UNITED STATES­­­­­

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2013

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

For the transition period from ___________ to ______________

Commission File Number: 000-53489

eCrypt Technologies, Inc.

 (Exact name of registrant as specified in its charter)

Colorado		32-0201472
(State or other jurisdiction of incorporation)		(IRS Employer Identification Number)
4750 Table Mesa Dr. Boulder CO, 80305
(Address of principal executive offices)
1.866.241.6868
(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 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 smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ]	Accelerated filer [ ]
Non-accelerated filer [ ]  (Do not check if a smaller reporting company)	Smaller reporting company [ X ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     [  ] Yes   [ x ] No

As of August 15, 2013, the Company had 135,923,552 shares issued and outstanding.

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PART I-FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS.

The financial statements of eCrypt Technologies, Inc. (the "Company" or “eCrypt”), a Colorado corporation, included herein were prepared, without audit, pursuant to rules and regulations of the Securities and Exchange Commission (“SEC”).  Because certain information and notes normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America were condensed or omitted pursuant to such rules and regulations, these financial statements should be read in conjunction with the financial statements and notes thereto included in the audited financial statements of the Company in the Company's Form 10-K for the fiscal year ended March 31, 2013, and all amendments thereto.

eCRYPT TECHNOLOGIES, INC.

(A DEVELOPMENT STAGE COMPANY)

FINANCIAL STATEMENTS

PERIOD ENDED JUNE 30, 2013

INDEX TO FINANCIAL STATEMENTS:	Page
Balance Sheets	3
Statements of Operations	5
Statement of Stockholders’ Equity (Deficit)	6
Statements of Cash Flows	8
Notes to Unaudited Financial Statements	10 – 21

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ECRYPT TECHNOLOGIES, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2013

(UNAUDITED)

1.

Nature of Operations

eCrypt Technologies Inc., a Colorado corporation (“the Company”), was incorporated on April 19, 2007.  The Company develops and sells encryption software which secures the transmission of, storage of, and access to digital information. Software applications range from device based (for Personal Digital Assistants (“PDAs”), wireless handheld devices, laptop and desktop computers, pocket computers, cellular phones, smartphones, and other file storage devices), to server-based encryption software for email servers and for file-store server.

2.

Significant Accounting Policies   

Basis of Presentation

The financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles of the United States of America (“US GAAP”).

In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present fairly the financial position as of June 30, 2013, and the results of operations and cash flows presented herein have been included in the financial statements. The Company has limited operations and in accordance with FASB ASC 915-10, “Development Stage Entities”, the Company is considered a development stage company.  Operating results for the three months ended June 30, 2013 are not necessarily indicative of the results that may be expected for the year ending March 31, 2014. The financial statements should be read in conjunction with the Form 10-K for the year ended March 31, 2013 of the Company.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that impact the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as at the date of the financial statements and the reported amounts of revenue and expense during the reporting period.  Actual results could differ from those estimates.

Uncertainty as a Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has suffered recurring losses from operations since inception (April 19, 2007) up to June 30, 2013 of $2,490,605 which raises substantial doubt about its ability to continue as a going concern.

The Company’s ability to continue as a going concern is dependent upon its ability to generate profitable operations in the future and/or obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has plans to seek additional capital through a private placement and public offering of its common stock. These plans, if successful, will mitigate the factors which raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.

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ECRYPT TECHNOLOGIES, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2013

(UNAUDITED)

Cash, Cash Equivalents and Investments

Cash equivalents consist of highly liquid investments with original maturities at the date of purchase of three months or less.  Short term investments mature in less than one year from the balance sheet date.

The Company places its cash and short-term investments with financial institutions with high credit quality investments in accordance with its investment policy designed to protect the principal investment.  Therefore, the Company believes that its exposure due to concentration of credit risk is minimal and has not experienced credit losses on investments in these instruments to date.

Property and Equipment

Property and Equipment are stated at cost less accumulated depreciation.  Depreciation is calculated using the straight line basis over their estimated useful lives:

Computer equipment	2 years straight line basis
Computer software	1 years straight line basis
Equipment	5 years straight line basis

Revenue Recognition

Product revenue and miscellaneous income are recognized as earned.

The Company recognizes revenue and gains when earned and related costs of sales and expenses when incurred. The Company recognizes revenue in accordance with Accounting Standards Codification Section 605-10-599, Revenue Recognition, Overall, SEC Materials ("Section 605-10-599"). Section 605-10-599 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services rendered; (3) the fee is fixed and determinable; and (4) collectability is reasonably assured. Cost of products sold consists of the cost of the purchased goods and labor related to the corresponding sales transaction. When a right of return exists, the Company defers revenues until the right of return expires. The Company recognizes revenue from services at the time the services are completed.

Income Taxes

The Company accounts for income taxes as outlined in the Accounting Standards Codification ("ASC") 740 "Income Taxes”. Under ASC Topic 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC Topic 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

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ECRYPT TECHNOLOGIES, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2013

(UNAUDITED)

Stock-Based Compensation

The Company accounts for share based payments in accordance with ASC 718, Compensation - Stock Compensation, which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on the grant date fair value of the award. In accordance with ASC 718-10-30-9, Measurement Objective – Fair Value at Grant Date, the Company estimates the fair value of the award using a valuation technique. For this purpose, the

Company uses the Black-Scholes option pricing model. The Company believes this model provides the best estimate of fair value due to its ability to incorporate inputs that change over time, such as volatility and interest rates, and to allow for actual exercise behavior of option holders.

Compensation cost is recognized over the requisite service period which is generally equal to the vesting period. Upon exercise, shares issued will be newly issued shares from authorized common stock

ASC 505, "Compensation-Stock Compensation", establishes standards for the accounting for transactions in which an entity exchanges its equity instruments to non employees for goods or services. Under this transition method, stock compensation expense includes compensation expense for all stock-based compensation awards granted on or after January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of ASC 505.

Related Parties

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions.  Parties are also considered to be related if they are subject to common control or common significant influence.

Financial Instruments

The Company’s financial instruments consist of cash and cash equivalents, accounts payable and accrued liabilities, stockholder loans and third party notes payable.  The Company does not hold or issue financial instruments for trading purposes and does not hold any derivative financial instruments.

The Company’s investment policy is to achieve, in order of importance, the financial objectives of preservation of principal, liquidity and return on investment.  Investments are made in U.S. obligations and bank securities provided the obligations are guaranteed or carry ratings appropriate for the policy.

The policy risks are primarily the opportunity cost of the conservative nature of the allowable investments.  As the Company is currently in the development stage, the Company has chosen to avoid investments of a trade or speculative nature.

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ECRYPT TECHNOLOGIES, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2013

(UNAUDITED)

Fair Value of Financial Instruments

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of June 30, 2013 and March 31, 2013. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash and accounts payable. Fair values were assumed to approximate carrying values for cash and payables because they are short term in nature and their carrying amounts approximate fair values or they are payable on demand.

Level 1: The preferred inputs to valuation efforts are “quoted prices in active markets for identical assets or liabilities,” with the caveat that the reporting entity must have access to that market. Information at this level is based on direct observations of transactions involving the same assets and liabilities, not assumptions, and thus offers superior reliability. However, relatively few items, especially physical assets, actually trade in active markets.

Level 2: FASB acknowledged that active markets for identical assets and liabilities are relatively uncommon and, even when they do exist, they may be too thin to provide reliable information. To deal with this shortage of direct data, the board provided a second level of inputs that can be applied in three situations.

Level 3: If inputs from levels 1 and 2 are not available, FASB acknowledges that fair value measures of many assets and liabilities are less precise. The board describes Level 3 inputs as “unobservable,” and limits their use by saying they “shall be used to measure fair value to the extent that observable inputs are not available.” This category allows “for situations in which there is little, if any, market activity for the asset or liability at the measurement date”. Earlier in the standard, FASB explains that “observable inputs” are gathered from sources other than the reporting company and that they are expected to reflect assumptions made by market participants.

Foreign Currency Translation

The measurement currency of the Company is the U.S. dollar. Transactions in foreign currencies are translated at the exchange rate in effect at the transaction date.  Monetary assets and liabilities denominated in other than the measurement currency are translated at the exchange rates in effect at the balance sheet date.  The resulting exchange gains and losses are recognized in earnings.

Net Earnings (Loss) per Share

Basic and diluted net loss per share information is presented under the requirements of ASC Topic 260. Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding for the period, less shares subject to repurchase. Diluted net loss per share reflects the potential dilution of securities by adding other common stock equivalents, including stock options, shares subject to repurchase, warrants and convertible notes in the weighted-average number of common shares outstanding for a period, if dilutive. The computation of earnings (loss) per share is as follows:

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ECRYPT TECHNOLOGIES, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2013

(UNAUDITED)

3.

Recent Accounting Pronouncements

The Company has adopted all recently issued accounting pronouncements. The adoption of the accounting pronouncements, including those not yet effective, is not anticipated to have a material effect on the financial position or results of operations of the Company.

4.

Property and Equipment

The components of the Company’s equipment are presented below:

		Accumulated	June 30, 2013	March 31, 2013
	Cost	Depreciation As at June 30, 2013	Net	Net
Computer equipment	$9,812	$9,812	$0	$0
Computer software	14,445	14,445	0	0
Equipment	38,483	27,630	10,853	11,874
Total	$62,740	$51,887	$10,853	$11,874

Depreciation expense for the three months ended June 30, 2013 and 2012 was $1,021 and $2,243, respectively.

5.

Stockholders’ Deficit

a)

Authorized:

500,000,000 Common shares with no par value

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ECRYPT TECHNOLOGIES, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2013

(UNAUDITED)

10,000,000 Preferred shares with no par value; none issued or outstanding:

During the period from inception (April 19, 2007) through March 31, 2008, the Company effected the following stock transactions:

The Company issued a total of 116,015,968 shares of the Company’s no par value common stock in exchange for cash of $55,130.

During the year ended March 31, 2009 the Company effected the following stock transactions:

On October 09, 2008, the Company announced a 4:1 forward stock split on its common shares. 33,203,992 common shares were issued for 8,300,998 common shares.

On November 12, 2009, the Board of Directors of the Company consented to and approved a 4:1 forward split of the Company’s 33,379,554 issued and outstanding shares of common stock.  Pursuant to Rule 10b-17, the Forward Split became effective 10 days following the submission of the required notification forms to FINRA, on November 24, 2009.  On the effective date, the Company’s transfer agent issued and mailed to the eligible shareholders of record, three additional shares of common stock for each share of

common stock held by the shareholder.  The forward split resulted in the increase in the number of shares of the Company’s common stock issued and outstanding to 133,518,216 while keeping the number of authorized shares the same. During the year ended March 31, 2009, the Company issued 17,502,248 shares of the Company’s no par value common stock in exchange for cash of $151,572.

During the year ended March 31, 2010, the Company effected the following stock transactions:

The Company issued a total of 40,455 shares of the Company’s no par value common stock at a conversion rate of $0.81 per share in full and final settlement of a convertible debenture dated July 2, 2007. The shares were issued on March 30, 2010 for total value of $32,768. The loan consisted of principal of $23,800 and interest of $8,968.  

During the year ended March 31, 2011, the Company effected the following stock transactions:

On April 19, 2010, the Company entered into a private placement agreement that would offer up to 952,381 units which consists of a subscription agreement and three warrants,

Warrant #1 offers the holder to purchase 952,381 shares of the Corporation’s common stock at a price of $0.42 per share at any time within a 24 month period from the date of closing.

Warrant #2 entitles the holder to purchase a total of 714,286 shares of the Corporation’s common stock at a price of $0.56 per share at any time within a 24 month period from the date of closing.

Warrant #3 entitles the holder to purchase up to a total of 3,809,524 units at a price of $0.42 per unit at any time during the six month period from the date of closing of this offering. Each unit under warrant #3 consists of one share of common stock and two warrants. One warrant allows the holder to purchase up to 3,809,524 shares of common stock at a price of $0.42 any time during the period of twenty four months from the date of purchase. The other warrant allows the holder to purchase 2,857,142 shares of common

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ECRYPT TECHNOLOGIES, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2013

(UNAUDITED)

stock at a price of $0.56 per share any time during the twenty four months from the date of closing of the purchase of these units under warrant 3.

On April 22, 2010, the Company issued 952,381 shares of common stock, and three (3) warrants for a total value of $400,000, per the private placement agreement explained above.

On February 9, 2011, the Company issued 250,000 shares of common stock for director compensation for a value of $52,500.  The share price is valued at the adjusted closing price on the date of grant which was $0.21 per share.  The compensation agreement calls for a total of 1,000,000 shares to be issued during a 12 month period.

On February 15, 2011, the Company issued 37,500 shares of common stock for director compensation for a value of $11,250.  The share price is valued at the adjusted closing price on the date of vesting of the shares which was $0.30 per share.  The compensation agreement calls for a total of 150,000 shares to be issued during a 12 month period.

During the year ended March 31, 2012, the Company effected the following stock transactions:

On June 23, 2011, the Company issued 250,000 shares of common stock for director compensation for a value of $50,000.  The share price is valued at the adjusted closing price on the date of vesting of the shares which was $0.20 per share.  The compensation agreement calls for a total of 1,000,000 shares to be issued during a 12 month period.

On June 23, 2011, the Company issued 37,500 shares of common stock for director compensation for a value of $6,941.  The share price is valued at the adjusted closing price on the date of vesting of the shares which was $.01851per share.  The compensation agreement calls for a total of 150,000 shares to be issued during a 12 month period.

On July 8, 2011, the Company issued 37,500 shares of common stock for director compensation for a value of $7,875.  The share price is valued at the adjusted closing price on the date of grant which was $0.21 per share.  The compensation agreement calls for a total of 150,000 shares to be issued during a 12 month period.

On October 9, 2011, the Company issued 250,000 shares of common stock for director compensation for a value of $41,250.  The share price is valued at the adjusted closing price on the date of vesting of the shares which was $0.165 per share.  The compensation agreement calls for a total of 1,000,000 shares to be issued during a 12 month period.

On October 15, 2011, the Company issued 37,500 shares of common stock for director compensation for a value of $6,375.  The share price is valued at the adjusted closing price on the date of vesting of the shares which was $.0.17 per share.  The compensation agreement calls for a total of 150,000 shares to be issued during a 12 month period.

On November 8, 2011, the Company issued 37,500 shares of common stock for director compensation for a value of $21,000.  The share price is valued at the adjusted closing price on the date of vesting of the shares which was $0.56 per share.  The compensation agreement calls for a total of 150,000 shares to be issued during a 12 month period.

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ECRYPT TECHNOLOGIES, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2013

(UNAUDITED)

On February 9, 2012, the Company issued 250,000 shares of common stock for director compensation for a value of $117,500.  The share price is valued at the adjusted closing price on the date of vesting of the shares which was $0.47 per share.  The compensation agreement calls for a total of 1,000,000 shares to be issued during a 12 month period.

On February 15, 2012, the Company issued 37,500 shares of common stock for director compensation for a value of $22,875.  The share price is valued at the adjusted closing price on the date of vesting of the shares which was $.0.61 per share.  The compensation agreement calls for a total of 150,000 shares to be issued during a 12 month period.

On February 16, 2012 the company granted a non- qualified stock option to its newly appointed director, Thomas Trkla as compensation for his services. The director is entitled to purchase a total of three hundred thousand (300,000) shares of restricted common stock for a price equal to $0.30 per share (Exercise Price), vested over a ten year period thereafter. The option shall be exercised during the 12 month period. As at March 31, 2012 no options have been vested.

On March 8, 2012, the Company issued 37,500 shares of common stock for director compensation for a value of $17,250.  The share price is valued at the adjusted closing price on the date of vesting of the shares which was $0.46 per share.  The compensation agreement calls for a total of 150,000 shares to be issued during a 12 month period.

During the year ended March 31, 2013, the Company effected the following stock transactions:

On May 30, 2012, the Company issued 362,500 shares of common stock out of stock payable.

On July 8, 2012, the Company issued 37,500 shares of common stock for director compensation for a value of $8,250.  The share price is valued at the adjusted closing price on the date of vesting of the shares which was $0.22 per share.  The compensation agreement calls for a total of 150,000 shares to be issued during a 12 month period. These shares were recorded as subscription payable as of March 31, 2013.

On September 25, 2012, the Company entered in an agreement to issue 37,500 shares of common stock for director compensation for a value of $5,250.  The share price is valued at the adjusted closing price on the date of vesting of the shares which was $0.14 per share.  The compensation agreement calls for a total of 150,000 shares to be issued during a 12 month period. These shares were issued on Oct 25, 2012.

On January 25, 2013, the Company issued 37,500 shares of common stock for director compensation for a value of $6,375.  The share price is valued at the adjusted closing price on the date of vesting of the shares which was $0.17 per share.  The compensation agreement calls for a total of 150,000 shares to be issued during a 12 month period. These shares were recorded as subscription payable as of March 31, 2013. On June 21, 2013, the Company issued 37,500 shares of common stock out of stock payable for director compensation for a value of $6,375.  

On June 20, 2013, the Company issued 37,500 shares of common stock out of stock payable for director compensation for a value of $8,250.  The share price is valued at the adjusted closing price on the date of vesting of the shares which was $0.22 per share.

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ECRYPT TECHNOLOGIES, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2013

(UNAUDITED)

On June 21, 2013, the Company issued 37,500 shares of common stock for director compensation for a value of $4,500.  The share price is valued at the adjusted closing price on the date of vesting of the shares.  The compensation agreement calls for a total of 150,000 shares to be issued during a 12 month period.

6.

Warrants

There are no warrants outstanding as of June 30, 2013. The 5,476,191 of unexercised warrants issued in the prior year expired on April 19, 2012.

7.

Stock options

On February 16, 2012, the Company granted a non-qualified stock option to its newly appointed director, Thomas Trkla as compensation for his services. The director is entitled to purchase a total of three hundred thousand (300,000) shares of restricted common stock for a price equal to $0.30 per share (Exercise Price), exercisable over a ten-year period thereafter. The option shall be vested during the 12 month period. As to the total number of Shares with respect to which the Option is granted, the Option

shall be exercisable as follows: (i) 25% of the Option in the aggregate may be exercised upon the mutual execution of this Agreement (ii) 50% of the Option in the aggregate may be exercised on or after the four month anniversary of the Grant Date; (iii) 75% of the Option in the aggregate may be exercised on or after the eight month anniversary of the Grant Date; and (iv) 100% of the Option in the aggregate may be exercised on or after the twelve month anniversary of the Grant Date (the twelve month period  commencing on the Grant Date and ending on the twelve month anniversary of the Grant Date being referred to as the “Vesting Period”).

As of June 30, 2013, the director has not exercised any rights. The total fair value of these options at the date of grant was estimated to be $180,000 and was determined using the Black-Scholes option pricing model with an expected life of 10 years, a risk free interest rate of 1.99%, a dividend yield of 0% and expected volatility of 419% .

		Number of Options		Weighted-Average Exercise Price per share		Weighted- Average Remaining Life (Years)
Outstanding at as at 4.01.2012		300,000		$      0.30		9.88
Granted		-		$            -		-
Exercised		-		$       NA		NA
Cancelled		-		$       NA		NA
Outstanding as at 6.30.2013		300,000		$      0.30		8.88
Exercisable at 6.30.2013		300,000		$      0.30

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ECRYPT TECHNOLOGIES, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2013

(UNAUDITED)

8.

Loan-Related Party

The Company issued on June 27, 2013 a $5,500 unsecured note payable to a shareholder.  The note bears interest at 10%, compounded annually, matures in two years on June 27, 2015.  

The Company issued on January 11, 2012 a $38,000 unsecured note payable to a shareholder.  The note bears interest at 10%, compounded annually, matures in two years on January 11, 2014.  

The Company issued on December 6, 2011 a $20,000 unsecured note payable to a shareholder.  The note bears interest at 10%, compounded annually, matures in two years on December 6, 2013.  

The Company issued on October 19, 2011 a $25,000 unsecured note payable to a shareholder.  The note bears interest at 10%, compounded annually, matures in two years on October 19, 2013.  

The Company issued on September 30, 2011 a $20,000 unsecured note payable to a shareholder.  The note bears interest at 10%, compounded annually, matures in two years on September 30, 2013.  

The Company issued on September 2, 2011 a $20,000 unsecured note payable to a shareholder.  The note bears interest at 10%, compounded annually, matures in two years on September 2, 2013.  

The Company issued on August 5, 2011 a $24,000 unsecured note payable from a shareholder.  The note bears interest at 10%, compounded annually, matures in two years on August 5, 2013.  

The Company acquired on July 7, 2011 a $40,000 unsecured note payable from a shareholder.  The note bears interest at 10%, compounded annually, matures in two years on July 7, 2013.  On July 17, 2013, the note was extended to mature in fifty-five (55) days on August 31, 2013.     

The Company issued on May 9, 2011 a $36,000 unsecured note payable to a shareholder.  The note bears interest at 10%, compounded annually, matures in two years on May 9, 2013.  On July 17, 2013 the note was extended to mature in one hundred and fourteen (114) days On August 31, 2013.

The Company issued on April 29, 2011 a $15,000 unsecured note payable to a shareholder.  The note bears interest at 10%, compounded annually, matures in two years on April 29, 2013.  On May 12, 2013, the note was extended to mature in one year on April 29, 2014.

The Company acquired a $100,000 advance during the month of January 2011 from shareholder.  The advance was unsecured, non-interest bearing and due in six months. On June 24, 2011 the loan was modified to bear interest at 10%, compounded annually, and extended to mature in two years on June 24, 2013.  On July 17, 2013, the note was extended to mature in sixty-eight (68) days on August 31, 2013.

The Company issued on May 18, 2010 a $215,000 unsecured note payable to a shareholder.  The note bears interest at 10%, compounded annually, matures in two years on May 18, 2012.  On July 1, 2012 the note was extended to mature in one year on May 18, 2013.  On July 17, 2013, the note was extended to mature in one hundred and five (105) days on August 31, 2013.

Interest expense-related party for the three months ended June 30, 2013, and 2012, was $16,543 and $0, respectively.

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ECRYPT TECHNOLOGIES, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2013

(UNAUDITED)

9.

Note Payable

The Company issued on February 21, 2012 a $99,964 unsecured note payable to a third party.  The note bears interest at 10%, compounded annually, matures in two years on February 21, 2014.  

The Company issued on June 13, 2012 a $99,970 unsecured note payable to a third party.  The note bears interest at 10%, compounded annually, matures in two years on June 13, 2014.  

The Company issued on September 27, 2012 a $49,980 unsecured note payable to a third party.  The note bears interest at 10%, compounded annually, matures in two years on September 27, 2014.  

The Company issued on October 5, 2012 a $49,980 unsecured note payable to a third party.  The note bears interest at 10%, compounded annually, matures in two years on October 5, 2014.

The Company issued on December 18, 2012 a $49,980 unsecured note payable to a third party.  The note bears interest at 10%, compounded annually, matures in two years on December 18, 2014.

The Company issued on February 26, 2013 a $49,980 unsecured note payable to a third party.  The note bears interest at 10%, compounded annually, matures in two years on February 26, 2015.

The Company issued on April 18, 2013 a $46,500 unsecured note payable to a third party.  The note bears interest at 10%, compounded annually, matures in two years on April 18, 2015.

The Company issued on May 7, 2013 a $3,500 unsecured note payable to a third party.  The note bears interest at 10%, compounded annually, matures in two years on May 7, 2015.

The Company issued on May 30, 2013 a $50,000 unsecured note payable to a third party.  The note bears interest at 10%, compounded annually, matures in two years on May 30, 2015.

Interest expense for the three months ended June 30, 2013, and 2012, was $11,671 and $17,617, respectively.

10.

Advertising Costs

The Company’s policy regarding advertising is to expense advertising when incurred. The Company incurred $5,111 and $1,474 of advertising expense during the three months ended June 30, 2013 and 2012, respectively.

11.

Stock Compensation Program

On April 12, 2011, subject to shareholder approval, the Board of Directors of eCrypt Technologies, Inc. (the “Company”) approved the adoption of the eCrypt Technologies, Inc. Stock Compensation Program (the “Program”) under which 13,500,000 shares have been reserved for purposes of possible future issuance of incentive stock options, non-qualified stock options, and restricted stock grants to employees, directors and certain key individuals.  On April 15, 2011, pursuant to a written consent in lieu of a meeting, a majority of the Company’s shareholders approved the Program.  The purpose of the Program is

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ECRYPT TECHNOLOGIES, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2013

(UNAUDITED)

to attract and retain key employees, consultants and other persons, and to provide such key individuals with an additional incentive to contribute to the success of the Company.  In order to maintain flexibility in the award of stock benefits, the Program constitutes a single “omnibus” plan, but is composed of three parts.  The first part is the Incentive Stock Option Plan (“Incentive Option Plan) which provides grants of incentive stock options under Section 422A of the Internal Revenue Code of 1986, as amended.  The second part is the Nonqualified Stock Option Plan (“Nonqualified Option Plan”) which provides grants of nonqualified stock options.  The third part is the Restricted Shares Plan (“Restricted Plan”) which provides grants of restricted shares of Company common stock. The Incentive Option Plan, the Nonqualified Option Plan and the Restricted Plan respectively comprise Plan I, Plan II, and Plan III of the Program.

12.

Subsequent Events

On July 17, 2013, the Company extended the $36,000 unsecured note payable issued to a shareholder on May 9, 2011.  The note bears interest at 10%, compounded annually, and matures on August 31, 2013.

On July 17, 2013, the Company extended the $100,000 unsecured note payable issued to a shareholder on June 24, 2011.  The note bears interest at 10%, compounded annually and matures on August 31, 2013.

On July 17, 2013, the Company extended the $215,000 unsecured note payable issued to a shareholder on May 18, 2010.  The note bears interest at 10%, compounded annually and matures on August 31, 2013.

On July 17, 2013, the Company extended the $40,000 unsecured note payable issued to a shareholder on July 7, 2011.  The note bears interest at 10%, compounded annually and matures on August 31, 2013.

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ITEM 2.

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

SPECIAL NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS

CERTAIN STATEMENTS IN THIS REPORT, INCLUDING STATEMENTS IN THE FOLLOWING DISCUSSION, ARE WHAT ARE KNOWN AS "FORWARD LOOKING STATEMENTS", WHICH ARE BASICALLY STATEMENTS ABOUT THE FUTURE. FOR THAT REASON, THESE STATEMENTS INVOLVE RISK AND UNCERTAINTY SINCE NO ONE CAN ACCURATELY PREDICT THE FUTURE. WORDS SUCH AS "PLANS," "INTENDS," "WILL," "HOPES," "SEEKS," "ANTICIPATES," "EXPECTS "AND THE LIKE OFTEN IDENTIFY SUCH FORWARD LOOKING STATEMENTS, BUT ARE NOT THE ONLY INDICATION THAT A STATEMENT IS A FORWARD LOOKING STATEMENT. SUCH FORWARD LOOKING STATEMENTS INCLUDE STATEMENTS CONCERNING OUR PLANS AND OBJECTIVES WITH RESPECT TO THE PRESENT AND FUTURE OPERATIONS OF THE COMPANY, AND STATEMENTS WHICH EXPRESS OR IMPLY THAT SUCH PRESENT AND FUTURE OPERATIONS WILL OR MAY PRODUCE REVENUES, INCOME OR PROFITS. NUMEROUS FACTORS AND FUTURE EVENTS COULD CAUSE THE COMPANY TO CHANGE SUCH PLANS AND OBJECTIVES OR FAIL TO SUCCESSFULLY IMPLEMENT SUCH PLANS OR ACHIEVE SUCH OBJECTIVES, OR CAUSE SUCH PRESENT AND FUTURE OPERATIONS TO FAIL TO PRODUCE REVENUES, INCOME OR PROFITS. THEREFORE, THE READER IS ADVISED THAT THE FOLLOWING DISCUSSION SHOULD BE CONSIDERED IN LIGHT OF THE DISCUSSION OF RISKS AND OTHER FACTORS CONTAINED IN THIS REPORT ON FORM 10-Q AND IN THE COMPANY'S OTHER FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. NO STATEMENTS CONTAINED IN THE FOLLOWING DISCUSSION SHOULD BE CONSTRUED AS A GUARANTEE OR ASSURANCE OF FUTURE PERFORMANCE OR FUTURE RESULTS.

Overview & Plan of Operation

eCrypt Technologies, Inc., a Colorado corporation, was incorporated in the State of Colorado, on April 19, 2007.  The Company provides encryption services and software which secures the transmission of, storage of, and access to digital information.  The Company is currently a development stage Company.

eCrypt’s primary business focus is on information security solutions which assist individuals and entities in securely transmitting, storing, and accessing information.  The Company’s business operations are oriented around the development and sale of encryption software and services.  To date the Company has earned limited revenue. The Company believes the majority of its revenues will be derived from enterprise-level information security software sales.  Currently the Company’s primary business operations are focused on the development of an enterprise-level information security soft-appliance called Ecrypt One which is designed to protect email communication and attachments and assist organizations and governments in compliance with information security regulations such as HIPAA.

 

Subsequent to the period ended June 30, 2013, in the interest of focusing the Company’s financial and development resources on the development and sale of Ecrypt One, the Company’s management elected to discontinue the production and sale of both One on One encryption software for BlackBerry devices, as well as Ecrypt Me, a secure email, secure file storage, and secure file sharing service.  As of June 30, 2013, the Company had earned very limited revenue from the sales of both One on One and Ecrypt Me.  In light of the limited revenue produced by both products, Management determined that it was in the best interests of the Company to focus the Company’s efforts and financial resources on the development and sale of Ecrypt One.  One or both of the discontinued products may be re-introduced into the market when it makes financial sense for the Company.  

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Over the next twelve (12) months, eCrypt will continue developing new products and strengthening strategic alliances. In particular, eCrypt plans to launch a new brand and brand strategy, and commence the distribution of its enterprise-level information security soft-appliance, Ecrypt One.

In addition to the foregoing, in an effort to advance the business operations of the Company, over the next twelve (12) months the Company plans to undertake the following actions in the order in which they are listed:

1.

Complete user interface designs for Ecrypt One;

2.

Commence and complete testing of Ecrypt One;

3.

Commence distribution of Ecrypt One.

The foregoing business actions are goals of the Company.  There is no assurance that the Company will be able to complete any, or all, of the foregoing actions.

Results of Operations

The following discussion and analysis provides information that we believe is relevant to an assessment and understanding of our results of operation and financial condition for the three months ended June 30, 2013, as compared to the three months ended June 30, 2012. The following discussion should be read in conjunction with the Financial Statements and related Notes appearing elsewhere in this Form 10-Q.

Our financial statements are stated in US Dollars and are prepared in accordance with generally accepted accounting principles of the United States (“GAAP”).

Results of Operation for eCrypt Technologies, Inc. for the Three Months Ended June 30, 2013 Compared to the Three Months Ended June 30, 2012.

Revenue

During the three months ended June 30, 2013, the Company had revenues of $1,213 as compared to revenues of $819 during the three months ended June 30, 2012, an increase of $394, or approximately 48.11%. The increase in revenue experienced by the Company was primarily attributable to additional subscriptions to eCrypt Me.

Operating Expenses

During the three months ended June 30, 2013 the Company had operating expenses of $155,666 as compared to operating expenses of $106,881 during the three months ended June 30, 2012, an increase of $48,785 or approximately 45.644%. The increase in operating expenses experienced by the Company was primarily attributable to an increase in general and administrative expenses.

Net Loss

The Company had a net loss of $(182,667) for the three months ended June 30, 2013, as compared to a net loss of $(123,679) for the three months ended June 30, 2012, a change of $58,988 or approximately 47.694%.  The change in net loss experienced by the Company was primarily attributable to the fact that the Company experienced an increase in operating expenses during the three months ended June 30,

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2013.

Liquidity and Capital Resources

Currently, we have limited operating capital.  The Company anticipates that it will require approximately $7,000,000 of working capital to complete all of its desired business activity during the next twelve months.  The Company has earned limited revenue from its business operations.  Our current capital and our other existing resources will be sufficient only to provide a limited amount of working capital, and, to date, the revenues generated from our business operations have not been sufficient to fund our operations or planned growth.  To date we have primarily funded out business operations through private party loans and private placement offerings.  As noted above, we will likely require additional capital to continue to operate our business, and to further expand our business.   We may be unable to obtain the additional capital required.   Our inability to generate capital or raise additional funds when required will have a negative impact on our operations, business development and financial results.   

During the next twelve months, we plan to seek to generate the necessary capital to fund our business operations and complete our desired business activity through the continued borrowing of funds from private parties and/or potentially conducting a private placement offering to seek to raise the necessary working capital to fund our business operations.  

The following discussion outlines the state of our liquidity and capital resources as of June 30, 2013:

Total Current Assets & Total Assets

Our unaudited balance sheet reflects that: i) as of June 30, 2013, we have total current assets of $15,421 as compared to total current assets of $10,863 at March 31, 2013, an increase of $4,558, or approximately 41.959%; and ii) as of June 30, 2013, we have total assets of $26,274, compared to total assets of $22,737 as of March 31, 2013, an increase of $3,537, or approximately 15.556%.  The increase in the Company’s total current assets and total assets from June 30, 2013 to March 31, 2013 was primarily attributable to the fact that the Company received cash via a loan from a third party during the period ended June 30, 2013.

Cash: As of June 30, 2013, our unaudited balance sheet reflects that we have cash of $15,421, as compared to $10,863 at March 31, 2013, an increase of $4,558, or approximately 41.959%.  The increase in the Company’s cash from June 30, 2013 to March 31, 2013 was primarily attributable to the fact that the Company received cash via a loan from a third party during the period ended June 30, 2013.

Total Current Liabilities

Our unaudited balance sheet reflects that: i) as of June 30, 2013, we have total current liabilities of $999,583 as compared to total current liabilities of $821,835 at March 31, 2013, an increase of $177,748 or approximately 21.628%; and ii) as of June 30, 2013, we have total liabilities of $1,318,218 as compared to total liabilities of $1,136,514 at March 31, 2013, an increase of $181,704 or approximately 15.988%.  The increase in the Company’s total current liabilities and total liabilities from June 30, 2013 to March 31, 2013 was primarily attributable to the fact that the Company received loans from a third party, and realized an increase in the accrued interest on loans payable to related and third parties, an increase in accounts payable and accrued liabilities, and an increase in accounts payable due to related parties.

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Cash Flow for the Company for the Three Month Period Ended June 30, 2013 as Compared to the Three Month Period Ended June 30, 2012

Operating Activities During the three month period ended June 30, 2013, the net cash used by the Company in operating activities was $(100,943) as compared to net cash used in operating activities of $(69,269) during the three month period ended June 30, 2012, a change of $31,674 or approximately 45.726%.  The increase in our net cash used in operating activities was primarily attributable to an increase in accounts payable and accrued liabilities, and an increase in interest on loan from a related party.

Financing Activities During the three month period ended June 30, 2013, the net cash provided by financing activities was $105,500 as compared to net cash provided by financing activities of $99,970 during the three month period ended June 30, 2012, an increase of $5,530, or approximately 5.532%. The change in net cash provided by financing activities was primarily attributable to the fact that the Company received cash via loans from third and related parties.

Investing Activities During the three month period ended June 30, 2013, and the three month period ended June 30, 2012, the net cash used in investing activities was $nil.

 

Off Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements.

ITEM 4.

CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

The Securities and Exchange Commission defines the term “disclosure controls and procedures” to mean the company's controls and other procedures of an issuer that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.  The Company maintains such a system of controls and procedures in an effort to ensure that all information which it is required to disclose in the reports it files under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified under the SEC's rules and forms and that information required to be disclosed is accumulated and communicated to principal executive and principal financial officers to allow timely decisions regarding disclosure.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures.  Based on this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are not designed to provide reasonable assurance of achieving the objectives of timely alerting them to material information required to be included in our periodic SEC reports and of ensuring that such information is recorded, processed, summarized and reported within the time periods specified.  Our chief executive

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officer and chief financial officer also concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this report to provide reasonable assurance of the achievement of these objectives.  Based on that evaluation, our management has concluded that, as of June 30, 2013, the Company's internal control over financial reporting contained a material weakness due to a failure by the Company to properly record and value stock transactions relating to stock options issued by the Company, and as a result of such material weakness, our internal controls over financial reporting were not effective as of June 30, 2013.  To remediate the weakness in our internal controls over financial reporting, we intend to: i) reconcile stock issuance transactions against the agreements underlying such stock issuance transactions to ensure that equity issuances are properly accounted for; and ii) implement a review board to review the stock issuance transactions to ensure that they are properly valued and accounted for.

Changes in Internal Control over Financial Reporting

There was no change in the Company's internal control over financial reporting during the period ended June 30, 2013, that has materially affected, or is likely to materially affect, the Company's internal control over financial reporting.

PART II-OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS.

The Company is not a party to any pending legal proceedings, and no such proceedings are known to be contemplated. No director, officer or affiliate of the Company and no owner of record or beneficial owner of more than 5.0% of the securities of the Company, or any associate of any such director, officer or security holder is a party adverse to the Company or has a material interest adverse to the Company in reference to pending litigation.

ITEM 1A.

 RISK FACTORS.

Not Applicable.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

During the three months ended June 30, 2013, the Company effected the following stock transactions:

On January 25, 2013, the Company issued 37,500 shares of common stock for director compensation for a value of $6,375.  The share price is valued at the adjusted closing price on the date of vesting of the shares which was $0.17 per share.  The compensation agreement calls for a total of 150,000 shares to be issued during a 12 month period. These shares were recorded as subscription payable as of March 31, 2013. On June 21, 2013, the Company issued 37,500 shares of common stock out of stock payable for director compensation for a value of $6,375.  

On June 20, 2013, the Company issued 37,500 shares of common stock out of stock payable for director compensation for a value of $8,250.  The share price is valued at the adjusted closing price on the date of vesting of the shares which was $0.22 per share.

On June 21, 2013, the Company issued 37,500 shares of common stock for director compensation for a value of $4,500.  The share price is valued at the adjusted closing price on the date of vesting of the

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shares.  The compensation agreement calls for a total of 150,000 shares to be issued during a 12 month period.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4.

MINE SAFETY DISCLOSURES.

None.

ITEM 5.    

OTHER INFORMATION.

None.

 

ITEM 6.

EXHIBITS.

(a)

The following exhibits are filed herewith:

31.1

Certifications pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certifications pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2

Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101

SCH XBRL Schema Document.

101

INS XBRL Instance Document.

101

CAL XBRL Taxonomy Extension Calculation Linkbase Document.

101

LAB XBRL Taxonomy Extension Label Linkbase Document.

101

PRE XBRL Taxonomy Extension Presentation Linkbase Document.

101

DEF XBRL Taxonomy Extension Definition Linkbase Document.

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.

eCRYPT TECHNOLOGIES, INC.

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By:  /S/ Brad Lever

Brad Lever, Chief Executive Officer, Chief Financial Officer

August 15, 2013

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