UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

[X]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended

June 30, 2012

or

[  ]

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

to

Commission File Number

333-120682

ENVIRONMENTAL CONTROL CORP.

(Exact name of registrant as specified in its charter)

Nevada

20-3626387

(State or other jurisdiction of incorporation or organization)

(IRS Employer Identification No.)

85 Kenmount Road, St. John's, Newfoundland, Canada

A1B 3N7

(Address of principal executive offices)

(Zip Code)

888.669.3588

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

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.

[X]

YES

[  ]

NO

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

[X]

YES

[  ]

NO

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company.  See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

[  ]

Accelerated filer

[  ]

Non-accelerated filer

[  ]

(Do not check if a smaller reporting company)

Smaller reporting company

[X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act

[  ]

YES

[X]

NO

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court.

[  ]

YES

[  ]

NO

APPLICABLE ONLY TO CORPORATE ISSUERS

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

45,569,068 common shares issued and outstanding as of August 20, 2012.

 

 

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION	3
Item 1. Financial Statements	3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3. Quantitative and Qualitative Disclosures About Market Risk	19
Item 4. Controls and Procedures	19
PART II - OTHER INFORMATION	19
Item 1. Legal Proceedings	19
Item 1A. Risk Factors	20
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	20
Item 3.  Defaults Upon Senior Securities	20
Item 4.  Mine Safety Disclosures	20
Item 5.  Other Information	20
Item 6.  Exhibits	20
SIGNATURES	21

 

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

 

Our unaudited consolidated interim financial statements for the three and six month periods ended June 30, 2012 form part of this quarterly report.  Unless otherwise specified our financial statements are expressed in Canadian Dollars (CDN$) and are prepared in accordance with United States generally accepted accounting principles.

 

 

 

 

 

 

 

 

Environmental Control Corp.
(A Development Stage Company)
Balance Sheets
(Expressed in Canadian Dollars)
										June 30,		December 31,
										2012		2011
										$		$
										(unaudited)
	ASSETS
	Current Assets
		Cash								737		30,516
		Amounts receivable								37,051		32,773
	Total Current Assets									37,788		63,289
	Property and equipment (Note 3)									5,652		6,447
	Total Assets									43,440		69,736
	LIABILITIES AND STOCKHOLDERS' DEFICIT
	Current Liabilities
		Accounts payable								54,700		38,688
		Accrued liabilities								1,652		2,579
		Accrued convertible interest payable to related parties (Note 5)								79,009		64,254
		Advances from related parties (Note 6(a))								26,906		26,906
	Total Current Liabilities									162,267		132,427
	Accrued convertible interest payable (Note 7)									10,795		8,247
	Accrued convertible interest payable to related party (Note 5)									27,808		15,459
	Convertible debenture (Note 7)									33,001		31,490
	Convertible debentures issued to related parties (Note 5)									508,409		492,299
	Advances from related parties (Note 6(b))									25,453		25,425
	Total Liabilities									767,733		705,347
	Contingencies and Commitments (Notes 1 and 8)
	Stockholders’ Deficit
		Common stock, 200,000,000 shares authorized, US$0.001 par value;
		45,569,068 shares issued and outstanding (December 31, 2011 – 45,569,068 shares)								52,810		52,810
		Additional paid-in capital								1,714,358		1,714,358
		Common stock to be issued (Note 8(a))								2,320		2,320
		Deficit accumulated during the development stage								(2,493,781)		(2,405,099)
	Total Stockholders’ Deficit									(724,293)		(635,611)
	Total Liabilities and Stockholders’ Deficit									43,440		69,736

 

  

	Environmental Control Corp.
	(A Development Stage Company)
	Statement of Operations
	(Expressed in Canadian Dollars)
	(Unaudited)
				Accumulated
				From March 6,
				1999 (Date of		For the Three		For the Three		For the Six		For the Six
				Inception)		Months Ended		Months Ended		Months Ended		Months Ended
				to June 30,		June 30,		June 30,		June 30,		June 30,
				2012		2012		2011		2012		2011
				$		$		$		$		$
	Revenue			-		-		-		-		-
	Expenses
		Depreciation		20,715		384		505		795		1,047
		Foreign exchange (gain) loss		(23,440)		9,379		(1,949)		985		(11,498)
		General and administrative (Note 4)		1,819,184		24,006		50,792		40,513		103,901
		Research and development		82,435		-		-		-		2,619
	Total Operating Expenses			1,898,894		33,769		49,348		42,293		96,069
	Loss From Operations			(1,898,894)		(33,769)		(49,348)		(42,293)		(96,069)
	Other Expenses
		Accretion of discounts on convertible debentures		(423,497)		(10,144)		(8,671)		(20,955)		(16,295)
		Interest expense		(156,510)		(13,257)		(9,410)		(25,434)		(18,873)
		Write off of income tax receivable		(14,880)		-		-		-		-
	Total Other Expenses			(594,887)		(23,401)		(18,081)		(46,389)		(35,168)
	Net Loss for the Period			(2,493,781)		(57,170)		(67,429)		(88,682)		(131,237)
	Net Loss Per Share – Basic and Diluted					(0.00)		(0.00)		(0.00)		(0.00)
	Weighted Average Shares Outstanding					45,569,000		45,569,000		45,569,000		45,569,000

 

 

 

	Environmental Control Corp.
	(A Development Stage Company)
	Statement of Cash Flows
	(Expressed in Canadian Dollars)
	(Unaudited)
								Accumulated
								From March 6,
								1999 (Date of		For the Six		For the Six
								Inception)		Months Ended		Months Ended
								to June 30,		June 30,		June 30,
								2012		2012		2011
								$		$		$
	Operating Activities
	Net loss for the period							(2,493,781)		(88,682)		(131,237)
	Adjustments to reconcile net loss to net cash used in operating activities:
		Accretion of discounts on convertible debentures						423,497		20,955		16,295
		Depreciation						20,715		795		1,047
		Stock-based compensation						239,058		-		28,571
		Foreign exchange (gain) loss						(35,586)		235		(24,845)
	Changes in operating assets and liabilities:
		Amounts receivable						(36,231)		(4,278)		(9,285)
		Prepaid expenses						1,125		-		-
		Accounts payable and accrued liabilities						(11,331)		15,762		19,007
		Accrued convertible interest payable						155,537		25,434		18,873
	Net Cash Used In Operating Activities							(1,736,997)		(29,779)		(81,574)
	Investing Activities
		Purchase of equipment						(13,617)		-		-
		Net cash acquired on business acquisition						178,365		-		-
	Net Cash Provided by Investing Activities							164,748		-		-
	Financing Activities
		Proceeds from convertible debt						700,471		-		50,000
		Proceeds from issuance of shares						505,953		-		-
		Proceeds from related parties						366,562		-		-
	Net Cash Provided by Financing Activities							1,572,986		-		50,000
	Increase (Decrease) in Cash							737		(29,779)		(31,574)
	Cash – Beginning of Period							-		30,516		39,384
	Cash – End of Period							737		737		7,810
	Supplemental Disclosures
		Interest paid						-		-		-
		Income taxes paid						-		-		-

 

 

	Environmental Control Corp.
	(A Development Stage Company)
	Notes to the Financial Statements
	(Expressed in Canadian Dollars)
	(unaudited)
	1.		Nature of Business and Continuance of Operations
			Environmental Control Corp. (the “Company”) was incorporated in the State of Nevada on February 17, 2004 under the name Boss Minerals, Inc. and, effective April 13, 2006, changed its name to Environmental Control Corp. Boss Minerals, Inc.’s initial operations included the acquisition and exploration of mineral resources.
			On March 20, 2006, management changed its primary business focus to that of development of emission control devices for small spark ignition combustion engines. On March 20, 2006, the Company entered into an Asset Acquisition Agreement (the “Agreement”) to acquire the principal assets of Environmental Control Corp. (“ECC”), a private Canadian based company. The Company is in the development stage as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915, Development Stage Entities. On April 4, 2006, the Company authorized a 5:1 stock split to be applied retroactively. In addition, the Company increased its authorized share capital to 200,000,000 common shares. All share amounts stated herein have been restated to reflect the stock split. On February 26, 2007, the acquisition of the business of ECC was completed through the issuance of 22,500,000 shares of common stock. Prior to the acquisition of ECC, the Company was a non-operating shell company. The acquisition was a capital transaction in substance and therefore has been accounted for as a recapitalization, which is outside the scope of ASC 805, Business Combinations. Under recapitalization accounting, ECC was considered the acquirer for accounting and financial reporting purposes, and acquired the assets and assumed the liabilities of the Company. Assets acquired and liabilities assumed were reported at their historical amounts. These financial statements include the accounts of the Company since the effective date of the recapitalization (February 26, 2007) and the historical accounts of the business of ECC since inception on March 6, 1999.
			These financial statements have been prepared on a going concern basis, which assumes the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations, and the attainment of profitable operations. As at June 30, 2012, the Company has a working capital deficiency of $124,479 and has incurred losses totaling $2,493,781 since inception, and has not yet generated any revenue from operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
			Management estimates expenditures of approximately $10,000 for research and development activities, and approximately $240,000 for other operational costs over the next twelve months. The Company had $737 in cash on hand at June 30, 2012. The Company currently has no revenues and must rely on debt financing and the sale of equity securities to fund operations. The Company does not have any arrangements in place for any future equity or debt financings, and there is no assurance that the Company will be able to obtain the necessary financings to complete its objectives.
	2.		Summary of Significant Accounting Policies
		a)	Basis of Presentation
			The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States and are expressed in Canadian dollars. The Company’s fiscal year end is December 31.
		b)	Interim Financial Statements
			These interim unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Securities and Exchange Commission (“SEC”) Form 10-Q. They do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Therefore, these financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended December 31, 2011, included in the Company’s Annual Report on Form 10K filed April 25, 2012 with the SEC.
			The financial statements included herein are unaudited; however, they contain all normal recurring accruals and adjustments that, in the opinion of management, are necessary to present fairly the Company’s financial position at June 30, 2012, and the results of its operations and cash flows for the three month and six month periods ended June 30, 2012 and 2011. The results of operations for the period ended June 30, 2012 are not necessarily indicative of the results to be expected for future quarters or the full year.

		c)			Use of Estimates
					The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the recoverability of receivables, deferred income tax asset valuation allowances, stock-based compensation and financial instrument valuations. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
		d)			Cash and Cash Equivalents
					The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.
		e)			Financial Instruments
					The Company’s financial instruments consist principally of cash, accounts payable, advances from related parties and convertible debentures. Pursuant to ASC 820, Fair Value Measurements and Disclosures, and ASC 825, Financial Instruments the fair value of the Company’s cash equivalents is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The Company believes that the recorded values of all of the Company’s other financial instruments approximate their current fair values.
					Assets measured at fair value on a recurring basis were presented on the Company’s balance sheet as of June 30, 2012 as follows:

			Fair Value Measurements Using
			Quoted Prices in Active Markets For Identical Instruments (Level 1)	Significant Other Observable Inputs        (Level 2)	Significant Unobservable Inputs      (Level 3)
						Balance as of June 30, 2012
		Assets:
		Cash	$737	–	–	$737

					The Company’s operations are in Canada, which results in exposure to market risks from changes in foreign currency rates. The financial risk is the risk to the Company’s operations that arise from fluctuations in foreign exchange rates and the degree of volatility of these rates. Currently, the Company does not use derivative instruments to reduce its exposure to foreign currency risk.
		f)			Earnings (Loss) Per Share
					The Company computes net income (loss) per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As at June 30, 2012, the Company has 15,003,834 potentially dilutive securities outstanding.
		g)			Comprehensive Loss
					ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at June 30, 2012 and 2011, the Company has no items that represent a comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements.

		h)	Foreign Currency Translation
			Effective on the closing of the Agreement on February 26, 2007 (see Note 1), the Company’s functional and reporting currency changed to the Canadian dollar. Monetary assets and liabilities denominated in foreign currencies are translated in accordance with ASC 830, Foreign Currency Translation Matters, using the exchange rate prevailing at the balance sheet date. Gains and losses arising on settlement of foreign currency denominated transactions or balances are included in the determination of income. Foreign currency transactions are primarily undertaken in Canadian dollars. The Company has not, to the date of these financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.
		i)	Stock-based Compensation
			In accordance with ASC 718, Compensation – Stock Based Compensation and ASC 505-50, Equity Based Payments to Non-Employees, the Company accounts for share-based payments using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.
		j)	Property and Equipment
			Property and equipment consists of office furniture, equipment, and computer equipment which are recorded at cost. Office furniture is amortized on a declining-balance basis at 20% per annum, equipment is amortized on a declining-balance basis at 30% per annum, and computer equipment is amortized on a declining-balance basis at 30% per annum.
		k)	Long-lived Assets
			In accordance with ASC 360, Property Plant and Equipment, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.
		l)	Research and Development Costs
			In accordance with ASC 730, Research and Development, research costs are expensed in the period in which they are incurred. Development costs are also expensed unless they meet the criteria for deferral. When development costs meet the criteria for deferral, the development costs are deferred to the extent their recoverability can be reasonably assured. Deferred development costs represent the cost of developing specific products and are amortized on a straight line basis over the expected commercial life of the product.

		m)	Income Taxes
			The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, Income Taxes. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.
		n)	Investment Tax Credits
			The Company incurs research and development expenditures that may qualify for investment tax credits recoverable from Canadian tax authorities. Investment tax credits are accounted for using the cost reduction approach. Under this approach, investment tax credits received or receivable are deducted from research and development expenditures when the Company has made the qualifying expenditures, provided that there is reasonable assurance that the credits will be realized. Realization is assessed based on the Company’s collection history. As at June 30, 2012, the Company has $Nil in investment tax credits receivable (December 31, 2011 - $Nil). The investment tax credits must be examined and approved by the tax authorities and the amounts granted may differ from the amounts recorded.
		o)	Recent Accounting Pronouncements
			In January 2010, the FASB issued Accounting Standards Update (ASU) No. 2010-06, Improving Disclosures about Fair Value Measurements, which amends the ASC Topic 820, Fair Value Measurements and Disclosures. ASU No. 2010-06 amends the ASC to require disclosure of transfers into and out of Level 1 and Level 2 fair value measurements, and also requires more detailed disclosure about the activity within Level 3 fair value measurements. The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures concerning purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The adoption of this amendment did not have a material effect on the Company’s financial statements.
			The Company has implemented all other new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

  

 

3

.

Property and Equipment

											June 30,		December 31,
											2012		2011
									Accumulated		Net Carrying		Net Carrying
							Cost		Amortization		Value		Value
							$		$		$		$
					Equipment		13,617		11,016		2,601		3,040
					Computer equipment		3,283		2,844		439		513
					Office furniture		9,467		6,855		2,612		2,894
							26,367		20,715		5,652		6,447

	4.				Related Party Transactions
					During the six months ended June 30, 2012, the Company recognized $Nil (2011 – $8,400) for rent due to a company controlled by a director of the Company. The transaction was in the normal course of operations and was recorded at the exchange amount, which is the amount agreed upon by the related parties.
	5.				Convertible Debentures Issued to Related Parties
		a)			On July 30, 2008, the Company entered into a convertible debenture agreement with a company controlled by the former President of the Company. The Company received US$36,376 ($36,960) which bears interest at 10% per annum and is due five years from the advancement date. No interest shall be payable for the first year from the advancement date but shall accrue from the advancement date and all accrued interest shall be payable annually, on the subsequent anniversaries of the advancement date. Proceeds of the loan are to be used to acquire certain patents and intellectual property rights and the loan amount is secured against such intellectual property. Any portion of the loan and unpaid interest are convertible at any time at the option of the lender into shares of common stock of the Company at a conversion price of US$0.17 per share. The Company recognized the intrinsic value of the embedded beneficial conversion feature of US$6,419 ($6,523) as additional paid-in capital and reduced the carrying value of the convertible debenture to US$29,957 ($30,437). The carrying value will be accreted over the term of the convertible debenture up to its face value of US$36,376. As at June 30, 2012, the carrying values of the convertible debenture and accrued convertible interest payable thereon were $35,302 and $14,519, respectively, after translation into Canadian dollars. The Company can repay any portion of the loan and accrued interest at any time without penalty.
		b)			On October 16, 2008, the Company entered into a convertible debenture agreement with the former President of the Company. The Company received US$50,000 ($59,110) which bears interest at 10% per annum and is due five years from the advancement date. No interest shall be payable for the first year from the advancement date but shall accrue from the advancement date and all accrued interest shall be payable annually, on the subsequent anniversaries of the advancement date. Proceeds of the loan are to be used to repay an outstanding loan and to further business development and research and development activities. Any portion of the loan and unpaid interest are convertible at any time at the option of the lender into shares of common stock of the Company at a conversion price of US$0.07 per share. The Company recognized the intrinsic value of the embedded beneficial conversion feature of US$14,286 ($16,889) as additional paid-in capital and reduced the carrying value of the convertible debenture to US$35,714 ($42,221). The carrying value will be accreted over the term of the convertible debenture up to its face value of US$50,000. As at June 30, 2012, the carrying values of the convertible debenture and accrued convertible interest thereon were $45,996 and $18,870, respectively, after translation into Canadian dollars. The Company can repay any portion of the loan and accrued interest at any time without penalty.
		c)			On April 9, 2009, the Company entered into a convertible loan agreement with a company controlled by directors of the Company. The Company received US$202,920 ($250,000) which bears interest at 10% per annum and is due five years from the advancement date. No interest shall accrue for the first year from the advancement date but shall begin to accrue on the second anniversary of the advancement date and all accrued interest shall be payable annually, on the subsequent anniversaries of the advancement date. Proceeds from the loan are to be used to further advance current business development and marketing initiatives, and to complete testing. The loan amount is secured against intellectual property rights owned by the Company. Any portion of the loan and unpaid interest are convertible at any time at the option of the lender into shares of common stock of the Company at a conversion price of US$0.06 per share. The Company recognized the intrinsic value of the embedded beneficial conversion feature of US$101,460 ($125,000) as additional paid-in capital and reduced the carrying value of the convertible debenture to US$101,460 ($125,000). The carrying value will be accreted over the term of the convertible debenture up to its face value of US$202,920. As at June 30, 2012, the carrying value of the convertible debenture and accrued convertible interest thereon were $163,208 and $45,620, respectively, after translation into Canadian dollars. The Company can repay any portion of the loan and accrued interest at any time without penalty.

 

 

		d)			On December 31, 2009, the Company entered into a convertible loan agreement with a company controlled by the former President of the Company. The Company received US$50,000 ($52,550) which bears interest at 10% per annum and is due five years from the advancement date. Interest shall accrue from the advancement date and shall be payable on the fifth anniversary of the advancement date. Proceeds of the loan are to be used to continue with current business development activities. Any portion of the loan and unpaid interest are convertible at any time at the option of the lender into shares of common stock of the Company at a conversion price of US$0.05 per share. As at June 30, 2012, the carrying value of the convertible debenture and accrued convertible interest thereon were $50,905 and $12,719, respectively, after translation into Canadian dollars. The Company can repay any portion of the loan and accrued interest at any time without penalty.
		e)			On July 15, 2010, the Company entered into a convertible debenture agreement with a company controlled by the former President of the Company. The Company received $50,000 which is due five years from the advancement date. The loan shall be interest free for the first year, after which it shall bear interest at a rate of 10% per annum. The accrued interest shall be payable annually on the anniversaries of the advancement date, commencing on the second anniversary. Proceeds of the loan are to be used to continue with current business development activities. Any portion of the loan and unpaid interest are convertible at any time at the option of the lender into shares of common stock of the Company at a conversion price of $0.035 per share. The Company recognized the intrinsic value of the embedded beneficial conversion feature of $7,143 as additional paid-in capital and reduced the carrying value of the convertible debenture to $42,857. The carrying value will be accreted over the term of the convertible debenture up to its face value of $50,000. As at June 30, 2012, the carrying value of the convertible debenture and accrued interest thereon were $48,207 and $4,808, respectively. The Company can repay any portion of the loan and accrued interest at any time without penalty.
		f)			On November 30, 2010, the Company entered into a convertible debenture agreement with a company controlled by the former President of the Company. The Company received $50,000 which is due five years from the advancement date. The loan shall be interest free for the first year, after which it shall bear interest at a rate of 10% per annum. The accrued interest shall be payable annually on the anniversaries of the advancement date, commencing on the second anniversary. Proceeds of the loan are to be used to continue with current business development activities. Any portion of the loan and unpaid interest are convertible at any time at the option of the lender into shares of common stock of the Company at a conversion price of $0.035 per share. The Company recognized the intrinsic value of the embedded beneficial conversion feature of $21,429 as additional paid-in capital and reduced the carrying value of the convertible debenture to $28,571. The carrying value will be accreted over the term of the convertible debenture up to its face value of $50,000. As at June 30, 2012, the carrying value of the convertible debenture and accrued interest thereon were $36,297 and $2,918, respectively. The Company can repay any portion of the loan and accrued interest at any time without penalty.
		g)			On April 21, 2011, the Company entered into a convertible debenture agreement with a company controlled by the former President of the Company. The Company received $50,000 which is due five years from the advancement date. The loan shall be interest free for the first year, after which it shall bear interest at a rate of 10% per annum. The accrued interest shall be payable annually on the anniversaries of the advancement date, commencing on the second anniversary. The loan is secured by a patent held by the Company. Proceeds of the loan are to be used to continue with current business development activities. Any portion of the loan and unpaid interest are convertible at any time at the option of the lender into shares of common stock of the Company at a conversion price of US$0.035 per share. The Company recognized the intrinsic value of the embedded beneficial conversion feature of $28,571 as additional paid-in capital and reduced the carrying value of the convertible debenture to $21,429. The carrying value will be accreted over the term of the convertible debenture up to its face value of $50,000. As at June 30, 2012, the carrying value of the convertible debenture and accrued interest thereon were $28,494 and $959 respectively. The Company can repay any portion of the loan and accrued interest at any time without penalty.
		h)			On August 29, 2011, the Company entered into a convertible debenture agreement with a company controlled by the former President of the Company. The Company received $100,000 which is due five years from the advancement date. The loan shall be interest free for the first year, after which it shall bear interest at a rate of 10% per annum. The accrued interest shall be payable annually on the anniversaries of the advancement date, commencing on the second anniversary. Proceeds of the loan are to be used to continue with current business development activities. Any portion of the loan and unpaid interest are convertible at any time at the option of the lender into shares of common stock of the Company at a conversion price of US$0.025 per share. As at June 30, 2012, the carrying value of the convertible debenture and accrued interest thereon were $100,000 and $6,404, respectively. The Company can repay any portion of the loan and accrued interest at any time without penalty.

 

 

	6.				Advances From Related Parties
		a)			On December 9, 2008, the Company received $25,000 from a company controlled by the President of the Company. The amount owing is unsecured, non-interest bearing, and has no specified repayment terms. As at June 30, 2012, the Company owed this company $1,906 (December 31, 2011 - $1,906) for payment of expenses on behalf of the Company.
		b)			On September 5, 2008, the Company entered into a loan agreement with a company controlled by the President of the Company. The Company received US$25,000 ($26,388) which is non-interest bearing and is due five years from the advancement date. As at June 30, 2012, the loan payable was $25,453 (December 31, 2011 - $25,425) after translation into Canadian dollars.
	7.				Convertible Debenture
					On May 18, 2010, the Company entered into a convertible loan agreement. The Company received US$50,000 ($51,850) which bears interest at 10% per annum and is due five years from the advancement date. Interest shall accrue from the advancement date and shall be payable on the fifth anniversary of the advancement date. Proceeds of the loan are to be used to continue with current business development activities. Any portion of the loan and unpaid interest are convertible at any time at the option of the lender into shares of common stock of the Company at a conversion price of US$0.035 per share. The Company recognized the intrinsic value of the embedded beneficial conversion feature of US$21,429 ($22,221) as additional paid-in capital and reduced the carrying value of the convertible debenture to US$28,571 ($29,629). The carrying value will be accreted over the term of the convertible debenture up to its face value of US$50,000.  As at June 30, 2012, the carrying values of the convertible debenture and accrued convertible interest thereon were $33,001 and $10,795, respectively, after translation into Canadian dollars. The Company can repay any portion of the loan and accrued interest at any time without penalty.
	8,				Commitments
		a)			On July 1, 2009, the Company entered into an investor relations agreement.  Pursuant to the agreement, the Company agreed to pay a fee of $1,000 per month for a period of six months beginning on August 1, 2009, and ending January 1, 2010. The Company must also issue 75,000 shares within 7 days of signing the agreement.  Any payments over 45 days will be subject to a penalty fee of 10% per week.  On February 8, 2010, the Company issued 75,000 shares of common stock at a value of $2,627.  On January 1, 2010, the agreement was extended for twelve months and the Company will issue an additional 75,000 shares.  On January 1, 2011, the agreement was extended for twelve months for no additional consideration and can be cancelled by either party by giving one months written notice. As at June 30, 2012, the additional shares have not been issued and have been included in common stock to be issued at a value of $2,320.
		b)			On September 1, 2011, the Company entered into a consulting agreement with a consultant of the Company. Pursuant to the agreement, the Company agreed to pay the consultant $1,500 per month. This agreement was terminated during the six month period ended June 30, 2012.

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

  

Forward-Looking Statements

This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Unless otherwise specified our financial statements are expressed in Canadian Dollars (CDN$) and are prepared in accordance with United States generally accepted accounting principles.

In this quarterly report, unless otherwise specified, all dollar amounts are expressed in Canadian dollars and all references to “common shares” refer to the common shares in our capital stock.

As used in this current report and unless otherwise indicated, the terms “we”, “us”, “our” and “our company” mean Environmental Control Corp., and our wholly-owned subsidiary, Environmental Control Corporation, a private Canadian company, unless otherwise indicated.

General Overview

We were incorporated under the laws of the State of Nevada on February 17, 2004 under the name “Boss Minerals, Inc.”. From our inception to March 20, 2006, we were an exploration stage company engaged in the exploration of mineral properties.

By an agreement dated March 20, 2006, we agreed to acquire the principal assets of Environmental Control Corporation (“ECC”), a Newfoundland, Canada based company involved in the development of emission control devices for small spark ignition combustion engines. Effective February 26, 2007, we completed the acquisition of the principal assets of ECC. The asset acquisition was deemed to be a reverse acquisition for accounting purposes. ECC, whose principal assets we acquired, is regarded as the predecessor entity as of February 26, 2007.

Our common stock was initially approved for quotation on the OTC Bulletin Board under the symbol “BOSM” on April 19, 2006, and our trading symbol was changed to “EVCC” in connection with our name change.

Other than as set out in this quarterly report, we have not been involved in any bankruptcy, receivership or similar proceedings, nor have we been a party to any material reclassification, merger, consolidation or purchase or sale of a significant amount of assets not in the ordinary course of our business.

Our Current Business

We are currently engaged in the development of emission control devices for small spark ignition combustion engines. Our catalytic muffler, like any other catalytic muffler, combines a muffler and a catalytic converter into one unit. However, we have used a unique approach to develop this emission control device, making it far more effective in reducing the emissions of spark ignition engines (oxides of nitrogen, carbon monoxide, and hydrocarbons) without compromising engine performance. This patented technology is linearly designed and can be modified to fit a wide variety of combustion engine.

Cash Requirements

Based on our planned expenditures, we will require approximately $250,000 to proceed with our business plan over the next 12 months. If we secure less than the full amount of financing than we require, we will not be able to carry out our complete business plan and we will be forced to proceed with a scaled back business plan based on our available financial resources.

  

We intend to raise the balance of our cash requirements for the next 12 months from private placements, loans from related parties or possibly a registered public offering (either self-underwritten or through a broker-dealer). If we are unsuccessful in raising enough money through such efforts, we may review other financing possibilities such as bank loans. At this time we do not have a commitment from any broker-dealer to provide us with financing. There is no assurance that any financing will be available to us or if available, on terms that will be acceptable to us.

Even though we plan to raise capital through equity or debt financing, we believe that the latter may not be a viable alternative for funding our operations as we do not have tangible assets to secure any such financing. We anticipate that any additional funding will be in the form of equity financing from the sale of our common stock. However, we do not have any financing arranged and we cannot provide any assurance that we will be able to raise sufficient funds from the sale of our common stock to finance our operations. In the absence of such financing, we may be forced to abandon our business plan.

Over the next twelve months we expect to expend funds as follows:

Estimated Net Expenditures During the Next Twelve Months
Sales and marketing expenses		$	90,000
Research and development expenses		$	10,000
General and administrative expenses		$	150,000
Total		$	250,000

 

We have suffered recurring losses from operations. The continuation of our company is dependent upon our company attaining and maintaining profitable operations and raising additional capital as needed.

The continuation of our business is dependent upon obtaining further financing, a successful program of exploration and/or development, and finally, achieving a profitable level of operations. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.

There are no assurances that we will be able to obtain further funds required for our continued operations. As noted herein, we are pursuing various financing alternatives to meet our immediate and long-term financial requirements. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we will be unable to conduct our operations as planned, and we will not be able to meet our other obligations as they become due. In such event, we will be forced to scale down or perhaps even cease our operations.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

Equity Compensation

We currently do not have any stock option or equity compensation plans or arrangements.

Critical Accounting Policies

These interim unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Securities and Exchange Commission (“SEC”) Form 10-Q. They do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Therefore, these financial statements should be read in conjunction with our company’s audited financial statements and notes thereto for the year ended December 31, 2011, included in our company’s Annual Report on Form 10K filed April 25, 2012 with the SEC.

The financial statements included herein are unaudited; however, they contain all normal recurring accruals and adjustments that, in the opinion of management, are necessary to present fairly our company’s financial position at June 30, 2012, and the results of its operations and cash flows for the three and six month periods ended June 30, 2012 and 2011. The results of operations for the period ended June 30, 2012 are not necessarily indicative of the results to be expected for future quarters or the full year.

Basis of Presentation

The financial statements of our company have been prepared in accordance with generally accepted accounting principles in the United States and are expressed in Canadian dollars. Our company’s fiscal year end is December 31.

 

Use of Estimates

The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Our company regularly evaluates estimates and assumptions related to the recoverability of receivables, deferred income tax asset valuation allowances, stock-based compensation and financial instrument valuations. Our company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by our company may differ materially and adversely from our company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

Cash and Cash Equivalents

Our company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.

Financial Instruments 

Our company’s financial instruments consist principally of cash, accounts payable, advances from related parties and convertible debentures. Pursuant to ASC 820, Fair Value Measurements and Disclosures, and ASC 825, Financial Instruments the fair value of our company’s cash equivalents is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. Our company believes that the recorded values of all of our company’s other financial instruments approximate their current fair values.

Assets measured at fair value on a recurring basis were presented on our company’s balance sheet as of June 30, 2012 as follows:

	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance as of June 30, 2012
Assets:
Cash	$	737	$	Nil	$	Nil	$	737

 

Our company’s operations are in Canada, which results in exposure to market risks from changes in foreign currency rates. The financial risk is the risk to our company’s operations that arise from fluctuations in foreign exchange rates and the degree of volatility of these rates. Currently, our company does not use derivative instruments to reduce its exposure to foreign currency risk.

Earnings (Loss) Per Share

Our company computes net income (loss) per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As at June 30, 2012, our company has 15,003,834 potentially dilutive securities outstanding.

Comprehensive Loss

ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at June 30, 2012 and 2011, our company has no items that represent a comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements.

Foreign Currency Translation

Effective on the closing of the Agreement on February 26, 2007 (see Note 1), our company’s functional and reporting currency changed to the Canadian dollar. Monetary assets and liabilities denominated in foreign currencies are translated in accordance with ASC 830, Foreign Currency Translation Matters, using the exchange rate prevailing at the balance sheet date. Gains and losses arising on settlement of foreign currency denominated transactions or balances are included in the determination of income. Foreign currency transactions are primarily undertaken in Canadian dollars. Our company has not, to the date of these financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

Stock-based Compensation

In accordance with ASC 718, Compensation – Stock Based Compensation and ASC 505-50, Equity Based Payments to Non-Employees, our company accounts for share-based payments using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.

Property and Equipment

Property and equipment consists of office furniture, equipment, and computer equipment which are recorded at cost. Office furniture is amortized on a declining-balance basis at 20% per annum, equipment is amortized on a declining-balance basis at 30% per annum, and computer equipment is amortized on a declining-balance basis at 30% per annum.

Long-lived Assets

In accordance with ASC 360, Property Plant and Equipment, our company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.

Research and Development Costs

In accordance with ASC 730, Research and Development, research costs are expensed in the period in which they are incurred. Development costs are also expensed unless they meet the criteria for deferral. When development costs meet the criteria for deferral, the development costs are deferred to the extent their recoverability can be reasonably assured. Deferred development costs represent the cost of developing specific products and are amortized on a straight line basis over the expected commercial life of the product.

Income Taxes

Our company accounts for income taxes using the asset and liability method in accordance with ASC 740, Income Taxes. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. Our company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

Investment Tax Credits

Our company incurs research and development expenditures that may qualify for investment tax credits recoverable from Canadian tax authorities. Investment tax credits are accounted for using the cost reduction approach. Under this approach, investment tax credits received or receivable are deducted from research and development expenditures when our company has made the qualifying expenditures, provided that there is reasonable assurance that the credits will be realized. Realization is assessed based on our company’s collection history. As at June 30, 2012, our company has $Nil in investment tax credits receivable (December 31, 2011 - $Nil). The investment tax credits must be examined and approved by the tax authorities and the amounts granted may differ from the amounts recorded.

Going Concern

As of June 30, 2012, we have accumulated losses of $2,493,781 since inception, we have a working capital deficiency of $124,479 and have earned no revenues since inception. We rely upon the sale of our common stock to fund our operations. We may not generate any revenues in the future and if we are unable to raise equity or secure alternative financing, we may not be able to continue our operations and our business plan may fail.

If our operations and cash flow improve, management believes that we can continue to operate. However, no assurance can be given that management's actions will result in profitable operations or an improvement in our liquidity situation. The threat of our ability to continue as a going concern will cease to exist only when our revenues have reached a level able to sustain our business operations.

 

Results of Operations

Three Months Ended June 30, 2012 and June 30, 2011

The following summary of our results of operations should be read in conjunction with our financial statements for the quarter ended June 30, 2012, which are included herein.

Our operating results for the three months ended June 30, 2012 and June 30, 2011 and the changes between those periods for the respective items are summarized as follows:

		Three Months Ended June 30, 2012				Three Months Ended June 30, 2011				Change Between Three Month Period Ended June 30, 2012 and June 30, 2011
Revenue		$	Nil			$	Nil			$	Nil
Depreciation		$	384			$	505			$	(121	)
Foreign exchange loss (gain)		$	9,379			$	(1,949	)		$	11,328
General and administrative		$	24,006			$	50,792			$	(26,786	)
Research and development		$	Nil			$	Nil			$	Nil
Accretion of discounts on convertible debentures		$	(10,144	)		$	(8,671	)		$	(1,473	)
Interest expense		$	(13,257	)		$	(9,410	)		$	(3,847	)
Net (Loss)		$	(57,170	)		$	(67,429	)		$	10,259

 

Our accumulated losses were $2,493,781 as of June 30, 2012. Our financial statements report a net loss of $57,170 for the three month period ended June 30, 2012 compared to a net loss of $67,429 for the three month period ended June 30, 2011. Our losses have decreased primarily as a result of a decrease in general and administrative expenses.

Six Months Ended June 30, 2012 and June 30, 2011

Our operating results for the six months ended June 30, 2012 and June 30, 2011 and the changes between those periods for the respective items are summarized as follows:

		Six Months Ended June 30, 2012				Six Months Ended June 30, 2011				Change Between Six Month Period Ended June 30, 2012 and June 30, 2011
Revenue		$	Nil			$	Nil			$	Nil
Depreciation		$	795			$	1,047			$	(252	)
Foreign exchange loss (gain)		$	985			$	(11,498	)		$	12,483
General and administrative		$	40,513			$	103,901			$	(63,388	)
Research and development		$	Nil			$	2,619			$	(2,619	)
Accretion of discounts on convertible debentures		$	(20,955	)		$	(16,295	)		$	(4,660	)
Interest expense		$	(25,434	)		$	(18,873	)		$	(6,561	)
Net (Loss)		$	(88,682	)		$	(131,237	)		$	42,555

 

Our financial statements report a net loss of $88,682 for the six month period ended June 30, 2012 compared to a net loss of $131,237 for the six month period ended June 30, 2011. Our losses have decreased primarily as a result of decreased general and administrative expenses.

Liquidity and Financial Condition

Working Capital

		At June 30, 2012				At December 31, 2011
Current assets		$	37,788			$	63,289
Current liabilities		$	162,267			$	132,427
Working capital (deficit)		$	(124,479	)		$	(69,138	)

 

 

Our total current liabilities as of June 30, 2012 were $162,267 as compared to total current liabilities of $132,427 as of December 31, 2011. The increase was primarily due to increases in accounts payable and accrued convertible interest payable to related parties.

Cash Flows

		At June 30, 2012				At June 30, 2011
Net cash used in operating activities		$	29,779			$	81,574
Net cash used in investing activities		$	Nil			$	Nil
Net cash provided by financing activities		$	Nil			$	50,000
Net increase (decrease) in cash during period		$	(29,779	)		$	(31,574	)

 

Operating Activities

Net cash used by operating activities was $29,779 in the six months ended June 30, 2012 compared with net cash used by operating activities of $81,574 in the six months ended June 30, 2011. The decrease in use of cash of $51,795 in operating activities is mainly attributed to decreases in depreciation, stock-based compensation, amounts receivable and accounts payable and accrued liabilities.

Investing Activities

Net cash used in investing activities was $Nil in the six months ended June 30, 2012 compared to net cash used in investing activities of $Nil in the six months ended June 30, 2011.

Financing Activities

Net cash provided by financing activities was $Nil in the six months ended June 30, 2012 compared to $50,000 provided by financing activities in the six months ended June 30, 2011.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

As a “smaller reporting company”, we are not required to provide the information required by this Item.

Item 4. Controls and Procedures 

Management’s Report on Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer (our principal executive officer, principal financial officer and principle accounting officer) to allow for timely decisions regarding required disclosure.

 

As of the end of our quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer (our principal executive officer, principal financial officer and principle accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our chief executive officer and chief financial officer (our principal executive officer, principal financial officer and principle accounting officer) concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarterly period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

 

We know of no material, existing or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our company. 

 Item 1A. Risk Factors

 

As a “smaller reporting company”, we are not required to provide the information required by this Item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

None.

Item 3.  Defaults Upon Senior Securities 

 

None.

Item 4.  Mine Safety Disclosures

 

Not applicable.

Item 5.  Other Information

 

None.

 

Item 6.  Exhibits

 

Exhibit Number	Description
(3)	Articles of Incorporation and Bylaws
3.1	Articles of Incorporation (incorporated by reference from our Registration Statement on Form SB-2 filed on May 4, 2005)
3.2	By-laws (incorporated by reference from our Registration Statement on Form SB-2 filed on May 4, 2005)
(10)	Material Contracts
10.1	Asset Acquisition Agreement with Boss Minerals Inc. dated March 20, 2006 (incorporated by reference to our Current Report on Form 8-K filed on May 19, 2006)
10.2	Contribution Agreement with National Research Council of Canada Industrial Research Program dated November 14, 2008 (incorporated by reference to our Current Report on Form 8-K filed on February 4, 2009)
10.3	Convertible Loan Agreement with 51644 Newfoundland and Labrador Inc. dated April 21, 2011 (incorporated by reference to our Quarterly Report on Form 10-Q filed on May 16, 2011)
(21)	Subsidiaries of the Registrant
21.1	Environmental Control Corporation
(31)	Rule 13a-14(a)/15d-14(a) Certifications
31.1*	Section 302 Certification under the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer
(32)	Section 1350 Certifications
32.1*	Section 906 Certification under the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer
101**	Interactive Data File
101.INS 101.SCH 101.CAL 101.DEF 101.LAB 101.PRE	XBRL Instance Document XBRL Taxonomy Extension Schema Document XBRL Taxonomy Extension Calculation Linkbase Document XBRL Taxonomy Extension Definition Linkbase Document XBRL Taxonomy Extension Label Linkbase Document XBRL Taxonomy Extension Presentation Linkbase Document

 

*

Filed herewith.

 

**

Furnished herewith. Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of any registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise are not subject to liability under those sections.

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) 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.

		ENVIRONMENTAL CONTROL CORP. (Registrant)
Dated:  August 20, 2012	By:	/s/ Gary Bishop
		Gary Bishop
		Chairman, Chief Executive Officer, Chief Financial Officer and Director
		(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer