Quarterly Report — Small Business — Form 10-QSB Filing Table of Contents
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TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF
1934
Commission
file number: 000-1388180
ECOLAND
INTERNATIONAL, INC.
(Exact
name of registrant as specified in its charter)
Nevada
(State
or other jurisdiction of incorporation or organization)
20-3061959
(I.R.S.
Employer Identification No.)
4425
Ventura Canyon Avenue, Suite 105
Sherman
Oaks, California
91423
(Address
of principal executive offices)
(Zip
Code)
(310)
281-2571
(Issuer’s
telephone number)
Check
whether the issuer (1) filed all reports required to be filed by Section 13
or
15(d) of the Exchange Act during the past 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
No
o
Indicate
by check mark whether the registrant is a shell company as defined in Rule
12b-2
of the Exchange Act. Yes o
No
x
State
the
number of shares outstanding of each of the issuer’s classes of common equity,
as of the latest practicable date: As of November 30, 2007, the issuer had
44,650,000 shares of its common stock issued and outstanding.
Transitional
Small Business Disclosure Format (check one): Yes o No
x
TABLE
OF
CONTENTS
PART
I - FINANCIAL INFORMATION
1
Item
1.
Financial
Statements.
1
Item
2.
Management’s
Discussion and Analysis or Plan of Operation.
8
Item
3.
Controls
and Procedures.
10
Part
II - OTHER INFORMATION
11
Item
1.
Legal
Proceedings.
11
Item
2.
Unregistered
Sales of Equity Securities and Use of Proceeds.
11
Item
3.
Defaults
Upon Senior Securities.
11
Item
4.
Submission
of Matters to a Vote of Security Holders.
The
accompanying notes are an integral part of these consolidated financial
statements.
3
ECOLAND
INTERNATIONAL, INC.
(Formerly
Guano Distributors, Inc.)
(A
Development Stage Company)
Consolidated
Statements of Cash Flows
For
the Three Months Ended
For
the Six Months Ended
November
30
November
30
2007
2006
2007
2006
CASH
FLOWS FROM OPERATING ACTIVITIES
Net
loss
$
(41,479
)
$
(33,944
)
$
(73,131
)
$
(67,896
)
Adjustments
to reconcile net loss to net cash used by operating
activities:
Depreciation
and amortization
58
157
161
217
Common
stock issued for services
-
-
-
-
Services
contributed by officers and directors
-
-
1,485
-
Changes
in operating assets and liabilities Increase in accounts
receivable
(3,150
)
6,527
8,488
8,641
Increase
in prepaid expenses and deposits
53
1,462
(1,671
)
1,307
Increase
in account payable and accrued expenses
23,720
(1,394
)
28,930
(1,394
)
Net
Cash Used by Operating Activities
(20,798
)
(27,192
)
(35,738
)
(59,125
)
CASH
FLOWS FROM INVESTING ACTIVITIES
Purchase
of fixed assets
-
-
-
-
Net
Cash Used by Investing Activities
-
-
-
-
CASH
FLOWS FROM FINANCING ACTIVITIES
Common
stock issued for cash
-
20,000
-
20,000
Proceeds
from issuance of notes payable
9,776
3,118
7,323
3,118
Proceeds
from issuance of notes payable - related parties
7,999
1,000
6,831
1,000
Net
Cash Provided by Financing Activities
17,775
24,118
14,154
24,118
NET
DECREASE IN CASH
(3,023
)
(3,074
)
(21,584
)
(35,007
)
CASH
AT BEGINNING OF PERIOD
6,069
6,902
24,630
38,835
CASH
AT END OF PERIOD
$
3,046
$
3,828
$
3,046
$
3,828
The
accompanying notes are an integral part of these consolidated financial
statements.
4
ECOLAND
INTERNATIONAL, INC.
(Formerly
Guano Distributors, Inc.)
(A
Development Stage Company)
Notes
to
the Consolidated Financial Statements
Note
1 - Organization And Summary Of Significant Accounting
Policies
Organization
of Business
The
Company began operations on April 15, 2005 as Guano Distributors (PTY) Ltd.
The
Company was then incorporated in the State of Nevada on June 24, 2005 as Guano
Distributors, Inc. The Company changed its name to Ecoland International, Inc
on
June 24, 2006. In May 2006, the Company amended its Articles of Incorporation
to
increase the authorized common stock to 500,000,000 shares and 50,000,000 of
“blank check” preferred shares. In May 2005 the Company acquired certain
distribution rights from Sociaf, LDA an Angolan company, pertaining to Dry
Bar
Cave Bat Guano.
The
Company is currently in the process of formulating business and strategic plans
to process, package and market the guano world wide from the deposits in
Angola.
The
Company has not achieved significant revenues and is a development stage
company.
Use
of
Estimates
The
preparation of 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 reporting amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of
the financial statements and the reported amounts of revenues and expenses
during the periods. Management makes these estimates using the best information
available at the time the estimates are made; however, actual results could
differ materially from these estimates.
Fair
Value of Financial Instruments
Fair
value estimates are based upon certain market assumptions and pertinent
information available to management as of May 31, 2007. The respective carrying
value of certain on-balance-sheet financial instruments approximated their
fair
values. These financial instruments include cash. 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.
Cash
equivalents
The
Company maintains a cash balance in a non-interest-bearing account that
currently does not exceed federally insured limits. For the purpose of the
statements of cash flows, all highly liquid investments with an original
maturity of three months or less are considered to be cash
equivalents.
Property
and Equipment
Property
and equipment are stated at cost, net of accumulated depreciation. Depreciation
is provided primarily by the straight-line method over the estimated useful
lives of the related assets of five years.
5
Net
Income Per Share
SFAS
No.
128, Earnings per Share, requires dual presentation of basic and diluted
earnings or loss per share (“EPS”) for all entities with complex capital
structures and requires a reconciliation of the numerator and denominator of
the
basic EPS computation to the numerator and denominator of the diluted EPS
computation. Basic EPS excludes dilution; diluted EPS reflects the potential
dilution that could occur if securities or other contracts to issue common
stock
were exercised or converted into common stock or resulted in the issuance of
common stock that then shared in the earnings of the entity.
Basic
loss per share is computed by dividing net loss applicable to common
shareholders by the weighted average number of common shares outstanding during
the period. Diluted loss per share reflects the potential dilution that could
occur if dilutive securities and other contracts to issue common stock were
exercised or converted into common stock or resulted in the issuance of common
stock that then shared in the earnings of the Company, unless the effect is
to
reduce a loss or increase earnings per share. The Company had no potential
common stock instruments which would result in a diluted loss per share.
Therefore, diluted loss per share is equivalent to basic loss per
share.
Revenue
recognition
The
Company recognizes revenue on an accrual basis as it invoices for product.
The
Company recognizes revenue after the product has been delivered, and collection
is reasonably assured.
Advertising
Advertising
costs are expensed as incurred.
Income
Taxes
Deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts
of
existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply
to
taxable income in the years in which those temporary differences are expected
to
reverse. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in the statement of operations in the period that includes
the enactment date.
Recently
Issued Accounting Pronouncements
In
September 2006, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 157, “Fair Value Measurements” which defines
fair value, establishes a framework for measuring fair value in generally
accepted accounting principles (GAAP), and expands disclosures about fair value
measurements. Where applicable, SFAS No. 157 simplifies and codifies
related guidance within GAAP and does not require any new fair value
measurements. SFAS No. 157 is effective for financial statements issued for
fiscal years beginning after November 15, 2007, and interim periods within
those fiscal years. Earlier adoption is encouraged. The Company does not expect
the adoption of SFAS No. 157 to have a significant effect on its financial
position or results of operation.
In
June
2006, the Financial Accounting Standards Board issued FASB Interpretation No.
48, “Accounting for Uncertainty in Income Taxes - an interpretation of FASB
Statement No. 109”, which prescribes a recognition threshold and measurement
attribute for the financial statement recognition and measurement of a tax
position taken or expected to be taken in a tax return. FIN 48 also provides
guidance on de-recognition, classification, interest and penalties, accounting
in interim periods, disclosure and transition. FIN 48 is effective for fiscal
years beginning after December 15, 2006. The Company does not expect the
adoption of FIN 48 to have a material impact on its financial reporting, and
the
Company is currently evaluating the impact, if any, the adoption of FIN 48
will
have on its disclosure requirements.
6
In
March
2006, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 156, “Accounting for Servicing of Financial Assets—an
amendment of FASB Statement No. 140.” This statement requires an entity to
recognize a servicing asset or servicing liability each time it undertakes
an
obligation to service a financial asset by entering into a servicing contract
in
any of the following situations: a transfer of the servicer’s financial assets
that meets the requirements for sale accounting; a transfer of the servicer’s
financial assets to a qualifying special-purpose entity in a guaranteed mortgage
securitization in which the transferor retains all of the resulting securities
and classifies them as either available-for-sale securities or trading
securities; or an acquisition or assumption of an obligation to service a
financial asset that does not relate to financial assets of the servicer or
its
consolidated affiliates. The statement also requires all separately recognized
servicing assets and servicing liabilities to be initially measured at fair
value, if practicable, and permits an entity to choose either the amortization
or fair value method for subsequent measurement of each class of servicing
assets and liabilities.
The
statement further permits, at its initial adoption, a one-time reclassification
of available for sale securities to trading securities by entities with
recognized servicing rights, without calling into question the treatment of
other available for sale securities under Statement 115, provided that the
available for sale securities are identified in some manner as offsetting the
entity’s exposure to changes in fair value of servicing assets or servicing
liabilities that a servicer elects to subsequently measure at fair value and
requires separate presentation of servicing assets and servicing liabilities
subsequently measured at fair value in the statement of financial position
and
additional disclosures for all separately recognized servicing assets and
servicing liabilities. This statement is effective for fiscal years beginning
after September 15, 2006, with early adoption permitted as of the beginning
of
an entity’s fiscal year. Management believes the adoption of this statement will
have no immediate impact on the Company’s financial condition or results of
operations.
Share
Based Compensation
The
Company follows the provisions of FAS No. 123R, “Share-Based Payment.” FAS
No. 123R requires all share-based payments to employees, including grants
of employee stock options, to be recognized in the income statement based on
their fair values.
As
permitted by FAS No. 123, the Company currently accounts for share-based
payments to employees and non employees using the Fair Market Value method
and
the Company recognizes compensation cost for employee stock options at fair
market value.
Note
2 - Going Concern
The
Company’s financial statements are prepared using accounting principles
generally accepted 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 ability of the Company to continue as a going
concern is dependent upon 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. Management’s plans to obtain such resources for
the Company include (1) financing current operations with funds obtained through
equity offerings, and (2) planning and streamlining distribution operations
with
respect to the Company’s Angolan guano supply. However, management cannot
provide any assurances that the Company will be successful in accomplishing
any
of its plans.
The
ability of the Company to continue as a going concern is dependent upon its
ability to successfully accomplish the plans described in the preceding
paragraph and eventually secure other sources of financing and attain profitable
operations. The accompanying financial statements do not include any adjustments
that might be necessary if the Company is unable to continue as a going
concern.
7
Note
3 -Common
Stock
During
the year ended May 31, 2006, the Company issued a total of 20,000,000 shares
to
Mr. Robert Russell in payment for services. The shares were valued at $20,000
which is the estimated fair value of the services performed in connection with
the formation of the Company.
During
the year ended May 31, 2005, the Company issued 20,000,000 shares of common
stock to Mr. David Wallace, upon the immediate exercise of a stock option
granted to Mr. Wallace on May 15, 2005. The stock option was granted to Mr.
Wallace as consideration for Mr. Wallace’s transfer of his ownership in Guano
Distributors (PTY) Ltd. In addition, pursuant to the transfer of ownership,
Mr.
Wallace agreed to perform certain administrative and consulting services for
the
Company. These services were valued at $20,000, were performed subsequent to
the
transfer of ownership, and were expensed during the year ended May 31,2006.
The
Company also issued 650,000 shares for services performed by various consultants
valued at $13,000 and 4,000,000 shares for cash of $80,000. The services were
valued at the fair value of the shares given.
Item
2.Management’s
Discussion and Analysis or Plan of Operation.
This
Report on Form 10-QSB contains forward-looking statements, including, without
limitation, statements concerning our possible or assumed future results of
operations. These statements are preceded by, followed by or include the words
“believes,”“could,”“expects,”“intends”“anticipates,” or similar expressions.
Our actual results could differ materially from those anticipated in the
forward-looking statements for many reasons including: our ability to continue
as a going concern, adverse economic changes affecting markets we serve;
competition in our markets and industry segments; our timing and the
profitability of entering new markets; greater than expected costs, customer
acceptance of wireless networks or difficulties related to our integration
of
the businesses we may acquire and other risks and uncertainties as may be
detailed from time to time in our public announcements and SEC filings. Although
we believe the expectations reflected in the forward-looking statements are
reasonable, they relate only to events as of the date on which the statements
are made, and our future results, levels of activity, performance or
achievements may not meet these expectations. We do not intend to update any
of
the forward-looking statements after the date of this document to conform these
statements to actual results or to changes in our expectations, except as
required by law.
The
discussion and financial statements contained herein are for the three and
six
months ended November 30, 2007 and 2006. The following discussion should be
read
in conjunction with our financial statements and the notes thereto included
herewith.
We
generated consolidated net revenues of $8,582 for the three month period ended
November 30, 2007, as compared to $7,020 for the three month period ended
November 30, 2006. Net revenues continue to fluctuate as we attempt to establish
the best mix of products to sell either in bulk deliveries or smaller
packages.
Cost
of Sales
We
incurred cost of sales of $5,011 for the three month period ended November30,2007, as compared to $1,513 for the three month period ended November 30, 2006.
This difference is as a result, as mentioned in Net Revenues, of attempts to
establish the best mix of product to sell.
8
Gross
Profit
We
generated gross profit of $3,571 for the three month period ended November30,2007, as compared to $5,507 for the three month period ended November 30, 2006.
The decrease in gross profit for this quarter when compared to the same quarter
last year is due to an increase in bulk deliveries to customers (i.e.,
greater
than one ton) as opposed to retail deliveries of smaller quantities (one kg
containers).
Genera
and Administrative Expenses
We
incurred general and administrative expenses of $51,013 for the three month
period ended November 30, 2007 as compared to $37,356 for the three month period
ended November 30, 2006. General and administrative expenses in the current
period increased due to our incurring significant professional charges arising
from delays in registering our shares of common stock for resale with the United
States Securities and Exchange Commission.
Net
Income (Loss)
We
had a
loss before taxes of $41,479 for the three month period ended November 30,2007
as compared to a loss before taxes of $33,944 for the three month period ended
November 30, 2006.
Basic
and Diluted Income (Loss) per Share
Our
basic
and diluted income (loss) per share for the three month period ended November30, 2007 was $(0.00), compared to a loss per share of ($0.00) during the
corresponding period ended November 30, 2006.
We
generated consolidated net revenues of $10,612 for the six month period ended
November 30, 2007, as compared to $14,040 for the six month period ended
November 30, 2006. The decrease in revenues for this period when compared to
the
same period last year arises as we have completed test marketing of our dry
bar
cave bat guano.
Cost
of Sales
We
incurred cost of sales of $5,715 for the six month period ended November 30,2007, as compared to $3,025 for the six month period ended November 30,2006.
Gross
Profit
We
generated gross profit of $4,897 for the six month period ended November 30,2007, as compared to $11,015 for the six month period ended November 30, 2006.
We achieved a gross profit on sales of approximately 50% which is in line with
expectations and our business plan. There has been a slight decline but this
is
mainly due to our varying the mix of products test marketed.
General
and Administrative Expenses
We
incurred general and administrative expenses of $76,115 for the six month period
ended November 30, 2007 as compared to $74,720 for the six month period ended
November 30, 2006. General and administrative expenses in the current period
increased due to our incurring significant professional charges arising from
delays in registering our shares of common stock for resale with the United
States Securities and Exchange Commission.
9
Net
Income (Loss)
We
had a
loss before taxes of $73,131 for the six month period ended November 30, 2007
as
compared to a loss before taxes of $67,896 for the six month period ended
November 30, 2006.
Basic
and Diluted Income (Loss) per Share
Our
basic
and diluted income (loss) per share for the six month period ended November30,2007 was $(0.00), compared to a loss per share of ($0.00) during the
corresponding period ended November 30, 2006.
Liquidity
and Capital Resources
Our
independent auditor has issued a “going concern” qualification as part of its
opinion in the Audit Report for the year ended May 31, 2007. We do not currently
have sufficient capital to meet our short-term cash requirements. We will
continue to need to raise additional funds to conduct our business activities
in
the next twelve months. We owe approximately $42,000 in current liabilities.
Additionally, we estimate that we will need approximately $1,000,000 to expand
operations through the end of the fiscal year 2008. These operating costs
include general and administrative expenses and the deployment of inventory.
We
anticipate raising funds through the sale of our capital stock.
Item
3.Controls
and Procedures.
We
have
established disclosure controls and procedures to ensure that material
information relating to Ecoland, including our subsidiaries, is made known
to
the officers who certify our financial reports and to other members of senior
management and our board of directors.
Evaluation
of disclosure controls and procedures.
Our
management, with the participation of our chief executive officer and chief
financial officer, has evaluated the effectiveness of the design and operation
of our disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the
end
of the period covered by this Quarterly Report on Form 10-QSB. Based on this
evaluation, our chief executive officer and chief financial officer concluded
that these disclosure controls and procedures are effective and designed to
ensure that the information required to be disclosed in our reports filed or
submitted under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the requisite time periods.
Changes
in internal controls.
There
was no change in our internal control over financial reporting (as defined
in
Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as
amended) that occurred during our last fiscal quarter that has materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting.
10
PART
II –OTHER
INFORMATION
Item
1.Legal
Proceedings.
None.
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.
On
December 21, 2007, our registration statement Form SB-2 relating to the resale
of 4,650,000 shares of our common stock by the selling stockholders identified
in our prospectus. The shares were issued in a private placement of our common
stock. On January 7, 2008, we registered for trading the shares of our common
stock pursuant to Form 8-A12(g) with the United States Securities and Exchange
Commission.
Item
6.Exhibits.
Exhibit
No.
Identification
of Exhibit
31.1*
Certification
of David Wallace, Chief Executive Officer of Ecoland
International, Inc.,
pursuant to 18 U.S.C. §1350, as adopted pursuant to §302 of the
Sarbanes-Oxley Act of 2002.
31.2*
Certification
of David Wallace, Chief Financial Officer of Ecoland
International, Inc.,
pursuant to 18 U.S.C. §1350, as adopted pursuant to §302 of the
Sarbanes-Oxley Act of 2002.
32.1*
Certification
of David Wallace, Chief Executive Officer of Ecoland
International, Inc.,
pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the
Sarbanes-Oxley Act of 2002.
32.2*
Certification
of David Wallace, Chief Financial Officer of Ecoland
International, Inc.,
pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the
Sarbanes-Oxley Act of 2002.
*
Filed
herewith.
SIGNATURES
In
accordance with the requirements of the Exchange Act, the Registrant caused
this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
