convertible Preferred Stock ("Series A")

In August, 2011, the Company designated 4,000,000 shares of authorized preferred stock as Series A Redeemable Convertible Preferred stock ("Series A"). As of May 31, 2012, there were 75,000 shares of Series A issued and outstanding.

As per the subscription agreement for 75,000 preferred stock Series A issued, each Series A shares will be converted into one share of the Company’s common stock and one share of Raptor Technology Group, Inc.

Series B Cumulative Convertible Preferred Stock ("Series B")

In September 2011, the Company designated 6,120,800 shares as Series B Cumulative Convertible Preferred stock.  As of May 31, 2012, there were 20,000 shares of Series B issued and outstanding.
 
During the nine months ended May 31, 2012, the Company issued 20,000 shares of its Series B Redeemable Convertible Preferred stock in exchange for proceeds of $50,000, valued at $2.50 per share.

Subsequent to one (1) year from the date of issuance, each share of Series B Preferred Stock shall be convertible at the option of the holder thereof (except as prohibited by law), in full or in part, into one point nine two (1.92) shares of fully paid and non assessable shares of common stock of the Company provided.

Common stock

The Company is authorized to issue 750,000,000 shares of $0.001 par value common stock as of May 31, 2012.  As of May 31, 2012, 2,250,591 shares of the Company's common stock were issued and 2,155,591 shares of the Company's common stock were outstanding.

On May 25, 2012 the shareholders and the board of directors of the Company approved a one (1) share for every forty (40) share of reverse stock split.  The reverse stock split had a record date of May 29, 2012 and an effective date of July 11, 2012.  All per share amounts in these unaudited condensed consolidated financial statements and accompanying notes have been retroactively adjusted to the earliest period presented for the effect of this reverse stock split.

On November 23, 2011, the Company issued, but held in escrow, 95,000 shares of its common stock pursuant to officer's employment agreements at par value. 

On November 23, 2011, the Company issued 1,250 shares of its common stock in exchange for officer's compensation with a fair value of $4,500, valued at $3.60 per share.

On January 27, 2012, the Company issued 20,000 shares of its common stock in exchange for notes payable in the amount of $32,000, valued at $1.60 per share.

On February 21, 2012, the company issued 42,691 shares of its common stock in exchange for a note payable in the amount of $68,737 valued at $1.60 per share.

On February 26, 2012, the Company issued 20,000 shares of its common stock in exchange for notes payable in the amount of $32,000, valued at $1.60 per share.

On March 23, 2012, the company issued 100,242 shares of its common stock in exchange for a note payable in the amount of $160,387, valued at $1.60 per share.

On April 18, 2012, the Company issued 11,250 shares of its common stock as employee compensation in the amount of $9,000 valued at the closing stock price of $0.80. 
 
NOTE 7 - STOCK OPTIONS

 
12

 

ECO VENTURES GROUP, INC.
 (formerly Modern Renewable Technologies, Inc.)
(a development stage company)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2012


On July 26, 2011, the 2011 Incentive Stock Option Plan (the “2011 Plan”) which provides incentive stock and non-statutory options to be granted to select employees, directors and consultants of the Company was approved by the Board of Directors and reserved 10.0 million shares of the Company’s common stock for the 2011 Plan.
 
As of May 31, 2012, the Company has not granted any stock options under the 2011 Plan.

NOTE 8 - RELATED PARTY TRANSACTIONS

The Company’s current officers and shareholders have advanced funds to the Company for travel related and working capital purposes.  No formal repayment terms or arrangements existed. There were $319,646 and $48,604 advances due at May 31, 2012 and August 31, 2011, respectively.
  
As described in Note 5, above, from November 9, 2010 (date of inception) through May 31, 2012, the Company issued five notes in the aggregate of $419,930 to the non-controlling interest shareholders of Eco Ventures – Florida.  The notes bear an 8% per annum interest rate, unsecured and are due on demand. During the nine months ended May 31, 2012, the Company issued an aggregate of 183,203 shares valued at $1.60 per share of common stock in settlement of $293,124 outstanding notes.

NOTE 9 - NON CONTROLLING INTEREST

The remaining 30% ownership of Eco Ventures – Florida is recorded as Non Controlling interest in the unaudited condensed consolidated financial statements.
 
A reconciliation of the non controlling loss attributable to the Company:

Net loss Attributable to the Company and transfers (to) from non-controlling interest for the nine months ended May 31, 2012:

Net loss
 
$
964,134
 
Average Non-controlling interest percentage
   
30.0
%
Net loss attributable to the non-controlling interest
 
$
289,241
 

The following table summarizes the changes in Non Controlling Interest from November 9, 2010 (date of inception) through May 31, 2012:
 
Balance, November 9, 2010 (date of inception)
 
$
-
 
Non controlling interest portion of contributed capital
   
188,325
 
Net loss attributable to the non-controlling interest
   
(163,652
)
Balance, August 31, 2011
   
24,673
 
Net loss attributable to the non-controlling interest
   
(289,241
)
Balance,  May 31, 2012
 
$
(264,568
)
 
NOTE 10 - SUBSEQUENT EVENTS

On May 25, 2012, the Board of Directors of Eco Ventures Group, Inc. (OTCBB: EVGI) ratified a “Binding Letter of Intent” (“the Agreement”) between the Company and Energiepark Supitz GmbH (“Energiepark”) whereby the Company will acquire 75% of the Shares of Energiepark in exchange for Shares of the Company which, upon issuance, will constitute 30% of the issued and outstanding Shares of Common Stock of the Company (“the Acquisition Shares”), and cash consideration of $3,000,000.  The Company has the option to acquire the remaining 25% of the Shares of Energiepark at a price which will be equal to 25% of the net value of the combined companies, as defined in the Agreement.

 
13

 

ECO VENTURES GROUP, INC.
 (formerly Modern Renewable Technologies, Inc.)
(a development stage company)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2012
 
Pursuant to the Agreement, the Company has also agreed to file a Registration Statement on Form S-1 to provide an additional $3,300,000 in working capital for the Company, and to register for public sale a portion of the Acquisition Shares.

Pursuant to the Agreement, a definitive agreement (the “Definitive Agreement”) satisfactory to the Company and Seller and Seller’s shareholders shall be executed by the Company, the Seller and all of Seller's shareholders on or before June 15, 2012.  The Definitive Agreement shall contain the terms, conditions, representations and warranties, covenants, due diligence and legal opinions normal and appropriate for a transaction of the type contem­plated, including,  without limitation, those summarized in the Agreement.

Upon signing the Definitive Agreement, the Company shall prepare and file with the SEC all appropriate documents including, but not limited to, a Current Report on Form 8K which will include the Definitive Agreement, a complete description of Seller’s business operations, and Seller’s audited and interim unaudited financial statements prepared in accordance with GAAP and/or PCAOB approved Audit statements and applicable rules and regulations of the Securities and Exchange Commission.

Süptitz, Germany-based Energiepark Süptitz is a diversified alternative energy feedstock, transportation, heat & power production company with approximately 50 employees -- whose primary business is the production, processing and brokering of bio fuel feedstocks including rapeseed, palm oil and wood.

Item 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This Management's Discussion and Analysis of Financial Condition and Results of Operations includes a number of forward-looking statements that reflect Management's current views with respect to future events and financial performance. You can identify these statements by forward-looking words such as “may,” “will,” “expect,” “anticipate,” “believe,” “estimate” and “continue,” or similar words. Those statements include statements regarding the intent, belief or current expectations of us and members of our management team as well as the assumptions on which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risk and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements.

Readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the Securities and Exchange Commission. Important factors currently known to Management could cause actual results to differ materially from those in forward-looking statements. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in the future operating results over time. We believe that our assumptions are based upon reasonable data derived from and known about our business and operations. No assurances are made that actual results of operations or the results of our future activities will not differ materially from our assumptions. Factors that could cause differences include, but are not limited to, expected market demand for our products, fluctuations in pricing for materials, and competition.
 
 
14

 
 
Introduction and Plan of Operation
 
The following discussion updates our plan of operation for the 2012 Fiscal Year. The discussion also summarizes the results of our operations for the three and nine month periods ended May 31, 2012 and the period from November 9, 2010 (date of inception) through May 31, 2012.

BACKGROUND

Eco Ventures Group, Inc. (“EVG” or “the Company”) is a family of ecologically-friendly and economically sound business ventures committed to providing for society’s growing minerals, energy and renewable resource needs -- building shareholder value and profiting from the efficient use of new green technologies. EVG concentrates on two planned core business activities. EVGI's Eco Minerals Recovery Group specializes in the extraction of precious metals from mineralized waste bodies and reclaimed mine tailings and Eco Energy Group will focus on the production of advanced biodiesel from recovered cooking oils and oil rich plants.  From inception to the current date the Company has not received any revenues from its Minerals Recovery Group or its Eco Energy Group business operations.
  
Company Background

We were incorporated on April 5, 2002 under the laws of the State of Nevada as “Aztek Ventures Inc.” Effective November 13, 2007, we filed a Certificate of Amendment to our Articles of Incorporation to change our name from “Aztek Ventures Inc.” to “Genesis Uranium Corp.” Effective April 21, 2008, we amended our Articles of Incorporation to change our name from “Genesis Uranium Corp.” to “Vault Technology Inc.” to reflect the change in our business focus beyond solely that of uranium exploration. Effective July 10, 2009, we filed a Certificate of Amendment to our Articles of Incorporation to change our name from “Vault Technology, Inc.” to “Modern Renewable Technologies, Inc.” (“Modern”).

Merger Agreement

On May 27, 2011, Modern, merged with Eco Ventures Group, Inc., (“Eco Ventures- Florida”) a privately held company formed on November 9, 2010 (date of inception) under the laws of the State of Florida (the “Merger Agreement” or the “Merger”).  Under the terms of the Merger Agreement, shareholders of Eco Ventures - Florida exchanged an aggregate of seventy percent (70%) of Eco Ventures – Florida’s issued and outstanding capital stock in exchange for 1,537,500 (including 125,000 shares issued to consultants and 95,000 shares issued to officers) restricted shares of Modern’s authorized but unissued capital stock.  As a condition to the Merger Agreement, 422,158 shares of Modern shall be issued to the Holders of the Registrant’s outstanding convertible debentures.  The Merger was consummated on June 1, 2011. 

In connection with the Merger, Modern changed its name to Eco Ventures Group, Inc. (“Eco Ventures – Nevada” or the “Registrant”).  The transaction has been accounted for in substance as a reverse acquisition of the Registrant by Eco Ventures –Florida since the stockholders of Eco Ventures – Florida owned a majority of the Registrant’s voting power immediately following the Merger Transaction and Eco Ventures – Florida’s management has assumed operational, management and governance control.  For accounting purposes, Eco Ventures – Florida shall be the accounting acquirer and or the surviving entity.  Accordingly, the historical financial statements are those of Eco Ventures – Florida, the accounting acquirer, immediately following the consummation of the reverse merger.
 
Upon completion of the Merger Transaction on June 1, 2011, our name was changed to Eco Ventures Group, Inc.  As a result, our OTC Bulletin Board symbol became “EVGI” as of June 6, 2011.
 
The Company’s current business operations and facilities are located in Groveland, FL. EVG has entered into to an exclusive strategic joint venture with Raptor Technology Group, Inc. of Groveland, FL to commercialize patent pending and proprietary technologies in the fields of efficient precious metals recovery.  EVG and Raptor have completed construction of a 5,000 concentrated ton per year mineral recovery facility.  EVG’s joint venture with Raptor Technology Group gives the Company access and equal ownership of the Intellectual Property rights related to key patent pending and proprietary technologies used in the Company’s minerals recovery technology.  EVG has also executed a non-exclusive license to utilize Raptor Technology Group’s patent pending and proprietary biofuel production technologies.  This technology makes use of a lower cost feedstock than the current industry standard.    The Company’s biofuel production facilities are strategically located close to large marine and land transport shipping hubs for sales of biodiesel fuel.
 
Our principal offices are located at 7432 State Road 50, Suite 101, Groveland, FL 34736, and our telephone number is (352) 557-4830.  Our common stock is quoted on the OTC Bulletin Board System under the symbol “EVGI.”  Our corporate website is www.ecoventuresgroup.com.
 
 
15

 
 
TERMS AND DEFINITIONS
 
Crushing
 
Crushers are machines that use a metal surface to break or compress materials.  Mining operations use crushers, commonly classified by the degree to which they fragment the starting material, with primary and secondary crushers handling course materials, and tertiary and quaternary crushers reducing mineralized waste particles to finer gradations.  Each crusher is designed to work with a certain maximum size of raw material, and often delivers its output to a screening machine which sorts and directs the product for further processing.  Typically, crushing stages are followed by milling stages if the materials need to be further reduced.  Crushers are used to reduce particle size enough so that the material can be processed into finer particles in a grinder. 
  
Extracting Metals (Hydrometallurgy)
 
Hydrometallurgy involves the use of aqueous solutions to extract metals or compounds from their mineralized wastes.  Some hydrometallurgical processes include leaching, precipitation of insoluble compounds, or pressure reduction.  Biohydrometallurgy is a sub topic of hydrometallurgy; this uses microbes to extract metals or metal compounds from the raw mineralized waste.
 
Leaching
 
Due to the difference in the dissolution rates, it is possible to separate the compounds of different metals. Often, some oxidative reagents need to be added to promote leaching.  Leaching involves the use of aqueous solutions, which is brought into contact with a material containing a valuable metal. .  In the leaching process, oxidation potential, temperature, and pH of the solution are important parameters, and are often manipulated to optimize dissolution of the desired metal component into the aqueous phase.  The three basic leaching techniques are in-situ leaching, heap leaching, and vat leaching. The Company’s patent pending photo catalytic oxidation system allows the enhancement of the acid’s capability of leaching the gold, platinum, palladium and  silver from mineralized waste.  This process may also use a grinding technology prior to leaching in which we take the mineralized waste to a -40 micron size to enhance surface area for the leaching.  (Reference to a grain of salt is 400 microns).
 
BioDiesel
 
Biodiesel is a renewable, clean-burning diesel replacement made from an increasingly diverse mix of resources such as agricultural oils, recycled cooking oil and animal fats, with a host of potential future feedstocks such as algae under research. It is the first and only commercial-scale fuel being produced nationwide to meet the EPA’s definition as an advanced biofuel under the agency’s Renewable Fuel Program, which is aimed at spurring development of sustainable alternatives to oil.
 
The EPA has determined that biodiesel reduces greenhouse gas emissions by 57 percent to 86 percent compared with petroleum diesel, depending on the feedstock used. Biodiesel also has the highest energy balance of any domestic, liquid fuel, yielding 4 ½ units of energy for every unit of fossil energy it takes to produce it. The EPA also says biodiesel dramatically reduces nearly every toxic air pollutant compared with traditional diesel.
 
OUR BUSINESS GROUPS

Our business operations have been internally divided into two working groups, neither of which are independent legal entities.  To date, we have not generated any revenues from either business group.

ECO MINERALS RECOVERY GROUP

Eco Minerals Recovery Group (EMRG) is our operating group which utilizes its proprietary technology for the extraction of precious metals from ore bodies and reclaimed mine tailings (mineralized waste materials).  Our process isolates and recovers precious minerals like gold, silver, platinum, palladium and rare earth oxides.   It is the company’s intent to generate operating revenues by selling these recovered precious minerals to third parties.

Our extraction process is currently accomplished without the use of traditional mineral leaching agents like arsenic and cyanide – highly toxic substances that pollute rivers and aquifers. EVG has recently acquired the right to process more than 12 million tons of ore and mineralized waste materials from a Nevada based mineral operation, Broken Hills, LLC.  The site’s surface ore deposit and mineralized waste materials covers 300 acres, and runs to a depth of 25 feet.  EVG, through its agreement with Broken Hills LLC, has the option rights to an additional 8,000 acres of similar ore body, adjacent to this initial Nevada claim(s), which is also owned by Broken Hills, LLC.  INX Laboratories, Inc., an independent assay and testing facility in Groveland, Florida, has tested a random sample of 20 tons of ore concentrate with preliminary results yielding high levels of target metals. Operations of the mineral processing facility is sporadic due to the lack of a continuous financing source.  EVG  is not a mining company, it does not own any of the mining property, nor does EVG own any ore reserves or any mineralized waste materials.  Through our joint venture with Broken Hills, LLC, a non-affiliated mining company, we have the right to process their ore and mineralized waste materials in exchange for a share of profits.
 
 
16

 
 
How Our Process Works

Commercial mining operations typically use a “heap leach” mineral recovery process – a very basic technology that usually recovers approximately 30% of the available ore in the mineralized waste materials.  The company’s utilization of proprietary technologies related to the mineral extraction through its joint venture with Raptor Technologies is designed to recover more precious metals and rare earth oxides than the traditional “heap leach” process without using toxic chemicals. This proprietary technology draws upon the hydrometallurgical and chemical backgrounds provided by the Company’s joint venture partner.  The extraction method consists of the application of the proprietary amounts of acids and other chemicals at the appropriate temperatures, and at the appropriate time during the extraction process to achieve metal recovery.  This technology was developed to allow for a relatively straightforward approach to the leaching of the contained metals from the various mineralized waste materials.
 
The company believes that a range of potentially proprietary (patentable) technology could be developed as a result of both the demonstration plant work and downstream advanced separation techniques that are applied to the precious metal recovery scenario.  The Company intends to evaluate its ability to proceed with proprietary protection and a near-term/long-term patent strategy.  Part of the mission of this joint venture is to market and scale these technologies as alternative mineral leaching ventures.   In order to accomplish this expansion of our business operations, the Company will need to provide financing for the capital-intensive equipment expenses needed to develop these ventures at scale, and help to prove the project’s financial feasibility.  These capital resources are currently not available to the Company.
 
The Company’s agreement with Broken Hills, LLC to process the mineralized waste materials owned by Broken Hills stipulates the Companies will split gross receipt revenues.  EVG will retain sixty percent (60%) of gross receipt revenue, while Broken Hills, LLC. will receive forty percent (40%) of gross receipt revenue for the initial twenty-thousand (20,000) tons of mineralized waste materials processed.  Once production has reached twenty-thousand tons of mineralized waste materials processed, the Companies will split gross receipt revenues in a manner of ninety-five percent (95%) for EVG, five percent (5%) to Broken Hills, LLC.
 
ECO ENERGY GROUP
 
Eco Energy Group (EEG) is a business group of EVG which is dedicated to the cost-effective production of biodiesel from multiple low-cost feedstocks by using bio refinery technologies.  EEG is near completion of its initial 3.6 million gallon facility in Groveland, FL, which processes biofuels from oil-rich plants and recovered cooking oils. EVG’s batch reactor will initially run on recycled cooking oils as a feedstock, termed “yellow grease.”   The Company will seek to secure reliable and cost-effective supplies of this feedstock.  EVG will need to obtain additional financing in order to complete this facility and make it operational.  Future plans include adding a $4M Advanced Biofuel Reactor facility that will produce 3 million gallons per year of biodiesel annually.   The Company expects to generate revenue by selling its biofuels at or near spot market prices.
 
To further completely position our Company in the Alternative Energy Market, EVG will collaborate with our joint venture partner Raptor to commercialize their advanced bio refinery technology can utilize significantly cheaper sources of feedstock, such as “brown grease”.   This 3 million gallon facility will be the first non-Defense Department facility using Raptor Technology Group’s Advanced Biofuel Reactor System.  Using this proprietary high-temperature, high-pressure process, the Advanced Biofuel plant makes biodiesel from “brown grease” sludge. This unique design allows for the use of a wide range of high FFA feedstocks that ensure that the least expensive and locally available resources can be used.  Feedstock makes up the single largest cost of producing biodiesel. EEG’s process is able to use much less expensive feedstock to remain competitive with the prices of petroleum diesel.

EVG and Raptor Technology Group (“Raptor”) have entered into a joint venture agreement in which the Companies will share in the first Advanced Biofuel facility’s gross revenue 50% / 50%. Additionally, the companies have entered into a management agreement whereby Raptor will manage EVG’s 3.6 million gallon per year biofuel facility in exchange for fifteen percent (15%) of the net revenue receipts.
  
How Our Process Works
 
In the production of biodiesel from various feedstocks, (e.g. vegetable oils, waste cooking oil materials, and brown grease) there are several techniques used to convert the materials to biodiesel, including primarily methyl esters.
 
For the most part, vegetable and rendered animal fats contain a mixture of triglycerides (TG) and free fatty acids (FFA).  With refined vegetable oils (e.g. soybean oil, canola oil), the oil consists predominately of TG materials.  In the case of the combined mixture of used vegetable oils (from cooking) and animal fats, there may also be quantities of FFA materials.  The amount of FFA in a used oil or animal fat depends to some extent on the age of the material, the extent of pretreatment, and the previous use of the material.
 
 
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In oils and fats that have been used as feedstocks for the production of biodiesel, FFA contents have ranged from near 0% to values in excess of 30% FFA (by weight).  Feedstocks consisting of greater than 90% FFA have also been processed in advanced conversion systems, although these are considered lower grade feedstock.
 
As the industry has developed, two basic methodologies have evolved for the treatment of the various feedstocks:  “base catalyst trans-esterification” and “two stage acid/base-esterification/trans-esterification”.  
 
For feeds that contain little or no FFA content (i.e. typically less than 2% FFA/weight), the "base catalyst trans-esterification" can be used.  In this approach, the feedstock is first prepared for use in the process using a variety of methods, and then mixed with a solution of methyl alcohol (methanol) and a "base" catalyst.  This catalyst can consist of sodium methoxide (or methylate) (NaOCH3); sodium hydroxide (NaOH); or potassium hydroxide (KOH).
 
In the base catalyst reaction, the oil reacts with the methanol, in the presence of the catalyst at elevated temperatures, and the TG fraction is converted to biodiesel, i.e. methyl ester.  As the conversion proceeds, a co-product consisting of glycerin is produced.  An excess of methanol is used in the reaction to ensure efficient conversion.  Further, the reaction can be carried out at atmospheric or elevated pressures in either batch or continuous modes.

In the "two-stage acid/base-esterification/trans-esterification" approach, the higher FFA feed is first pretreated and is then contacted with a mixture of methanol and an acid catalyst.  Typically sulfuric acid is used as the acid catalyst, although other materials have been looked at.

 
In the acid catalyst step, the FFA content in the feedstock is "esterified" via the reaction of the methanol with the FFA in the presence of the catalyst.  Contained TG components are primarily unaffected in the acid catalysis step. The reaction is generally carried out at elevated temperatures and can be conducted in batch or continuous reactors at atmospheric or elevated pressures.

After the esterification (i.e. 1st stage reaction), the mixture is treated to allow for separation of the co-products that can form in this reaction, (predominantly water).  The recovered TG/ester (produced from the FFA) fraction is then transferred to a second stage.

In the 2nd stage of the process, the TG/ester is mixed with the base catalyst, and a trans-esterification reaction carried out. This step is similar to the technique used in the base catalyst process, wherein only the trans-esterification stage was employed.  As in the first case, co-product glycerin is formed and any FFA remaining after the 1st stage is converted to soaps.  The biodiesel and glycerin fractions are eventually separated and treated as outlined in the base catalyst summary.

Advanced Biofuel Reactor Technology

Now consider a similar situation wherein the methanol is heated, but is in a container that keeps the solution under pressure.  In this case, when the solution starts to boil, the vapor enters the vapor phase; pressure builds up, and the methanol stops boiling.  As the temperature is further increased, the pressure will also increase (in the closed container) and the solution, while well above the "atmospheric boiling point" will not boil.

This is the same principle as that used in a conventional "pressure cooker".  In the pressure cooker case, an enclosed vessel is used with a pressure control regulator that will only allow the pressure to build up to a certain point.  As the liquid heats to the "atmospheric boiling point", for example that associated with elevated conditions, it will not boil due to the pressure control device, and the liquid continues to heat until it reaches the temperature associated with the pressure that is allowed by the pressure control device.  

In this manner, liquids can be made to boil at a higher temperature than they normally would for the elevation under consideration.  Applying this principle to methanol, wherein the solution is further heated in the enclosed vessel until the so-call "critical temperature" and "critical pressure" is reached (for methanol the critical temperature is about 464 degrees F and the critical pressure about 1142 psi).  Once these critical values have been reached (or exceeded), the properties of the fluid under consideration change markedly from the properties associated with the solution under "normal" (below critical) conditions.  

The main characteristics of Advanced Reactor fluids are that they behave as both vapors and liquids and in some cases make excellent substitutes for other, more toxic, organic solvents.  As an example, supercritical carbon dioxide (CO2) is finding expanded uses in the food processing industries for use as a solvent (to replace more toxic materials).  The Advanced Reactor fluid can be an excellent penetrant (when acting somewhat as a vapor) as well as a useful solvent, especially when behaving as a liquid.  

Methanol, in the Advanced Reactor reaction approach, is mixed with the lower grade feedstock then fed into a specially designed Advanced Reactor reaction system.  The extent of pretreatment needed for the feedstock is less than that associated with the "conventional" single or 2 stage-processing methodologies.  No catalyst is used in this approach, and the methanol/feedstock mixture is then subjected to temperatures and pressures that are above the critical points in the reaction system.  Both continuous and batch reaction systems can be used depending on the volumes of feeds to be processed.

 
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Under the conditions achieved at levels above advanced reaction, the methanol reacts with both the FFA content of the feed to convert it to a methyl ester, i.e. esterification, as well as with the contained TG portion of the feed for ester production, i.e. trans-esterification, both without the need for a separate catalyst.  

As in the conventional approaches, both water (from the esterification reaction) and glycerin (from the trans-esterification reaction) are formed as co-products.  Note, however, that since there is no base catalyst used, the formation of potential soaps, via base catalyst reaction with any residual FFA components, is eliminated.

The reaction product mixture then exits the AR reaction system and enters the post-treatment section of the process.  Typically, the post-treatment would involve energy recovery, to minimize overall energy consumption; separation of the biodiesel (methyl ester) from the glycerin phase; and potential biodiesel final treatment (normally distillation) to produce a high quality product.

In this manner, a relatively straightforward process approach is used to treat very low quality or highly variable feedstock materials.  Further, the use of the advanced reactor step, followed by biodiesel post-treatment, allows for close quality control and minimized effects of any feedstock changes or process variations.
 
Employees
 
There were two people employed by our Company on a full-time basis as of May 31, 2012, including Randall Lanham, our Chief Executive Officer, and Paul Smith, our President and CFO.   Additional technological experts provide services to the Company as independent contractors on a project basis.
 
Office and Manufacturing Facilities
 
Eco Ventures Group’s operations and facilities are located in Groveland, FL, 25 miles West of Orlando, FL on State Road 50.  The Company has leased an office / warehouse complex with a large warehouse facility for its Mineral Recovery Operation and Bio-Diesel Operation. The warehouse contains the completed 5,000 ton per year facility, which is already plumbed for expansion to a 10,000 concentrated ton per year facility. The leases shall be for a period of one (1) year term commencing April 1, 2011 with annual rent of $189,390.  The Company has an option to extend the term of these leases for five successive periods of one year each with a 3.5% escalation clause upon each renewal.
 
Plans include constructing an additional 10,000 ton per year facility, as well as the 3-million gallon Advanced Biofuel Facility at the current location.
 
Plan of Operations

 For the period from November 9, 2010 (date of inception) through May 31, 2012, we experienced the negative effects of the financial markets upheaval, which made capital acquisition extremely difficult.   Our plan of operations for fiscal 2012 is to continue seeking funding for our operations and expansion of our precious metals extraction and biofuel operations, complete all necessary permitting requirements, and seek further acquisitions of ore and mine tailings.
 
We are presently in the development stage of our planned business and have not earned any revenues for the period from November 9, 2010 (date of inception) through May 31, 2012.

Recent Activities:

On September 8, 2011, the Company completed construction of its precious metal extraction plant.  Phase I of this project gives EVGI the ability to process 5,000 tons of concentrated ore per year.  The Company eventually plans to bring the facility online to its maximum capacity of 10,000 tons of concentrated ore per year.   This new facility was manufactured in conjunction with our partner in the project, Raptor Technology Group, Inc. Utilizing its proprietary processing method the facility will extract Gold, Platinum, Palladium and other precious metals from concentrated ore bodies.  Using our pre-concentration system, processing 5,000 tons of concentrated ore is equivalent up to processing approximately 50,000 or more tons of raw ore per year depending upon the ore’s chemical characteristics.
 
On October 19, 2011, the Company signed a Mineral Exploitation Agreement with Broken Hills, LLC to recover the precious metals from certain mine claims in Nevada. The ore containing the precious metals will be concentrated on location using EVGI’s proprietary technology and then shipped to EVGI’s precious metal extraction facility in Groveland, Florida.  Based on land surveys, exploratory drilling and independent assays, the ore from the claims contain significant quantities of Gold, Platinum and Palladium.
 
 
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We announced on December 12, 2011 that the Company has entered into a Mineral Exploitation Agreement with DRR Partners, LLC to process 1,100 tons of highly concentrated ore.  This complex black ore being delivered by DRR is currently being tested and evaluated for its precious metal content.  Per the agreement, we will pay DRR a percentage of gross sales on a sliding scale ranging from 10% if the precious metal content is less than $75,000 per ton, up to 40% if the precious metal content is greater than $250,000 per ton.  The Company has no obligation to continue in the agreement if the precious metal content is less than $50,000 per ton.
 
Results of Operations
 
For the three months ended May 31, 2012 as compared to the three months ended May 31, 2011
 
For the three months ended May 31, 2012 we incurred a net loss attributable to Eco Ventures Group, Inc. common shareholders of $163,011 as compared to $-0- for the three month period ended May 31, 2011.

Selling, general and administrative
 
For the three months ended May 31, 2012, total selling, general and administrative costs were $219,940 as compared to $-0- for the three months ended May 31, 2011. Selling, general and administrative costs were primarily comprised of costs associated with starting operations and related salaries, overhead and travel expenses.  As part of our selling, general and administrative expenses, we incurred stock based compensation (non cash) of $18,301 for services rendered as compensation.
 
Interest expense

For the three months ended May 31, 2012, we incurred $8,948 in interest expense on demand notes issued in settlement of expenses paid on the Company's behalf and working capital provided. For the three months ended May 31, 2011, we did not incur interest expense.
 
For the nine months ended May 31, 2012 as compared to the period from November 9, 2010 (date of inception) through May, 31, 2012
 
For the nine months ended May 31, 2012 we incurred a net loss attributable to Eco Ventures Group, Inc. common shareholders of $805,446 as compared to $-0- for the period from November 9, 2010 (date of inception) through May 31, 2011.

Operating expenses
 
For the nine months ended May 31, 2012 we incurred $159,974 in operating expenses as compared to $-0- for the period from November 9, 2010 (date of inception) through May 31, 2011. Operating expenses were comprised primarily of the rental space and related costs for our production facility.

Selling, general and administrative
 
For the nine months ended May 31, 2012, total selling, general and administrative costs were $914,611 as compared to $-0- for the period from November 9, 2010 (date of inception) through May 31, 2011. Selling, general and administrative costs were primarily comprised of costs associated with starting operations and related salaries, overhead and travel expenses.  As part of our selling, general and administrative expenses, we incurred stock based compensation (non cash) of $139,552 for services rendered as compensation.
 
Interest expense
 
For the nine months ended May 31, 2012, we incurred $20,102 in interest expense on demand notes issued in settlement of expenses paid on the Company's behalf and working capital provided. For the period from November 9, 2010 (date of inception) through May 31, 2011, we did not incur interest expense.
 
Liquidity and Capital Resources
 
 Since November 9, 2010 (date of inception), we have been in the development stage and have to date  received no revenue from the extraction of gold or other precious metals or other business operations, we have relied on funds received in connection with our equity and debt offerings to finance our ongoing operations. We have experienced net losses since inception, and we expect we will continue to incur losses for the next year. As of the date of this filing, we do not have any available external source of funds. We require additional capital in the near term to maintain our current operations. Although we are actively seeking additional equity and debt financing, such financing may not be available on acceptable terms, if at all.
 
 
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 Our unaudited condensed consolidated financial statements have been prepared assuming that we will continue as a going concern. Since our inception on November 9, 2010, we have not generated revenue and have incurred net loss. We have a working capital deficit of $1,046,134 at May 31, 2012, incurred net loss attributable to Eco Ventures Group of $805,446 for the nine months ended May 31, 2012, and have a deficit accumulated during the development stage of $1,602,555 for the period from November 9, 2010 (date of inception) through May 31, 2012. Accordingly, we have not generated cash flow from operations and have primarily relied upon loans from officers, promissory notes and advances from related parties, and equity financing to fund our operations. These conditions as indicated in the report of our Independent Registered Public Accounting Firm dated December 1, 2011 on our consolidated financial statements for the period from November 9, 2010 (date of inception) through August 31, 2011, which included an explanatory paragraph indicating that there is substantial doubt about our ability to continue as a going concern.
 
We currently have $333 cash on hand. Accordingly, we do not have sufficient cash resources or current assets to pay our obligations, and we have been meeting many of our obligations through the issuance of our common stock to our employees, consultants and advisors as payment for goods and services. Considering the foregoing, we are dependent on additional financing to continue our operations and exploration efforts and, if warranted, to further develop and expand our precious metals extraction operations. Our significant capital requirements for the foreseeable future include development and operational costs,   and our corporate overhead expenses.
 
We are actively seeking additional equity or debt financing. However, there can be no assurance that funds required during the next twelve months or thereafter will be available from external sources. The lack of additional capital resulting from the inability to generate cash flow from operations or to raise capital from external sources would force us to substantially curtail or cease operations and would, therefore, have a material adverse effect on our business. Further, there can be no assurance that any such required funds, if available, will be available on attractive terms or that they will not have a significantly dilutive effect on our existing shareholders. All of these factors have been exacerbated by the extremely unsettled credit and capital markets presently existing.

As of May 31, 2012, we had cash of $333, and other current assets of $10,000 and current liabilities of $1,056,467 resulting in a negative working capital of $1,046,134. We used cash and cash equivalents of $349,854 in operating activities for the nine month period ended May 31, 2012 primarily from our net loss of $1,094,687 offset by stock based compensation of $139,552, operating expenses paid by related parties on behalf of the Company in exchange for notes payable of $86,856 and expenses paid by related parties of $57,392.  In addition, net change in operating assets and liabilities were comprised of an increase in accounts payable and accrued expenses of $461,033.
 
We used $36,971 in investing activities for the nine month period ended May 31, 2012 consisting of property, plant and equipment acquisitions. Cash flows from financing activities of $331,251 consisted of $213,651 from advances made by related parties and officers, sale of our Series B preferred stock of $50,000 and issuance of related party notes payable of $67,600 for operating funds provided.
 
Going Concern
 
The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company is a development stage entity, has not established any sources of revenue to cover its operating expenses from November 9, 2010 (date of inception) through May 31, 2012.  In addition, the Company has incurred deficit accumulated during development stage of $1,602,555, used $349,854 in cash for operating activities since inception and had a negative working capital (current liabilities exceeded current assets) of $1,046,134 as of May 31, 2012. The Company will engage in very limited activities without incurring any significant liabilities that must be satisfied in cash until a source of funding is secured.  These factors raise substantial doubt about the Company’s ability to continue as a going concern.
 
The Company’s ability to continue existence is dependent upon commencing its planned operations, management’s ability to develop and achieve profitable operations and/or upon obtaining additional financing to carry out its planned business. The Company intends to fund its business development, acquisition endeavors and operations through equity and debt financing arrangements. 

There can be no assurance that any additional financings will be available to the Company on satisfactory terms and conditions, if at all. In the event the Company is unable to continue as a going concern, it may elect or be required to seek protection from its creditors by filing a voluntary petition in bankruptcy or may be subject to an involuntary petition in bankruptcy. To date, management has not considered this alternative, nor does management view it as a likely occurrence.
 
The accompanying unaudited condensed consolidated financial statements do not include any adjustments related to the recoverability or classification of asset-carrying amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 
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Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. A summary of the critical accounting policies and the judgments that we make in the application of those policies is presented in Note 1 to our unaudited condensed consolidated financial statements.

Our unaudited condensed consolidated financial statements are based on the selection of accounting policies and the application of accounting estimates, some of which require management to make significant assumptions. Actual results could differ materially from the estimated amounts. The following accounting policy is critical to understanding and evaluating our reported financial results:
 
Development Stage Company
 
The Company is considered to be a development stage entity, as defined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 915.
 
Going Concern
 
The unaudited condensed consolidated financial statements have been prepared on the going concern basis, which assumes the realization of assets and liquidation of liabilities in the normal course of operations. If we were not to continue as a going concern, we would likely not be able to realize on our assets at values comparable to the carrying value or the fair value estimates reflected in the balances set out in the preparation of the consolidated financial statements. There can be no assurances that we will be successful in generating additional cash from equity or other sources to be used for operations. The unaudited condensed consolidated financial statements do not include any adjustments relating to the recoverability of assets and classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.
 
Principles of Consolidation
 
The unaudited condensed consolidated financial statements include the accounts of the Company and its majority owned subsidiary, Eco Ventures - Florida.  All significant intercompany balances and transactions have been eliminated in consolidation.

The remaining 30% ownership of Eco Ventures – Florida as of May 31, 2012 is recorded as non-controlling interest in the unaudited condensed consolidated financial statements.
 
Revenue Recognition

The Company will recognize revenue in accordance with Accounting Standards Codification subtopic 605-10, Revenue Recognition (“ASC 605-10”) which requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management's judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded.

ASC 605-10 incorporates Accounting Standards Codification subtopic 605-25, Multiple-Element Arraignments (“ASC 605-25”). ASC 605-25 addresses accounting for arrangements that may involve the delivery or performance of multiple products, services and/or rights to use assets. The effect of implementing 605-25 on the Company's financial position and results of operations was not significant.
 
Stock-Based Compensation
 
We utilize the Black-Scholes option-pricing model to determine fair value of options and warrants granted as stock-based compensation, which requires us to make judgments relating to the inputs required to be included in the model. In this regard, the expected volatility is based on the historical price volatility of the Company’s common stock. The dividend yield represents the Company’s anticipated cash dividend on common stock over the expected life of the stock options. The U.S. Treasury bill rate for the expected life of the stock options is utilized to determine the risk-free interest rate. The expected term of stock options represents the period of time the stock options granted are expected to be outstanding.
 
 
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Recent Accounting Pronouncements

There were various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company's unaudited condensed consolidated financial position, results of operations or cash flows.

Inflation
 
We believe that inflation has not had, and is not expected to have, a material effect on our operations.
 
Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Climate Change
 
We believe that neither climate change, nor governmental regulations related to climate change, have had, or are expected to have, any material effect on our operations.
 
Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Not applicable
 
Item 4. Controls and Procedures
 
Evaluation of Disclosure Controls and Procedures
 
As of May 31, 2012, under the supervision and with the participation of our Chief Executive Officer (Principal Executive Officer), and Chief Financial Officer (Principal Financial Officer), management has evaluated the effectiveness of the design and operations of the Company’s disclosure controls and procedures. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not effective as of May 31, 2012 as a result of the material weakness in internal control over financial reporting discussed below.
 
Management’s Report on Internal Control Over Financial Reporting
 
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in the Securities Exchange Act of 1934 Rule 13a-15(f). Our Chief Executive Officer and President/Chief Financial Officer conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO Framework”).
 
The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of May 31, 2012. Based on this evaluation, management concluded that our internal control over financial reporting was not effective as of May 31, 2012. Our Chief Executive Officer and President/Chief Financial Officer concluded we have a material weakness due to lack of segregation of duties and a limited corporate governance structure.
 
Our size has prevented us from being able to employ sufficient resources to enable us to have an adequate level of supervision and segregation of duties within our internal control system. Therefore while there are some compensating controls in place, it is difficult to ensure effective segregation of accounting and financial reporting duties. Management reported a material weakness resulting from the combination of the following significant deficiencies:
 
Lack of segregation of duties in certain accounting and financial reporting processes including the approval and execution of disbursements;
 
The Company’s corporate governance responsibilities are performed by the Board of Directors; we do not have independent Board of Directors, we do not have an audit committee or compensation committee. Because our Board of Directors only meets periodically throughout the year, several of our corporate governance functions are not performed concurrent (or timely) with the underlying transaction, evaluation, or recordation of the transaction.
 
While we strive to segregate duties as much as practicable, there is an insufficient volume of transactions at this point in time to justify additional full time staff. We believe that this is typical in most exploration stage companies. We may not be able to fully remediate the material weakness until we commence mining operations at which time we would expect to hire more staff. We will continue to monitor and assess the costs and benefits of additional staffing.
 
 
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In light of the above material weakness, we performed additional analyses and procedures in order to conclude that our unaudited condensed consolidated financial statements for the three month period ended May 31, 2012 included in this Quarterly Report on Form 10-Q were fairly stated in accordance with US GAAP. Accordingly, management believes that despite our material weaknesses, our unaudited condensed consolidated financial statements for the three and nine month periods ended May 31, 2012 are fairly stated, in all material respects, in accordance with US GAAP.
 
Changes in Internal Control over Financial Reporting
 
There were no changes in internal control over financial reporting that occurred during the last fiscal quarter covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II.
OTHER INFORMATION

Item 1.
Legal Proceedings.

None.

Item 1A.
Risk Factors.

There have been no material changes in our risk factors from those disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended August 31, 2011.
 
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds.

None

Item 3.
Defaults Upon Senior Securities.

None.

Item 4.
Mine Safety Disclosures.
 
None

Item 5.
Other Information.
 
None.
 
 
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Item 6.  
Exhibits.
 
EXHIBIT INDEX
     
   
 
Exhibit
 
 
31.1
Certification Pursuant to Rule 13A-14 or 15D-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 signed by the Principal Executive Officer*
     
 
31.2
Certification Pursuant to Rule 13A-14 or 15D-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 signed by the Principal Financial Officer*
     
 
32.1
Certification Required by 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 signed by Principal Executive Officer,*
     
 
32.2
Certification Required by 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 signed by Chief Financial Officer*
     
 
 
101 INS
XBRL Instance Document*
     
 
101 SCH
XBRL Schema Document*
     
 
101 CAL
XBRL Calculation Linkbase Document*
     
 
101 LAB
XBRL Labels Linkbase Document*
     
 
101 PRE
XBRL Presentation Linkbase Document*
     
 
101 DEF
XBRL Definition Linkbase Document*

*     The XBRL related information in Exhibit 101 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.
 
*     Filed herewith
 
 
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SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


 
ECO VENTURES GROUP,  INC.
     
Date: July 23, 2012
By:
/s/ RANDALL LANHAM
   
Randall Lanham
   
Chief Executive Officer (Principal Executive Officer)
     
     
Date: July 23, 2012
By:
 /s/ PAUL SMITH
   
Paul Smith
   
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
 
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