UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
(X)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2009
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
2010
Commission File No. Number: 333-148546
ELEMENTAL PROTECTIVE COATINGS CORP.
-------------------------------------------
(Exact
BIO-CARBON SOLUTIONS INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)
Nevada 20-8248213
- --------------------------------- ------------------------------------
(State or other jurisdiction (I.R.S.
| NEVADA | 20-8248213 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
103 Metig Street,
Sault Ste Marie, Ontario, Canada P6A 2Z5
(Address of incorporation or organization)
Water Park Place
20 Bay Street
Toronto, ON M5J2N8
- ---------------------------------------- ----------------
(Address of Principal Executive Office) Zip Code
principal executive offices, including zip code)
(705)253-0339
(Registrant's telephone number, including Area Code: (646) 448-0197
area code)
Securities registered pursuant to Section 12(b) of the Act:
None
| Title of class | Name of each exchange on which registered | |
| Common Stock. $0.001 par value per share | None |
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001 par value per share
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. [ ]
Yes o No x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. [ ]
Yes x No o
Indicate by check mark whether the registrantregistrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X]x No [ ]
Indicate by check mark whether the registrant has submitted electronically and
posted on it corporate Web site, if any, every Interactive Data File required to
be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.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 [X] No [ ]
o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]
x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer"filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller
reporting company)
(Check one):
Large accelerated filer o | Accelerated filer o | |
Non-accelerated filer o (Do not check if 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): [ X ]. Yes [ ]o Nox
The common stock was last issued at a price of $0.01 on May 13, 2010. The aggregate market value of the voting stockand non-voting common equity held by non-affiliates of the
Company on June 30, 2009 was -0-. $1,344,000 at December 31, 2010.
As of March 31, 2010,April 15, 2011, the CompanyRegistrant had 13,300,000 issued and34,811,111 outstanding shares of common stock. Documents incorporated
by reference: None
ITEM 1. BUSINESS
The Company was formed in January 2007 to provide elderly and hospitalized
personsCommon Stock with assistance in performing everyday tasks that, due to health
reasons, they were unable to perform. The Company never generated any revenue
and essentially abandoned its business plan in 2008. In July 2009,a par value of $0.001 per share.
INDEX
BIO-CARBON SOLUTIONS INTERNATIONAL INC.
| PAGE NO | ||
| PART I | ||
| ITEM 1 | BUSINESS | 4 |
| ITEM 1A | RISK FACTORS | 9 |
| ITEM 1B | UNRESOLVED STAFF COMMENTS | 13 |
| ITEM 2 | PROPERTIES | 13 |
| ITEM 3 | LEGAL PROCEEDINGS | 13 |
| ITEM 4 | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS | 13 |
| PART II | ||
| ITEM 5 | MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES | 13 |
| ITEM 6 | SELECTED FINANCIAL DATA | 14 |
| ITEM 7 | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 14 |
| ITEM 7A | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 15 |
| ITEM 8 | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA | 15 |
| ITEM 9 | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE | 15 |
| ITEM 9A(T) | CONTROLS AND PROCEDURES | 15 |
| ITEM 9B | OTHER INFORMATION | 17 |
| PART III | ||
| ITEM 10 | DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE | 18 |
| ITEM 11 | EXECUTIVE COMPENSATION | 20 |
| ITEM 12 | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS | 20 |
| ITEM 13 | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE | 21 |
| ITEM 14 | PRINCIPAL ACCOUNTANT FEES AND SERVICES | 21 |
| PART IV | ||
| ITEM 15 | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES | 21 |
| SIGNATURES | 22 | |
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PART I.
Cautionary Note
This Annual Report on Form 10-K contains forward-looking statements within the Company's
directors approved a 10-1 forward stock split. Prior to the stock split there
were 5,630,000 outstanding sharesmeaning of common stock. Subsequent to the stock split
there were 56,300,000 outstanding shares of common stock. The stock split did
not affect the number of shares of common or preferred stock that the Company is
authorized to issue. In October 2009, Debbie Barnum, an officer and directorSection 27A of the Company sold 21,500,000 sharesSecurities Act of common stock to the Company for $100. On
that same date, Darin Barnum, also an officer1933 and director of the Company sold
21,500,000 shares of common stock to the Company for $100.
In November 2009, MSE Enviro-Tech Corp ("MSE") assigned to the Company the
rights to sell MSE's fire retardant products in the United States. In
consideration for the assignment of these rights, the Company issued MSE a
promissory note in the principal amount of $5,000,000.
The note bears interest at 6% per year, is unsecured, and is payable on
November 16, 2011. At the option of the holder, the note can be converted into
shares of the Company's common stock. The number of shares to be issued will be
determined by dividing the amount of the note to be converted by $0.25. In
November 2009, Gilles Trahan and Martin Baldwin were appointed directors of the
Company. Subsequent to these appointments, Ms. Barnum and Mr. Barnum resigned as
officers and directors of the Company. Mr. Trahan was then appointed as the
Company's President and Chief Executive Officer and Mr. Baldwin was appointed as
the Company's Secretary, Treasurer and Chief Financial Officer.
In connection with their resignations, Ms. Barnum sold her 3,500,000
remaining shares in the Company to Mr. Trahan and Mr. Barnum has sold his
3,500,000 remaining shares in the Company to Mr. Baldwin. In November 2009, in
accordance with Nevada Revised Statutes, the directors of the Company approved
an amendment to the Company's articles of incorporation changing the Company's
name from DBL Senior Care, Inc. to Elemental Protective Coatings Corp. On the
same day, the shareholders owning a majority of the Company's issued and
outstanding shares approved the amendment. The name change became effective on
the OTC Bulletin Board on January 21, 2010.
The Company plans to sell environmentally friendly, water-based products
that prevent materials from igniting and in doing so prevent fires from
spreading.
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The Company is in the development stage and has not generated any revenue.
The Company needs capital to implement its business plan. The Company will
attempt to raise capital through the private sale of its common stock or other
securities.
General
As of March 31, 2010, the Company had two part time employees. The Company
does not have a website.
ITEM 2. DESCRIPTION OF PROPERTY
As of March 31, 2010 the Company did not own any tangible property.
ITEM 3. LEGAL PROCEEDINGS.
The Company is not involved in any legal proceedings and the Company does
not know of any legal proceedings which are threatened or contemplated. ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not Applicable.
ITEM 5. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS.
Between June 12, 2008 and January 21, 2010 the Company's common stock was
quoted on the OTC Bulletin Board under the symbol "DBLT". On January 21, 2010,
and in connection with the Company's name change, the Company's trading symbol
was changed to "EPRO". During the year ended December 31, 2009 the Company's
common stock did not trade.
Trades of the Company's common stock are subject to Rule 15g-9Section 21E of the Securities Exchange Act of 1934, which are subject to a number of risks and uncertainties. All statements that are not historical facts are forward-looking statements, including statements about our business strategy, the effect of Generally Accepted Accounting Principles ("GAAP") pronouncements, uncertainty regarding our future operating results and our profitability, anticipated sources of funds and all plans, objectives, expectations and intentions and the statements regarding future potential revenue, gross margins and our prospects for fiscal 2009. These statements appear in a number of places and can be identified by the use of forward-looking terminology such as "may," "will," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "future," "intend," or "certain" or the negative of these terms or other variations or comparable terminology, or by discussions of strategy.
Actual results may vary materially from those in such forward-looking statements as a result of various factors that are identified in "Item 1A.—Risk Factors" and elsewhere in this document. No assurance can be given that the risk factors described in this Annual Report on Form 10-K are all of the factors that could cause actual results to vary materially from the forward-looking statements. References in this Annual Report on Form 10-K to (i) the "Company," the "Registrant," "Bio-Carbon "we," "our," “BICS,” and "us" refer to Bio-Carbon Solutions International Inc
Investors and security holders may obtain a free copy of the Annual Report on Form 10-K and other documents filed by Bio-Carbon Solutions International Inc. with the Securities and Exchange Commission ("SEC") at the SEC's website at http://www.sec.gov. Free copies of the Annual Report on Form 10-K and other documents filed by Bio-Carbon Solutions International Inc. with the SEC may also be obtained from Bio-Carbon Solutions International Inc. by directing a request to Bio-Carbon Solutions International Inc., Attention: Dr. Luc C. Duchesne-103 Metig Street, Sault Ste Marie, Ontario, Canada P6A 2Z5.
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| ITEM 1 | BUSINESS. |
General
Bio-Carbon Solutions International Inc. (“The Company”) is a development stage company incorporated on January 17, 2007, under the laws of the State of Nevada. The principal offices are located at 103 Metig Street, Sault Ste Marie, Ontario, Canada P6A 2Z5. The telephone number is (705) 253-0339. The Company has never declared bankruptcy, it has never been in receivership, and it has never been involved in any legal action or proceedings. Our fiscal year end is December 31st.
Description of Business
The Company’s business plan and objective is to use its licensed intellectual property to provide services and capitalize on opportunities relating to carbon trading, carbon sequestration, and other greenhouse gas emission control, offset and reduction programs worldwide. With the increasing importance of such programs, whether participation in them by businesses is voluntary, or as a result of mandatory government regulations, we believe there are opportunities to monetize any program, project or initiatives that will permit the reduction of emissions of green house warming gases. Application of renewable energy projects that displace fossil fuels, treatment of wastes, as well as projects that aim at reducing energy consumption, and/or substances that reduce the emission of greenhouse warming gases, offers a broad spectrum of opportunities for our Company.
Investors must be aware that we have not begun significant operations and we have not generated any revenue. We currently have minimal funds available and in order to continue our business plan we must raise additional proceeds. We will likely be required to borrow proceeds from a shareholder in order to pay expenses associated with filing this report. We cannot provide any guarantee will be successful in securing adequate proceeds in the future and failure to do so would result in a complete loss of any investment made into the Company.
Employees
Currently there are only two employees of the Company, whom also serve as directors of the Company; however, several other employees will be needed to implement the Company’s business plan. To that end, and in anticipation of a growing work force, a stock option plan for the Company’s Common Stock has been prepared and accepted by the Board of Directors.
Research and Development Expenditures
Since the time of our incorporation we have not incurred any research or development expenditures.
Business Strategy
The company is a provider of carbon offset development solutions (accounting, measuring, reporting, verification and registration) to:
| · | Companies with the need to model, monitor and report their carbon footprints; |
· Adipic acid manufacturing · Aluminum manufacturing · Ammonia manufacturing · Carbon dioxide transfer recipients · Cement manufacturing · Coal mine fugitive emissions · Coal storage · Cogeneration · Electricity generation · Electronics Manufacturing · Ferroalloy production · General stationary fuel combustion · Glass Production and other uses of carbonates · HCFC-22 production · Hydrogen production · Industrial wastewater · Iron and steel manufacturing | · Lead production · Essential Requirements of Mandatory Reporting · Lime manufacturing · Magnesium production · Natural gas transmission and distribution systems · Nitric acid manufacturing · Nonroad equipment at facilities · Oil and gas production & gas processing · Petrochemical production · Petroleum refineries · Phosphoric acid production · Pulp and paper manufacturing · Refinery fuel gas · SF6 from electrical equipment · Soda ash manufacturing · Zinc production |
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| · | Its own carbon offset development projects—the company targets developing 1,000,000 hectares from 2011-2016; |
| · | Companies that emit greenhouse gases and are seeking cost-effective carbon offsets—see below the extensive lists of potential greenhouse gases emitters that are subjected to reporting and cap-and-trade regulations; and, |
| · | Landowners in search of expertise to develop the carbon potential of their properties. |
In November 2010, management of the Company identified the need to pursue carbon opportunities because of international and North American markets in the carbon economy. Namely, carbon offsets are identified registered and/or traded through a number of methodologies/venues (see below) and can be either voluntary or mandated. For example, in Europe large emitters are subjected to the European Emissions Trading System which is a result of the EU entering into the Kyoto Protocol. In North America, 7 states of the USA and 4 Canadian provinces are members of the Western Climate Initiative. Of these regulated cap and trade systems are taking place in California and British Columbia. The Company plans to generate revenues from the exploitation of its two licenses: the Lacey Holdings which it entered on November 4, 2010 and the 1776739 License which it entered on January 14, 2011.
The company’s Lacey Holdings license permits us to calculate carbon offsets from the business activities of emitters, which we see as a significant consulting activity. For example, under the Western Climate Initiative, California’s large industrial entities, including refineries, cement plants, and chemical plants, must report on their emissions starting in 2012 if they emit more than 25,000 MT CO2e per year. Likewise CO2 suppliers are covered entities to the extent that they supply more than 25,000 tons of CO2 per year. Electricity suppliers and generators are also covered entities during the initial phase of the Program. Under WCI’s Final Essential Requirements of Mandatory Reporting a large number of greenhouse gas emitters will need to report their emissions. The GHGs that must be reported under this rule are carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFC), perfluorocarbons (PFC), and hexafluoride (SF Sulfur 6) by:
| 1. | Any facility that emits 10,000 metric tons CO2e or more per year, in combined emissions from one or more of the following source categories ,in any calendar year starting in 2010. Of these, All importers of electricity. Importers of electricity include both retail providers and marketers that import electricity into the WCI region. |
| 2. | Any supplier that within the WCI region distributes transportation fuels in quantities that when combusted would emit 10,000 metric tons CO2e per year or more, in any calendar year starting in 2010. |
| 3. | Any supplier that distributes, within the WCI region, residential, commercial, and industrial fuels in quantities that when combusted would emit 10,000 metric tons CO2e per year or more, in any calendar year starting in 2010. |
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The technology acquired from Lacey Holdings can be offered to various consulting clients, for example, in assessing the life cycle analysis of different biomass options for the displacement of coal: assessing the carbon footprint of wood biomass, emissions from the combustions municipal solid refuse, emissions from forested, aquatic or agricultural ecosystems or methane emission from coal beds. This technology is derived from a number of scholarly papers that have been authored or co-authored by Dr Luc C Duchesne who is a director of the Company and Director of Ontario 1776729 which is referenced in this section under a separate license agreement. Here is a selected list of scholarly papers which served in the construction of the intellectual property underlying the Lacey Holdings License: 1. WETZEL, S., L. C. DUCHESNE and M. LAPORTE. 2007. Bioproducts from Canada’s forests: new partnerships in the bioeconomy. Springer. 2. ZASADA, J.C., C.W. SLAUGHTER, L.C. DUCHESNE and A.G. GORDON. 1997. Ecological considerations for the North American Boreal forest. International Institute for Applied Systems Analysis, Laxenburg Austria. Pub. No. IR-97-024. 3. LAPORTE, M.F., L. C. DUCHESNE and S. WETZEL. 2003. Effect of rainfall patterns on soil surface CO2 efflux, soil moisture, soil temperature and plant growth in a grassland ecosystem of northern Ontario, Canada: implications for climate change. Biomed Central Ecology, 2: 10-16. 4. TROFYMOW, J.A., T.R. MOORE, B. TITUS, C. PRESCOTT, I. MORRISON, M. SILTANEN, S. SMITH, J. FYLES, R. WEIN, C. CAMIRE. L.C. DUCHESNE, L. KOZAK, M. KRANANBETTER and S. VISSER. 2002. Rates of litter decomposition over six years in Canadian forests: Influence of litter quality and climate. Canadian Journal of Forest Research, 32: 789-804. 5.LAPORTE, M., L.C. DUCHESNE and I. K. MORRISON. 2002. Effect of clearcutting, selection cutting, shelterwood cutting and micro-sites on soil respiration in a tolerant hardwood ecosystem of northern Ontario. Forest Ecology and Management, 174: 565-575. 6. DUCHESNE, L.C. and D.W. LARSON. 1989. Cellulose and the evolution of plant life. Bioscience, 39: 238241. 7.PRESTON, C.M., J.A. TROFYMOW and L.C. DUCHESNE. 2000. Variability in litter quality and its relationship to litter decay in Canadian forests. Canadian Journal of Botany, 78: 1269-1287. 8.DUCHESNE, L.C. and S. WETZEL. 2000. Effect of clear-cutting, prescribed burning and scarification on litter decomposition in an Eastern Ontario jack pine (Pinus banksiana) ecosystem. International Journal of Wildland Fire, 9:195-201. 9. MOORE, T.J., J. A. TROFYMOW, B. TAYLOR, C. PRESCOTT, C. CAMIRE, L.C. DUCHESNE, J. FYLES, L. KOZAK, M. KRANABETTER, I. MORRISON, M. SILTANEN, S. SMITH, B. TITUS, S. VISSER, R. WEIN and S. ZOLTAI. 1999. Litter decomposition rates in Canadian forests. Global Change Biology, 5: 75-82.
The Lacey Holdings Licence was originally purchased from Dr. Duchesne by Lacey Holdings Inc which is a private company owned exclusively by Mr Christopher Skinner. Mr. Wilkes, as CEO of Elemental Protective Coatings, while scoping business potential for the Company, identified the Lacey Holdings license as a business opportunity. Furthermore, as management delved into the carbon market and with the emergence of supporting cap-and-trade legislation in California, it became evident that engaging in carbon development projects also offered new business opportunities. Consequently, the business improved its business plan and made the acquisition of the 1776729 license which permits a greater offering of services than the Lacey Holdings Inc license. Mr. Duchesne is not a shareholder or a director of Lacey Holdings or related to the only shareholder, officer or director of Lacey Holdings Inc. There is no relationship between Lacey Holdings, the directors of the Company or its management.
Whereas the Lacey Holdings Licence permits to measure carbon emissions, the 1776729 License agreement permits to develop carbon offset credits for the purpose of taking advantage of recent developments showing that the regulated carbon market is emerging in North America despite the lack of support by the United States Government and the Canadian Government who refuse to ratify the Kyoto Protocol, States and provincial jurisdictions are actively engaged in Cap-and-Trade efforts through the Western Climate Initiative (WCI).
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The WCI Partner jurisdictions have developed a comprehensive strategy to reduce regional GHG emissions to 15 percent below 2005 levels by 2020. The figure below shows that 4 Canadian provinces (British Columbia, Manitoba, Ontario and Quebec) and 7 states in the USA (Washington, Oregon, California, Arizona, New Mexico, Montana, Utah) are members of the Western Climate Initiative. In addition 16 States/provinces of Canada, the USA and Mexico enjoy observer status in the Western Climate Initiative, which means they are interested but undecided as of yet.
In Canada, British Columbia spearheads Cap-and-Trade efforts. In November 2010, British Columbia posted its Draft Protocol for Forest Carbon Sequestration from Forests making it the most advanced jurisdiction member of the WCI in Canada. British Columbia is the first Canadian province with a Cap-and-Trade legislation. In the USA, California spearheads the efforts of Cap-and-Trade under the Western Climate Initiative with numerous protocols and methodologies published under The Climate Action Reserve registry. In December 2010, California, a member of the Western Climate Initiative, has legislated that carbon offsets from forests are a part of its Cap-and-Trade system. California produces roughly 1.4 percent of the worlds, and 6.2 percent of the total U.S. greenhouse gases. This has two significant consequences that create a business case for the development of carbon credits from Canadian forests:
1. Under the Western Climate Initiative, credits can be traded between province and member state –see insert below; From www.westernclimateinitiative.org/component/remository/general/program-design/Design-Summary/ page 6:
1. The WCI Cap-and-Trade Program will be composed of the individual jurisdictions’ cap-and-trade programs implemented through state and provincial regulations. Each WCI Partner jurisdiction implementing the cap-and-trade program design will issue “emission allowances” to meet its jurisdiction-specific emissions goal. The total number of available allowances serves as the “cap” on emissions. The allowances can be bought and sold (“traded”). A regional allowance market is created by the Partner jurisdictions recognizing one another’s allowances for compliance. Through this recognition, the emissions allowances issued by each jurisdiction will be usable throughout the jurisdictions for compliance purposes. We note that carbon offset vary in quality as reviewed in “FOREST CARBON OFFSETS: A Scorecard for Evaluating Project Quality” by Julie L. Beane, John M. Hagan, Andrew A. Whitman, John S. Gunn. 2008. Manomet Center for Conservation Sciences. #MCCS NCI 2008, which heightens the needs for a rigorous, approach to the development of carbon offsets from forests.
Management feels that it might be difficult for California emitters to meet their regulated carbon requirements without having to purchase carbon offsets from Canada. According to the Climate Action Reserve’s projections, the projects currently under approval have just under 30 million tons of credits in the pipeline through 2014 that could be used in the California program. Yet the demand for total reduction requirements is projected to exceed 230 million tons between 2012 through 2020 in California alone. Of these, 8% are allowable from forests. The Company believes that emitters will attempt to fill the offset supply gap which will greater demand pressure on the price point of carbon and also stimulate carbon forest sequestration projects from other jurisdictions of the WCI.
More precisely the 1776729 License provides the Company with the means to engage in carbon development as the license is based on 1: Knowledge of and/or relationships with technology providers in various manufacturing sectors who own technologies that can be used by carbon emitters to meet emission reduction requirements; 2. Knowledge of and/or relationships with land owners in various countries with interests in providing land bases for the development of biological sequestration offset credits to meet emission reduction requirements; 3. Knowledge of and/or relationships with financial institutions with interest in providing capital for the development of carbon sequestration tools or implementation of novel technologies to meet emissions reduction requirements; and, 4. Knowledge of and/or relationships with purchasers of carbon offsets. 1776729 is a holding company which has licensed intellectual property from GSN Dreamworks Inc and R & B Cormier Enterprises Inc, which are controlled by Luc Duchesne and Robert G. Cormier, respectively. Both these businesses have been engaged in carbon research through a joint venture since July 2009 and have licensed intellectual property into 1776729 as a holding company in November 2010. GSN Dreamworks and R & B Cormier Enterprises are the owner of significant intellectual property in various fields of application that are not related to carbon crediting. Therefore it was elected to apportion their respective intellectual properties pertinent to carbon development into 1776729. Collectively they have established a number of contacts with international clients, including clients from Chile and Norway with whom management plans to enter into agreements as the Company moves forward.
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The Company does not currently engage in any business activities that may provide immediate cash flow. We expect to incur expenses without generating any material revenues for the foreseeable future. We anticipate the need to raise funds to support our operations for the next 12 months. We have not identified any sources of additional funding for our continued operations, nor have we committed to a plan for funding if our current assets prove inadequate. During the next 12 months we anticipate incurring costs related to:
• pursuing business opportunities to obtain engagements from clients for the use of our licensed technology;
• preparing our financial statements and having them reviewed and audited; and
• preparing and filing of Exchange Act reports.
We anticipate that we will be able to meet these costs through use of funds in our treasury; additional amounts, if necessary, to be loaned by, or invested in us by our stockholders, management or other investors. Management has funded operations thus far but there is no guaranty that management will be able support operations definitely.
Competitive Business Conditions
Carbon trading is a commercial activity that is regulated by specific jurisdictions pursuant to regional legislation or can be voluntary. When regulated (Eg. Europe and Western Climate Initiative), governments compel polluters to reduce their greenhouse gas emissions through technological improvements or through the purchase of carbon offsets (carbon credits). It is an identified risk factor that new legislation may arise in certain jurisdictions that may render the Company’s business plan and knowledge obsolete with respect to carbon credits. With respect to the voluntary trade of carbon credits, there is a significant risk that certain voluntary purchasers of carbon credits may elect to cease the purchase of carbon credits for various reasons that are inherent to their business plans, or because of changing economic, political contexts or other conditions that cannot be controlled by the management of the Company.
Patents and Trademarks
We have no patents or trademarks.
Governmental Regulation
See “Competitive Business Conditions.”
Reports to Security Holders
We file our quarterly and annual report with the Securities and Exchange Commission (SEC), which the public may view and copy at the Public Reference Room at 100 F Street, N.E. Washington D.C. 20549. SEC filings, including supplemental schedule and exhibits, can also be accessed free of charge through the SEC website www.sec.gov.
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| ITEM 1A | RISK FACTORS |
Factors Affecting Future Operating Results
This Annual Report on Form 10-K contains forward-looking statements concerning our future programs, expenses, revenue, liquidity and cash needs as well as our plans and strategies. These forward-looking statements are based on current expectations and we assume no obligation to update this information, except as required by applicable laws and regulations. Numerous factors could cause actual results to differ significantly from the results described in these forward-looking statements, including the following risk factors.
Because our auditors have issued a going concern opinion, there is substantial uncertainty we will continue activities in which case you could lose your investment.
Our auditors have issued a going concern opinion. This means that there is substantial doubt that we can continue as an ongoing business for the next twelve months. As such we may have to cease activities and you could lose your investment.
We currently do not have adequate funds to cover the costs associated with maintaining our status as a Reporting Company.
The Company currently has no cash available. This amount will not be enough to pay the legal, accounting, and filing fees that is required to maintain our status as a reporting company, which is currently estimated at $20,000 for fiscal year 2011. If we can no longer be a reporting company our common stock would no longer be eligible for quotation on the Over-the-Counter Bulletin Board. This would result in there being no public market for an investor to trade our common stock and any investment made would be lost in its entirety.
We lack an operating history and have losses which we expect to continue into the future. As a result, we may have to suspend or cease activities, which would result in a complete loss of any investment made into the Company.
We were incorporated on January 17, 2007 and we have not started our proposed business activities or realized any revenues. We have no operating history upon which an evaluation of our future success or failure can be made. As of December 31, 2010 our net loss since inception is $2,325,592. Based upon current plans, we expect to incur operating losses in future periods. As a result, we may not generate revenues in the future. Failure to generate revenues will cause us to suspend or cease activities.
If we are able to complete financing through the sale of additional shares of our common stock in the future, then shareholders will experience dilution.
The most likely source of future financing presently available to us is through the sale of shares of our common stock. Any sale of common stock will result in dilution of equity ownership to existing shareholders. This means that if we sell shares of our common stock, more shares will be outstanding and each existing shareholder will own a smaller percentage of the shares then outstanding. To raise additional capital we may have to issue additional shares, which may substantially dilute the interests of existing shareholders. Alternatively, we may have to borrow large sums, and assume debt obligations that require us to make substantial interest and capital payments.
Because there is currently a limited public trading market for our common stock, you may not be able to resell your stock.
Although our common stock is quoted on the Over-the-Counter Bulletin Board (OTCBB) the market is limited. If a market does not develop there would be no central place, such as stock exchange or electronic trading system to resell your shares.
Because our securities are subject to penny stock rules, you may have difficulty reselling your shares.
Our shares are penny stocks are covered by section 15(g) of the Securities Exchange Act of 1934 which imposes certainadditional sales practice requirements on broker/dealers who sell the Company's securities subject toincluding the rule to persons other than
established customersdelivery of a standardized disclosure document; disclosure and accredited investors.confirmation of quotation prices; disclosure of compensation the broker/dealer receives; and, furnishing monthly account statements. For transactions covered bysales of our securities, the rule, brokers/dealersbroker/dealer must make a special suitability determination and receive from its customer a written agreement prior to making a sale. The imposition of the foregoing additional sales practices could adversely affect a shareholder's ability to dispose of his stock.
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We are subject to the requirements of section 404 of the Sarbanes-Oxley Act. If we are unable to timely comply with section 404 or if the costs related to compliance are significant, our profitability, stock price and results of operations and financial condition could be materially adversely affected.
We are required to comply with the provisions of Section 404 of the Sarbanes-Oxley Act of 2002, which require us to maintain an ongoing evaluation and integration of the internal controls of our business. We were required to document and test our internal controls and certify that we are responsible for maintaining an adequate system of internal control procedures for the year ended December 31, 2010. In subsequent years, our independent registered public accounting firm will be required to opine on those internal controls and management’s assessment of those controls. In the process, we may identify areas requiring improvement, and we may have to design enhanced processes and controls to address issues identified through this review.
We evaluated our existing controls for the year ended December 31, 2010. Our Chief Executive Officer and Chief Financial Officer identified material weaknesses in our internal control over financial reporting and determined that we did not maintain effective internal control over financial reporting as of December 31, 2010. The identified material weaknesses did not result in material audit adjustments to our 2010 financial statements; however, uncured material weaknesses could negatively impact our financial statements for subsequent years.
We cannot be certain that we will be able to successfully complete the procedures, certification and attestation requirements of Section 404 or that our auditors will not have to report a material weakness in connection with the presentation of our financial statements. If we fail to comply with the requirements of Section 404 or if our auditor’s report such material weakness, the accuracy and timeliness of the filing of our annual report may be materially adversely affected and could cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock.
In addition, a material weakness in the effectiveness of our internal controls over financial reporting could result in an increased chance of fraud and the loss of customers, reduce our ability to obtain financing and require additional expenditures to comply with these requirements, each of which could have a material adverse effect on our business, results of operations and financial condition.
Further, we believe that the out-of-pocket costs, the diversion of management’s attention from running the day-to-day operations and operational changes caused by the need to comply with the requirements of Section 404 of the Sarbanes-Oxley Act could be significant. If the time and costs associated with such compliance exceed our current expectations, our results of operations could be adversely affected.
There may be conflicts of interest between our management and our non-management stockholders.
Conflicts of interest create the risk that management may have an incentive to act adversely to the interests of other investors. A conflict of interest may arise between our management's personal financial interests and the fiduciary duty to our stockholders. Further, our management's own financial interests may at some point compromise their fiduciary duty to our stockholders. Luc Duchesne and Robert Cormier, who are the Company’s sole officers and a majority of its directors, continue to be involved in businesses that operate and commercialize technologies that are similar or related to the Company’s, although those businesses exploit and seek to exploit different applications and opportunities. In addition, although it is anticipated that these individuals will spend significant time and effort developing our business, it is possible that they will be exposed to business or employment opportunities that would conflict with the interests of the Company, or cause them to reduce their efforts on the Company’s behalf or to entirely cease working with the Company. If we and any other businesses with which our officers are involved wish to take advantage of the same opportunity, then the officer and director that is affiliated with both companies would abstain from voting upon the opportunity.
10
Future success is highly dependent on the ability of management to further develop and implement a business plan, and secure customers.
The nature of our operations is highly speculative and there is a consequent risk of loss of your investment. The success of our activities will depend on the availability of finances, opportunities relating to carbon trading, offset and reduction regimes, greenhouse gas emission reduction programs, government regulations and economic conditions in the forestry and timber industries. As we have no operating history or revenue and only minimal assets, there is a risk that we will be unable to consummate a business combination. The Company has had no recent operating history and no revenues or earnings from operations since inception. We have no significant assets or financial resources. We will, in all likelihood, sustain operating expenses without realizing significant revenues for the foreseeable future, at least until the market opportunities for the Company’s services and technology develops and the demand for our services becomes more proven and regular. This will likely result in our incurring net operating losses for the foreseeable future. We cannot assure that our business will develop as hoped, or that it will become profitable.
Our business may have no revenues for the foreseeable future.
We are a development stage company and have had no revenues from operations. Although the technologies offer potential, we may not realize any revenues unless and until we successfully develop a revenue stream from the use of the Lacey Holdings and the 1776729 licenses.
We may issue more shares to raise additional capital, and permit the development of the Company’s business.
As a result, the shareholdings of current shareholders may be diluted. Our Articles of Incorporation authorizes the issuance of a maximum of 275,000,000 shares of common stock. We may issue additional shares from time to time to raise the capital that we anticipate will be required to further develop our business. Any share issuance would be subject to compliance with applicable securities laws and subject to that limitation, unless our Articles of Incorporation are amended with approval of our stockholders. The Company’s issuance of additional shares may be accomplished without stockholder approval. This may result in substantial dilution in the percentage of our common stock held by our then existing stockholders. Moreover, the common stock issued from time to time may be valued on an arbitrary or non-arm’s-length basis by our management, resulting in an additional reduction in the percentage of common stock held by our then existing stockholders. Our Board of Directors has the power to issue any or all of such authorized but unissued shares without stockholder approval. To the extent that additional shares of common stock or preferred stock are issued, dilution to the interests of our stockholders will occur and the rights of the holders of common stock might be materially and adversely affected.
There is limited public market for our Common Stock, and we have never paid dividends on our Common Stock.
There is limited public trading market for our common stock which is listed on OTCQB: BICS and none is expected to develop until our business develops further. Additionally, we have never paid dividends on our common stock and do not presently intend to pay any dividends in the foreseeable future. We anticipate that any funds available for payment of dividends will be re-invested into the Company to further its business strategy. Moreover, a significant number of unregistered securities may not become traded. Pursuant to the Securities Act of 1933, as amended (the “Securities Act”) and any other applicable securities laws or regulations these restrictions will limit the ability of our stockholders to liquidate their investment.
Carbon trading may become obsolete.
Carbon trading is a commercial activity that is regulated by specific jurisdictions pursuant to regional legislation or can be voluntary. When regulated (Eg. Europe and Western Climate Initiative), governments compel polluters to reduce their greenhouse gas emissions through technological improvements or through the purchase of carbon offsets (carbon credits). It is an identified risk factor that new legislation may arise in certain jurisdictions that may render the Company’s business plan and knowledge obsolete with respect to carbon credits. With respect to the voluntary trade of carbon credits, there is a significant risk that certain voluntary purchasers of carbon credits may elect to cease the securitiespurchase of carbon credits for various reasons that are inherent to their business plans, or because of changing economic, political contexts or other conditions that cannot be controlled by the management of the Company.
11
Limited Operating History; Need for Additional Capital.
Although the Company draws on the expertise on the principals who have been operating private businesses for some time in the renewable energy and receiveforestry sectors, there is no pertinent historical financial information for the purchaser's written agreementCompany upon which to base an evaluation of our performance. Our assets and business have not yet generated substantial or recurring revenues. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and possible cost overruns due to price and cost increases in services. We will require additional financing to cover costs that we expect to incur over the next twelve months. We believe that debt financing will not be an alternative for funding our operations as we do not have tangible assets to secure any debt financing. We anticipate that additional funding will be in the form of equity financing from the sale of our common stock or other securities. However, we cannot provide any assurance that we will be able to raise sufficient funding from the sale of our common stock to fund our plan of operations. In the absence of such financing, we will not be able to continue and our business plan will fail.
Our common stock is subject to the transaction prior to sale. "penny stock" rules of the SEC and the trading market in our securities is limited, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.
The Securities and Exchange Commission also has adopted certain rules under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that regulate broker/dealer practices in connection with transactions inare applicable to "penny stocks". Penny stocks generally areFor the purposes relevant to us, a “penny stock” is any equity securities withsecurity that has a market price of less than $5.00 (otherper share or has an exercise or conversion price of less than securities registered on$5.00 per share, subject to certain national securities
exchangesexceptions, constitutes a "penny stock". For any transaction involving a penny stock, unless exempt, the rules require:
| · | that a broker or dealer approve a person's account for transactions in penny stocks; |
| · | the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased; and |
| · | that a broker or dealer provide certain detailed market information about the market for the applicable company’s securities. |
In order to approve a person's account for transactions involving penny stocks, the broker or quoted ondealer must:
obtain financial information, investment experience and investment objectives of the NASDAQ system, providedperson; and
make a reasonable determination that current price and volume
information with respect tothe proposed transactions in penny stocks are suitable for that security is provided byperson and the exchangeperson has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
The broker or system). The penny stock rules require a broker/ dealer must also deliver, prior to aany transaction in a penny stock, not otherwise exempt from the rules, to deliver a standardized risk disclosure documentschedule prepared by the Commission that provides
information about penny stocks and the nature and level of risks inSEC relating to the penny stock market. The broker/dealer alsomarket, which, in highlight form:
| · | sets forth the basis on which the broker or dealer made the suitability determination; and |
| · | that the broker or dealer received a signed, written agreement from the investor prior to the transaction. |
Following a transaction, monthly statements must provide the customer with current bid
3
and offer quotationsbe sent disclosing recent price information for the penny stock, the compensation of the broker/dealer
and its salesperson in the transaction, and monthly account statements showing
the market value of each penny stock held in the customer's account. The bidaccount and offer quotations,information on the limited market in penny stocks.
Generally, brokers may be less willing to execute transactions in securities subject to the "penny stock" rules. This may make it more difficult for investors to dispose of our common stock and depress the market value of our stock.
There are additional risks of investing in penny stocks whether in public offerings or in secondary trading, relating to commissions payable to both the broker-dealer and the broker/dealerregistered representative, current quotations for the securities and salesperson compensation
information, must be giventhe rights and remedies available to an investor in cases of fraud in penny stock transactions.
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| TEM 1B | UNRESOLVED STAFF COMMENTS |
None
| ITEM 2 | PROPERTIES. |
We do not own any property; the principal offices are located at 103 Metig Street, Sault Ste Marie, Ontario P6A 5K9. The telephone number is (705) 253-5096. The website is www.bio-carb.com.
| ITEM 3 | LEGAL PROCEEDINGS. |
Bio-Carbon Solutions International is not currently a party to any legal proceedings. The Company’s agent for service of process in Nevada is: Sharon D. Mitchell
| ITEM 4 | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. |
None
PART II
| ITEM 5 | MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. |
Our common stock is quoted on the Over-the-Counter Bulletin Board (OTCBB) under the ticker symbol BICS. The stock trades are limited and sporadically; there is no established public trading market for our common stock.
Dividends
We did not declare or pay dividends during the Fiscal Year 2010 and do not anticipate declaring or paying dividends in fiscal year 2011.
Securities Authorized for Issuance under Equity Compensation Plans
In January 2011, the Company adopted a Stock Option Incentive Plan. Pursuant to the customer orally orPlan, the Company may grant stock option awards to employees and contractors as compensation for services rendered on behalf of the Company. The Company issued 5,000,000 options exercisable at $0.75 with an expiration date of December 31, 2012.
Recent Sales of Unregistered Securities
There were no sales of unregistered securities in writing prior to
effecting2010.
Securities issued in 2010
During the transaction and must be given to the customer in writing before or
with the customer's confirmation. These disclosure requirements may have the
effect of reducing the level of trading activity in the secondary market for the
Company's common stock.
As of Marchyear ended December 31, 2010, the Company had 13,300,000 outstanding shares of
common stock and 30 shareholders of record.
Holders of common stock are entitled to receive dividends as may be
declared by the Board of Directors. The Company's Board of Directors is not
restricted from paying any dividends but is not obligated to declareissued a dividend.
No dividends have ever been declared and it is not anticipated that dividends
will ever be paid.
In October 2009, the Company purchased 43,000,000total 23,333,333 shares of its common stock from two former officersvalued at $2,100,000 in a private transaction. These shares were
subsequently cancelled. In November 2009,exchange for technology licenses.
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| ITEM 6 | SELECTED FINANCIAL DATA. |
Summary of Financial Data
December 31, 2010 | ||||
| Revenues | $ | - | ||
| Operating Expenses | $ | 164,478 | ||
| Earnings (Loss) | $ | (2,264,478 | ) | |
| Total Assets | $ | - | ||
| Liabilities | $ | 179,282 | ||
| Stockholders’ Deficit | $ | (179,282) | ||
| ITEM 7 | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
The following discussion is intended to assist in the two former officers collectively
sold 7,000,000 sharesunderstanding and assessment of the Company's common stocksignificant changes and trends related to the Company's current
officers. See Item 1results of operations and financial condition of Bio-Carbon Solutions International Inc. This discussion and analysis should be read in conjunction with our financial statements and notes thereto included elsewhere in this reportAnnual Report on Form 10-K for further information. With the exception
of the foregoing, during thefiscal year ended December 31, 2009, none2010.
Critical Accounting Policies
The preparation of our consolidated financial statements and notes thereto requires management to make estimates and assumptions that affect the Company's
officers or directors, nor any ofamounts and disclosures reported within those financial statements. On an ongoing basis, management evaluates its principal shareholders, purchased any
shares ofestimates, including those related to revenue recognition, contingencies, litigation and income taxes. Management bases its estimates and judgments on historical experiences and on various other factors believed to be reasonable under the Company's common stockcircumstances. Actual results under circumstances and conditions different than those assumed could result in differences from third parties in a private transaction
or as a result of purchasesthe estimated amounts in the open market.
ITEM 6. SELECTED FINANCIAL DATA
Not applicable.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
PLAN OF OPERATION
The Company was incorporated in January 2007. The Company is in the
development stage and asfinancial statements. There have been no material changes to these policies during fiscal 2010. As of MarchDecember 31, 2010 has never generated any revenue.
Since its inception, the Company has financed its operations throughnot identified any critical estimates that are used in the private salepreparation of its common stock. The Company doesthe financial statements.
Plan of Operations
Liquidity and Capital Resources. At the end of fiscal year 2010 we had no cash on hand and we had liabilities of $179,282. We must secure additional funds in order to continue our business. We will be required to secure a loan to pay expenses relating to filing this report including legal, accounting and filing fees. We believe that we will be able to obtain this loan from a current shareholder of the Company; however we cannot provide any assurance that we will be able to raise additional proceeds or secure additional loans in the future to cover our expenses related to maintaining our reporting company status (estimated at $20,000 for fiscal year 2011). Furthermore, there is no guarantee we will receive the required financing to complete our business strategies; we cannot provide any assurance that future financing will be available to us on acceptable terms. If financing is not haveavailable on satisfactory terms, we may be unable to continue, develop or expand our operations. If we are unable to accomplish raising adequate funds then any commitments or
arrangements fromit would be likely that any person to provideinvestment made into the Company would be lost in its entirety.
14
Results of Operations. We have not begun revenue generating operations and as such we have not generated any revenues. Since inception we have incurred a loss of $2,370,181.
Off-Balance Sheet Arrangements. None
Contractual Obligations. None
| ITEM 7A | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. |
We do not currently hold any market risk sensitive instruments entered into for hedging transaction risks related to foreign currencies. In addition, we have not entered into any transactions with any additional capital.
See Item 1derivative financial instruments for trading purposes.
| ITEM 8 | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. |
Our financial statements appear beginning on page F-1, immediately following the signature page of this report for information concerning the Company's plan of
operation.
See Note 2 to the financial statements included as part of this report for
a description of the Company's accounting policies and recent accounting
pronouncements.
4
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Not applicable.
ITEM 8. FINANCIAL STATEMENTS
See the financial statements attached to this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
On July 20, 2009,February 25, 2011, the Company through andfiled on a Form 8-K/A information detailing agreements entered into with the approval of its Board
of Directors, dismissed Moore & Associates, Charteredvarious business partners as well as its independent
registered public accounting firm. The reportsstock option incentive plan.
| ITEM 9 | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. |
None
| ITEM 9A(T) | CONTROLS AND PROCEDURES. |
Disclosure Controls and Procedures
Management of Moore & Associates on the
financial statements of the CompanyBio-Carbon Solutions International Inc. is responsible for the two years ended December 31, 2008
did not contain an adverse opinion or disclaimer of opinion nor were the reports
qualified or modified as to uncertainty, audit scope or accounting principles.
However, the reports of Moore & Associates for those fiscal years were qualified
with respect to uncertainty as to the Company's ability to continue as a going
concern.
During the Company's two fiscal years ended December 31, 2008 and the
subsequent interim period ended July 20, 2009, there were no disagreements with
Moore & Associates on any matter of accounting principles or practices,
financial statementmaintaining disclosure or auditing scope or procedure, which
disagreements, if not resolved to Moore & Associates satisfaction, would have
caused them to refer to such disagreements in their reports.
On July 23, 2009, the Company hired De Joya Griffith & Company, LLC, as
its independent registered public accounting firm. Prior to hiring De Joya
Griffith & Company, the Company did not consult with De Joya Griffith & Company
regarding the application of accounting principles to a specific completed or
contemplated transaction or regarding the type of audit opinion that might be
rendered by De Joya Griffith & Company on the Company's financial statements,
and De Joya Griffith & Company did not provide any written or oral advice that
was an important factor considered by the Company in reaching a decision as to
any accounting, auditing or financial reporting issue.
ITEM 9A. CONTROLS AND PROCEDURES
The Company maintains a system of controls and procedures that are designed to ensure that information required to be disclosed in the reports filedthat the Company files or submittedsubmits under the Securities Exchange Act of 1934 as amended ("1934 Act"(the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC'sSecurities and Exchange Commission’s rules and formsforms.
In addition, the disclosure controls and toprocedures must ensure that such information required to be disclosed by the
Company in the reports that it files or submits under the 1934 Act, is accumulated and communicated to the Company'sCompany’s management, including its PrincipalChief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Asfinancial and other required disclosures.
At the end of December 31, 2009, the Company's
Principal Executive and Financial Officer evaluatedperiod covered by this report, an evaluation of the effectiveness of the
design and operation of the Company'sour disclosure controls and procedures.procedures (as defined in Rules 13(a)-15(e) and 15(d)-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”)) was carried out under the supervision and with the participation of our Principal Executive Officer, Principal Financial and Accounting Officer, Luc C. Duchesne. Based on thathis evaluation the Company's Principal Executiveof our disclosure controls and Financial Officerprocedures, he concluded that during the Company'speriod covered by this report, such disclosure controls and procedures were effective.
Management'snot effective to detect the inappropriate application of US GAAP standards. This was due to deficiencies that existed in the design or operation of our internal control over financial reporting that adversely affected our disclosure controls and that may be considered to be “material weaknesses.”
The Company will continue to create and refine a structure in which critical accounting policies and estimates are identified, and together with other complex areas, are subject to multiple reviews by accounting personnel. In addition, the Company will enhance and test our year-end financial close process. Additionally, Bio-Carbon Solutions Internationals’ audit committee will increase its review of our disclosure controls and procedures. Finally, we plan to designated individuals responsible for identifying reportable developments. We believe these actions will remediate the material weakness by focusing additional attention and resources in our internal accounting functions. However, the material weakness will not be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.
15
Management’s Annual Report on Internal Control over Financial Reporting
5
The Company's
Our management is responsible for establishing and maintaining adequate internal control over financial reporting and for the assessment of the
effectiveness of internal control overour financial reporting. As defined by the
Securities and Exchange Commission, internalInternal control over financial reporting is a process designed by, or under the supervision of the Company's principal
executive officer and principal financial officer and implemented by the
Company's Board of Directors, management and other personnel, to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation of the Company's financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions; (ii) provide reasonable assurance that transactions are recorded as necessary for preparation of our financial statements; (iii) provide reasonable assurance that receipts and expenditures of company assets are made in accordance with management authorization; and (iv) provide reasonable assurance that unauthorized acquisition, use or disposition of company assets that could have a material effect on our financial statements would be prevented or detected on a timely basis.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions may occur or that the degree of compliance with the policies or procedures may deteriorate.
The Company's management evaluated
Management assessed the effectiveness of itsour internal control over financial reporting as of December 31, 20092010. This assessment is based on the criteria establishedfor effective internal control described in Internal Control -— Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, or the COSO Framework.
Management'sCommission. Based on its assessment, included an evaluation of the design of the Company'smanagement concluded that our internal control over financial reporting and testing of the operational
effectiveness of those controls.
Based on this evaluation, the Company's management concluded that the
Company's internal control over financial reporting was effective as of December 31, 2009.
There2010 was no changenot effective in the Company'sspecific areas described in the “Disclosure Controls and Procedures” section above and as specifically described in the paragraphs below.
As of December 31, 2010 the Principal Executive Officer/Principal Financial Officer identified the following specific material weaknesses in the Company’s internal controlcontrols over its financial reporting processes:
• Policies and Procedures for the Financial Close and Reporting Process — Currently there are no policies or procedures that occurred duringclearly define the quarter endedroles in the financial close and reporting process. The various roles and responsibilities related to this process should be defined, documented, updated and communicated. Failure to have such policies and procedures in place amounts to a material weakness to the Company’s internal controls over its financial reporting processes.
• Representative with Financial Expertise — For the year ending December 31, 20092010, the Company did not have a representative with the requisite knowledge and expertise to review the financial statements and disclosures at a sufficient level to monitor the financial statements and disclosures of the Company. Failure to have a representative with such knowledge and expertise amounts to a material weakness to the Company’s internal controls over its financial reporting processes.
• Adequacy of Accounting Systems at Meeting Company Needs — The accounting system in place at the time of the assessment lacks the ability to provide high quality financial statements from within the system, and there were no procedures in place or built into the system to ensure that all relevant information is secure, identified, captured, processed, and reported within the accounting system. Failure to have an adequate accounting system with procedures to ensure the information is secure and accurately recorded and reported amounts to a material weakness to the Company’s internal controls over its financial reporting processes.
• Segregation of Duties — Management has materially affected, or is reasonably likelyidentified a significant general lack of definition and segregation of duties throughout the financial reporting processes. Due to materially affect, the Company'spervasive nature of this issue, the lack of adequate definition and segregation of duties amounts to a material weakness to the Company’s internal controls over its financial reporting processes.
16
In light of the foregoing, once we have the adequate funds, management plans to develop the following additional procedures to help address these material weaknesses:
• Bio-Carbon Solutions International will create and refine a structure in which critical accounting policies and estimates are identified, and together with other complex areas, are subject to multiple reviews by accounting personnel. In addition, we plan to enhance and test our month-end and year-end financial close process. Additionally, our audit committee will increase its review of our disclosure controls and procedures. We also intend to develop and implement policies and procedures for the financial close and reporting process, such as identifying the roles, responsibilities, methodologies, and review/approval process. We believe these actions will remediate the material weaknesses by focusing additional attention and resources in our internal accounting functions. However, the material weaknesses will not be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management'sManagement’s report was not subject to attestation by the Company's
independentour registered public accounting firm pursuant to temporary rules of the SECSecurities and Exchange Commission that permit us to provide only management’s report in this annual report.
This report shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of that section , and is not incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
Changes in Internal Controls
There have been no changes in our internal control over financial reporting that occurred during our fiscal year ended December 31, 2010 that have materially affected, or are reasonable likely to materially affect, our internal control over financial reporting.
| ITEM 9B | OTHER INFORMATION. |
On January 14, 2011, the Company entered into a License Agreement with 1776729 Ontario Corporation (the “1776729 License”), a privately owned corporation registered under the Laws of Ontario. Pursuant to the 1776729 License, the Company was granted an exclusive, non-transferable, and irrevocable right to develop and commercialize certain intellectual property that will be used in developing carbon credits from forested lands. The intellectual property consists of knowledge pertaining to the registration of carbon offsets or carbon credits from the biological carbon pools contained in ecosystems (mainly forest ecosystems). Carbon assets can then be conveyed into a new form of security, termed carbon credits, which are bought by carbon emitters who are compelled to reduce their carbon emissions through legislation, or carbon emitters who may voluntarily engage in carbon trading for the purpose of increasing their environmental stewardship or for publicity purposes. Under the 1776729 License the Company must pay a royalty of 6 % of its gross annual sales to 1776729. In addition, the Company has agreed to pre-pay the royalty on the first $15,000 of revenue to be earned under the 1776729 License, which will be paid by the issuance of 5,000,000 of the Company’s Common Stock to 1776729 Ontario Corporation (Such stocks were exempted from the reverse stock split effected on January 11, 2011). This permitted the Company to provide only management's reportfurther advance business activities by providing carbon development services as well as carbon development of its own projects under plans in addition to carbon accounting services (see Section 2.02).
17
On January 17, 2011, the Company entered into a Carbon Development Agreement (“CDA”) with Basia Holdings, Inc. (“Basia”), a privately held company incorporated in the State of Tennessee. Under the Basia CDA, the Company has acquired exclusive and irrevocable rights to the development of carbon credit potential on internal
controla 9,000 acre parcel of heavily forested land in this report.
ITEM 9B. OTHER INFORMATION
Not applicable.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Name Age Position
Gilles Trahan 38 President, Chief Executive OfficerGrundy County, Tennessee from which coal exploitation is possible. In the short term, the Company plans to create a business plan for generating carbon offsets from the Basia property’s trees, and/or generating revenues from logging using existing voluntary carbon registries such as the Voluntary Carbon Standards Registry (www.v-c-s.org). Further, under the Basia CDA, the Company will pursue the development and sales of carbon credits from the forested land, and form the possible exploitation of coal; methane emitted from coal mines has 23 times the greenhouse warming potential of carbon dioxide. By capturing the methane and either flaring it, or using it in power application, significant amounts of carbon offsets can be generated. Developing carbon offset projects through flaring has been exemplified in the United Nations Framework Convention Climate Change (UNFCCC) approved consolidated methodology ACM0008 Version 6 issued 25 March 2009 titled “Consolidated methodology for coal bed methane, coal mine methane and ventilation air methane capture and use for power (electrical or motive) and heat and/or destruction through flaring or flameless oxidation”.
On February 1, 2011 the Company entered into a Director.
6
Martin Baldwin 44 Secretary, Treasurer, Chief Financial OfficerCarbon Development Agreement with Sierra Gold Corp (OTC Pinkseets: SGCP) for the purpose of providing technical services for the development of a Project Design Document for the registration of carbon offsets from forestry activities (conservation and a Director.
The directorsafforestation) from 42,000 acres of lands in Sierra Leone in Africa. Pursuant to the Carbon Development Agreement the Company shall retain 10% of the net profits from the sales of the carbon credits, if or when they are realized.
On February 17, 2011 the Company serveentered into a Memorandum of Understanding with Genesys International, a company based in such capacityIndia with business activities in outsourcing in various computer technologies. Under the Memorandum of Understanding the Companies shall discuss Agreements in co-marketing activities and assess joint carbon development opportunities in India.
On March 27, 2011. The Corporation entered into a Memorandum of Agreement with Grid Cloud Solutions Inc (Pink: GRDC) to offer services for carbon accounting and trading for the clients of Grid Cloud Solutions Inc. Grid Cloud Solutions offers energy saving management service to various industrial and commercial clients. Under the Agreement the Corporation will offer carbon services to the clients of Grid Cloud Solutions Inc in exchange for 50% of the revenues generated.
PART III
| ITEM 10 | DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. |
Bio-Carbon Solutions International Inc.’s executive officer and director and his respective age as of December 31, 2010 are as follows:
Directors:
| Name of Director | Age | ||
| Luc C. Duchesne | 50 | ||
| John Wilkes | 49 |
Executive Officer:
| Name of Officer | Age | Office | |||
| Luc C. Duchesne | 50 | President, CFO,CEO |
The term of office for each director is one year, or until the next annual meeting of the Company's shareholdersshareholders.
18
Biographical Information
Set forth below is a brief description of the background and business experience of our officers and director for the past year.
Luc Duchesne (50), for the past five years, has been President and CEO of Forest BioProducts Inc, a consulting firm in forestry dealing with resource development. Forest BioProducts is owned in majority by Grid Cloud Solutions, Inc. (OTC Pinksheets: GRDC) a publicly trading technology and consulting company in the renewable energy sector ,where Mr. Duchesne holds the positions of director and Chief Technology Officer. He has also been president and CEO of SITTM Technologies Inc, a private biodiesel technology and brokerage firm until their successors have been duly
electedFebruary 17, 2011 when it was acquired by MSE Envirotech Corp (OTC Pinksheets: MEVT); and qualified. The officersof GSN Dreamworks Inc., a private research and development firm involved in opportunities relating to carbon stocks and natural resources.
From 2004 to 2006 Mr. Duchesne was fully engaged in forestry consulting, acting as CEO of Forest BioProducts, providing various services to clients seeking economic opportunities from the exploitation of non timber values from forest ecosystems such as bioenergy, biomass, pharmaceuticals and nutraceuticals. These activities were reduced to 20% of his time when he took the position of CEO of SITTM Technologies Inc, in 2006. SITTM Technologies Inc is a privately owned corporation involved in the manufacturing and sales of biodiesel and value added products from fatty acid methyl esters. This took up 60% of his time. He was president of GSN Dreamworks from 2006 continuing until June 2010 when he became CEO of BioCarbon Systems International. From June 2010 to December 2010 he was CEO and director of Bio-Carbon Systems International Inc. He is currently engaged in the full time management of the Company servewith an effort of at least 40 hours per week.
Mr. Duchesne holds a PhD in plant biochemistry from the discretionUniversity of Guelph, a M.Sc. in Forest Sciences from the University of Toronto (1985) and a B.Sc. in Forest Engineering from Laval University (1983). He has authored or co-authored 85 peer-reviewed scientific articles, book chapters or books. He has developed algorithms and other knowledge relating to carbon stocks and the assessment of the Company's directors. The Company does not compensate any person for actingamount of carbon stock found in various natural ecosystems. That intellectual property can be used to validate carbon stocks in the context of carbon trading regimes. Mr. Duchesne was appointed as a director
The principal occupation of the Company's officers and directors during
the past several years is as follows:
Mr. Trahan has been an officer and director of the Company since November,
2009. Since August 2008 Mr. Trahan has beenin large part because of his academic training with respect to forestry matters, his training and experience in the Chief Executive Officerforestry sector, his prior experience as an entrepreneur, and a
directorhis specific knowledge and understanding of MSE Enviro-Tech Corp. Between 2002the intellectual property to be exploited by the Company and the business opportunities in which that technology could be applied. Mr. Duchesne anticipates that over the next six months he will devote approximately 160 hours per month to the business of the Company.
Mr. Wilkes (49) earned his C.A. designation with Price Waterhouse in Toronto, Canada. Upon obtaining his designation he worked privately for a brief period of time hebefore joining Coopers & Lybrand in Toronto, Canada. While there Mr. Wilkes focused on insolvency and Mergers and Acquisitions. In the early ‘90’s Mr. Wilkes joined MSE
Enviro-Tech, Mr. Trahan was the Chief Executive Officer and President of Geneva
Bancorp Inc.a junior investment bank called Peagun Corporation where he was involved in international financial consulting and
investment banking. Between 1998 and 2002spent most of his time evaluating environmental technologies. Since 2005, Mr. Trahan was the Chief Executive
Officer and a Director of Symphony Telecom, Inc. Since October 2008, Mr. Trahan
has also been a director of Atlantic Wind & Solar, Inc.
Mr. BaldwinWilkes has been an officerIndependent Investment Management Professional, making private investments in both private and director ofpublic companies that, for the Company since November,
2009. Since April 2009 Mr. Baldwin has been a Director of MSE Enviro-Tech Corp.
Between July 2008 and April 2009 Mr. Baldwin was a Director with the
International Money Market Department at the Bank of Nova Scotia in Toronto.
Between August 2002 and June 2008 Mr. Baldwin was the Assistant General
Manager/Head Treasurer at Scotiabank Caribbean Treasury Limited (formerly the
Caribbean Treasury Unit of Scotiabank Bahamas Ltd.) in Nassau, Bahamas. Between
January 2001 and August 2002 Mr. Baldwin was a Director with the International
Money Market Department at the Bank of Nova Scotia in London. Since November
2008, Mr. Baldwin has also been a director of Atlantic Wind & Solar, Inc.
The Company does notmost part, have a compensation or an audit committee. The Company
does not have a financial expert. Mr. Trahan and Mr. Baldwin are not independent
directors as that term is defined in section 803 of the listing standards of the
NYSE AMEX. Neither Mr. Trahan nor Mr. Baldwin are a "financial expert" as that
term is definedtheir core business in the regulationsenvironmental space.
Significant Employees
We do not employ any non-officers who are expected to make a significant contribution to its business.
Corporate Governance
Nominating Committee. We have not established a Nominating Committee because of our limited operations; and because we have only one director and officer, we believe that we are able to effectively manage the Securitiesissues normally considered by a Nominating Committee.
Audit Committee. We have has not established an Audit Committee because of our limited operations; and Exchange Commission.
The Company hasbecause we have only one director and officer, we believe that we are able to effectively manage the issues normally considered by a Audit Committee.
19
Code of Ethics. We have not adopted a Code of Ethics applicable to itsfor our principal executive and financial and accounting officers and persons performing similar
functions. The Company does not believe it requires a Code of Ethics since itofficers.
| ITEM 11 | EXECUTIVE COMPENSATION. |
Summary Compensation Table
Name and principal position | Fiscal Year | Salary | Bonus | Other annual compensation | Restricted stock award(s) | Securities underlying options/ SARs | LTIP payouts | All other compensation | ||||||||||||||||||||||
Luc C. Duchesne Director, President | 2010 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
John Wilkes Director | 2010 | $ | 80,000 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
There has only two officers.
7
Changesbeen no cash payment paid to the individuals above for services rendered in Management
The following showsall capacities to us for the changes in the Company's management since its
inception:
Appointed (A)
to or
Resigned (R) Positions Appointed to
Date Name from Position or Resigned From
1/17/07 Debbie Barnum A President, Treasurer Principal
Financial Officer, and a Director
1/17/07 Darrin Barnum A Secretary and a Director
11/19/09 Gilles Trahan A Director
11/19/09 Martin Baldwin A Director
11/19/09 Debbie Barnum R President, Treasurer Principal
Financial Officer, and a Director
11/19/09 Darrin Barnum R Secretary and a Director
11/19/09 Gilles Trahan A President and Chief Executive Officer
11/19/09 Martin Baldwin A Secretary, Treasurer and Chief
Financial Officer
Compensation Committee Interlocks and Insider Participation.
The Company's directors act as its compensation committee. During the yearperiod ended December 31, 2009, none of2010. There has been no compensation awarded to, earned by, or paid to the Company's officers were also a member ofexecutive officer by any person for services rendered in all capacities to us for the fiscal period ended December 31, 2010. No compensation committeeis anticipated within the next six months to any officer or a director of another entity, which other entity
had one of its executive officers serving as a director of the Company or as a
member ofCompany.
Stock Option Grants
We did not grant any stock options to the Company's compensation committee.
ITEM 11. EXECUTIVE COMPENSATION
executive officer during the most recent fiscal period ended December 31, 2010. However, 5,000,000 options were granted in January 2011.
| ITEM 12 | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. |
The following table showsprovides the compensation paid or accrued during the year
ended December 31, 2009names and addresses of each person known to the executive officersBio-Carbon Solutions International Inc. to own more than 5% of the Company. No officeroutstanding common stock as of
the Company has ever received compensation in excess of $100,000 per year.
8
All
Other
Annual
Stock Option Compen-
Name and Fiscal Salary Bonus Awards Awards sation
Principal Position Year (1) (2) (3) (4) (5) Total
- ------------------ ------ ------ ----- ------ ----- --------- --------
Gilles Trahan 2009 - - - - - -
Chief Executive
Officer(11-09 to
12-09)
Martin Baldwin 2009 - - - - - -
Secretary, Treasurer
and Chief Financial
Officer(11-0 to 12-09)
Debbie Barnum 2009 - - - - - -
Chief Executive 2008 - - - - - -
Officer (1-07 to 2007 - - - - - -
11-09)
Darrin Barnum 2009 - - - - - -
Secretary (1-07 to 2008 - - - - - -
11-09) 2007 - - - - - -
(1) The dollar value of base salary (cash and non-cash) received.
(2) The dollar value of bonus (cash and non-cash) received.
(3) During the periods covered by the table, the value of the Company's shares
issued as compensation for services to the persons listed in the table.
(4) The value of all stock options granted during the periods covered by the
table. (5) All other compensation received that the Company could not
properly report in any other column of the table.
See Item 10 of this report regarding changes in the Company's management.
The Company does not have employment agreements with any of its officers.
The following shows the amounts that the Company expects to pay to its
officer during the twelve-month period ending December 31, 2010 and by the time
its officer plans to devote to the Company's business. officers and directors, individually and as a group. Except as otherwise indicated, all shares are owned directly.
| Title of Class | Name and address of beneficial owner | Amount of beneficial ownership | Percent of class | |||||||
| Common Stock | Lacey Holdings | 23,333,333 | 94.0 | % | ||||||
| 2nd Floor, 33 Waterfront Drive | ||||||||||
| PO Box 3339, Road Town | ||||||||||
| Tortola, BVI | ||||||||||
The Company does not have
employment agreements with any person.
9
Proposed Time to be Devoted to
Name Compensation Company's Business
Gilles Trahan $ 75,000 10
Martin Baldwin $ 75,000 10%
Long-Term Incentive Plans. The Company does not have any pension,percent of class is based on 24,811,111 shares of common stock appreciation rights, long-term incentive or other plansissued and has no intentionoutstanding as of
implementing any of these plans for the foreseeable future.
Employee Pension, Profit Sharing or other Retirement Plans. The Company
does not have a defined benefit, pension plan, profit sharing or other
retirement plan, although it may adopt one or more of such plans in the future.
Compensation of Directors. The Company's directors did not receive any
compensation for their services as directors during the fiscal year ended December 31, 2009.
Stock Option and Bonus Plans
The Company has not adopted any stock option or stock bonus plans.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDERS MATTERS
The following table lists, as of March 31,2010.
20
| ITEM 13 | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. |
During Fiscal Year 2010, those persons owning
beneficially 5% or more of the Company's common stock, the number and percentage
of outstanding shares owned by each director and officer ofthere were no material transactions between the Company and by
all officersany Officer, Director or related party has not, since the date of incorporation, had any material interest, direct or indirect, in any transaction with us or in any presently proposed transaction that has or will materially affect us:
-The sole Officer and directorsDirector;
-Any person proposed as a group. Unless otherwise indicated, each owner
has solenominee for election as a director;
-Any person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting and investment powers over hisrights attached to the outstanding shares of common stock.
Namestock;
-Any relative or spouse of any of the foregoing persons who have the same house as such person.
Any future transactions between us and Address Numberour Officers, Directors, and Affiliates will be on terms no less favorable to us than can be obtained from unaffiliated third parties. Such transactions with such persons will be subject to approval of Shares Percentour Board of Class
- ---------------- ---------------- ----------------
Gilles Trahan 3,500,000 26%
Sunsational
Old Fort Point
West Bay Street
Nassau, Bahamas
Martin Baldwin 3,500,000 26%
Lot #27
Love Beach
Nassau, Bahamas ________ ___
All officersDirectors.
| ITEM 14 | PRINCIPAL ACCOUNTANT FEES AND SERVICES. |
As of December 31, 2010 the Company has incurred auditing expenses of approximately $20,000 since inception which includes bookkeeping and directorsauditing services. There were no other audit related services or tax fees incurred.
PART IV
| ITEM 15 | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. |
(a) The following documents have been filed as group (2 persons) 7,000,000 52%
========= ==
10
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
See Item 1a part of this report.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Moore & Associates auditedAnnual Report on Form 10-K.
1. Financial Statements
| Page | |
| Report of Independent Registered Public Accounting Firm | F-1 |
| Balance Sheets | F-2 |
| Statements of Operations | F-3 |
| Statements of Stockholders' Deficit | F-4 |
| Statements of Cash Flows | F-5 |
| Notes to Financial Statements | F-6-15 |
2. Financial Statement Schedules.
All schedules are omitted because they are not applicable or not required or because the Company's financial statements forrequired information is included in the year
ended Financial Statements or the Notes thereto.
21
3. Exhibits.
The following exhibits are filed as part of, or incorporated by reference into, this Annual Report:
| EXHIBIT | ||
| NUMBER | DESCRIPTION | |
| 31.1 | 8650 SECTION 302 CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER | |
| 32.1 | 4700 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| BIO-CARBON SOLUTIONS INTERNATIONAL INC. | ||
| By: |  | |
| Luc C. Duchesne | ||
| President | ||
| Chief Executive Officer | ||
| Chief Financial Officer | ||
| Chief Accounting Officer | ||
| Secretary, Director | ||
| Date: April 15, 2011 | ||
22
BIO-CARBON SOLUTIONS INTERNATIONAL, INC.
(formerly Elemental Protective Coatings Corp..)
(A Development Stage Company)
Financial Statements
December 31, 2008. The following table shows the aggregate fees billed to
the Company during the year ended 2010 and 2009
23
BIO-CARBON SOLUTIONS INTERNATIONAL, INC.
(formerly ELEMENTAL PROTECTIVE COATINGS CORP.)
(A Development Stage Company)
Financial Statements
December 31, 2008 by Moore & Associates.
2008
Audit Fees $7,000
Audit-Related Fees --
Financial Information Systems --
Design2010 and Implementation Fees --
Tax Fees --
All Other Fees --
------
$7,000
De Joya Griffith & Company audited the Company's financial statements for
the year ended December 31, 2008 and 2009. The following table shows the
aggregate fees billed to the Company during the year ended December 31, 2009 by
De Joya Griffith & Company.
2009
Audit Fees $7,000
Audit-Related Fees --
Financial Information Systems --
Design and Implementation Fees --
Tax Fees --
All Other Fees --
------
$7,000
Audit fees represent amounts billed for professional services rendered for
the audit of the Company's annual financial statements and the review of the
Company's interim financial statements. Before Moore & Associates and De Joya
Griffith & Associates was engaged by the Company to render these services, the
engagement was approved by the Company's Directors.
11
ITEM 15. EXHIBITS
Exhibit
Number Exhibit Name
3.1 Articles of Incorporation *
3.2 Bylaws *
10.1 Assignment of Contract Rights
31 Rule 13a-14(a) Certifications
32 Section 1350 Certifications
* Incorporated by reference to the same exhibit filed with the Company's
registration statement on Form SB-2 (File # 333-148546).
12
De Joya Griffith & Company, LLC
CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS
CONTENTS
| Page(s) | ||
| Report of Independent Registered Accounting Firm | F-1 | |
| Balance Sheets as of December 31, 2010 and 2009 | F-2 | |
| Statements of Operations for the years ended December 31, 2010 and 2009 and the period of January 17, 2007 (Inception) to December 31, 2010 | F-3 | |
| Statement of Changes in Stockholders’ Equity (Deficit) Cumulative to December 31, 2010 | F-4 | |
| Statement of Cash Flows for the years ended December 31, 2010 and 2009 and the period of January 17, 2007 (Inception) to December 31, 2010 | F-5 | |
| Notes to the Financial Statements | F-6 - F-15 | |
24
Report of Independent Registered Public Accounting Firm
To Thethe Board of Directors and Stockholdersof
Bio-Carbon Solutions International, Inc
(Formerly Known As Elemental Protective Coating Corporation
Toronto, Canada
Coatings Corp.)
(A Development Stage Company)
We have audited the accompanying balance sheetssheet of Bio-Carbon Solutions International, Inc (Formerly Known As Elemental Protective Coating
Corp. (formerly DBL Senior Care, Inc.) (A Development Stage Enterprise)Coatings Corp) as of December 31, 20092010 and 2008,December 31, 2009 and the related statements of operations, stockholders' equity (deficit), and cash flows for the years then ended andperiod from the date of inception (Januaryon January 17, 2007)2007 to December 31, 2009.2010 then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on thethese financial statements based on our audit.
audits.
We conducted our auditaudits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit providesaudits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Bio-Carbon Solutions International, Inc (Formerly Known As Elemental Protective CoatingCoatings Corp. (formerly DBL Senior Care, Inc.) (A Development Stage Enterprise) as of December 31, 20092010 and 2008,December 31, 2009, and the results of theirits operations and cash flows for the years then ended andperiod from the date of inception (Januaryon January 17, 2007)2007 to December 31, 20092010 then ended in conformity with accounting principlesU.S. generally accepted inaccounting principles.
We were not engaged to examine management's assessment of the United
States.
effectiveness of the Company’s internal control over financial reporting as of December 31, 2010, and accordingly, we do not express an opinion thereon.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 32 to the consolidated financial statements, the Company has suffered recurring losses and has experienced negative cash flows from operations, which raiseraises substantial doubt about itsthe Company's ability to continue as a going concern. Management's plans in regard to thesethose matters are also described in Note 3.2 to the consolidated financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
De Joya Griffith & Company, LLC
/s/ De Joya Griffith & Company, LLC
Henderson, Nevada
| /s/ SAM KAN & COMPANY | |
| Sam Kan & Company |
April 8, 2010
Elemental 10-K Dec 09 Auditors Report 4-12-10
Elemental Protective Coating Corp.
(formerly DBL Senior Care, Inc.14, 2011
Alameda, California
F-1
BIO-CARBON SOLUTIONS INTERNATIONAL, INC.
(Formerly ELEMENTAL PROTECTIVE COATINGS CORP., INC.)
(a
(A Development Stage Company)
Balance Sheets
December 31,
--------------------------------
2009 2008
--------------- ---------------
Assets
Current assets:
Cash $ 37 $ 33
---------- ----------
Total current assets 37 33
---------- ----------
Intangible asset- net 4,970,833 --
---------- ----------
Total assets $4,970,870 $ 33
========== ==========
Liabilities and
| December 31, | ||||||||
| 2010 | 2009 | |||||||
| (Restated) | ||||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash | $ | - | $ | 37 | ||||
| Total current assets | - | 37 | ||||||
| Intangible assets | - | 5,000,000 | ||||||
| Total assets | $ | - | $ | 5,000,037 | ||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | 17,236 | $ | 14,430 | ||||
| Related party payables | 8,066 | - | ||||||
| Wages payable | 153,980 | - | ||||||
| Total current liabilities | 179,282 | 14,430 | ||||||
| Convertible note payable | - | 5,000,000 | ||||||
| Total liabilities | 179,282 | 5,014,430 | ||||||
| Stockholders' deficit | ||||||||
| Preferred stock, $.001 par value; 5,000,000 shares authorized, no shares issued or outstanding | - | - | ||||||
| Common stock, $.001 par value; 275,000,000 shares authorized; 24,811,111 and 1,477,778 issued and outstanding at December 31, 2010 and 2009 | 24,811 | 1,478 | ||||||
| Additional paid in capital | 2,166,499 | 89,832 | ||||||
| Other comprehensive loss | (411 | ) | - | |||||
| Deficit accumulated during the development stage | (2,370,181 | ) | (105,703 | ) | ||||
| Total stockholders' deficit | (179,282 | ) | (14,393 | ) | ||||
| Total liabilities and stockholders' deficit | $ | - | $ | 5,000,037 | ||||
See accompanying notes to financial statements
F-2
BIO-CARBON SOLUTIONS INTERNATIONAL, INC.
(formerly ELEMENTAL PROTECTIVE COATINGS CORP., INC.)
(A Development Stage Company)
Statement of Operations
| For the period from | ||||||||||||
| January 17, 2007 | ||||||||||||
| Year ended December 31, | (inception) to | |||||||||||
| 2010 | 2009 | December 31, 2010 | ||||||||||
| (Restated) | ||||||||||||
| Revenue | $ | - | $ | - | $ | - | ||||||
| Operating expenses | ||||||||||||
| General and administrative | 2,254 | 2,946 | 12,748 | |||||||||
| Officer compensation | 153,569 | - | 153,569 | |||||||||
| Professional fees | 8,655 | 21,090 | 58,905 | |||||||||
| Total operating expenses | 164,478 | 24,036 | 225,222 | |||||||||
| Other income (expense) | ||||||||||||
| Other income | - | - | 41 | |||||||||
| Impairment loss | (2,100,000 | ) | - | (2,100,000 | ) | |||||||
| Total other income (expense) | (2,100,000 | ) | - | (2,099,959 | ) | |||||||
| Net loss applicable to common shareholders | $ | (2,264,478 | ) | $ | (24,036 | ) | $ | (2,325,181 | ) | |||
| Other comprehensive loss | ||||||||||||
| Foreign currency translation adjustment | (411 | ) | - | (411 | ) | |||||||
| Total comprehensive loss | $ | (2,264,889 | ) | $ | (24,036 | ) | $ | (2,325,592 | ) | |||
| Basic and diluted loss per common share | $ | (0.46 | ) | $ | (0.00 | ) | ||||||
| Weighted average shares outstanding | 4,929,833 | 5,704,274 | ||||||||||
See accompanying notes to financial statements
F-3
BIO-CARBON SOLUTIONS INTERNATIONAL, INC.
(formerly ELEMENTAL PROTECTIVE COATINGS CORP., INC.)
(A Development Stage Company)
Statement of Changes in Stockholders' Equity (Deficit)
Current liabilities:
Accounts payable $ 8,430 $ -
Notes payable 6,000 -
---------- ----------
Total current liabilities 14,430 -
---------- ----------
Long term liabilities:
Accrued interest-related party 34,521 -
Convertible note payable- related party 5,000,000 -
---------- ----------
Total long term liabilities 5,034,521 -
---------- ----------
Total liabilities 5,048,951 -
---------- ----------
Stockholders' equity (deficit)
Preferred stock, $0.001 par value,
5,000,000 shares authorized, no shares
issued and outstanding - -
Common stock, $0.001 par value,
70,000,000 shares authorized, 13,300,000
and 56,300,000 shares issued and outstanding
as of 12/31/2009 and 12/31/2008, respectively 13,300 56,300
Additional paid-in capital 78,010 25,400
Deficit accumulated during development
stage (169,391) (81,667)
---------- ----------
Total stockholders' equity (deficit) (78,081) 33
---------- ----------
Total liabilities and stockholders' equity
(deficit) $4,970,870 $ 33
========== ==========
The
| Common Stock | Preferred Stock | Additional Paid-in | Other Comprehensive | Accumulated | ||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Loss | Deficit | Total | |||||||||||||||||||||||||
| Beginning balance | - | $ | - | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||||||||
| Common stock issued for cash | 5,555,556 | 5,556 | - | - | 44,444 | - | (45,000 | ) | 5,000 | |||||||||||||||||||||||
| Donated capital | - | - | - | - | 200 | - | - | 200 | ||||||||||||||||||||||||
| Common stock issued for cash | 700,000 | 700 | - | - | 30,800 | - | - | 31,500 | ||||||||||||||||||||||||
| Net loss, period ended December 31, 2007 | - | - | - | - | - | - | (7,507 | ) | (7,507 | ) | ||||||||||||||||||||||
| Balance, December 31, 2007 | 6,255,556 | 6,256 | - | - | 75,444 | - | (52,507 | ) | 29,193 | |||||||||||||||||||||||
| Net loss, year ended December 31, 2008 | - | - | - | - | - | - | (29,160 | ) | (29,160 | ) | ||||||||||||||||||||||
| Balance, December 31, 2008 | 6,255,556 | 6,256 | - | - | 75,444 | - | (81,667 | ) | 33 | |||||||||||||||||||||||
| Donated capital | - | - | - | - | 100 | - | - | 100 | ||||||||||||||||||||||||
| Repurchase of company stock and cancellation | (4,777,778 | ) | (4,778 | ) | - | - | 4,578 | - | - | (200 | ) | |||||||||||||||||||||
| Donated capital | - | - | - | - | 9,710 | - | - | 9,710 | ||||||||||||||||||||||||
| Net loss, year ended December 31, 2009 | - | - | - | - | - | - | (24,036 | ) | (24,036 | ) | ||||||||||||||||||||||
| Balance, December 31, 2009 | 1,477,778 | 1,478 | - | - | 89,832 | - | (105,703 | ) | (14,393 | ) | ||||||||||||||||||||||
| Common stock issued for intangible asset | 23,333,333 | 23,333 | - | - | 2,076,667 | - | - | 2,100,000 | ||||||||||||||||||||||||
| Foreign currency translation | - | - | - | - | - | (411 | ) | - | (411 | ) | ||||||||||||||||||||||
| Net loss, year ended December 31, 2010 | - | - | - | - | - | - | (2,264,478 | ) | (2,264,478 | ) | ||||||||||||||||||||||
| Balance, December 31, 2010 | 24,811,111 | $ | 24,811 | - | $ | - | $ | 2,166,499 | $ | (411 | ) | $ | (2,370,181 | ) | $ | (179,282 | ) | |||||||||||||||
See accompanying notes are an integral part of theseto financial statements.
2
Elemental Protective Coating Corp.
(formerly DBL Senior Care, Inc.statements
F-4
BIO-CARBON SOLUTIONS INTERNATIONAL, INC.
(formerly ELEMENTAL PROTECTIVE COATINGS CORP., INC.)
(a
(A Development Stage Company)
Statements of Operations
Inception
For the years ended (January 17, 2007)
December 31, to December 31, 2009
------------------ --------------------
2009 2008
---- ----
Revenue $ - $ - $ -
-------- ------- ----------
Expenses:
General and administrative
expenses 2,946 1,656 10,494
Amortization expense 29,167 - 29,167
Professional fees 21,090 27,504 50,250
-------- ------- ----------
Total expenses 53,203 29,160 89,911
-------- ------- ----------
Other income (expense):
Other income - - 41
Interest expense (34,521) - (34,521)
-------- ------- ----------
Total other expenses (34,521) - (34,480)
-------- ------- ----------
Net loss $(87,724) $(29,160) $ (124,391)
======== ======== ==========
Weighted average number of
common shares outstanding -
basic 51,338,462 56,300,000
========== ==========
Net loss per common share -
basic $ (0.00) $ (0.00)
========== ==========
The accompanying notes are an integral part of these financial statements.
3
Elemental Protective Coating Corp.
(formerly DBL Senior Care, Inc.)
(a Development Stage Company)
Statement of Stockholders' Equity (Deficit)
Deficit
Accumu-
lated
during Total
the Stock-
Additional Develop- holders'
Common Stock Paid-in ment Equity
Shares Amount Capital Stage (Deficit)
------ ------ ---------- -------- ---------
January 17, 2007
Subscriptions
receivable $0.001
per share 50,000,000 $ 50,000 $ - $ (45,000) 5,000
July 30, 2007
Donated capital - - 200 - 200
August 6, 2007
Private placement
$0.05 per share 6,300,000 6,300 25,200 - 31,500
Net loss - - - (7,507) (7,507)
----------- --------- --------- --------- -------
Balance, December 31,
2007 56,300,000 56,300 25,400 (52,507) 29,193
----------- --------- --------- --------- -------
Net loss - - - (29,160) (29,160)
----------- --------- --------- --------- -------
Balance, December 31,
2008 56,300,000 56,300 25,400 (81,667) 33
----------- --------- --------- --------- -------
April 14, 2009
Donated capital - - 100 - 100
November 19, 2009
Repurchase of company
stock and
cancellation (43,000,000) (43,000) 42,800 - (200)
December 31, 2009
Donated capital - - 9,710 - 9,710
Net loss - - - (87,724) (87,724)
----------- --------- --------- --------- -------
Balance, December 31,
2009 13,300,000 $ 13,300 $ 78,010 $(169,391) $(78,081)
=========== ========= ========== ========= ========
The accompanying notes are an integral part of these financial statements.
4
Elemental Protective Coating Corp.
(formerly DBL Senior Care, Inc.)
(a Development Stage Company)
Statements of Cash Flows
Inception
For the years ended (January 17, 2007)
December 31, to December 31, 2009
------------------ --------------------
2009 2008
---- ----
Operating activities
Net loss $ (87,724) $ (29,160) $ (124,391)
Adjustments to reconcile
net loss to net cash used
in operating activities:
Amortization 29,167 - 29,167
Changes in operating assets
and liabilities:
Increase in accounts
payable 8,430 - 8,430
Increase in accrued interest 34,521 - 34,521
--------- --------- -----------
Net cash (used) by operating
activities (15,606) (29,160) (52,273)
--------- --------- -----------
Financing activities
Donated capital 9,810 - 10,010
Issuances of common stock - - 36,500
Payment on cancelled shares (200) - (200)
Proceeds from notes payable 6,000 - 6,000
--------- --------- -----------
Net cash provided by financing
activities 15,610 - 52,310
--------- --------- -----------
Net increase (decrease) in cash 4 (29,160) 37
Cash - beginning 33 29,193 -
--------- --------- -----------
Cash - ending $ 37 $ 33 $ 37
========= ========= ===========
Supplemental disclosures:
Acquisition of license agreement
through
through debt financing $5,000,000 $ - $ 5,000,000
========== ========= ===========
Income taxes paid $ - $ - $ -
========== ========= ===========
The
| For the period of | ||||||||||||
| January 17, 2007 | ||||||||||||
| Year ended December 31, | (inception) to | |||||||||||
| 2010 | 2009 | December 31, 2010 | ||||||||||
| (Restated) | ||||||||||||
| Cash flows from operating activities | ||||||||||||
| Net loss | $ | (2,264,478 | ) | $ | (24,036 | ) | $ | (2,325,181 | ) | |||
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||||||||
| Impairment loss | 2,100,000 | - | 2,100,000 | |||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Accounts payable and accrued liabilities | 2,806 | 14,430 | 17,236 | |||||||||
| Wages payable | 153,569 | - | 153,980 | |||||||||
| Net cash used in operating activities | (8,103 | ) | (9,606 | ) | (53,965 | ) | ||||||
| Net cash used in investing activities | - | - | - | |||||||||
| Cash flows from financing activities | ||||||||||||
| Proceeds from related party loans | 8,066 | - | 8,066 | |||||||||
| Contributed capital | - | 9,810 | 10,010 | |||||||||
| Proceeds from sale of stock | - | - | 36,500 | |||||||||
| Payment on cancelled shares | - | (200 | ) | (200 | ) | |||||||
| Net cash provided by financing activities | 8,066 | 9,610 | 54,376 | |||||||||
| Effect of exchange rate on cash | - | - | (411 | ) | ||||||||
| (Decrease) increase in cash | (37 | ) | 4 | - | ||||||||
| Cash at beginning of period | 37 | 33 | - | |||||||||
| Cash at end of period | $ | - | $ | 37 | $ | - | ||||||
| Non-Cash Investing Activities | ||||||||||||
| Common stock issued for purchase of intangible asset | $ | 2,100,000 | $ | - | $ | 2,100,000 | ||||||
| Supplemental Cash Flow Information: | ||||||||||||
| Cash paid for interest | $ | - | $ | - | $ | - | ||||||
| Cash paid for income taxes | $ | - | $ | - | $ | - | ||||||
See accompanying notes are an integral part of theseto financial statements.
5
statements
F-5
BIO-CARBON SOLUTIONS INTERNATIONAL, INC.
(formally Elemental Protective CoatingCoatings Corp.
(formerly DBL Senior Care, Inc)
(a, Inc.)
(A Development Stage Company)
Notes to the Financial Statements
December 31, 2010 and 2009
Note 1 - History and organizationNature of the company
Business
The Company was organized January 17, 2007 (Date of Inception) under the laws of the State of Nevada, as DBL Senior Care, Inc. The Company subsequently changed its name on December 11,2009 to Elemental Protective Coatings Corp and most recently on January 27, 2011 to Bio-Carbon Solutions International, Inc. The Company provides specialized advisory and value chain management services to those wishing to participate in the carbon development market. The Company is authorized to issue up to 70,000,000275,000,000 shares of its $0.001 par value common stock and 5,000,000 shares of its $0.001 par value preferred stock. The Company has limited operations and in accordance with FASB ASC 915-10, "Development Stage Entities," the Company is considered a development stage company.
On December 11, 2009, the Company amended its articles of incorporation to
change its name from DBL Senior Care, Inc. to Elemental Protective Coatings
Corp.
The former business of the Company was to provide personal care services to elderly, handicapped or other home-bound individuals suffering infirmity. During the year ended December 31, 2009, the board of directors changed the Company's focus toward the manufacture and sale of fire retardant products.
During January 2011, the Company issued a 1:9 reverse split on its common stock. As this is a reportable subsequent event, the effects of this split are reflected in these financial statements.
Note 2 - Significant Accounting policies and procedures
Year end
The Company has adopted December 31 as its fiscal year end.
Basis of Presentation
The financial statements present the balance sheet, statement of operations,
stockholder's equity (deficit) and cash flows of the Company. The financial
statements of the Company have been prepared in accordance with generally
accepted accounting principles in the United States of America.
Use of estimates
Policies
Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenuerevenues and expenses during the reporting period. Actual results could differ from those estimates.
The Company maintains a cash balance in a non-interest-bearing account that
currently does not exceed federally insured limits.
Cash
For the purposeStatements of the
statements of cash flows,Cash Flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. There were no cash equivalents as of December 31, 2009 and 2008.
6
Note 2 - Accounting policies and procedures (continued)
Concentrations2010 or 2009.
Income taxes
Income taxes are provided for using the liability method of Risks: Cash Balances
The Company maintains its cash in institutions insured by the Federal Deposit
Insurance Corporation (FDIC). This government corporation insured balances up to
$100,000 through October 13, 2008. As of October 14, 2008 all non-interest
bearing transaction deposit accounts at an FDIC-insured institution, including
all personal and business checking deposit accounts that do not earn interest,
are fully insured for the entire amount in the deposit account. This unlimited
insurance coverage is temporary and will remain in effect for participating
institutions until December 31, 2009.
All other deposit accounts at FDIC-insured institutions are insured up to at
least $250,000 per depositor until December 31, 2009. On January 1, 2010, FDIC
deposit insurance for all deposit accounts, except for certain retirement
accounts, will return to at least $100,000 per depositor. Insurance coverage for
certain retirement accounts, which include all IRA deposit accounts, will remain
at $250,000 per depositor.
Revenue recognition
The Company recognizes revenue and gains when earned and related costs of sales
and expenses when incurred.
Loss per share
Net loss per share is providedaccounting in accordance with FASB ASC 260-10, "Earnings per
Share"Topic 740 (formally SFAS No. 109 “Accounting for Income Taxes”). Basic loss per shareA deferred tax asset or liability is computed by dividing losses available to common
stockholders byrecorded for all temporary differences between financial and tax reporting. Temporary differences are the weighted average number of common shares outstanding during
the period. Diluted income (loss) per share gives effect to all dilutive
potential common shares outstanding during the period. Dilutive loss per share
excludes all potential common shares if their effect is anti-dilutive. The
Company had no dilutive common stock equivalents, such as stock options or
warrants as of December 31, 2009 and 2008.
Advertising costs
The Company expenses all costs of advertising as incurred. There were no
advertising costs included in selling, general and administrative expenses at
December 31, 2009 and 2008.
Impairment of long-lived assets
The Company follows the provisions of FASB ASC 360-10 "Property, Plant and
Equipment". Management regularly reviews property, equipment, intangibles and
other long-lived assets for possible impairment. This review occurs annually, on
December 31, or more frequently if events or changes in circumstances indicate
the carrying amount of the asset may not be recoverable. The Company amortizes
its intangible assets with definite lives over their estimated useful lives and
reviews these assets for impairment. The Company will amortize its acquired
intangible assets with definite lives over a period of twenty years.
7
Note 2 - Accounting policies and procedures (continued)
If there is indication of impairment, then management prepares an estimate of
future cash flows expected to result from the use of the asset and its eventual
disposition. If these cash flows are less than the carrying amount of the asset,
an impairment loss is recognized to write down the asset to its estimated fair
value. Management believes that the accounting estimate related to impairment of
its property and equipment, is a "critical accounting estimate" because: (1) it
is highly susceptible to change from period to period because it requires
management to estimate fair value, which is based on assumptions about cash
flows and discount rates; and (2) the impact that recognizing an impairment
would have on the assets reported on our balance sheet, as well as net income,
could be material. Management's assumptions about cash flows and discount rates
require significant judgment because the Company has no historical information
upon which to rely upon to estimate future or ongoing revenues and expenses. The
Company did not incur any impairment expense during the years ended December 31,
2009 and 2008.
Contingencies
The Company is not currently a party to any pending or threatened legal
proceedings. Based on information currently available, management is not aware
of any matters that would have a material adverse effect on the Company's
financial condition, results of operations or cash flows.
Fair value of financial instruments
Fair value estimates discussed herein are based upon certain market assumptions
and pertinent information available to management as of December 31, 2009 and
2008. The respective carrying value of certain on-balance-sheet financial
instruments approximated their fair values. 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.
Income Taxes
The Company follows FASB ASC 740-10, "Income Taxes" for recording the provision
for income taxes. Deferred tax assets and liabilities are computed based upon
the differencedifferences between the financial statement and income tax basisreported amounts of assets and liabilities using the enacted marginaland their tax rate applicablebasis. Deferred tax assets are reduced by a valuation allowance when, the related
asset or liability is expected to be realized or settled. Deferred income tax
expenses or benefits are based on the changes in the asset or liability each
period. If available evidence suggests thatopinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation
allowance is required to reduce the deferredrealized. Deferred tax assets toand liabilities are adjusted for the amount that is
more likely than not to be realized. Futureeffect of changes in tax laws and rates on the date of enactment.
Advertising Costs
Advertising and promotion costs are expensed as incurred. The Company has incurred no such valuation allowance
are included in the provision for deferred income taxes in the period of change.
8
expenses since inception.
F-6
BIO-CARBON SOLUTIONS INTERNATIONAL, INC.
(formerly Elemental Protective Coatings Corp., Inc.)
(A Development Stage Company)
Notes to Financial Statements
December 31, 2010 and 2009
Note 2 - Significant Accounting policiesPolicies (continued)
Revenue Recognition
Revenue is recognized when evidence of an agreement exists, the price is fixed or determinable, goods are delivered or services performed and procedures (continued)
Income Taxes (continued)
Deferred income taxes may arise from temporary differences resulting from income
and expense items reported for financial accounting and tax purposes in
different periods. Deferred taxes are classified as current or non-current,
depending on the classification of assets and liabilities to which they relate.
Deferred taxes arising from temporary differences that are not related to an
asset or liability are classified as current or non-current depending on the
periods in which the temporary differences are expected to reverse.
The Company does not anticipate any significant changes to its total
unrecognized tax benefits with the next twelve months.
General and administrative expenses
The significant components of general and administrative expenses consist of
outside services, office supplies, postage, and bank service fees.
Dividendscollectibility is reasonably assured. The Company has not recognized any revenue since its inception.
Share Based Expenses
The Company complies with FASB ASC Topic 718 Compensation—Stock Compensation, which establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. FASB ASC Topic 718 primarily focuses on accounting for transactions in which an entity obtains employee services in share-based payment transactions. This statement requires a public entity to expense the cost of employee services received in exchange for an award of equity instruments. This statement also provides guidance on valuing and expensing these awards, as well as disclosure requirements of these equity arrangements. The Company adopted any policy regarding paymentFASB ASC Topic 718 upon formation of dividends. No
dividends have been paid or declared since inception. For the foreseeable
future,company and expenses share based costs in the period incurred.
Going concern
The Company’s financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern. This contemplates the realization of assets and the liquidation of liabilities in the normal course of business. Currently, the Company intendshas minimal cash and no material assets, nor does it have operations or a source of revenue sufficient to retain any earningscover its operation costs and allow it to finance the development
and expansion of its business and it does not anticipate paying any cash
dividends on its common stock. Any future determination to pay dividends will be
at the discretion of the Board of Directors andcontinue as a going concern. The Company will be dependent upon then
existing conditions, including the Company's financial condition and resultsraising of operations,additional capital requirements, contractual restrictions,through placement of our common stock in order to implement its business prospects
and other factorsplan, or merge with an operating company. There can be no assurance that the boardCompany will be successful in either situation in order to continue as a going concern. The officers and directors have committed to advancing certain operating costs of directors considers relevant.
Recentthe Company.
Valuation of Investments in Securities and Securities at fair value – Definition and Hierarchy
Effective January 1, 2008, the Company adopted FASB ASC 820-10-15, Fair Value Measurements. This Statement defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. It applies to other accounting pronouncements In June 2009,where the Financial Accounting Standards Board ("FASB"(“FASB”) requires or permits fair value measurements but does not require any new fair value measurements. The Company had adopted FASB ASC 820-10-15, which had deferred the effective date for the disclosure of fair value measurements related to nonfinancial assets and nonfinancial liabilities to fiscal years beginning after November 15, 2008. The adoption of FASB ASC 820-10-15 did not have any material impact on the Company’s financial statements.
F-7
BIO-CARBON SOLUTIONS INTERNATIONAL, INC.
(formerly Elemental Protective Coatings Corp., Inc)
(A Development Stage Company)
Notes to Financial Statements
December 31, 2010 and 2009
Note 2 - Significant Accounting Policies (continued)
Valuation of Investments in Securities and Securities at fair value – Definition and Hierarchy
FASB ASC 820-10-15 defines fair value, thereby eliminating inconsistencies in guidance found in various prior accounting pronouncements, and increases disclosures surrounding fair value calculations. FASB ASC 820-10-15 establishes a three-tiered fair value hierarchy that prioritizes inputs to valuation techniques used in fair value calculations. The three levels of inputs are defined as follows:
Level 1 – unadjusted quoted prices for identical assets or liabilities in active markets accessible by the Company at the measurement date.
Level 2 – inputs that are observable in the marketplace other than those inputs classified as Level 1
Level 3 – inputs that are unobservable in the marketplace and significant to the valuation
FASB ASC 820-10-15 requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs. If a financial instrument uses inputs that fall in different levels of the hierarchy, the instrument will be categorized based upon the lowest level of input that is significant to the fair value calculation.
Valuation Techniques
The Company values investment in securities that are freely tradable and are listed on a national securities exchange or reported on the NASDAQ national market at their last sales price as of the last business day of the year. At December 31, 2010 and 2009 the Company had no investments classified as securities owned on the balance sheet that were classified as Level 1 investments.
Recent Accounting Pronouncements
In October 2009, the FASB approved for issuance Emerging Issues Task Force (“EITF”) issue 08-01, Revenue Arrangements with Multiple Deliverables. This statement provides principles for allocation of consideration among its multiple-elements, allowing more flexibility in identifying and accounting for separate deliverables under an arrangement. The EITF introduces an estimated selling price method for valuing the elements of a bundled arrangement if vendor-specific objective evidence or third-party evidence of selling price is not available, and significantly expands related disclosure requirements. This standard is effective on a prospective basis for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Alternatively, adoption may be on a retrospective basis, and early application is permitted. The Company does not expect the adoption of this statement to have a material effect on its financial statements or disclosures.
In August 2009, the FASB issued Accounting Standards Update No. 2009-05, Measuring Liabilities at Fair Value, (“ASU 2009-05”). ASU 2009-05 provides guidance on measuring the fair value of liabilities and is effective for the first interim or annual reporting period beginning after its issuance. The Company’s adoption of ASU 2009-05 did not have an effect on its disclosure of the fair value of its liabilities.
F-8
BIO-CARBON SOLUTIONS INTERNATIONAL, INC.
(formerly Elemental Protective Coatings Corp., Inc)
(A Development Stage Company)
Notes to Financial Statements
December 31, 2010 and 2009
Note 2 - Significant Accounting Policies (continued)
Recent Accounting Pronouncements (continued)
In December 2007, the FASB issued FASB ASC 105-10, "Generally Accepted Accounting Principles."805-10-10, Business Combinations. FASB ASC 105-10 sets forth805-10-10 replaces SFAS 141 and establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the level of authority to a given accounting pronouncement or document by
category. Where there might be conflicting guidance between two categories,identifiable assets acquired, the more authoritative category will prevail.liabilities assumed, any non-controlling interest in the acquiree and the goodwill acquired. FASB ASC 105-10805-10-10 also establishes disclosure requirements which will enable users to evaluate the nature and financial effects of the business combination. Acquisition costs associated with the business combination will generally be expensed as incurred. FASB ASC 805-10-10 is effective for business combinations occurring in the fiscal years beginning on or after December 15, 2008. The adoption of FASB ASC 805-10-10 did not have a significant impact on our financial position, results of operations or cash flows.
In December 2007, FASB issued FASB ASC 810-10-65, Noncontrolling Interests in Consolidated Financial Statements, an amendment of FASB ASC 810-10-10, which changes the accounting and reporting for minority interests. Minority interests will be re-characterized as noncontrolling interests and will be reported as a component of equity separate from the parent’s equity, and purchases or sales of equity interests that do not result in a change in control will be accounted for as equity transactions. In addition, net income attributable to the noncontrolling interest will be included in consolidated net income on the face of the income statement and, upon a loss of control, the interest sold, as well as any interest retained, will be recorded at fair value with any gain or loss recognized in earnings. FASB ASC 810-10-65 is effective for financial statements issued for reporting periods that endfiscal years beginning on or after SeptemberDecember 15, 2009.
2008 and will apply prospectively, except for the presentation and disclosure requirements, which will apply retroactively. The adoption of FASB ASC 810-10-65 did not have a significant impact on our consolidated financial position, results of operations or cash flows.
In June 2009,March 2008, the Financial Accounting Standards Board ("FASB")FASB issued FASB ASC 810-10, "Consolidation". The amendments include: (1) the elimination815-10-15, Disclosures about Derivative Instruments and Hedging Activities-an amendment of the
exemptionFASB ASC 815-10-05. This new standard requires enhanced disclosures for qualifying special purpose entities, (2) a new approach for
determining who should consolidate a variable-interest entity, and (3) changes
to when it is necessary to reassess who should consolidate a variable-interest
entity. SFAS 167derivative instruments, including those used in hedging activities. FASB ASC 815-10-15 is effective for the first annual reporting periodperiods beginning after November 15, 20092008 and for interim periods within that first annual
reporting period.those fiscal years. The Company will adopt FASB ASC 810-10 in fiscal 2010. The
Company does not expect that the adoption of FASB ASC 810-10 will815-10-15 did not have a materialsignificant impact on theour financial statements.
9
Note 2 - Accounting policies and procedures (continued)
position, results of operations or cash flows.
In JuneApril 2009, the Financial Accounting Standards Board ("FASB")FASB issued FASB ASC 860-10, "Transfers820-10-65, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Servicing", which eliminates the concept of a
"qualifying special-purpose entity," changes the requirements for derecognizing
financial assets, and requires additional disclosures in order to enhance
information reported to users of financial statements by providing greater
transparency about transfers of financial assets, including securitization
transactions, and an entity's continuing involvement in and exposure to the
risks related to transferred financial assets.Identifying Transactions That Are Not Orderly. FASB ASC 860-10820-10-65 provides guidance for determining when a transaction is not orderly and for estimating fair value in accordance with FASB ASC 820-10-05, Fair Value Measurements, when there has been a significant decrease in the volume and level of activity for an asset or liability. FASB ASC 820-10-65 does not change the measurement objective of FASB ASC 820-10-05 which is “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” FASB ASC 820-10-65 shall be effective for fiscal years beginninginterim and annual reporting periods ending after NovemberJune 15, 2009.2009, and shall be applied prospectively. The Company will adopt FASB ASC
860-10 in fiscal 2010. The Company does not expect that the adoption of FASB ASC 860-10 will820-10-65 did not have a materialsignificant impact on theour financial statements.
position, results of operations or cash flows.
F-9
BIO-CARBON SOLUTIONS INTERNATIONAL, INC.
(formerly Elemental Protective Coatings Corp., Inc)
(A Development Stage Company)
Notes to Financial Statements
December 31, 2010 and 2009
Recent Accounting Pronouncements (continued)
In JuneApril 2009, the Financial Accounting Standards Board ("FASB")FASB issued FASB ASC 855-10 "Subsequent Events,"320-10-65, Recognition and Presentation of Other-Than-Temporary Impairments. FASB ASC 855-10 establishes general standards320-10-65 modifies the existing other-than-temporary impairment guidance to require the recognition of accountingan other-than-temporary impairment when an entity has the intent to sell a debt security or when it is more likely than not an entity will be required to sell the debt security before its anticipated recovery. FASB ASC 320-10-65 shall be effective for interim and disclosureannual reporting periods ending after June 15, 2009. The adoption of FASB ASC 320-10-65 did not have a significant impact on our financial position, results of operations or cash flows.
In April 2009, the FASB issued FASB ASC 825-10-65, Interim Disclosures about Fair Value of Financial Instruments. FASB ASC 825-10-65 amends FASB Statement No. 107, Disclosures about Fair Value of Financial Instruments, to require fair value of financial instrument disclosures whenever a publicly traded company issues financial information in interim reporting periods in addition to the annual disclosures at year-end. The provisions of FASB ASC 825-10-65 are effective for interim periods ending after June 15, 2009. The adoption of FASB ASC 825-10-65 did not have a significant impact on our financial position, results of operations or cash flows.
In May 2009, the FASB issued FASB ASC 855-10-15, Subsequent Events. This Statement requires entities to recognize in the financial statements the effects of all subsequent events that occur afterprovide additional evidence about conditions that existed at the date of the balance sheet, date
but beforeincluding estimates inherent in the process of preparing financial statements are issued or are available(“recognizable subsequent events”). This Statement also requires entities to be issued.disclose the date through which subsequent events have been evaluated and the nature and estimated financial effects of certain subsequent events. FASB ASC 855-10 applies to both interim financial statements and annual financial
statements. FASB ASC 855-10 was855-10-15 is effective for interim or annual financial periods ending after June 15, 2009. The adoption of FASB ASC 855-10855-10-15 did not have a significant impact on our financial statements.
In June 2009, the FASB issued FASB ASC 105-10-65, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, a replacement of SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles. The Statement establishes the FASB Accounting Standards Codification (“Codification”) as the single source of authoritative accounting principles recognized by the FASB in the preparation of financial statements in conformity with U.S. GAAP. This Statement is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The adoption of ASC 105-10-65 did not have a material impact on our financial statements.
In June 2009, the FASB issued SFAS No. 166, Accounting for Transfers of Financial Assets, an Amendment of FASB ASC 860-10-1 (“SFAS 166”). This Statement improves the relevance, representational faithfulness and comparability of the information that a reporting entity provides in its financial statements about a transfer of financial assets; the effects of a transfer on its financial position, financial performance, and cash flows; and a transferor’s continuing involvement, if any, in transferred financial assets. This statement is effective for interim and annual reporting periods beginning after November 15, 2009, and is not expected to have a material impact on our financial statements.
F-10
BIO-CARBON SOLUTIONS INTERNATIONAL, INC.
(formerly Elemental Protective Coatings Corp., Inc)
(A Development Stage Company)
Notes to Financial Statements
December 31, 2010 and 2009
Note 2 – Significant Accounting Policies (continued)
Recent Accounting Pronouncements (continued)
In June 2009, the FASB issued SFAS No. 167, Amendments to FASB ASC 810-10-15 (“SFAS 167”). This statement which eliminates exceptions to consolidating qualifying special purpose entities, contains new criteria for determining the primary beneficiary, and increases the frequency of required reassessments to determine whether a company is the primary beneficiary of a variable interest entity. This Statement clarifies, but does not significantly change, the characteristics that identify a variable interest entity. This Statement is effective for fiscal years and interim periods beginning after November 15, 2009, and is not expected to have a material impact on our financial statements
None of the above new pronouncements has current application to the Company, but may be applicable to the Company’s future financial reporting.
Net loss per common share
Net loss per share is calculated in accordance with FASB ASC Topic 260 (formerly SFAS No. 128, Earnings Per Share). The weighted-average number of common shares outstanding during each period is used to compute basic loss per share. Diluted loss per share is computed using the weighted average number of shares and dilutive potential common shares outstanding. Dilutive potential common shares are additional common shares assumed to be exercised. Basic net loss per common share is based on the weighted average number of shares of common stock outstanding during the periods presented. The Company has two notes payable outstanding which can be converted to common shares. These currently do not have an impact on the weighted average shares outstanding calculation as they are considered anti-dilutive.
Foreign Currency Translation
The Company maintains a limited number of accounts in the Canadian dollar (CAD), while the Company’s reporting currency is the U.S. dollar (USD). All transactions initiated in Canadian dollars are translated into U.S. dollars in accordance with ASC 830, "Foreign Currency Translation" as follows:
i) Monetary assets and liabilities at the rate of exchange in effect at the balance sheet date.
ii) Equity at historical rates.
iii) Revenue and expense items at the average rate of exchange prevailing during the period.
Adjustments arising from such translations are deferred until realization and are included as a separate component of stockholders’ equity as a component of comprehensive income or loss. Therefore, translation adjustments are not included in determining net income (loss) but reported as other comprehensive income.
For foreign currency transactions, the Company translates these amounts to the Company’s functional currency at the exchange rate effective on the invoice date. If the exchange rate changes between the time of purchase and the time actual payment is made, a foreign exchange transaction gain or loss results which is included in determining net income for the period. The exchange rates used are as follows:
| 12/31/2010 | 12/31/2009 | |||||||
| Period end: CAD to USD | 0.9998 | 0.95320 | ||||||
| Average for period: CAD to USD | 0.9705 | 0.88029 | ||||||
F-11
BIO-CARBON SOLUTIONS INTERNATIONAL, INC.
(formerly Elemental Protective Coatings Corp., Inc)
(A Development Stage Company)
Notes to Financial Statements
December 31, 2010 and 2009
Note 3 - Going concern
Stockholders’ Equity
Common stock
The Company's financial statements are prepared using generally accepted
accounting principles in the United States of America applicable to a going
concern which contemplates the realization of assets and liquidation of
liabilities in the normal course of business. The Company has not yet
established an ongoing source of revenues sufficient to cover its operating
costs and allow it to continue as a going concern. The Company had an
accumulated deficit of $169,391 as of December 31, 2009. The abilityauthorized common stock of the Company to continue asconsists of 275,000,000 shares with a going concern is dependent on the Company obtaining
adequate capital to fund operating losses until it becomes profitable. If the
Company is unable to obtain adequate capital, it could be forced to cease
operations.
In order to continue as a going concern, the Company will need, among other
things, additional capital resources.par value of $0.001. The Company is contemplating conducting an
offering of its debt or equity securities to obtain additional operating
capital. The Company is dependent upon its ability, and will continue to
attempt, to secure equity and/or debt financing. There are no assurances that
the Company will be successful and without sufficient financing it would be
unlikely for the Company to continue as a going concern.
The abilityauthorized preferred stock of the Company to continue asconsists of 5,000,000 shares with a going concern is dependent upon its
ability to successfully accomplish the plans described in the preceding
paragraph and eventually secure other sourcespar value of financing and attain profitable
operations. 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.
10
Note 4 - Reclassification: Stock Split Adjustment
Certain reclassifications have been made in the current year's financial
statements.
$0.001.
Share Issuances
On July 7, 2009, the Board of Directors authorized and a majority of the stockholders of the Company ratified a forward stock split on a ten-for-one basis, resulting in a total of ten post-split shares for each pre-split share that was outstanding as of July 24, 2009. All references to share and per share information in the condensed financial statements and related notes have been adjusted to reflect the stock split on a retroactive basis. (See Note 7 for more
information regarding the stock split).
Note 5 - Intangible Assets
The Company amortizes its acquired intangible assets with definite lives over a
period of 20 years. The following table summarizes the components of gross and
net intangible asset balances as of December 31, 2009 and 2008:
On November 19, 2009, the Company entered into an Assignment of Contract Rights
with MSE Enviro-Tech Corp., a related party, whereby the Company obtained
certain exclusive and non-exclusive rights pertaining to various products and
technologies. As of December 31, 2009, the Company did not conduct an impairment
evaluation on the newly acquired asset. Being the recentness of the transaction,
the Company is still evaluating the economic life of the asset. The Company
intends to review the carrying amount of the intangible asset on December 31,
2010, or sooner if circumstances warrant.
11
Note 6 - Income taxes
For the years ended December 31, 2009 and 2008, the Company incurred net
operating losses and, accordingly, no provision for income taxes has been
recorded. In addition, no benefit for income taxes has been recorded due to the
uncertainty of the realization of any tax assets. At December 31, 2009 and 2008,
the Company had approximately $169,391 and $81,667 of federal and state net
operating losses. The net operating loss carryforwards, if not utilized, will
begin to expire in 2027. The provision for income taxes consisted of the
following components for the year ended December 31:
Components of net deferred tax assets, including a valuation allowance, are as
follows at December 31:
December 31,
2009 2008
-------------------------
Deferred tax assets:
Net operating loss carryforwards 59,287 28,583
Valuation allowance (59,287) (28,583)
------- -------
Total deferred tax asse $ -0- $ -0-
======== =======
The valuation allowance for deferred tax assets as of December 31, 2009 and 2008
was $59,287 and $28,583, respectively. In assessing the recovery of the deferred
tax assets, management considers whether it is more likely than not that some
portion or all of the deferred tax assets will not be realized. The ultimate
realization of deferred tax assets is dependent upon the generation of future
taxable income in the periods in which those temporary differences become
deductible. Management considers the scheduled reversals of future deferred tax
liabilities, projected future taxable income, and tax planning strategies in
making this assessment. As a result, management determined it was more likely
than not the deferred tax assets would not be realized as of December 31, 2009
and 2008, and recorded a full valuation allowance.
Reconciliation between the statutory rate and the effective tax rate is as
follows at December 31, 2009:
2009 & 2008
Federal statutory tax rate (35.0)%
Permanent difference and other 35.0 %
12
Note 7 - Debt obligations
On February 22, 2009 and March 15, 2009, the Company issued two notes payable of
$2,500 and $3,500, respectively, for an aggregate amount of $6,000. The notes
were issued to one non-affiliated entity, bear no interest, and are due on
demand. As of December 31, 2009, the balance due is $6,000.
During the year ended December 31, 2009, the Company issued a note payable in
the aggregate amount of $540 from one non-affiliated entity. The note bears no
interest and was due on demand. On December 31, 2009, the note holder forgave
the entire amount payable; thus as of December 31, 2009, $0 was due on these
notes.
Through the year ended December 31, 2009, the Company issued a note payable to
one non-affiliated person in the aggregate amount of $9,170. The note bears no
interest and was due on demand. On December 31, 2009, the note holder forgave
the entire balance owed; thus as of December 31, 2009, $0 was due on these
notes.
On November 19, 2009, the Company issued a Convertible Promissory Note in the
principal amount of $5,000,000 a related party entity, in exchange for the
assignment of certain contractual rights with the note holder. The principal
amount and interest accrued are due on November 16, 2011, bears an interest rate
of 6% per annum and contains no prepayment penalty. The note holder may convert
any portion of the unpaid principal balance, and interest accrued thereupon at
the time of such conversion, into shares of common stock at the rate of $0.25
per share. The Company believes the fair market value for its common stock is
$0.25 per share, and thus there exists no beneficial conversion feature on the
note. (See Note 10 for more information concerning the Assignment).
Note 8 - Stockholders' equity (deficit)
The Company is authorized to issue 70,000,000 shares of its $0.001 par value
common stock and 5,000,000 shares of its $0.001 par value preferred stock.
On July 7, 2009, the Board of Directors authorized and a majority of the
stockholders of the Company ratified a forward stock split on a ten-for-one
basis, resulting in a total of ten post-split shares for each pre-split share
that was outstanding as of July 24, 2009. All references to share and per share
information in the condensed financial statements and related notes have been
adjusted to reflect the stock split on a retroactive basis.
On January 17, 2007, the Company issued 50,000,000 shares of its par value common stock as founders' shares to two officers and directors in exchange for a subscription receivable in the amount of $5,000. The subscription receivable was satisfied on February 2, 2007, with a cash payment of $5,000.
13
Note 8 - Stockholders' equity (deficit) (continued)
On July 30, 2007, an officer and director of the Company donated cash in the
amount of $200. The entire amount was donated, is not expected to be repaid and
is considered to be additional paid-in capital.
On August 6, 2007, the Company issued an aggregate of 6,300,000 shares of its $0.001 par value common stock for total cash of $31,500 in a private placement pursuant to Regulation D, Rule 505, of the Securities Act of 1933, as amended.
On April 14, 2009, an officer and director of the Company donated cash in the
amount of $100. The entire amount was donated, is not expected to be repaid and
is considered to be additional paid-in capital.
On November 19, 2009, the Company repurchased and cancelled 43,000,000 shares of its common stock from two of its founding shareholders.
On December 31, 2009, a non-affiliated entity forgave the entire balance of a
note payable in the amount of $540. The forgiven amount is considered to be
additional paid-in capital.
On December 31, 2009, a non-affiliated individual forgave the entire balance of
a note payable in the amount of $9,170. The forgiven amount is considered to be
additional paid-in capital.
As of December 31, 2009, there have been no other issuances of common stock.
Note 9 - Warrants and options
As of December 31, 2009 and 2008, there were no warrants or options outstanding
to acquire any additional shares of common stock.
Note 10 - Commitments and contingencies
On November 19, 2009, the Company entered into an Assignment of Contract Rights
with MSE Enviro-Tech Corp., a related party, whereby the Company obtained
certain exclusive and non-exclusive rights to manufacture, sell, share, license
or otherwise distribute the products and technologies pertaining to various fire
extinguishing and inhibiting products. In exchange,8, 2010, the Company issued a
convertible note payable in the principal amount of $5,000,000. The principal
amount and interest accrued have a maturity date of November 16, 2011, bears an
interest rate of 6% per annum and contains no prepayment penalty. The note
holder may convert any portion of the unpaid principal balance, and interest
accrued thereupon at the time of such conversion, into shares of common stock at
the rate of $0.25 per share. The Company believes the fair market value for its
common stock is $0.25 per share, and thus there exists no beneficial conversion
feature on the note.
14
Note 11 - Related party transactions
On January 17, 2007, the Company issued 50,000,000 shares of its par value
common stock as founders' shares to two officers and directors in exchange for a
subscription receivable in the amount of $5,000. The subscription receivable was
satisfied on February 2, 2007, with a cash payment of $5,000.
On July 30, 2007, an officer and director of the Company donated cash in the
amount of $200. The entire amount was donated, is not expected to be repaid and
is considered to be additional paid-in capital.
On April 14, 2009, an officer and director of the Company donated cash in the
amount of $100. The entire amount was donated, is not expected to be repaid and
is considered to be additional paid-in capital.
On November 19, 2009, the Company repurchased and cancelled 43,000,000210,000,000 shares of its common stock from twoto purchase software technology valued at $2,100,000.
There were 24,811,111 common shares issued and outstanding at December 31, 2010.
Note 4 - Income Taxes
We did not provide any current or deferred U.S. federal income tax provision or benefit for any of its founding shareholders.
On November 19, 2009,the periods presented because we have experienced operating losses since inception. Pursuant to FASB ASC Topic 740, when it is more likely than not that a tax asset cannot be realized through future income, the Company entered intomust allow for this future tax benefit. We provided a full valuation allowance on the net deferred tax asset, consisting of net operating loss carry-forwards, because management has determined that it is more likely than not that we will not earn income sufficient to realize the deferred tax assets during the carry-forward period.
The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income before provision for income taxes. The sources and tax effects of the differences for the periods presented are as follows:
F-12
BIO-CARBON SOLUTIONS INTERNATIONAL, INC.
(formally Elemental Protective Coatings Corp., Inc)
(A Development Stage Company)
Notes to Financial Statements
December 31, 2010 and 2009
Note 4 - Income Taxes (continued)
December 31, 2010 | December 31, 2009 | |||||||
| Net operating loss carry forward | $ | 2,370,181 | $ | 105,703 | ||||
| Valuation allowance | (2,370,181 | ) | (105,703 | ) | ||||
| Net deferred tax asset | $ | - | $ | - | ||||
This represents an Assignmentincrease in both the net operating loss carry forward and the valuation allowance of Contract Rights
with MSE Enviro-Tech Corp.,$2,254,478 and $24,036 for the years ended December 31, 2010 and 2009. A reconciliation of income taxes computed at the 35% statutory rate to the income tax recorded is as follows:
December 31, 2010 | December 31, 2009 | |||||||
| Tax at statutory rate (35%) | $ | 829,563 | $ | 36,996 | ||||
| Increase in valuation allowance | (829,563 | ) | (36,996 | ) | ||||
| Net deferred tax asset | $ | - | $ | - | ||||
This represents an increase of $792,567 and $8,413 for the years ended December 31, 2010 and 2009. The Company did not pay any income taxes during the years ended December 31, 2010 or 2009 or since inception.
The net federal operating loss carry forward will expire in 2026. This carry forward may be limited upon the consummation of a related party, wherebybusiness combination under IRC Section 381.
Note 5 - Related Party Transactions
During the year ended December 31, 2010, the Company obtained
certain exclusivereceived loans from its officers totaling $8,066 to fund operations. These loans are non-interest bearing, are due on demand and non-exclusive rightsas such included in current liabilities. Imputed interest has been considered, but determined to manufacture, sell, share, license
or otherwise distribute the products and technologies pertaining to various fire
extinguishing and inhibiting products. In exchange, the Company issued a
convertible note payable in the principal amount of $5,000,000. The note has a
maturity date of November 16, 2011, bears an interest rate of 6% per annum and
contains no prepayment penalty. The note holder may convert any portion of the
unpaid principal balance, and interest accrued thereupon at the time of such
conversion, into shares of common stock at the rate of $0.25 per share. The
Company believes the fair market value for its common stock is $0.25 per share,
and thus there exists no beneficial conversion feature on the note.
The Company does not lease or rent any property. Office services are provided
without charge by an officer and director of the Company. Such costs arebe immaterial to the financial statements as a whole.
Note 6 – Restatement
The Company’s 2009 balance sheet, statement of operations and accordingly, have notstatement of cash flows has been reflected
therein. The officersrestated to reflect the amortization and directorsinterest expense incurred on an intangible asset and related note payable. This note was cancelled in 2010 due to non-delivery by the party owning the technology. This also resulted in the cancellation of the related intangible asset. The effects of the restatement are as follows:
F-13
BIO-CARBON SOLUTIONS INTERNATIONAL, INC.
(formally Elemental Protective Coatings Corp., Inc)
(A Development Stage Company)
Notes to Financial Statements
December 31, 2010 and 2009
Note 6 – Restatement (continued)
| Originally Reported | Restated | Change | ||||||||||
| Balance Sheet | ||||||||||||
| Intangible asset | $ | 4,970,833 | $ | 5,000,000 | $ | 29,167 | ||||||
| Accrued interest | 34,521 | - | (34,521 | ) | ||||||||
| Accumulated deficit | (169,391 | ) | (105,703 | ) | 63,688 | |||||||
| Statement of Operations | ||||||||||||
| Amortization | 29,167 | - | (29,167 | ) | ||||||||
| Interest expense | 34,521 | - | (34,521 | ) | ||||||||
| Net loss | (87,724 | ) | (24,036 | ) | 63,688 | |||||||
| Statement of Cash Flows | ||||||||||||
| Cash used in operating activities | (15,606 | ) | (15,606 | ) | - | |||||||
| Cash provided by investing activities | - | - | - | |||||||||
| Cash provided by financing activities | 15,610 | 15,610 | - | |||||||||
Note 7 – Impairment Loss
During the year ended December 31, 2010, the Company are involvedissued 23,333,333 shares of its common stock in otherexchange for technology vital to its business activitiesplan. The Company performed an impairment test on the value of this asset as of December 31, 2010 and may,determined its value to be impaired based on the undeterminable amount of future benefit expected to be received. As such, the value of the intangible asset as been impaired reflecting a $2,100,000 loss in the future, become involved in other business
opportunities. If a specific business opportunity becomes available, such
persons may face a conflict in selecting betweenstatement of operations for the year ended December 31, 2010.
Note 8 – Subsequent Events
On January 14, 2011, the Company and their other
business interests. The Company has not formulatedentered into a policy forLicense Agreement with 1776729 Ontario Corporation (the “1776729 License”), a privately owned corporation registered under the resolutionLaws of such conflicts.
15
Note 12 -Subsequent Events
The Company has evaluated subsequent events through April 8, 2010, the date
which the financial statements were available to be issued. The Company has
determined that there were no such events that warrant disclosure or recognition
in the financial statements.
16
SIGNATURES
In accordance with Section 13 or 15(a) of the Exchange Act, the Registrant
has caused this Report to be signed on its behalf by the undersigned, thereunto
duly authorized on the 30th day of March 2010.
ELEMENTAL PROTECTIVE COATINGS CORP.
By:/s/ Gilles Trahan
------------------------------------
Gilles Trahan, President and Principal
Executive Officer
By: /s/ Martin Baldwin
------------------------------------
Martin Baldwin, Principal Financial and
Accounting OfficerOntario. Pursuant to the requirements1776729 License, the Company was granted an exclusive, non-transferable, and irrevocable right to develop and commercialize certain intellectual property that will be used in developing carbon credits from forested lands. The intellectual property consists of knowledge pertaining to the registration of carbon offsets or carbon credits from the biological carbon pools contained in ecosystems (mainly forest ecosystems). Carbon assets can then be conveyed into a new form of security, termed carbon credits, which are bought by carbon emitters who are compelled to reduce their carbon emissions through legislation, or carbon emitters who may voluntarily engage in carbon trading for the purpose of increasing their environmental stewardship or for publicity purposes. Under the 1776729 License the Company must pay a royalty of 6 % of its gross annual sales to 1776729. In addition, the Company has agreed to pre-pay the royalty on the first $15,000 of revenue to be earned under the 1776729 License, which will be paid by the issuance of 5,000,000 of the Securities ActCompany’s Common Stock to 1776729 Ontario Corporation (Such stocks were exempted from the reverse stock split effected on January 11, 2011). This permitted the Company to further advance business activities by providing carbon development services as well as carbon development of l934, this Reportits own projects under plans in addition to carbon accounting services (see Section 2.02).
F-14
BIO-CARBON SOLUTIONS INTERNATIONAL, INC.
(formerly Elemental Protective Coatings Corp., Inc)
(A Development Stage Company)
Notes to Financial Statements
December 31, 2010 and 2009
Note 8 – Subsequent Events (continued)
On January 17, 2011, the Company entered into a Carbon Development Agreement (“CDA”) with Basia Holdings, Inc. (“Basia”), a privately held company incorporated in the State of Tennessee. Under the Basia CDA, the Company has acquired exclusive and irrevocable rights to the development of carbon credit potential on a 9,000 acre parcel of heavily forested land in Grundy County, Tennessee from which coal exploitation is possible. In the short term, the Company plans to create a business plan for generating carbon offsets from the Basia property’s trees, and/or generating revenues from logging using existing voluntary carbon registries such as the Voluntary Carbon Standards Registry (www.v-c-s.org). Further, under the Basia CDA, the Company will pursue the development and sales of carbon credits from the forested land, and form the possible exploitation of coal; methane emitted from coal mines has 23 times the greenhouse warming potential of carbon dioxide. By capturing the methane and either flaring it, or using it in power application, significant amounts of carbon offsets can be generated. Developing carbon offset projects through flaring has been signed belowexemplified in the United Nations Framework Convention Climate Change (UNFCCC) approved consolidated methodology ACM0008 Version 6 issued 25 March 2009 titled “Consolidated methodology for coal bed methane, coal mine methane and ventilation air methane capture and use for power (electrical or motive) and heat and/or destruction through flaring or flameless oxidation”.
On February 1, 2011 the Company entered into a Carbon Development Agreement with Sierra Gold Corp (OTC Pinkseets: SGCP) for the purpose of providing technical services for the development of a Project Design Document for the registration of carbon offsets from forestry activities (conservation and afforestation) from 42,000 acres of lands in Sierra Leone in Africa. Pursuant to the Carbon Development Agreement the Company shall retain 10% of the net profits from the sales of the carbon credits, if or when they are realized.
On February 17, 2011 the Company entered into a Memorandum of Understanding with Genesys International, a company based in India with business activities in outsourcing in various computer technologies. Under the Memorandum of Understanding the Companies shall discuss Agreements in co-marketing activities and assess joint carbon development opportunities in India.
On January 27, 2011, the Company changed its name to Bio-Carbon Solutions International, Inc to better represent is planned business activities.
Also on January 27, 2011, the Company authorized a 1:9 reverse stock split decreasing the number of common shares issued and outstanding from 223,300,000 to 24,811,111.
On March 25, 2011, Mr. Robert G. Cormier resigned as Chief Operating Officer and director of the Corporation to pursue other interests.
On March 27, 2011. The Corporation entered into a Memorandum of Agreement with Grid Cloud Solutions Inc (Pink: GRDC) to offer services for carbon accounting and trading for the clients of Grid Cloud Solutions Inc. Grid Cloud Solutions offers energy saving management service to various industrial and commercial clients. Under the Agreement the Corporation will offer carbon services to the clients of Grid Cloud Solutions Inc in exchange for 50% of the revenues generated.
On March 29, 2011, the Corporation revised stock options granted to Mr. John Wilkes, Mr. Robert G Cormier and Mr. Luc C Duchesne, as directors and officers of the Corporation. More particularly, the options granted to these individuals were at a strike price of $0.03 whereas the market value post the reverse split was $0.34 per share. In light of this pricing being in-the-money, management decided that the options granted to these individuals were not in the best interest of the shareholders and consequently revised the options granted to a strike price of $0.75 per share with an expiration date of December 31, 2012. The strike price of these options was approved by the following persons on behalfBoard of the Registrant and in the
capacities and on the dates indicated.
Title Date
/s/ Gilles Trahan
- ------------------------
Gilles Trahan Director March 30, 2010
/s/ Martin Baldwin
- ------------------------
Martin Baldwin Director March 30, 2010
ELEMENTAL PROTECTIVE COATINGS CORP.
REPORT ON FORM 10-K
EXHIBITS
Directors as $0.75 per share with an expiration date of December 31, 2012.
F-15