Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
|
|
☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|
For the quarterly period ended September 30, 2016
or
|
|
☐
|
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: 333-207096
ECO ENERGY TECH ASIA, LTD.
(Exact name of Registrant as specified in its charter)
Nevada
|
|
0100
|
|
47-3444723
|
(State
or other jurisdiction of incorporation
or
organization)
|
|
(Primary
Standard Industrial Classification
Code
Number)
|
|
(I.R.S.
Employer
Identification
Number)
|
Flat A, 15/F, Block 1, Site 7, Whampoa Garden, Hung Hom, Kowloon,
Hong Kong
(852) 91235575
(Address, including zip code, and telephone number, including area
code,
of Registrant’s principal executive offices)
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
(Exchange Act) during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing
requirements for the past
90 days. Yes ☒
No ☐
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Website, 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). 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 definition of “large
accelerated filer,” and “smaller reporting
company” in Rule 12b-2 of the Exchange Act. (Check
one):
Large
Accelerated Filer
|
☐
|
Accelerated
Filer
|
☐
|
|
|
|
|
Non-accelerated
Filer
|
☐
(Do not check if a smaller reporting company)
|
Smaller
reporting company
|
Yes ☒
|
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act).
Yes ☐
No ☒
Indicate the number of shares outstanding of each of the
issuer’s classes of common stock, as of the latest
practicable date.
As
of the date of filing of this report, there were outstanding
21,671,600 shares of the issuer’s common stock, par value
$0.001 per share.
1
TABLE OF CONTENTS
|
|
Page
|
PART I – FINANCIAL INFORMATION
|
|
|
|
|
|
Item
1
|
Consolidated
Financial Statements
|
F-1
|
|
|
|
Item
2
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
4
|
|
|
|
Item
3
|
Quantitative
and Qualitative Disclosures About Market Risk
|
12
|
|
|
|
Item
4
|
Controls
and Procedures
|
12
|
|
|
|
PART II – OTHER INFORMATION
|
|
|
|
|
|
Item
1
|
Legal
Proceedings
|
12
|
|
|
|
Item
1A
|
Risk
Factors
|
12
|
|
|
|
Item
2
|
Unregistered
Sale of Equity Securities and Use of Proceeds
|
12
|
|
|
|
Item
3
|
Defaults
Upon Senior Securities
|
12
|
|
|
|
Item
4
|
Other
Information
|
12
|
|
|
|
Item
5
|
Exhibits
|
13
|
|
|
|
|
Signatures
|
14
|
2
PART
I – FINANCIAL INFORMATION
Item 1. Consolidated Financial
Statements
The accompanying unaudited consolidated financial statements have
been prepared in accordance with the instructions to Form 10-Q and
Item Regulation S-X, Rule 10-01(c) Interim Financial Statements,
and, therefore, do not include all information and footnotes
necessary for a complete presentation of financial position,
results of operations, cash flows, and stockholders' equity in
conformity with generally accepted accounting principles. In the
opinion of management, all adjustments considered necessary for a
fair presentation of the results of operations and financial
position have been included and all such adjustments are of a
normal recurring nature. Operating results for the nine months
ended September 30, 2016, are not necessarily indicative of the
results that can be expected for the year ended December 31,
2016.
3
ECO
ENERGY TECH ASIA, LTD AND SUBSIDIARIES
INDEX
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Nine Months Ended September 30, 2016 and 2015
CONTENTS
|
|
Condensed
Consolidated Financial Statements
|
|
|
|
Condensed Consolidated Balance Sheets (Unaudited)
|
F-2
|
|
|
Condensed Consolidated Statements of Loss and Comprehensive
Loss (Unaudited)
|
F-3
|
|
|
Condensed Consolidated Statements of Stockholders’
Deficit (Unaudited)
|
F-4
|
|
|
Condensed Consolidated Statements of Cash Flows
(Unaudited)
|
F-5
|
|
|
Notes to Unaudited Condensed Consolidated
Financial Statements
|
F-6 to F-15
|
F-1
ECO
ENERGY TECH ASIA LIMITED AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS (Unaudited)
(Stated
in US Dollars)
|
September
30,
|
December
31,
|
|
2016
|
2015
|
|
(Unaudited)
|
|
ASSETS
|
|
|
Cash
|
$87,135
|
$89,824
|
Deposit and
prepayment
|
942
|
451
|
Total
Current Assets
|
88,077
|
90,275
|
|
|
|
Property and
equipment, net
|
641,073
|
628,819
|
Total
Assets
|
$729,150
|
$719,094
|
|
|
|
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
|
|
Liabilities
|
|
|
Accrued expenses
and other payables
|
$17,327
|
$17,947
|
Amount due to a
director
|
5,993,517
|
4,828,067
|
Mortgage loans -
current portion
|
24,718
|
14,436
|
Total
Current Liabilities
|
6,035,562
|
4,860,450
|
|
|
|
Mortgage loans -
non-current portion
|
658,829
|
644,266
|
Total
Liabilities
|
6,694,391
|
5,504,716
|
|
|
|
SHAREHOLDERS'
DEFICIT
|
|
|
Common stock
($0.001 par value; authorized 75,000,000 shares, 21,671,600 shares
issued and outstanding at September 30, 2016 and 20,650,000 shares
issued and outstanding at December 31, 2015)
|
21,672
|
20,650
|
Additional paid-in
capital
|
192,019
|
89,859
|
Accumulated
deficits
|
(5,173,884)
|
(3,945,173)
|
Accumulated other
comprehensive income
|
518,015
|
453,178
|
Total Eco Energy
Tech Asia, Ltd’s deficit
|
(4,442,178)
|
(3,381,486)
|
Non-controlling
interests
|
(1,523,063)
|
(1,404,136)
|
Total
Shareholders' Deficit
|
(5,965,241)
|
(4,785,622)
|
Total
Liabilities and Shareholders' Deficit
|
$729,150
|
$719,094
|
See notes to unaudited condensed consolidated
financial statements
F-2
ECO
ENERGY TECH ASIA LIMITED AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
(Unaudited)
(Stated
in US Dollars)
|
For
the Three Months Ended Sep 30,
|
For
the Nine Months Ended Sep 30,
|
||
|
2016
|
2015
|
2016
|
2015
|
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
REVENUE
|
$-
|
$-
|
$-
|
$-
|
COST OF
REVENUES
|
-
|
-
|
-
|
-
|
GROSS
PROFIT
|
-
|
-
|
-
|
-
|
|
|
|
|
|
OPERATING
EXPENSES
|
|
|
|
|
General and
administrative
|
(771,892)
|
(765,920)
|
(1,333,565)
|
(1,884,983)
|
LOSS FROM
OPERATIONS
|
(771,892)
|
(765,920)
|
(1,333,565)
|
(1,884,983)
|
OTHER
EXPENSES
|
|
|
|
|
Interest
expenses
|
(3,017)
|
(5,086)
|
(14,073)
|
(16,204)
|
|
|
|
|
|
LOSS BEFORE INCOME
TAX
|
(774,909)
|
(771,006)
|
(1,347,638)
|
(1,901,187)
|
Income tax
expense
|
-
|
-
|
-
|
-
|
NET
LOSS
|
(774,909)
|
(771,006)
|
(1,347,638)
|
(1,901,187)
|
Net loss
attributable to non-controlling interests
|
58,799
|
111,397
|
118,926
|
553,707
|
NET LOSS
ATTRIBUTABLE TO STOCKHOLDERS
|
(716,110)
|
(659,609)
|
(1,228,711)
|
(1,347,480)
|
|
|
|
|
|
OTHER COMPREHENSIVE
(LOSS) INCOME
|
|
|
|
|
Foreign currency
translation adjustments
|
(217,419)
|
714,426
|
64,837
|
561,029
|
COMPREHENSIVE
(LOSS) INCOME
|
$(933,529)
|
$54,817
|
$(1,163,874)
|
$(786,451)
|
|
|
|
|
|
NET LOSS PER COMMON
STOCK:
|
|
|
|
|
Basic
|
$(0.033)
|
$(0.032)
|
$(0.058)
|
$(0.066)
|
Diluted
|
$(0.033)
|
$(0.032)
|
$(0.058)
|
$(0.066)
|
|
|
|
|
|
WEIGHTED AVERAGE
COMMON STOCK OUTSTANDING:
|
|
|
|
|
Basic
|
21,671,600
|
20,650,000
|
21,145,886
|
20,511,905
|
Diluted
|
21,671,600
|
20,650,000
|
21,145,886
|
20,511,905
|
See
notes to unaudited condensed consolidated financial
statements
F-3
ECO
ENERGY TECH ASIA LIMITED AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ DEFICIT
(Unaudited)
For the
Nine Months Ended September 30, 2016
(Stated
in US Dollars)
|
Common
stock
|
|
|
Accumulated
|
|
|
|
|
Number of
shares
|
Amount
|
Additional paid-in
capital
|
Accumulated
deficit
|
other
comprehensive
income
(loss)
|
Non-controlling
interests
|
Total
|
|
|
|
|
|
|
|
|
Balance as of
December 31, 2015
|
20,650,000
|
$20,650
|
$89,859
|
$(3,945,173)
|
$453,178
|
$(1,404,136)
|
$(4,785,622)
|
Issuance of
shares
|
1,021,600
|
1,022
|
102,160
|
-
|
-
|
-
|
103,182
|
Net loss for the
period
|
-
|
-
|
-
|
(1,228,711)
|
-
|
(118,927)
|
(1,347,638)
|
Foreign currency
translation adjustment
|
-
|
-
|
-
|
-
|
64,837
|
-
|
64,837
|
Balance as of
September 30, 2016 (Unaudited)
|
21,671,600
|
$21,672
|
$192,019
|
$(5,173,884)
|
$518,015
|
$(1,523,063)
|
$(5,965,241)
|
|
|
|
|
|
|
|
|
See
notes to unaudited condensed consolidated financial
statements
F-4
ECO
ENERGY TECH ASIA LIMITED AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
For the
Nine Months Ended September 30, 2016 and 2015
(Stated
in US Dollars)
|
For
The Nine Months Ended September 30,
|
|
|
2016
|
2015
|
|
(Unaudited)
|
(Unaudited)
|
Cash
Flows from Operating Activities
|
|
|
Net
loss
|
$(1,347,638)
|
$(1,901,187)
|
Adjustments to
reconcile net loss to net cash provided by operating
activities:
|
|
|
Depreciation
|
22,732
|
23,555
|
Changes in
operating assets and liabilities:
|
|
|
Prepaid
expenses
|
(469)
|
-
|
Accrued expenses
and other payables
|
(1,515)
|
122,488
|
Net
Cash Used In Operating Activities
|
(1,326,890)
|
(1,755,144)
|
|
|
|
Cash
Flows from Investing Activities
|
|
|
Acquisition of
subsidiary
|
-
|
(74,577)
|
Net
Cash Used In Investing Activities
|
-
|
(74,577)
|
|
|
|
Cash
Flows from Financing Activities
|
|
|
Issuance of
shares
|
103,182
|
-
|
Advances from a
director
|
1,157,704
|
1,833,074
|
Repayment of
mortgage loans
|
(11,709)
|
(24,437)
|
Net
Cash Provided By Financing Activities
|
1,249,177
|
1,808,637
|
|
|
|
Effect of Exchange
Rate Changes on Cash and Cash Equivalents
|
75,024
|
45,068
|
Net (Decrease)
Increase in Cash and Cash Equivalents
|
(2,689)
|
23,984
|
Cash and Cash
Equivalents at Beginning of Period
|
89,824
|
19,211
|
Cash
and Cash Equivalents at End of Period
|
$87,135
|
$43,195
|
|
|
|
Supplemental
Disclosure of Cash Flow Information:
|
|
|
Cash paid
for:
|
|
|
Interest
expenses
|
$14,073
|
$16,204
|
Income
taxes
|
$-
|
$-
|
See
notes to unaudited condensed consolidated financial
statements
F-5
ECO ENERGY TECH ASIA, LTD AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015
(Stated in US Dollars)
NOTE 1 - ORGANIZATION AND
PRINCIPAL ACTIVITIES
Eco
Energy Tech Asia, Ltd (individually “ECO” and
collectively with its subsidiaries, the “Company”) was
incorporated under the laws of the State of Nevada on January 20,
2015.
On
February 27, 2015, ECO entered into a Share Exchange Agreement with
Eco Energy Tech Asia Limited (“EETA”) to issue
20,000,000 shares of its common stock to the shareholder of EETA in
exchange for 100% of the EETA shares owned by the shareholder. Upon
the consummation of the share exchange agreement, ECO became the
holding company of EETA and EETA became a wholly-owned subsidiary
of ECO.
EETA
was incorporated under the laws of Hong Kong on December 27, 2012.
The wholly-owned subsidiary of EETA, 3986489 Canada Inc.
(“3CI”) was incorporated in Surrey, British Columbia of
Canada on December 17, 2001, which acquires 60% equity interests of
7582919 Canada Inc. (“7CI”) on June 21, 2014. EETA and
3CI are engaged in investment holding.
7CI was
incorporated in Surrey, British Columbia of Canada on June 21,
2010. The initial name was Renergy Foods Canada Inc. On March 6,
2012, Renergy Foods Canada Inc. changed its name to NuAgri, Inc. On
October 1, 2013, NuAgri, Inc. changed its name to 7582919 Canada
Inc. 7CI is engaged in developing a proprietary growing system that
designs and builds custom BioDomes ranging in size appropriate for
global commercial agricultural concerns as well as small local
producers.
On June
30, 2016, 3CI further acquired the equity interests of 7CI from
83.480% to 92.40%.
NOTE 2 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The
Company maintains its general ledger and journals with the accrual
method accounting for financial reporting purposes. The
consolidated financial statements and notes are representations of
management. Accounting policies adopted by the Company conform to
generally accepted accounting principles in the United States of
America and have been consistently applied in the presentation of
consolidated financial statements. These financial statements
include all adjustments that, in the opinion of management, are
necessary in order to make them not misleading.
Principles of consolidation
The
consolidated financial statements give effect to the Share Exchange
Transaction as if occurred at the beginning of the periods
presented and include the accounts of the Company and its
wholly-owned subsidiaries. All significant inter-company accounts
and transactions have been eliminated in
consolidation.
Use of estimates
The
preparation of the financial statements in conformity with
generally accepted accounting principles in the United States of
America 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 periods. Actual results could differ
from these estimates. Significant estimates include the useful life
of property and equipment, and assumptions used in assessing
impairment of long-term assets.
F-6
ECO ENERGY TECH ASIA, LTD AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015
(Stated in US Dollars)
NOTE
2 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Fair value of financial instruments
The
Company adopted the guidance of Accounting Standards Codification
(“ASC”) 820 for fair value measurements which clarifies
the definition of fair value, prescribes methods for measuring fair
value, and establishes a fair value hierarchy to classify the
inputs used in measuring fair value as follows:
●
|
|
Level
1-Inputs are unadjusted quoted prices in active markets for
identical assets or liabilities available at the measurement
date.
|
●
|
|
Level
2-Inputs are unadjusted quoted prices for similar assets and
liabilities in active markets, quoted prices for identical or
similar assets and liabilities in markets that are not active,
inputs other then quoted prices that are observable, and inputs
derived from or corroborated by observable market
data.
|
●
|
|
Level
3-Inputs are unobservable inputs which reflect the reporting
entity’s own assumptions on what assumptions the market
participants would use in pricing the asset or liability based on
the best available information.
|
The
carrying amounts reported in the balance sheets for cash, due from
related parties, other assets, accrued expenses, other payables,
and due to related parties approximate their fair market value
based on the short-term maturity of these instruments. The Company
did not have any non-financial assets or liabilities that are
measured at fair value on a recurring basis as of September 30,
2016 and December 31, 2015.
ASC 825-10 “Financial
Instruments”, allows entities to voluntarily choose to measure
certain financial assets and liabilities at fair value (fair value
option). The fair value option may be elected on an
instrument-by-instrument basis and is irrevocable, unless a new
election date occurs. If the fair value option is elected for an
instrument, unrealized gains and losses for that instrument should
be reported in earnings at each subsequent reporting date. The
Company did not elect to apply the fair value option to any
outstanding instruments.
Cash
The
Company considers all highly liquid instruments purchased with a
maturity of three months or less and money market accounts to be
cash equivalents.
F-7
ECO ENERGY TECH ASIA, LTD AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015
(Stated in US Dollars)
NOTE
2 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Property and equipment
Property and
equipment are carried at cost and are depreciated on a
straight-line basis (after taking into account their respective
estimated residual value) over the estimated useful lives of the
assets. The cost of repairs and maintenance is expensed as
incurred; major replacements and improvements are
capitalized. When assets are retired or disposed of, the cost
and accumulated depreciation are removed from the accounts, and any
resulting gains or losses are included in income in the year of
disposition. The Company examines the possibility of decreases in
the value of fixed assets when events or changes in circumstances
reflect the fact that their recorded value may not be
recoverable.
The estimated useful lives are as
follows:
Land
and Buildings
|
35
years
|
BioDomes
|
10
years
|
Machinery
and equipment
|
5
years
|
Impairment of long-lived assets
In
accordance with ASC Topic 360, the Company reviews long-lived
assets for impairment whenever events or changes in circumstances
indicate that the carrying amount of the assets may not be fully
recoverable, or at least annually. The Company recognizes an
impairment loss when the sum of expected undiscounted future cash
flows is less than the carrying amount of the asset. The amount of
impairment is measured as the difference between the asset’s
estimated fair value and its book value. The Company did not record
any impairment charges for the nine months ended September 30, 2016
and 2015.
Revenue recognition
The
Company generates its revenue from sales of BioDomes, sales of
propagation services, and sales of produces. Pursuant to the
guidance of ASC Topic 605 and ASC Topic 360, the Company recognizes
revenue when persuasive evidence of an arrangement exists, delivery
has occurred or services have been rendered, the purchase price is
fixed or determinable and collectability is reasonably assured, and
no significant obligations remain.
Advertising
Advertising is
expensed as incurred and is included in selling expenses on the
accompanying consolidated statements of loss and comprehensive
loss. Advertising expenses amounted to $305,155 and $331,795 for
the nine months ended September 30, 2016 and 2015, respectively.
And advertising expenses amounted to $126,665 and $331,795 for the
three months ended September 30, 2016 and 2015,
respectively.
F-8
ECO ENERGY TECH ASIA, LTD AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015
(Stated in US Dollars)
NOTE
2 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Employee benefits
The
Company’s operations and employees are located in Hong Kong
and Canada. The Company makes mandatory contributions to the
local government’s health, retirement benefit and
unemployment funds in accordance with the relevant domestic social
security laws. The costs of these payments are charged to income in
the same period as the related salary costs and are not
material.
Income taxes
The
Company is governed by the Income Tax Law of Hong Kong and
Canada. The Company accounts for income tax using the
liability method prescribed by ASC 740, “Income Taxes”. Under this method,
deferred tax assets and liabilities are determined based on the
difference between the financial reporting and tax bases of assets
and liabilities using enacted tax rates that will be in effect in
the year in which the differences are expected to reverse. The
Company records a valuation allowance to offset deferred tax assets
if based on the weight of available evidence, it is
more-likely-than-not that some portion, or all, of the deferred tax
assets will not be realized. The effect on deferred taxes of a
change in tax rates is recognized as income or loss in the period
that includes the enactment date.
The
Company applied the provisions of ASC
740-10-50, “Accounting for Uncertainty in Income
Taxes”, which provides clarification related to the process
associated with accounting for uncertain tax positions recognized
in our financial statements. Audit periods remain open for review
until the statute of limitations has passed. The completion of
review or the expiration of the statute of limitations for a given
audit period could result in an adjustment to the Company’s
liability for income taxes. Any such adjustment could be material
to the Company’s results of operations for any given
quarterly or annual period based, in part, upon the results of
operations for the given period. As of September 30, 2016 and
December 31, 2015, the Company had no uncertain tax positions,
and will continue to evaluate for uncertain positions in the
future.
The
Company is subject to harmonized sales tax (“HST”). The
applicable HST rate is 12% for agricultural products sold in the
Canada. The amount of HST liability is determined by applying the
applicable tax rate to the amount of goods sold (output HST) less
HST accrued on purchases made with the relevant supporting invoices
(input HST).
F-9
ECO ENERGY TECH ASIA, LTD AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015
(Stated in US Dollars)
NOTE
2 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Foreign currency translation
The
accompanying consolidated financial statements are presented in
U.S. dollars (“USD”). The reporting currency of the
Company is the USD. The functional currency of EETA is Hong Kong
dollars (“HKD”), the functional currency of CI located
in Canada is the Canadian dollars (“CAD”). For the
subsidiaries whose functional currencies are the HKD or CAD,
results of operations and cash flows are translated at average
exchange rates during the period, assets and liabilities are
translated at the unified exchange rate at the end of the period,
and equity is translated at historical exchange rates. As a result,
amounts relating to assets and liabilities reported on the
statements of cash flows may not necessarily agree with the changes
in the corresponding balances on the balance
sheets. Translation adjustments resulting from the process of
translating the local currency financial statements into U.S.
dollars are included in determining comprehensive
income.
All of
the Company’s revenue transactions are transacted in the
functional currency. The Company does not enter any material
transaction in foreign currencies and, accordingly, transaction
gains or losses have not had, and are not expected to have, a
material effect on the results of operations of the
Company.
The
exchange rates used to translate amounts in CAD into USD for the
purposes of preparing the consolidated financial statements were as
follows:
|
|
September
30
|
|
December
31
|
|
September
30
|
|
|
2016
|
|
2015
|
|
2015
|
Exchange
rate on balance sheet dates
|
|
|
|
|
|
|
USD :
CAD exchange rate
|
|
1.3143
|
|
1.3870
|
|
1.3409
|
|
|
|
|
|
|
|
Average
exchange rate for the period
|
|
|
|
|
|
|
USD :
CAD exchange rate
|
|
1.3040
|
|
1.2785
|
|
1.2584
|
The
exchange rates used to translate amounts in HKD into USD for the
purposes of preparing the consolidated financial statements were as
follows:
|
|
September
30
|
|
December
31
|
|
September
30
|
|
|
2016
|
|
2015
|
|
2015
|
Exchange
rate on balance sheet dates
|
|
|
|
|
|
|
USD :
HKD exchange rate
|
|
7.7550
|
|
7.7507
|
|
7.7500
|
|
|
|
|
|
|
|
Average
exchange rate for the period
|
|
|
|
|
|
|
USD :
HKD exchange rate
|
|
7.7565
|
|
7.7525
|
|
7.7528
|
F-10
ECO ENERGY TECH ASIA, LTD AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015
(Stated in US Dollars)
NOTE
2 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Earnings per share
ASC 260
“Earnings per
Share,” requires dual presentation of basic and
diluted earnings per share (“EPS”) with a
reconciliation of the numerator and denominator of the basic EPS
computation to the numerator and denominator of the diluted EPS
computation. Basic EPS excludes dilution. Diluted EPS reflects the
potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into
common stock or resulted in the issuance of common stock that then
shared in the earnings of the entity.
Basic
net income per share is computed by dividing net income available
to common shareholders by the weighted average number of shares of
common stock outstanding during the period. Diluted income per
share is computed by dividing net income by the weighted average
number of shares of common stock, common stock equivalents and
potentially dilutive securities outstanding during each
period.
Accumulated other comprehensive loss
Comprehensive loss
is comprised of net loss and all changes to the statements of
stockholders’ equity, except those due to investments by
stockholders, changes in paid-in capital and distributions to
stockholders. For the Company, comprehensive loss for the three
months ended September 30, 2016 and 2015 included net loss and
unrealized loss from foreign currency translation
adjustments.
Related party transactions
A
related party is generally defined as (i) any person that
holds 10% or more of the Company’s securities including such
person’s immediate families, (ii) the Company’s
management, (iii) someone that directly or indirectly
controls, is controlled by or is under common control with the
Company, or (iv) anyone who can significantly influence the
financial and operating decisions of the Company. A transaction is
considered to be a related party transaction when there is a
transfer of resources or obligations between related
parties.
Recent accounting pronouncements
The
Company has considered all new accounting pronouncements and has
concluded that there are no new pronouncements that may have a
material impact on results of operations, financial condition, or
cash flows, based on current information.
F-11
ECO ENERGY TECH ASIA, LTD AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015
(Stated in US Dollars)
NOTE 3 – GOING
CONCERN
As
shown in the accompanying consolidated financial statements, the
Company has generated a net loss of $1,347,638 for the nine months
ended September 30, 2016 and an accumulated deficit of $5,173,884
as of September 30, 2016. The Company also experienced insufficient
cash flows from operations and will be required continuous
financial support from the shareholder. The Company will need to
raise capital to fund its operations until it is able to generate
sufficient revenue to support the future development. Moreover, the
Company may be continuously raising capital through the sale of
debt and equity securities.
The
Company’s ability to achieve these objectives cannot be
determined at this stage. If the Company is unsuccessful in its
endeavors, it may be forced to cease operations. These consolidated
financial statements do not include any adjustments that might
result from this uncertainty which may include adjustments relating
to the recoverability and classification of recorded asset amounts,
or amounts and classifications of liabilities that might be
necessary should the Company be unable to continue as a going
concern.
These
factors have raised substantial doubt about the Company’s
ability to continue as a going concern. There can be no assurances
that the Company will be able to obtain adequate financing or
achieve profitability. These financial statements do not include
any adjustments that might result from the outcome of this
uncertainty.
NOTE 4 – PROPERTY
AND EQUIPMENT
Property and
equipment consisted of the following as of September 30, 2016 and
December 31, 2015:
|
September
30,
|
December
31,
|
|
2016
|
2015
|
|
(Unaudited)
|
|
|
|
|
Land and
buildings
|
$722,127
|
$684,251
|
BioDomes
|
72,132
|
68,348
|
Machinery and
equipment
|
11,135
|
10,551
|
|
$805,394
|
$763,150
|
Less: accumulated
depreciation
|
(164,321)
|
(134,331)
|
Property and
equipment, net
|
$641,073
|
$628,819
|
For the
nine months ended September 30, 2016 and 2015, depreciation
expenses amounted to $22,732 and $23,555, respectively, and for the
three months ended September 30, 2016 and 2015, depreciation
expenses amounted to $7,403 and $7,544, respectively.
Buildings with net
book value of approximately $603,492 and $571,838 were used as
collateral of bank borrowings as at September 30, 2016 and December
31, 2015, respectively.
F-12
ECO ENERGY TECH ASIA, LTD AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015
(Stated in US Dollars)
NOTE
5 – ACCRUED EXPENSES AND OTHER PAYABLES
At
September 30, 2016 and December 31, 2015, accrued expenses
consisted of the following:
|
Septe3mber
30,
|
December
31,
|
|
2016
|
2015
|
|
(Unaudited)
|
|
|
|
|
Accrued property
tax
|
$5,503
|
$5,214
|
Accrued
professional fees
|
258
|
1,484
|
Other accrued
expenses
|
11,566
|
11,249
|
Total
|
$17,327
|
$17,947
|
NOTE 6 - TAXATION
The
Company has not recognized an income tax benefit for its operating
losses generated based on uncertainties concerning its ability to
generate taxable income in future periods. The tax benefit for the
periods presented is offset by a valuation allowance established
against deferred tax assets arising from the net operating losses
and other temporary differences, the realization of which could not
be considered more likely than not. In future periods, tax benefits
and related deferred tax assets will be recognized when management
considers realization of such amounts to be more likely than not.
For the nine months ended September 30, 2016 and 2015, the Company
incurred losses, resulting from operating activities, which result
in deferred tax assets at the effective statutory rates. The
deferred tax asset has been off-set by an equal valuation
allowance.
The
Company was incorporated in the State of Nevada. The Company did
not generate taxable income in the US for the nine months ended
September 30, 2016 and 2015
EETA
was incorporated under the laws of Hong Kong. EETA did not generate
taxable income in the Hong Kong for the nine months ended September
30, 2016 and 2015
3CI and
7CI were incorporated in Surrey, British Columbia of Canada. 3CI
and 7CI did not generate taxable income in the Canada for the nine
months ended September 30, 2016 and 2015
F-13
ECO ENERGY TECH ASIA, LTD AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015
(Stated in US Dollars)
NOTE 7 – EARNINGS
PER SHARE
The
following table presents a reconciliation of basic and diluted net
loss per share:
|
For
the three months ended September 30,
|
For
the nine months ended September 30,
|
||
|
2016
|
2015
|
2016
|
2015
|
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
Net loss available
to common stockholders for basic and diluted net loss per share of
common stock
|
$(716,110)
|
$(659,609)
|
$(1,228,711)
|
$(1,347,480)
|
Weighted average
common stock outstanding – basic
|
21,671,600
|
20,650,000
|
21,145,886
|
20,511,905
|
Effect of dilutive
securities
|
-
|
-
|
-
|
-
|
Weighted average
common stock outstanding – diluted
|
21,671,600
|
20,650,000
|
21,145,886
|
20,511,905
|
|
|
|
|
|
Net loss per common
stock – basic
|
$(0.033)
|
$(0.032)
|
$(0.058)
|
$(0.066)
|
Net loss per common
stock – diluted
|
$(0.033)
|
$(0.032)
|
$(0.058)
|
$(0.066)
|
NOTE 8 - RELATED PARTY TRANSACTIONS
8.1 Nature of relationships with related party
Name
|
Relationships with the Company
|
Cheung
Yuen May
|
Director
|
8.2 Related party balances and transactions
Amount
due to Cheung Yuen May were $5,993,517 and $4,828,067 as at
September 30, 2016 and December 31, 2015, respectively. The amount
is unsecured, interest free and does not have a fixed repayment
date.
A
summary of changes in the amount due to Cheung Yuen May is as
follows:
|
September
30,
|
December
31,
|
|
2016
|
2015
|
|
(Unaudited)
|
|
At
beginning of period
|
$4,828,067
|
$2,768,207
|
Advances
from the director
|
1,165,450
|
2,059,860
|
At
end of period
|
$5,993,517
|
$4,828,067
|
F-14
ECO ENERGY TECH ASIA, LTD AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015
(Stated in US Dollars)
NOTE
9 – MORTGAGE
LOANS
The
mortgage loans at September 30, 2016 and December 31, 2015 is
as follows:
|
|
September
30,
|
December
31,
|
|
|
2016
|
2015
|
|
Interest
rate
|
(Unaudited)
|
|
|
|
|
|
Farm Credit
Canada
|
4.2%
p.a.
|
$347,240
|
$337,603
|
Farm Credit
Canada
|
4.2%
p.a.
|
112,154
|
108,703
|
iFunds
Mortgage
|
13.5%
p.a.
|
224,153
|
212,396
|
Total
|
|
$683,547
|
$658,702
|
Mortgage loan
payable-current portion
|
|
(24,718)
|
(14,436)
|
Mortgage loan
payable-non-current portion
|
|
$658,829
|
$644,266
|
The
mortgage loans are secured by the land and buildings owned by the
Company.
Interest
expenses incurred on the mortgage loans were $14,074 and $16,204
for the nine months ended September 30, 2016 and 2015 respectively
and $3,017 and $5,086 for the three months ended September 30, 2016
and 2015 respectively.
NOTE 10 – COMMITMENTS AND
CONTINGENCIES
Operating lease commitments
As of
September 30, 2016, the Company did not have commitments and
contingency liability.
Legal proceeding
The
Company is not currently a party to any legal proceeding,
investigation or claim which, in the opinion of the management, is
likely to have a material adverse effect on the business, financial
condition or results of operations.
NOTE 11 - SUBSEQUENT
EVENTS
There
were no events or transactions other than those disclosed in this
report, if any, that would require recognition or disclosure in our
consolidated financial statements for the nine month ended
September 30, 2016.
F-15
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition
and results of operations are based upon our consolidated financial
statements and the notes thereto included elsewhere in this
Quarterly Report on Form 10-Q, which have been prepared in
accordance with accounting principles generally accepted in the
United States. The preparation of such financial statements
requires us to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses. On
an ongoing basis, we evaluate these estimates, including those
related to useful lives of real estate assets, bad debts,
impairment, contingencies and litigation. We base our estimates on
historical experience and on various other assumptions that are
believed to be reasonable under the circumstances, the results of
which form the basis for making judgments about the carrying values
of assets and liabilities that are not readily apparent from other
sources. There can be no assurance that actual results will not
differ from those estimates. The analysis set forth below is
provided pursuant to applicable SEC regulations and is not intended
to serve as a basis for projections of future events. See
“Cautionary Statement Regarding Forward Looking
Statements” above.
Plan of Operations
Company Summary
Eco Energy Tech Asia, Ltd. is a development stage company. We were
incorporated under the laws of the state of Nevada on January 20,
2015. We have developed a proprietary growing system that designs
and builds custom BioDomes ranging in size appropriate for global
commercial agricultural concerns as well as small local producers;
delivering greater yields per meter than traditional single level
greenhouse operations resulting from our multi-tier/multi-level
growing system which permits us to grow a greater number of plants.
Our fiscal year end is December 31.
On February 27, 2015, we entered into a Share
Exchange Agreement to acquire 100% of the outstanding capital stock
of Eco Energy Tech Asia, Ltd. (“EETA”), a Hong Kong
corporation formed on December 27, 2012. Pursuant to the Share
Exchange Agreement, we issued 20,000,000 shares of our common stock
to the sole shareholder of EETA in exchange for 1,000,000 ordinary
shares of EETA. The sole shareholder of EETA, Yuen May Cheung, is
also our Chief Executive Officer, President and sole
Director. EETA is also the owner of 92.4% of the common
stock of 7582919 Canada, Inc., a corporation originally formed
pursuant to the laws of British Columbia, Canada on September 21,
2010 as Renergy Foods Canada, Inc. On March 6, 2012, Renergy Foods
Canada, Inc. changed its name to NuAgri, Inc. On October 1, 2013,
NuAgri, Inc. changed its name to 7582919 Canada, Inc. The
wholly-owned subsidiary of EETA, 3986489 Canada Inc.
(“3CI”) was incorporated in Surrey, British Columbia of
Canada on December 17, 2001, which acquired a 60% equity interests
in 7582919 Canada Inc. (“7CI”) on September 21, 2014.
EETA and 3CI are engaged in investment holding. On September 30,
2016, 3CI increased its equity interest in 7CI from 83.480% to
92.40% whereby it acquired 20,000,000 shares of the 7CI’s
Class A Voting Stock at a per share price of Cdn $0.01, for an
aggregate value of Cdn $200,000.
Our business offices are currently located at Flat A, 15/F,
Block 1, Site 7, Whampoa Garden, Hung Hom, Kowloon, Hong Kong. Our
telephone number is (852) 91235575.
We have three (3) executive officers, Yuen May Cheung, our Chief
Executive Officer and President, Philip K.H. Chan, our Chief
Financial Officer, and Thomas Colclough, our Chief Operating
Officer. Yuen May Cheung is our sole Director.
We are a development stage company that has generated no revenues
and has had limited operations to date. From January 20, 2015 (date
of inception) to September 30, 2016, we have incurred accumulated
net losses of $5,173,884 As of September 30, 2016, we had $88,077
in current assets and current liabilities of $6,035,562. Through
September 30, 2016, we have issued an aggregate of 21,671,600shares
of our common stock since our inception. We issued 20,000,000
shares of our common stock pursuant to the Share Exchange Agreement
on February 27, 2015, and we issued a total of 650,000 shares to 41
separate foreign shareholders on April 24, 2015, pursuant to a
private placement of our common stock exempt from registration
under Regulation S of the Securities Act of 1933, for total
proceeds of approximately $6,500. On May 20, 2016, we issued
1,021,600 shares of our common stock to five foreign (5)
shareholders, pursuant to a private placement of our common stock
exempt from registration under Regulation S of the Securities Act
of 1933, at a price of $0.10 per share, for an aggregate value of
$102,160. Except for the transaction pursuant to the Share Exchange
Agreement described above, since our inception we have not made any
significant purchase or sale of assets, nor have we been involved
in any mergers, acquisitions or consolidations.
4
Our Business
We have developed a proprietary growing system that designs and
builds custom BioDomes ranging in size appropriate for global
commercial agricultural concerns as well as small local producers;
delivering greater yields per meter than traditional single level
greenhouse operations resulting from our multi-tier/multi-level
growing system which allows us to grow a greater number of plants.
By avoiding a traditional, low-profit commoditized monoculture
environment, Eco Energy can increase profitability by selling a
higher yielding and diversified range of high-profit niche
produce.
We have completed the first BioDomes on five acres land which
located 4174 184th Street, Surrey, Canada, and we are in process of
establishing manufacturing capabilities. Eco Energy designs and
builds climate-controlled BioDomes with Vertical Aeroponic Growing
Cabinets that mitigate the risks associated with growing
vegetables, herbs, microgreens, and fruits. BioDomes can be
designed to incorporate retail areas and be situated at ground
level, on rooftops in urban areas, or in virtually any geographic
location. Revenues will be generated from the sale of BioDomes,
Vertical Aeroponic Growing Cabinets, nutrient solutions, and
support media.
Our goals over the next twelve (12) months are to:
|
●
|
Commercialization
of the first BioDomes in Canada
|
|
●
|
Development
and Commercialization of the Biodomes for the Asian
Market
|
|
●
|
Contracting
to build the first BioDomes in China Market
|
|
●
|
Development
the second generation of the Biodomes
|
|
●
|
Increase
sales, engineering, and support personnel
|
Expenditures
The following chart provides an overview of our budgeted
expenditures by significant area of activity over the next twelve
(12) months, assuming we are able to attract sufficient debt or
equity financing. There can be no assurance that we will be able to
attract financing and we may be required to scale back operations
accordingly.
The following table outlines the planned use of working capital and
does not take Inventory expenses into account. If we are able to
attract sufficient debt or equity financing and are successful in
securing manufacturing facilities for Biodomes and are able to
secure orders, we will need to secure inventory financing. There
can be no assurance that such financing will be available to us,
and our inability to obtain such financing would materially impact
our ability to execute our business plan as outlined in this
Report.
|
Months
1-3
|
Months 4 -
6
|
Months
7-9
|
Months
10-12
|
Total
12 months
|
Mortgage
|
$22,000
|
$22,000
|
$22,000
|
$22,000
|
$88,000
|
Payroll
|
$60,000
|
$60,000
|
$80,000
|
$80,000
|
$280,000
|
Loans
|
$9,000
|
$9,000
|
$9,000
|
$9,000
|
$36,000
|
Supplies
|
$10,000
|
$12,000
|
$12,000
|
$15,000
|
$49,000
|
Utilities
|
$3,000
|
$4,500
|
$6,000
|
$8,000
|
$21,500
|
Accounting
|
$6,000
|
$6,000
|
$6,000
|
$18,000
|
$36,000
|
Legal
|
$10,000
|
$12,000
|
$12,000
|
$12,000
|
$46,000
|
Auditing
|
$10,000
|
$10,000
|
$10,000
|
$30,000
|
$60,000
|
CFO
|
$25,000
|
$25,000
|
$25,000
|
$25,000
|
$100,000
|
VP
Sales
|
$20,000
|
$20,000
|
$20,000
|
$20,000
|
$80,000
|
5
Consulting
|
$20,000
|
$25,000
|
$25,000
|
$25,000
|
$95,000
|
Project
Management
|
$48,000
|
$48,000
|
$48,000
|
$48,000
|
$192,000
|
Product
Development
|
$45,000
|
$45,000
|
$45,000
|
$45,000
|
$180,000
|
Engineering
|
$30,000
|
$30,000
|
$30,000
|
$30,000
|
$120,000
|
Mechanical
|
$60,000
|
$60,000
|
$30,000
|
$30,000
|
$180,000
|
Electrical
|
$20,000
|
$20,000
|
$20,000
|
$20,000
|
$80,000
|
Software
|
$30,000
|
$10,000
|
$10,000
|
$10,000
|
$60,000
|
Marketing
|
$150,000
|
$180,000
|
$200,000
|
$220,000
|
$750,000
|
Advertising
|
$150,000
|
$200,000
|
$220,000
|
$250,000
|
$820,000
|
Promotion
|
$50,000
|
$50,000
|
$50,000
|
$60,000
|
$210,000
|
Investor
Relations
|
$120,000
|
$120,000
|
$120,000
|
$150,000
|
$510,000
|
Total
Expenditures
|
$898,000
|
$968,500
|
$1,000,000
|
$1,127,000
|
$3,993,500
|
Milestones
Months 1 through 3
During the first three (3) months we plan to:
|
o
|
Complete
development on the next generation of BioDome
|
|
o
|
Define
the testing procedures Nutrition Fluid with New Pi-water
system.
|
|
o
|
Apply
for Trademark registration in China and process the application of
patent in China and Japan that are currently in
process.
|
|
o
|
Enter
into contract with a factory and the contractor for the first
BioDome development in China
|
|
o
|
Start
the new architecture drawing in the second level of expansion in
Canada property
|
|
o
|
Design
the new flame work of the BioDome
|
|
o
|
Hire
three engineering staff in Canada and China
|
BioDome II
We design and builds climate-controlled BioDomes with Vertical
Aeroponic Growing Cabinets that mitigate the risks associated with
growing vegetables, herbs, microgreens, and fruits. BioDome can be
designed to incorporate retail areas and be situated at ground
level, on rooftops in urban areas, or in virtually any geographic
location. Revenues will be generated from the sale of BioDomes,
Vertical Aeroponic Growing Cabinets, nutrient solutions, and
support media. It is our intention to make the necessary
modifications to the system, namely the development of a BioDome
II, to make the system work faster and control better, but we will
need to source components, make engineering refinements, and have
molds for mass production made.
Testing of Nutrition Solution
We have developed a naturally derived nutrient solution to grow
healthy and good tasting produce rich in nutrients. The basic
nutrients required for plant growth are divided into two main
categories:
● Macronutrients: Nitrogen,
calcium, potassium, magnesium, phosphorus, and sulphur;
and;
● Micronutrients: Iron,
zinc, molybdenum, selenium, manganese, boron, copper, cobalt, and
chlorine.
And we added up a New Pi-water system into the Nutrients for
plants
We have engaged China Agricultural Labs to test the fluid and
develop the system to produce the nutrition
fluid.
6
Complete
Trademark (神农殿) (means ‘God of
Vega Palace’) Registration in
China
File for trademark protection in China to protect our business
name, product names, domain names, logos and slogans still in
process. We anticipate the completion of this process within three
months.
Contract to build the first BioDome in Southern China
We are currently negotiating a contract with a company in Southern
China for a 50 acres of agriculture land foot where we can build a
300,000 sq. ft. Green House building that can producing 800 tons of
vegetables per month. We have developed a proprietary,
patent-pending aeroponic growing cabinet in which crops of various
sizes can be cultivated vertically in multiple layers. This growing
arrangement increases plant density. Based on a variety of plant
sizes, an Eco Energy BioDome will hold between 200,000 and 600,000
plants, all in a footprint comprising less than a third of an
acre.
Development the Second Generation of the BioDomes
We presently are working with South China Agricultural University
to develop the new BioDome II drawing for a large size greenhouse
on engineering, manufacturing, and tooling. During this period, we
intend on securing all work in process inventory, design
documentation, prototypes and all intellectual
property
Financial/Sales/Engineering Staff
We plan on hiring three engineers. One engineer for hardware, one
for software, and one for mechanical. If in the event, we are
unable to secure engineers with the required skills necessary we
will continue to outsource such functions. We believe, however,
that having in house engineers will significantly reduce the amount
of time we spend going back and forth with outsourced service
providers.
In addition, we expect that during months one (1) through three (3)
that we will hire a VP of sales to handle product sales to
distributors and retailers for the vegetable markets.
Months 4 through 6
During the following three (3) months, we expect to achieve the
following:
|
o
|
Hiring
the architecture company for
the new design for Biodome in China
|
|
o
|
Seek
more suppliers for the materials for lighting and nutrition
fluids
|
|
o
|
Hiring
the first architecture drawing of expansion in Canada
site
|
|
o
|
Engage
the engineering company to design the Pi-water system for the New
Biodome
|
|
o
|
Developing
second generation of Aeroponic Growing Systems with centralize
computing.
|
|
o
|
Developing
the IT marketing Program for wechat and other social media
platforms.
|
Hiring the Architecture Company for the new design for BioDome in
China Project
Eco Energy will use ETFE pillows as cladding for its BioDomes with
the pillows held in place by aluminum keder tracks and compression
plates. Structural movement is absorbed within each panel. A
significant architectural feature of the Eco Energy BioDome is that
they are largely sealed and equipped with air-lock doors. These
features limit the venting of carbon dioxide (which is added as a
plant growth accelerant) and keep insects and pathogens
out.
Hiring the first architecture drawing of expansion in Canada
site
The Canada greenhouse projects can be expanded to 200,000 sq. ft.
and storage to 50,000 sq. ft. with controlled atmosphere storages
system. We are hiring Karl Wein & Associates to prepare
architectural drawings for new development purpose.
7
Engage the engineering company to design the Controlled Atmosphere
Storages
The ideal oxygen level for storing pears must be between 1 and 3%;
for some varieties of apples, however, it must be lower than 1%.
Storage under such O2 conditions is referred to as Ultra Low Oxygen
(ULO) storage. ULO storage takes place in gas-tight cells and is
used for the long-term storage of apples, pears, blue berries and
kiwis. We shall be engaging a European engineering company to
develop storage system to protect the fast-growing
products.
Developing third generation of Aeroponic Growing
Systems
Conventional soil-based agriculture may use anywhere from 200 to
400 liters of NEW pi-water to produce a single kilogram of
tomatoes. In a hydroponic horticulture in a typical greenhouse, the
same quantity of tomatoes would require 70 liters of water.
However, with our aeroponic system, less than 20 liters of water
will be required to produce a kilogram of tomatoes. The second
generation of Aeroponic growing systems will be saving more energy
and water, better time controlling for anti-season
products.
Months 7 through 9
During the following three (3) months, we expect to achieve the
following:
|
o
|
Set up
the New App and start to send sample to end users
|
|
o
|
Finish
the design in China project and start to order the
materials
|
|
o
|
Finish
the second level of Biodome and Lighting system design
|
|
o
|
Begin
Engineering on Controlled Atmosphere Storage
|
|
o
|
Starting
the develop the computer system to control the lighting and
temperature for the Biodome
|
Distributor Samples
If we are successful in previous months, it is anticipated that in
months seven (7) through nine (9) we will have the first crop of
products and send samples to distributors as well as certain
supermarket chains and local market suppliers. During our
discussions with distributors, such as Big Corporation, our
understanding is that new products are evaluated and tested by a
committee and then taken to retailers to gauge interest. Retailer
interest determines initial order levels.
Finish the design for China project and start to order the
materials
We are currently negotiating a contract with Dragon Dream Company
in Shanghai, China to develop a 100,000 sq. ft. BioDome industrial
area. When we successfully enter this contract, we shall complete
the architectural drawings and order the materials, most of which
can be purchased in China.
Months 10 through 12
|
o
|
Start
to install the equipment in the China BioDome
|
|
o
|
Design
the package for the products for the Asia market
|
|
o
|
Seeking
the products seeds sources for China markets
|
|
o
|
Testing
the Controlled
Atmosphere Storage
|
|
o
|
Begin
advertising / promotion campaign
|
During the following three (3) months, we expect to achieve the
following:
Start to
install the equipment in the China BioDome
We will start to install control systems in the building as
follows:
● Artificial Light Control System: Measures available light
conditions and automatically switches supplemental lighting on/off,
when necessary;
8
● Carbon Dioxide Control System: Monitors and automatically
adjusts carbon dioxide levels for optimal plant growth when the
BioDome is sealed;
● Climate Control System: Monitors a variety of climate
control parameters, automatically activating the appropriate HVAC
equipment in order to heat, cool, or dehumidify the
BioDome;
● Energy Control System: Monitors both the availability and
energy requirements in the BioDome;
● ETFE Control System: Measures parameters such as interior
and exterior temperatures, wind velocity, and snow loads and
automatically inflate or deflate the BioDome pneumatic ETFE pillows
in order to maintain structural integrity and interior climate
conditions.
● Nutrient Control System: Monitors, activates and maintain
the release of plant nutrients and oxygen;
● Plant Productivity System: Monitors, manages, and forecasts
crop growing / harvest parameters;
● Video Monitoring System: Monitors and activates video
cameras in and around the BioDome.
Water Test System: Monitors the testing of water in
pH
Design the package for the products for the Online
Customers
We believe the fruity packaging designs are offering consumers
some eye-catching ways to feel more health-conscious about the
products they are using. Today, people
are often concerned about the dietary ingredients and health
effects of certain foods and beverages they consume. That is why
marketing a product to consumers that visually seems healthier or
nutritious is an inventive way to stand out from
competitors.
Testing the Controlled
Atmosphere Storage
●
|
Controlled
Atmosphere Storage is a system for holding respiratory produce in
an atmosphere that differs from normal air in
respect of CO2 and O2 levels. Practical advantages of storage under
Controlled Atmosphere:
|
■
|
Considerable
decrease in fruit respiration rate.
|
■
|
A
reduction in the effect of ethylene on metabolism.
|
■
|
An
extension in storage life and excellent firmness of
flesh.
|
Begin advertising / promotion campaign
Seek on-going associations and industry group approvals and
marketing support. We intend to get needed industry and association
and government approvals and seek their help in securing potential
industry and government access as well as any needed sponsorships
and support.
Work with other complimentary vertical farming product
providers.
Work with other firms to assist in optimizing its products for
certain verticals where needed.
Sign additional sub-license agreements or joint venture agreements
with strategic partners. Central to the Company’s strategy is
to sign large (i.e., multi-million dollar) “vertical
markets” agreements with commercial partners.
We do not currently have any arrangements for financing and we can
provide no assurance to investors we will be able to find such
financing. There can be no assurance that additional financing will
be available to us, or on terms that are acceptable. Consequently,
we may not be able to proceed with our intended business plans or
complete the development and commercialization of our
product.
9
Liquidity
and Results of Operations
Comparison for the Three Months Ended September 30, 2016 &
September 30, 2015, and for the Nine Months Ended September 30,
2016 and 2015
Revenues and Gross Profit
Revenues and Gross Profit for the three months ended September
30, 2016 and September 30, 2015 are zero, and for the nine months
ended September 30, 2016 and September 30, 2015 are zero. The
Company is a development stage company and has incurred significant
costs in research and development activities. See discussion below
for further information. As of September 30, 2016, the
Company had incurred an accumulated deficit of $5,173,884 since
inception.
Costs and Expenses
Total operating cost and expenses increased to $771,892 for the
three months ended September 30, 2016, as compared to $765,920 for
the three months ended September 30, 2015. And the total operating
cost and expenses decreased to $1,333,565 for the nine months ended
September 30, 2016, as compared to $1,884,983 for the nine months
ended September 30, 2015. These decreases were primarily due
to decreasing costs associated with General Administrative
Expenses.
Other Income and Expenses
Interest expense was $3,017 in the three months ended September 30,
2016 as compared to $5,086 for the three months ended September 30,
2015. And $14,073 in the nine months ended September 30, 2016 as
compared to $16,204 for the nine months ended September 30,
2015.
Income Taxes
The Company had no income tax expenses or income tax benefit for
each of the three months ended September 30, 2016, and
September 30, 2015 and for the nine months ended September 30,
2016, and September 30, 2015, due to incurrence of net operating
loss in each of these periods. There are no income tax refund
opportunities currently available.
Effect of Inflation
Inflation has not had a significant impact on the Company’s
operations or cash flows.
Liquidity and Capital Resources
Long-Term Debt / Note Payable and Other Commitments
The Company had owned a Land and Buildings and had mortgage
commitments for capital expenditures. In addition, the Company is
liable for monthly payments of $5,518 on mortgage finance. As at
September 30, 2016, the principal owed is $683,547. As of
December 31, 2015, the principal owed is $658,702.
Cash Flow Information
The Company had working capital deficit of approximately $5,947,485
and a current ratio of 0.015 as of September 30, 2016. And
the Company had working capital deficit of $4,770,175 and a
current ratio of 0.019 at December 31, 2015. The decrease in
working capital and the current ratio at September 30, 2016, as
compared to December 31, 2015, was primarily due to the use of
working capital for operations as well as marketing expenses. The
Company believes it has insufficient cash resources to meet its
liquidity requirements for the next twelve (12)
months.
During the nine months ended September 30, 2016, the Company had
cash and cash equivalents of approximately $87,135 as compared to
cash and cash equivalents of $89,824 as of December 31, 2015. This
represents a slight decrease in cash of $2,689.
10
Cash provided by Operating Activities
The Company used approximately $1,326,890 of cash for operating
activities in the nine months ended September 30, 2016, as compared
to used $1,755,144 of cash for operating activities in the nine
months ended September 30, 2015. This resulted in a decrease in
cash used in operating activities of $428,254. The expenses
consisted of filing fees, professional fees and other general
expenses.
Cash Used In Investing Activities
The Company uses approximately $nil of cash for investing
activities in the nine months ended September 30, 2016 as
compared to use $74,577 of cash for investing activities
in the nine months ended September 30, 2015. This resulted in a
decrease in cash used in investing activities of
$74,577.
Cash Used in Financing Activities
Financing activities in the nine months ended September 30, 2016,
provided $1,249,177 of cash as compared to $1,808,637 of
cash provided by the nine months ended September 30, 2015. The
Company did not incur any debt issuance costs in 2015.
The Company’s principal sources and uses of funds are
investments from accredited investors. The Company would need to
raise additional capital in order to meet its business plan.
Management intends to secure additional funds using borrowing or
the further sale of securities to accredited investors in the
future. There is no assurance that we may secure funding, or
whether it can do so on terms acceptable to us, or at all, and its
liquidity would be severely compromised.
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern which
contemplates, amongst other things, the realization of assets and
satisfaction of liabilities in the course of business.
We anticipate that our future liquidity requirements will arise
from the need to fund our growth, pay our current obligations and
future capital expenditures. The primary sources of funding for
such requirements are expected to be cash generated from operations
and raising additional funds from private sources and/or debt
financing.
Going Concern Consideration
Our independent auditors included an explanatory paragraph in their
report on the accompanying financial statements expressing concerns
about our ability to continue as a going concern. Our financial
statements contain additional note disclosures describing the
circumstances that lead to this disclosure by our independent
auditors.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Critical Accounting Policies
The preparation of our financial statements requires us to make
estimates and assumptions that affect the reported amounts of
assets, liabilities, revenues, and expenses and related disclosures
about contingent assets and liabilities. We base these estimates
and assumptions on historical experience and on various other
information and assumptions that are believed to be reasonable
under the circumstance. Estimates and assumptions about future
events and their effects cannot be perceived with certainty and,
accordingly, these estimates may change as additional information
is obtained, as more experience is acquired, as our operating
environment changes and as new events occur. Our critical
accounting policies are listed in the notes to our audited
financial statements included in of this registration
Statement
11
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
Evaluations of Disclosure Controls and Procedures
Under the supervision and with the participation of our management
team, including our Chief Executive Officer and Chief Financial
Officer, we conducted an evaluation of our disclosure controls and
procedures, as such term is defined under Rule 13a-15(e) and
15d-15(e) promulgated under the Securities Exchange Act of 1934, as
amended, as of December 31, 2004. Based on this evaluation, we
concluded that our disclosure controls and procedures are effective
in timely alerting them to material information required to be
included in our periodic reports.
Changes in Internal Control over Financial Reporting
During the period covered by this report, there has been no change
in our internal control over financial reporting that has
materially affected or is reasonably likely to materially affect
our internal control over financial reporting.
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company has no knowledge of existing or pending legal
proceedings against the Company, nor is the Company involved as a
plaintiff in any proceeding or pending litigation. There are no
proceedings in which any of the Company’s directors, officers
or any of their respective affiliates, or any beneficial
stockholder, is an adverse party or has a material interest adverse
to our interest.
ITEM 1A. RISK FACTORS
As a “smaller reporting company”, we are not required
to provide the information required by this Item.
ITEM 2. UNREGISTERED SALE OF EQUITY SECURITIES AND
USE OF PROCEEDS
We did not sell or issue any shares of unregistered securities
during the three month period ending September 30,
2016.
ITEM
3. DEFAULTS UPON SENIOR
SECURITIES
Not applicable
ITEM 4. OTHER INFORMATION
None
12
ITEM 5. EXHIBITS
INDEX
TO EXHIBITS
Exhibit
|
|
Description
|
|
||
|
||
|
||
|
13
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ECO ENERGY TECH ASIA, LTD. (Registrant)
Signature
|
|
Title
|
|
Date
|
/s/
Yuen May Cheung
|
|
|
|
|
Yuen
May Cheung
|
|
Chief
Executive Officer
|
|
November
17, 2016
|
|
|
Principal
Executive Officer
|
|
|
/s/
Philip K.H. Chan
|
|
|
|
|
Philip
K.H. Chan
|
|
Chief
Financial Officer
Principal
Financial Officer
|
|
November
17, 2016
|
|
|
|
|
|
14