The accompanying notes are an integral part of the financial statements.
ECO GLOBAL CORPORATION
(FORMERLY DRIVER PASSPORT, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2009 AND 2008
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
GENERAL
The unaudited financial statements included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The financial statements and notes are presented as permitted on Form 10-Q and do not contain information included in the Company’s annual statements and notes. Certain information and footnote disclosure normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these financial statements be read in conjunction with the December 31, 2008 10-K and audited financial statements and the accompanying notes thereto. While management believes the procedures followed in preparing these financial statements are reasonable, the accuracy of the amounts are in some respects dependent upon the facts that will exist, and procedures that will be accomplished by the Company later in the year.
These unaudited financial statements reflect all adjustments, including normal recurring adjustments which, in the opinion of management, are necessary to present fairly the operations and cash flows for the periods presented.
Driver Passport, Inc. (“Driver Passport”) was incorporated on December 7, 2005 to be effective January 1, 2006 as a North Dakota corporation.
On January 1, 2006, Driver Passport issued 25,500,000 shares of its common stock in exchange for 100% of the membership interest of Driver Passport, LLC, a North Dakota limited liability company formed on October 12, 2004.
On January 2, 2006, Driver Passport, LLC was dissolved.
ECO GLOBAL CORPORATION
(FORMERLY DRIVER PASSPORT, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2009 AND 2008
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)
Driver Passport is considered a development stage company and has presented numbers since the inception of Driver Passport, LLC which was October 12, 2004. The business combination that took place was essentially a reverse merger whereby the operating company, Driver Passport, LLC was acquired by a shell company, Driver Passport. Driver Passport has treated this as a purchase for accounting purposes.
Driver Passport has recognized no revenue since inception. In July of 2007, Driver Passport ceased marketing operations under its former business plan and has since considered other business ventures and as a result, acquired a patent as described below and will now conduct its new business. Driver Passport had impaired the remaining $9,975 of software development costs that remained at June 30, 2007 in the quarter ended September 20, 2007.
On September 12, 2008, Driver Passport and Incablock International, LLC. (“INCA”), a California limited liability company, entered into a Letter of Intent (“LOI”) for the Company to acquire a patent (as described in patent number US 7,305,803 B2) covering the use of the INCABLOCK™ Construction System (the “Patent”).
On October 30, 2008, per the LOI, Driver Passport and INCA entered into and closed an Assignment Agreement pursuant to which Inca transferred and assigned the Patent to Driver Passport in consideration for an option to purchase 20,000,000 shares of common stock and 2% of the net sale price of all products manufactured by the Company using the technology in the Patent and then sold or disposed of.
In addition, on October 30, 2008, Driver Passport and Randy Brown, an executive officer, director and shareholder of Driver Passport, entered into and closed an Agreement and Release whereby Mr. Brown agreed to return 16,575,000 shares of common stock of Driver Passport to Driver Passport in consideration for the sale of all of the assets of Driver Passport relating to the driver security program. Further, except for the Promissory Note in the principal amount of approximately $319,000, Mr. Brown agreed to assume all of the liabilities of Driver Passport.
Further, Randy Brown, an executive officer, director and majority of Driver Passport, agreed to return 16,575,000 shares of common stock to Driver Passport for cancellation in consideration of the transfer of all of the current existing assets of Driver Passport following the closing of the acquisition of the Patent.
ECO GLOBAL CORPORATION
(FORMERLY DRIVER PASSPORT, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2009 AND 2008
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)
Concurrent with the assignment of the Patent to Driver Passport, Daniel D. Correa was appointed as the Chief Executive Officer, Chief Financial Officer, and Secretary of Driver Passport as well as a director of Driver Passport. In addition, Mr. Brown resigned as an executive officer of Driver Passport.
As a result of the acquisition of the Patent, Driver Passport ceased being a shell company as that term is defined in Rule 12b-2 and, its new business focus is on selling licenses, developing INCABLOCK™ manufacturing facilities, related engineering and training and marketing of the INCABLOCK™ Construction System.
On January 13, 2009, Driver Passport and its newly formed, wholly owned subsidiary, Eco Global Corporation, a Nevada corporation (“Eco Global” or the “Company”), entered into a Plan and Agreement of Merger (the “Merger Agreement”). Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, the Company merged with and into Eco Global (the “Migratory Merger”), with Eco Global continuing as the surviving corporation domesticated in Nevada.
As a result of the Migratory Merger, the Company in now incorporated in Nevada, is authorized to issue 250,000,000 shares of common stock, par value $0.001 per share, and 10,000,000 shares of blank check preferred stock, par value $0.001, and the Company’s name has been changed to Eco Global Corporation.
TECHNOLOGY
The Company owns a proprietary technology known as INCABLOCK™ Construction System to establish a business that specializes in pre-manufactured houses, as well as commercial and industrial structures. These opportunities will be offered through strategic joint ventures and licensing for manufacturing and or marketing. The Company intends to focus first in Mexico, followed by the USA and subsequently other countries.
ECO GLOBAL CORPORATION
(FORMERLY DRIVER PASSPORT, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2009 AND 2008
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)
OVERVIEW
The Company owns a unique intellectual property (the Patent) for the production of Concrete Interlocking Modular Blocks System, which can be safely and efficiently assembled without any mortar. The Company initially intends to generate revenue through licensing opportunities whereby a license will develop a plant for the production of the block and will in turn market prefabricated buildings using the technology covered under the Patent. The Company intends to design, develop, and construct dignified, financially sound and decent housing units by employing an innovative, profitable and environmentally sound new construction technology.
Further, the Company will license the INCABLOCK™ technology internationally, to provide a strong, innovative construction system with which to construct housing developments and commercial buildings, e.g. warehouses, hangars, etc. The joint venture opportunities will include royalty arrangements, and percentage of ownership in exchange for the transfer of the technology.
THE PATENT AND TRADEMARK
A patent application was submitted to the United States Patent and Trademark Office on September 18, 2000 and subsequently an improvement filing was made in 2003. The inventors are Mr. Daniel D. Correa and Mr. Lorenzo Correa. The Patent letter was granted on December 11, 2007 with the Patent No. 7,305,803 with an expiration date of May 16, 2025. The Patent was subsequently assigned to INCA. Trademark applications were filed on April 3, 2008 (serial No. 77/439,024) for INCABLOCK™.
PRODUCT DESCRIPTION
The Company, with the INCABLOCK™ technology, will license the ability to design, manufacture and market customized concrete block products, interlocking concrete blocks, roofing structures, light concrete aggregate panels and a “kit system” of a pre-fabricated houses or structures on a standard format or custom made basis according to customer blue prints.
ECO GLOBAL CORPORATION
(FORMERLY DRIVER PASSPORT, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2009 AND 2008
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)
Below are features of the INCABLOCK™ system that the Company believes set it apart from other block systems or standard construction:
| · | The INCABLOCK™ product line offers more than six different modular blocks in different thicknesses (4”-6”-8”-12”) that can be versatile to accommodate a total modular construction project. |
| · | Interlocking capabilities on all contact faces, each block forms a dilatation joint in each contact face of the block (top-bottom-left side-right side), increasing the flexibility to resist earthquakes and high winds. |
| · | Mortar-less, it does not require mortar as its design includes an interlocking tongue and groove system that allows an easy assembly; they can be grouted inside their cells when dictated by the structural plans. |
| · | Self-alignment capabilities-all blocks of the system are component to each other and can only be fit in one-way position. |
| · | Per conventional square meter is quicker to assemble than standard construction methods. |
| · | Hollow cells in their block interior allows the passage of re-bars, insulation materials, cables, pipes for utilities and grout when needed. |
| · | Unskilled labor rated, after the first course is grouted to the flooring structure, the blocks are just assemble together. |
| · | Fire resistant. Since concrete blocks do not support combustion and their mass transfer’s heat slowly their fire resistance is very high. |
| · | Sound control, especially important in multi-unit housing, commercial and industrial applications, and excellent sound barrier for populated areas with highways. |
| · | Attractive finishes. Perfectly aligned blocks with no mortar provide a better surface for applying decorative finishes by brush, towel, or spray, in some areas may be left expose. |
| · | Pre-manufactured kit for houses and buildings with all the necessary modular pieces including blocks with self contained electrical and plumbing outlets, window molding and sills, cornices, dentils, etc. |
ECO GLOBAL CORPORATION
(FORMERLY DRIVER PASSPORT, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2009 AND 2008
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)
MARKETING
The market for factory-built housing is affected by a number of factors, including the availability, cost and credit underwriting standards of consumer financing, consumer confidence, employment levels, general housing market and other economic conditions and the overall affordability of factory-built housing versus other forms of housing. In addition, demographic trends such as changes in population growth and competition affect demand for housing products. Interest rates and the availability of financing also influence the affordability of factory-built housing.
The Company believes the segment of the housing market in which manufactured housing is most competitive includes consumers located in developing countries and lower class consumerism in the United States. The comparatively low cost of manufactured homes attracts these consumers. People in rural areas, where fewer housing alternatives exist, and those who presently live in factory-built homes, also make up a significant portion of the demand for new factory-built housing.
The Company intends to offer licenses for manufacturing to established block manufacturers, new start up and interested companies that will like to ad manufacturing of blocks as part of their own expansion program, such as contractors, developers and others.
Additionally, the Company will offer the licensing of the Company technology for the implementation and construction of all inclusive manufacturing facilities, including the use of the INCABLOCK™ Construction System and roofing structure manufacturing, use for the sale of “KIT” housing and or commercial buildings, to companies in the industry, or turn key opportunities.
In the foreign market, the Company will offer the licensing of the Company technology for the implementation and construction of all inclusive manufacturing facilities, including the use of the INCABLOCK™ Construction System and roofing structure manufacturing, use for the sale of “KIT” housing and or commercial buildings, to companies in the industry, or turn key opportunities.
In the past, a number of factors have restricted demand for factory-built housing, including in some cases, less-favorable financing terms compared to site-built housing, the effects of restrictive zoning on the availability of certain locations for home placement and, in some cases, an unfavorable public image. Certain of these adverse factors have lessened considerably in recent years with the improved quality and appearance of factory-built housing.
ECO GLOBAL CORPORATION
(FORMERLY DRIVER PASSPORT, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2009 AND 2008
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Development Stage Company
The Company is considered to be in the development stage as defined in Statement of Financial Accounting Standards (SFAS) No. 7, “Accounting and Reporting by Development Stage Enterprises”. The Company has devoted substantially all of its efforts to business planning and development. Additionally, the Company has allocated a substantial portion of their time and investment in bringing their services to the market and the raising of capital.
The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
In accordance with the American Institute of Certified Public Accountants Statement of Position 98-5, “Reporting on the Costs of Start-up Activities”, the Company expenses all costs incurred in connection with the start-up and organization of the Company.
Although, the Company has not recognized revenue to date, the Company will account for the licensing of its patent in accordance with the terms of their license agreements.
Revenue from licenses and sublicenses sold on an individual basis are recognized upon shipment, provided that evidence of an arrangement exists, delivery has occurred and risk of loss has passed to the customer, fees are fixed or determinable and collection of the related receivable is reasonably assured. Revenue from installation, training, and consulting services if required is recognized as services are performed.
If there are licensing fees collected in advance, revenues from these license fees will be recognized on a prorated-basis over the life of the license.
ECO GLOBAL CORPORATION
(FORMERLY DRIVER PASSPORT, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2009 AND 2008
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The Company will assess probability of collection based on a number of factors, including the creditworthiness of the customer. New customers will be subject to a credit review process that evaluates the customers’ financial position and ultimately its ability to pay according to the original terms of the arrangement. Based on this review process, if it is determined from the outset of an arrangement that collection of the resulting receivable is not probable, the Company will establish an allowance for uncollectibility.
e. Income Taxes
The Company accounts for income taxes utilizing the liability method of accounting. Under the liability method, deferred taxes are determined based on differences between financial statement and tax bases of assets and liabilities at enacted tax rates in effect in years in which differences are expected to reverse. Valuation allowances are established, when necessary, to reduce deferred tax assets to amounts that are expected to be realized.
f. Fixed Assets
Fixed assets are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets; computer equipment- 5 years.
When assets are retired or otherwise disposed of, the costs and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is recognized in income for the period. The cost of maintenance and repairs is charged to income as incurred; significant renewals and betterments are capitalized. Deduction is made for retirements resulting from renewals or betterments.
g. Impairment of Long-Lived Assets
Long-lived assets, primarily fixed assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. The Company does not perform a periodic assessment of assets for impairment in the absence of such information or indicators. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or a significant adverse change that would indicate that the carrying amount of an asset or group or assets is not recoverable.
ECO GLOBAL CORPORATION
(FORMERLY DRIVER PASSPORT, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2009 AND 2008
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
For long-lived assets to be held and used, the Company recognizes an impairment loss only if its carrying amount is not recoverable through its undiscounted cash flows and measures the impairment loss based on the difference between the carrying amounts and estimated fair value.
h. (Loss) Per Share of Common Stock
Basic net (loss) per common share is computed using the weighted average number of common shares outstanding. Diluted earnings per share (EPS) include additional dilution from common stock equivalents, such as stock issuable pursuant to the exercise of stock options and warrants.
Common stock equivalents were not included in the computation of diluted earnings per share when the Company reported a loss because to do so would be anti dilutive for periods presented.
The following is a reconciliation of the computation for basic and diluted EPS:
| | | | | | | |
| | | March 31, | | | March 31, | |
| | | 2009 | | | 2008 | |
| | | | | | | |
| Net Loss | | $ | (76,545 | ) | | $ | (12,365 | ) |
| | | | | | | | | |
| Weighted-average common shares | | | | | | | | |
| Outstanding (Basic) | | | 33,622,000 | | | | 29,847,000 | |
| | | | | | | | | |
| Weighted-average common stock | | | | | | | | |
| Equivalents | | | | | | | | |
| Stock options | | | - | | | | - | |
| Warrants | | | - | | | | - | |
| | | | | | | | | |
| Weighted-average common shares | | | | | | | | |
| Outstanding (Diluted) | | | 33,622,000 | | | | 29,847,000 | |
ECO GLOBAL CORPORATION
(FORMERLY DRIVER PASSPORT, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2009 AND 2008
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
i. Uncertainty in Income Taxes
In July 2006, the FASB issued Interpretation No. 48 (FIN No. 48), “Accounting for Uncertainty in Income Taxes”. This interpretation requires recognition and measurement of uncertain income tax positions using a “more-likely –than-not” approach. FIN No. 48 is effective for fiscal years beginning after December 15, 2006. Management has adopted FIN 48 for 2007, and they evaluate their tax positions on an annual basis, and have determined that as of March 31, 2009, no additional accrual for income taxes is necessary.
j. Recent Accounting Pronouncements
In September 2006, the FASB issued FAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities- Including an amendment of FASB Statement No. 115”, (“FAS 159”) which permits entities to choose to measure many financial instruments and certain other items at fair value at specified election dates. A business entity is required to report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. This statement is expected to expand the use of fair value measurement. FAS 159 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years.
In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an amendment of Accounting Research Bulletin No 51” (SFAS 160). SFAS 160 establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other than the parent, changes in a parent’s ownership of a noncontrolling interest, calculation and disclosure of the consolidated net income attributable to the parent and the noncontrolling interest, changes in a parent’s ownership interest while the parent retains its controlling financial interest and fair value measurement of any retained noncontrolling equity investment.
SFAS 160 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Early adoption is prohibited. Management is determining the impact that the adoption of SFAS No. 160 will have on the Company’s consolidated financial position, results of operations or cash flows.
ECO GLOBAL CORPORATION
(FORMERLY DRIVER PASSPORT, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2009 AND 2008
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
j. Recent Accounting Pronouncements (Continued)
In December 2007, the FASB issued SFAS 141R, Business Combinations (“SFAS 141R”), which replaces FASB SFAS 141, Business Combinations. This statement retains the fundamental requirements in SFAS 141 that the acquisition method of accounting be used for all business combinations and for an acquirer to be identified for each business combination. SFAS 141R defines the acquirer as the entity that obtains control of one or more businesses in the business combination and establishes the acquisition date as the date that the acquirer achieves control. SFAS 141R will require an entity to record separately from the business combination the direct costs, where previously these costs were included in the total allocated cost of the acquisition. SFAS 141R will require an entity to recognize the assets acquired, liabilities assumed, and any noncontrolling interest in the acquired at the acquisition date, at their fair values as of that date. This compares to the cost allocation method previously required by SFAS No. 141. SFAS 141R will require an entity to recognize as an asset or liability at fair value for certain contingencies, either consideration at the date of acquisition, based on the fair value at that date. This Statement will be effective for business combinations completed on or after the first annual reporting period beginning on or after December 15, 2008. Early adoption of this standard is not permitted and the standards are to be applied prospectively only. Upon adoption of this standard, there would be no impact to the Company’s results of operations and financial condition for acquisitions previously completed. The adoption of SFAS No. 141R is not expected to have a material effect on the Company’s consolidated financial position, results of operations or cash flows.
In April 2008, the FASB issued FSP No. FAS 142-3, “Determination of the Useful Life of Intangible Assets”. This FSP amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, “Goodwill and Other Intangible Assets”. The Company was required to adopt FSP 142-3 on October 1, 2008. The guidance in FSP 142-3 for determining the useful life of a recognized intangible asset shall be applied prospectively to intangible assets acquired after adoption, and the disclosure requirements shall be applied prospectively to all intangible assets recognized as of, and subsequent to, adoption. The Company does not believe that FSP 142-3 will materially impact their financial position, results of operations or cash flows.
Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date and are not expected to have a material impact on the financial statements upon adoption.
ECO GLOBAL CORPORATION
(FORMERLY DRIVER PASSPORT, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2009 AND 2008
Fixed assets as of March 31, 2009 and 2008 were as follows:
| | | Estimated | | | | | | | |
| | | Useful | | | | | | | |
| | | Lives | | | | | | | |
| | | (Years) | | | 2009 | | | 2008 | |
| Computer equipment | | | 5 | | | $ | 0 | | | $ | 7,281 | |
| | | | | | | | | | | | | |
| Less: accumulated depreciation | | | | | | | 0 | | | | (2,348 | ) |
| Fixed assets, net | | | | | | $ | 0 | | | $ | 4,933 | |
The Company as part of the Assignment Agreement entered into on October 30, 2008, disposed of the equipment and as a result the balance is zero as of March 31, 2009.
NOTE 4 - INTANGIBLE ASSETS
On September 18, 2000, a patent application was submitted with the United States Patent and Trademark Office and subsequently an improvement filing was made in 2003 by the inventors of the Inca Block system, Mr. Daniel D. Correa and Mr. Lorenzo Correa. The patent letter was granted on December 11, 2007 with Patent No. 7,305,803 with an expiration date of May 16, 2025. The Patent was subsequently assigned to INCA. Trademark applications were filed on April 3, 2008 (serial No. 77/439,024) for INCABLOCK.
The Company as part of the Assignment Agreement entered into on October 30, 2008, acquired the Patent in exchange for the 20,000,000 shares of common stock they issued on December 31, 2008. The Company’s common stock had a fair value of $.14 per share on this date, and as a result, the Company valued the Patent at $2,800,000. The Patent has an estimated useful life of 16 years and will be amortized commencing January 1, 2009. In addition, the Company will perform annual impairment tests for all of its long-lived assets including the Patent.
ECO GLOBAL CORPORATION
(FORMERLY DRIVER PASSPORT, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2009 AND 2008
NOTE 4 - INTANGIBLE ASSETS (CONTINUED)
Intangible assets as of March 31, 2009 and 2008 were as follows:
| | | Estimated | | | | | | | |
| | | Useful | | | | | | | |
| | | Live | | | | | | | |
| | | (Years) | | | 2009 | | | 2008 | |
| INCABLOCK Patent | | | 16 | | | $ | 2,800,000 | | | $ | 0 | |
| | | | | | | | | | | | | |
| Less: accumulated amortization | | | | | | | (43,750 | ) | | | 0 | |
| Intangible assets, net | | | | | | $ | 2,756,250 | | | $ | 0 | |
Intangible assets with finite useful lives are amortized over their respective useful lives. Based on the carrying values at December 31, 2008 and assuming no subsequent impairment of the underlying assets, the annual amortization is expected to be $175,000 in 2009 through 2013.
NOTE 5 - SHARING ARRANGEMENT
The Company has a bank account, however, runs most of its operations and banking activity through a related party, its majority shareholder and the majority shareholders related entities. Since Driver Passport, LLC’s inception, October 12, 2004, most of the Company’s transactions involving its cash disbursements had been provided by a related company who was funded by the Company’s former sole member. At December 31, 2005 and December 31, 2004, the Company had a note payable with this member in the amount of $130,081 and $537, respectively. However, on December 31, 2005, the former sole member converted these amounts to contributed capital. Therefore, Driver Passport LLC had no amounts outstanding on December 31, 2005 to the sole member. Upon acquisition of Driver Passport LLC by the Company, the majority shareholder and former sole member of the Company funded all activity either personally or through an entity controlled by him, and the Company entered into a note payable with this majority shareholder for repayment of these amounts funded. (See Note 6). As of March 31, 2009, the Company has $280,388 outstanding to this shareholder, as well as $43,024 in accrued interest. The majority shareholder has since ceased funding the operations as of October 2008, however has entered into a separate note payable as discussed in Note 6.
ECO GLOBAL CORPORATION
(FORMERLY DRIVER PASSPORT, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2009 AND 2008
The Company entered into an unsecured promissory note with its former majority shareholder in a maximum amount of $500,000, due on demand. The shareholder has charged the Company interest at the prime rate (4.00% as of March 31, 2009). Interest is calculated on a monthly basis on the principal balance owing on the last day of the month. The balance as of March 31, 2009 and December 31, 2008 on this note was $280,388. Included in the statements of operations is $2,804 and $4,159, respectively in interest expense on this note.
On November 18, 2008, the Company entered into a promissory note with Randy Brown, separate from the unsecured promissory note. This note, is in the principal amount of $100,000 and bears interest at a rate of 10% per annum. The amounts were received in three advances, $25,000 each on November 18, 2008 and December 9, 2008 and the final $50,000 on December 19, 2008. The note matures May 18, 2009. If the Company fails to repay the balance of the note plus accrued interest by the maturity date, the Company agrees to increase the interest rate by 5% per annum for each six month period the note remains unpaid, and this rate shall be applied to the entire balance from the beginning of the note.
The purpose of this note is to provide proceeds for a project the Company is working on with an entity known as Eco Mining, Inc., for a mining project in Mexico, relating to the mining of a product known as “pozzolan”. The note, is guaranteed by real estate in Baja California, Mexico, owned by INCA and the irrevocable unconditional personal guarantee of Daniel Correa.
During the period January 1, 2009 through March 31, 2009, the note accrued interest of $2,466 which the Company has capitalized as part of the project that they are working on. Eco Mining, Inc. is a related company through common ownership, and the Company has funded $84,647 through March 31, 2009 (see Note 7).
NOTE 7 - DUE FROM RELATED PARTY – ECO MINING, INC.
During the period January 1, 2009 through March 31, 2009, the Company paid $4,629 in certain non-interest advances directly related to Eco Mining, Inc. a corporation that has common ownership to the Company. The Company has advanced a cumulative total $84,647 to Eco Mining, Inc. for a certain project in Mexico. The Company used the proceeds of the promissory note entered into on November 18, 2008 to fund this project.
ECO GLOBAL CORPORATION
(FORMERLY DRIVER PASSPORT, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2009 AND 2008
NOTE 8 - PROVISION FOR INCOME TAXES
Deferred income taxes are determined using the liability method for the temporary differences between the financial reporting basis and income tax basis of the Company’s assets and liabilities. Deferred income taxes are measured based on the tax rates expected
to be in effect when the temporary differences are included in the Company’s tax return. Deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases.
At March 31, 2009, deferred tax assets consist of the following:
| Net operating losses | | $ | 262,422 | |
| | | | | |
| Valuation allowance | | | (262,422 | ) |
| | | | | |
| | | $ | - | |
At March 31, 2009, the Company had a net operating loss carry forward in the approximate amount of $771,829, available to offset future taxable income through 2029. The Company established valuation allowances equal to the full amount of the deferred tax assets due to the uncertainty of the utilization of the operating losses in future periods.
A reconciliation of the Company’s effective tax rate as a percentage of income before taxes and federal statutory rate for the periods ended March 31, 2009 and 2008 is summarized as follows:
| | | 2009 | | | 2008 | |
| Federal statutory rate | | | (34.0 | %) | | | (34.0 | %) |
| State income taxes, net of federal benefits | | | 4.5 | | | | 4.5 | |
| Valuation allowance | | | 29.5 | | | | 29.5 | |
| | | | 0 | % | | | 0 | % |
ECO GLOBAL CORPORATION
(FORMERLY DRIVER PASSPORT, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2009 AND 2008
As shown in the accompanying financial statements, as is typical of companies going through the development stage, the Company incurred a net loss for the three months ended March 31, 2009 and 2008 of $76,545 and $12,365 respectively. The Company had a working capital deficit of $388,293 at March 31, 2009.
The Company acquired a development stage company on January 1, 2006, and there is no guarantee that the Company will be able to generate enough revenue and/or raise capital to support current operations and generate anticipated sales. Due to the Company’s continued losses and change in business, along with a lack of suitable equity and liquidity in the Company, these conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months.
On October 30, 2008, per the LOI, the Company and INCA entered into and closed an Assignment Agreement pursuant to which Inca transferred and assigned the Patent to the Company in consideration for an option to purchase 20,000,000 shares of common stock and 2% of the net sale price of all products manufactured by the Company using the technology in the Patent and then sold or disposed of.
In addition, on October 30, 2008, the Company and Randy Brown, an executive officer, director and shareholder of the Company, entered into and closed an Agreement and Release whereby Mr. Brown agreed to return 16,575,000 shares of common stock of the Company to the Company in consideration for the sale of all of the assets of the Company relating to the driver security program. Further, except for the Promissory Note in the principal amount of approximately $319,000, Mr. Brown agreed to assume all of the liabilities of the Company.
Further, Randy Brown, an executive officer, director and majority of the Company, agreed to return 16,575,000 shares of common stock to the Company for cancellation in consideration of the transfer of all of the current existing assets of the Company following the closing of the acquisition of the Patent.
Concurrent with the assignment of the Patent to the Company, Daniel D. Correa was appointed as the Chief Executive Officer, Chief Financial Officer, and Secretary of the Company as well as a director of the Company. In addition, Mr. Brown resigned as an executive officer of the Company.
ECO GLOBAL CORPORATION
(FORMERLY DRIVER PASSPORT, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2009 AND 2008
NOTE 9 - GOING CONCERN (CONTINUED)
As a result of the acquisition of the Patent, the Company ceased being a shell company as that term is defined in Rule 12b-2 and, its new business focus is on selling licenses, developing INCABLOCK™ manufacturing facilities, related engineering and training and marketing of the INCABLOCK™ Construction System.
The Company is still in need of additional liquidity to carry out the proposed business of INCA, and is currently in discussions to secure financing. Should the Company be successful in securing financing, it may be on terms that are unfavorable to the Company.
The financial statements do not include any adjustments that might result from the outcome of these uncertainties.
NOTE 10 - STOCKHOLDERS’ EQUITY (DEFICIT)
The Company was established with 50,000,000 shares of authorized stock; 40,000,000 of common stock and 10,000,000 of preferred stock. Each class of stock has a par value of $.001. As a result of the Migratory Merger (see Note 1), the Company in now authorized to issue 250,000,000 shares of common stock, par value $0.001 per share, and 10,000,000 shares of blank check preferred stock, par value $0.001.
On January 1, 2006, the Company acquired Driver Passport LLC for 25,500,000 shares of common stock. The value of the stock was par or $25,500.
In June 2006, the Company issued 2,217,000 shares of common stock. Of these shares, 1,197,000 shares were issued for $39,900 in cash, and 1,020,000 shares were issued for consulting services valued at $34,000. The Company also received $1,500 of contributed capital in the year ended December 31, 2006 and $1,383 of contributed capital for the year ended December 31, 2007.
In July 2006, the Company received acknowledgement from the Securities and Exchange Commission of an effective registration.
The Company accrued at December 31, 2006 the issuance of 2,130,000 shares of common stock valued at $.05 per share (the opening bid price of the common stock) or $106,500. These shares were earned under agreements due when the Company was deemed effective by the SEC and commenced trading. The shares were issued on February 15, 2007.
ECO GLOBAL CORPORATION
(FORMERLY DRIVER PASSPORT, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2009 AND 2008
NOTE 10 - STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED)
The Company accrued at December 18, 2007 the issuance of 50,000 shares of common stock valued at $0.08 per share or $4,000. These shares were earned by Jay Mitchell, independent contractor, as part of an agreement to promote the Company.
On October 30, 2008, per the LOI, the Company and INCA entered into and closed an Assignment Agreement pursuant to which Inca transferred and assigned the Patent to the Company in consideration for an option to purchase 20,000,000 shares of common stock and 2% of the net sale price of all products manufactured by the Company using the technology in the Patent and then sold or disposed of. A value has been issued to the shares issued on December 31, 2008 in an amount of $0.14 cents per share for the 20,000,000 shares of common stock or $2,800,000. The shares were issued for the patent and were issued on December 31, 2008.
In addition, on December 31, 2008, the Company issued 300,000 shares of common stock for legal services provided at a value of $0.14 per share or $42,000.
As of March 31, 2009, the Company had 33,622,000 shares issued and outstanding.
As of Mach 31, 2009, there were no shares of preferred stock issued or outstanding, and the Company has not issued any stock options or warrants.
On September 12, 2008, Driver Passport, Inc. (the “Company”) and INCA, a California limited liability company, entered into a LOI for the Company to acquire a patent (as described in patent number US 7,305,803 B2) covering the use of the INCABLOCK™ Construction System (the “Patent”).
On October 30, 2008, per the LOI, the Company and INCA entered into and closed an Assignment Agreement pursuant to which Inca transferred and assigned the Patent to the Company in consideration for an option to purchase 20,000,000 shares of common stock and 2% of the net sale price of all products manufactured by the Company using the technology in the Patent and then sold or disposed of.
In addition, on October 30, 2008, the Company and Randy Brown, an executive officer, director and shareholder of the Company, entered into and closed an Agreement and Release whereby Mr. Brown agreed to return 16,575,000 shares of common stock of the Company to the Company in consideration for the sale of all of the assets of the Company relating to the driver security program. Further, except for the Promissory Note in the principal amount of approximately $319,000, Mr. Brown agreed to assume all of the liabilities of the Company.
ECO GLOBAL CORPORATION
(FORMERLY DRIVER PASSPORT, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2009 AND 2008
NOTE 11 - ACQUISITION (CONTINUED)
Further, Randy Brown, an executive officer, director and majority of the Company, agreed to return 16,575,000 shares of common stock to the Company for cancellation in consideration of the transfer of all of the current existing assets of the Company following the closing of the acquisition of the Patent.
Concurrent with the assignment of the Patent to the Company, Daniel D. Correa was appointed as the Chief Executive Officer, Chief Financial Officer, and Secretary of the Company as well as a director of the Company. In addition, Mr. Brown resigned as an executive officer of the Company.
As a result of the acquisition of the Patent, the Company ceased being a shell company as that term is defined in Rule 12b-2 and, its new business focus is on selling licenses, developing INCABLOCK™ manufacturing facilities, related engineering and training and marketing of the INCABLOCK™ Construction System.
NOTE 12 - FAIR VALUE MEASUREMENTS
On January 1, 2008, the Company adopted SFAS 157. SFAS 157 defines fair value, provides a consistent framework for measuring fair value under generally accepted accounting principles and expands fair value financial statement disclosure requirements. SFAS 157’s valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. SFAS 157 classifies these inputs into the following hierarchy:
Level 1 inputs: Quoted prices for identical instruments in active markets.
Level 2 inputs: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
Level 3 inputs: Instruments with primarily unobservable value drivers.
The following table represents the fair value hierarchy for those financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2009:
ECO GLOBAL CORPORATION
(FORMERLY DRIVER PASSPORT, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2009 AND 2008
NOTE 12 - FAIR VALUE MEASUREMENTS (CONTINUED) |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
| Cash | | | 80 | | | | - | | | | - | | | | 80 | |
| | | | | | | | | | | | | | | | | |
| Total assets | | | 80 | | | | - | | | | - | | | | 80 | |
| | | | | | | | | | | | | | | | | |
| Notes payable | | | - | | | | - | | | | 380,388 | | | | 380,388 | |
| | | | | | | | | | | | | | | | | |
| Total liabilities | | | - | | | | - | | | | 380,388 | | | | 380,388 | |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION
The following discussion and analysis is provided to increase the understanding of, and should be read in conjunction with, the financial statements and the notes thereto contained elsewhere in this report. The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. Information in this, "Management's Discussion and Analysis of Financial Conditions and Results of Operations," and elsewhere in this 10-Q that does not consist of historical facts, are "forward-looking statements." Statements accompanied or qualified by, or containing words such as "may," "will," "should," "believes," "expects," "intends," "plans," "projects," "estimates," "predicts," "potential," "outlook," "forecast," "anticipates," "presume," and "assume" constitute forward-looking statements, and as such, are not a guarantee of future performance. The statements involve factors, risks and uncertainties including those discussed in the “Risk Factors” section contained elsewhere in this report, the impact or occurrence of which can cause actual results to differ materially from the expected results described in such statements. Risks and uncertainties can include, among others, fluctuations in general business cycles and changing economic conditions; changing product demand and industry capacity; increased competition and pricing pressures; advances in technology that can reduce the demand for the Company's products, as well as other factors, many or all of which may be beyond the Company's control. Consequently, investors should not place undue reliance on forward-looking statements as predictive of future results. The Company disclaims any obligation to update the forward-looking statements in this report.
Driver Passport, Inc. (“Driver Passport”) was incorporated on December 7, 2005 to be effective January 1, 2006 as a North Dakota corporation. On January 1, 2006, Driver Passport issued 25,500,000 shares of its common stock in exchange for 100% of the membership interest of Driver Passport, LLC, a North Dakota limited liability company formed on October 12, 2004. On January 2, 2006, Driver Passport, LLC was dissolved.
On September 12, 2008, Driver Passport and Incablock International, LLC. (“INCA”), a California limited liability company, entered into a Letter of Intent (“LOI”) for the Company to acquire a patent (as described in patent number US 7,305,803 B2) covering the use of the INCABLOCK™ Construction System (the “Patent”). On October 30, 2008, per the LOI, Driver Passport and INCA entered into and closed an Assignment Agreement pursuant to which Inca transferred and assigned the Patent to Driver Passport in consideration for an option to purchase 20,000,000 shares of common stock and 2% of the net sale price of all products manufactured by the Company using the technology in the Patent and then sold or disposed of. Concurrent with the assignment of the Patent to Driver Passport, Daniel D. Correa was appointed as the Chief Executive Officer, Chief Financial Officer, and Secretary of Driver Passport as well as a director of Driver Passport. In addition, Mr. Brown resigned as an executive officer of Driver Passport.
In addition, on October 30, 2008, Driver Passport and Randy Brown, an executive officer, director and shareholder of Driver Passport, entered into and closed an Agreement and Release whereby Mr. Brown agreed to return 16,575,000 shares of common stock of Driver Passport to Driver Passport in consideration for the sale of all of the assets of Driver Passport relating to the driver security program. Further, except for the Promissory Note in the principal amount of approximately $319,000, Mr. Brown agreed to assume all of the liabilities of Driver Passport.
On November 4, 2008, following the cancellation of the 16,575,000 shares of common stock of the Company by Mr. Brown, Inca exercised its option and received 20,000,000 shares of common stock of the Company. Upon issuance of the new shares, Inca became the new majority shareholder of Driver Passport.
As a result of the acquisition of the Patent, Driver Passport ceased being a shell company as that term is defined in Rule 12b-2 and, its new business focus is on selling licenses, developing INCABLOCK™ manufacturing facilities, related engineering and training and marketing of the INCABLOCK™ Construction System.
On January 13, 2009, Driver Passport and its newly formed, wholly owned subsidiary, Eco Global Corporation, a Nevada corporation (“Eco Global” or the “Company”), entered into a Plan and Agreement of Merger (the “Merger Agreement”). Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, the Company merged with and into Eco Global (the “Migratory Merger”), with Eco Global continuing as the surviving corporation domesticated in Nevada.
As a result of the Migratory Merger, the Company in now incorporated in Nevada, is authorized to issue 250,000,000 shares of common stock, par value $0.001 per share, and 10,000,000 shares of blank check preferred stock, par value $0.001, and the Company’s name has been changed to Eco Global Corporation.
For the 3 months ended March 31, 2009 compared to the three months ended March 31, 2008
Due to the Company’s continued losses, change in business, lack of suitable equity and liquidity, and no guarantee that it will be able to generate future revenue and/or raise sufficient capital to support current operations, there is substantial doubt about the Company’s ability to continue as a “going concern”. Going concern contemplates the realization of assets and the satisfaction of liabilities in the normal course of business over a reasonable length of time.
Based on our current cash and cash equivalents levels and expected cash flow from operations, we believe our current cash position is not sufficient to fund our requirements during the next twelve months, including operations and capital expenditures. The Company has borrowed limited amounts of capital from a private lender in order to sustain short-term business operations and is currently seeking alternative sources of financing.
The Company intends to focus its efforts on introducing the INCABLOCK™ System to the international marketplace. We believe this will include the selling of licenses, the establishment of joint ventures, developing INCABLOCK™ manufacturing facilities, and providing related engineering, training and marketing to support the entire INCABLOCK™ System. We also believe that entry into the international affordable housing market sector will expose us to different and potentially fertile financing opportunities - such as project-based debt financing through government organizations and/or agencies who have earmarked funds to promote the construction of housing in emerging markets worldwide. In addition, the Company is pursuing an interest, through a related party, in a mining project in Mexico, relating to the mining of a product known as “pozzolan”. However, the Company cannot assure that financing will be available or that it will be available on satisfactory terms when required. To the extent that we may raise additional funds by issuing equity securities, our stockholders may experience significant dilution. Management plans to aggressively control costs while pursuing more substantive equity and /or debt financing as required to support our business plan.
The Company did not generate cash from financing activities for the three months ended March 31, 2009.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.
ITEM 4T. CONTROLS AND PROCEDURES
As of March 31, 2009, we carried out an evaluation, under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, the Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were not effective in ensuring that information required to be disclosed by us in our periodic reports is recorded, processed, summarized and reported, within the time periods specified for each report and that such information is accumulated and communicated to our management, including the principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
We did not maintain effective controls to ensure appropriate segregation of duties as the same employees were responsible for the initiating and recording of transactions, thereby creating segregation of duties weaknesses. Due to the (1) significance of segregation of duties to the preparation of reliable financial statements, (2) the significance of potential misstatement that could have resulted due to the deficient controls and (3) the absence of sufficient other mitigating controls, we determined that this control deficiency resulted in more than a remote likelihood that a material misstatement or lack of disclosure within the annual or interim financial statements will not be prevented or detected.
Management is currently evaluating avenues for mitigating our internal controls weaknesses, but mitigating controls that are practical and cost effective may not be found based on the size and structure of our organization. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple error or mistake. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks.
There was no change in our internal controls over financial reporting that has materially affected, or is reasonable likely to materially affect, our internal control over financial reporting during the quarter covered by this Report.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm its business.
We are currently not aware of any legal proceedings or claims that we believe will have, individually or in the aggregate, a material adverse affect on our business, financial condition or operating results.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
