We
are
registering 4,650,000 shares of our common stock, par value $0.001 per share,
for resale by the selling stockholders identified in this prospectus. The shares
were issued in a private placement of our common stock.
Please
refer to “Selling Stockholders” beginning on page 31 of this
prospectus.
We
will
not receive any proceeds from the sale of the shares of our common stock by
the
selling stockholders. However, we will bear all expenses in connection with
the
registration of the shares, other than underwriting discounts and selling
commissions.
The
selling stockholders are offering these shares of our common stock. The selling
stockholders may sell all or a portion of these shares from time to time in
market transactions through any market on which our common stock is then traded,
in negotiated transactions or otherwise, at a price of $0.02 per share until
such time as our shares are quoted for sale on the OTC Bulletin Board as
described in this prospectus, and thereafter, at prices and on terms that will
be determined by the then prevailing market price or at privately negotiated
prices directly or through a broker or brokers, who may act as agent or as
principal or by a combination of such methods of sale. For additional
information on the methods of sale, you should refer to the section in this
prospectus entitled “Plan of Distribution.”
The
selling stockholders and intermediaries through whom such securities may be
sold
may be deemed “underwriters” within the meaning of the Securities Act of 1933,
as amended, with respect to the securities offered hereby, and any profits
realized or commissions received may be deemed underwriting compensation. We
have agreed to indemnify the selling stockholders against certain liabilities,
including liabilities under the Securities Act.
The
shares of our common stock are not currently listed for sale on any exchange,
although we do plan to attempt to have our shares quoted for sale on the OTC
Bulletin Board after the effective date of this prospectus.
THE
SECURITIES OFFERED HERBY INVOLVE A HIGH DEGREE OF RISK.
INVESTING
IN OUR COMMON STOCK INVOLVES RISKS WHICH ARE DESCRIBED UNDER “RISK FACTORS”
BEGINNING ON PAGE 4.
NEITHER
THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION
HAS
APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS
IS
TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The
information in this prospectus is not complete and may be changed. This
prospectus is included in the registration statement that was filed by Ecoland
International, Inc. with the Securities and Exchange Commission. The selling
stockholders may not sell these securities until the registration statement
becomes effective. This prospectus is not an offer to sell these securities
and
is not soliciting an offer to buy these securities in any state where the sale
is not permitted.
You
may
only rely on the information contained in this prospectus or that we have
referred to you. We have not authorized anyone to provide you with different
information. This prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any securities other than the common stock
offered by this prospectus. This prospectus does not constitute an offer to
sell
or a solicitation of an offer to buy any common stock in any circumstances
in
which such offer or solicitation is unlawful. Neither the delivery of this
prospectus nor any sale made in connection with this prospectus shall, under
any
circumstances, create any implication that there has been no change in our
affairs since the date of this prospectus or that the information contained
by
reference to this prospectus is correct as of any time after its
date.
Intentionally
Left Blank.
i
PROSPECTUS
SUMMARY
You
should read the entire prospectus carefully, including the more detailed
information regarding Ecoland International, Inc., the risks of purchasing
our
common stock discussed under “Risk Factors,” and our financial statements and
the accompanying notes. Throughout this prospectus references to “Ecoland,”“we,”“us” and “our” refer to Ecoland International, Inc., a Nevada corporation,
unless otherwise specified or the context otherwise requires.
General
We
began
business on April 15, 2005 as Guano Distributors (Pty) Ltd., a South African
registered company, owned by David Wallace, our current chief executive officer,
chief financial officer and sole director. On May 11, 2005, we executed two
non-exclusive letter agreements with Sociaf, LDA, an Angolan company, which
provided Ecoland with the non-exclusive right to distribute Sociaf’s dry bar
cave bat guano, an organic/non-chemical fertilizer, in the United States,
Europe, South Africa, Asia and the Middle East. Before May 11, 2005, we had
an
informal verbal agreement with Sociaf to distribute its dry bar cave bat guano
only in Africa. It should be clearly understood that we do not own any bat
guano. We only have distribution rights to the guano deposits.
Pursuant
to an agreement dated May 15, 2005 and a resolution of our board of directors,
Mr. Wallace agreed to transfer all of his ownership interest in Guano
Distributors (Pty) Ltd. to Guano Distributors, Inc., a corporation to be
incorporated in Nevada on June 24, 2005 by Robert Russell. As consideration
for
the transfer by Mr. Wallace, and pursuant to a resolution of our board of
directors, Mr. Wallace received an option to acquire 20,000,000 shares of our
common stock. Mr. Wallace exercised his option immediately. As a result of
the
transfer by Mr. Wallace, Guano Distributors (Pty) Ltd. became a wholly-owned
subsidiary of Guano Distributors, Inc. We changed the name of Guano
Distributors, Inc. to Ecoland International, Inc. on June 28, 2006, in order
to
avoid confusion between the name of our subsidiary and the parent company.
There
were no management changes at that time. However, Mr. Russell resigned as an
officer and director of Ecoland on November 4, 2006 in order to pursue other
personal interests. Mr. Russell desired to leave a fully-dedicated management
team in place to further develop our business.
Dry
bar
cave bat guano exists in limited supplies worldwide. Sociaf has a license from
the Angolan government to an estimated supply of 350,000 tons of dry bar cave
bat guano in 54 caves located on the properties in which the distribution rights
are held. Our distribution rights have a lifespan of three years beginning
May11, 2005, and are renewable for three year periods thereafter. Our pre-existing
distribution rights for Africa continued, even though not mentioned in the
written May 11, 2005 letter agreements.
There
are
a number of risks associated with an investment in Ecoland going forward, many
of which are discussed in the sections “Risk Factors” and “Description of
Business,” and elsewhere in this prospectus. Any potential investor should be
particularly mindful that we have a limited operating history on which to
evaluate our business and that a comparison of our results of operations from
period to period is not necessarily meaningful. Further, our results of
operations for any period are not necessarily indicative of our future
performance. Due to our limited resources, the sales and marketing of our dry
bar cave bat guano have been minimal to date and dedicated to establishing
that
a viable market for bat guano fertilizer exists.
For
the
fiscal year ended May 31, 2007, we generated revenues of $21,014 and incurred
a
net loss of $157,774. As a result, our auditors in their report on our
financials for the fiscal year ended May 31, 2007, have expressed substantial
doubt about our ability to continue as a going concern. If we are unable to
successfully execute our marketing plans with limited resources, we will not
be
able to generate enough revenue to achieve and maintain profitability or to
continue our operations.
During
the quarter ended August 31, 2007, we incurred a loss of $31,666 as compared
to
a loss of $33,952 for the quarter ended August 31, 2006.
Our
principal executive office is located at 4425 Ventura Canyon Avenue, Suite
105,
Sherman Oaks, California91423. Our telephone number is (310)
281-2571.
1
Transaction
Relating to this Offering
This
prospectus relates to the resale of up to 4,650,000 shares of our common stock
that have been issued in connection with a private placement of our common
stock
in April and May 2006 to 47 purchasers. See “Description of Business - Private
Placement” and “Selling Stockholders.”
The
Offering
Common
stock offered by selling stockholders
Up
to 4,650,000 shares or approximately 10.2 percent of the total issued
and
outstanding shares of our common stock.
Common
stock to be outstanding after the offering
44,650,000
shares. After the sale of shares by our selling stockholders, our
outstanding shares will remain unchanged, since we are not issuing
any
additional shares in this offering or canceling any shares which
may be
sold.
Use
of proceeds
We
will not receive any proceeds from the sale of our common
stock.
Risk
factors
An
investment in our common stock involves a high degree of risk and
could
result in a loss of your entire investment. See “Risk
Factors.”
OTC
Bulletin Board symbol
The
shares of our common stock are not currently listed for sale on any
exchange. We plan to attempt to have our shares quoted for sale on
the OTC
Bulletin Board after the effective date of this
prospectus.
Intentionally
Left Blank.
2
SUMMARY
HISTORICAL FINANCIAL INFORMATION
The
statements of operations data from inception on April 15, 2005 through the
years
ended May 31, 2007 and 2006 have been derived from our audited consolidated
financial statements included elsewhere in this prospectus. The statements
of
operations data for the periods ending August 31, 2007 and August 31, 2006
and
the balance sheet data as of August 31, 2007 have been derived from our
unaudited consolidated financial statements included elsewhere in this
prospectus, and in the opinion of management have been prepared on a basis
consistent with the audited consolidated financial statements and include all
adjustments which consist only of normal recurring adjustments necessary to
present fairly in all material respects the information included in those
statements. The data presented below have been derived from consolidated
financial statements that have been prepared in accordance with generally
accepted accounting principles and should be read in conjunction with our
consolidated financial statements, including the notes, included elsewhere
in
this prospectus, and with “Management’s Discussion and Analysis or Plan of
Operation” in this prospectus.
An
investment in our shares involves a high degree of risk. Before making an
investment decision, you should carefully consider all of the risks described
in
this prospectus. If any of the risks discussed in this prospectus actually
occur, our business, financial condition and results of operations could be
materially and adversely affected, the price of our shares could decline
significantly and you may lose all or a part of your investment. Our
forward-looking statements in this prospectus are subject to the following
risks
and uncertainties. Our actual results could differ materially from those
anticipated by our forward-looking statements as a result of the risk factors
below.
Risks
Related to Our Business
We
have incurred significant losses to date and expect to continue to incur
losses.
During
the fiscal year ended May 31, 2007, we incurred a net loss of $157,774, compared
to a net loss of $88,433 for the fiscal year ended May 31, 2006. We incurred
a
loss for our fiscal quarter ending August 31, 2007 of $31,666 as compared to
a
loss of $33,952 for our fiscal quarter ending August 31, 2006. We expect to
continue to incur losses for at least the next 12 months. Continuing losses
will
have an adverse impact on our cash flow and may impair our ability to raise
additional capital required to continue and expand our operations.
Our
auditors have issued a going concern opinion, which may make it more difficult
for Ecoland to raise capital.
Our
auditors have included a going concern opinion on our financial statements
because of uncertainty about our ability to generate sufficient cash flow to
meet our obligations and sustain our operations. If we are unable to continue
as
a going concern, you could lose your entire investment in Ecoland.
We
will most likely be required to obtain additional funding. If we cannot, we
may
have to reduce our business operations.
We
anticipate that the funds already received will be sufficient to satisfy our
operations for the next 12 months. Nevertheless, if our marketing campaign
is
not successful in promoting sales of our dry bar cave bat guano, we will be
required to seek additional financing. We have no current arrangements with
respect to any additional financing. The inability to obtain additional capital
may reduce our ability to expand our business operations. Any additional equity
financing may involve substantial dilution to our then existing stockholders.
Dependence
on key personnel; need for additional personnel.
We
are
highly dependent upon the efforts of David Wallace, our chief executive officer,
chief financial officer and sole director. See, “Management” in this prospectus.
The loss of the services of Mr. Wallace could impede the achievement of
development and commercialization of our dry bar cave bat guano fertilizer
operations. We do not have key man life insurance on the life of Mr.
Wallace.
We
have limited resources to market the dry bar cave bat
guano.
Due
to
our limited resources, the execution of our business model and sales and
marketing of the dry bar cave bat guano has been limited to date. If we are
unable to successfully execute our marketing plans with limited resources,
we
will not be able to generate enough revenue to achieve and maintain
profitability or to continue our operations. In such event, you may lose your
entire investment.
We
are a development stage company.
We
are a
development stage company that has to date principally been engaged in the
logistics involved in implementing our business plan, arranging for the
necessary working capital and setting up preliminary operations in Angola and
South Africa. The following analyze the risks that are more qualitative
and management opinion based:
4
Strategic
Risk.
Competitor’s
Risk.
This
risk can be broken down into two components, Angola and Export markets.
In
Angola, there are further deposits of guano available but none are being
exploited at the moment.
One can therefore expect new supplies of guano to come onto the market once
our
marketing
efforts are noticed. This
threat can be countered by:
·
Accepting
it as normal competition which is vital for the development of
markets.
·
We
have the necessary legal documents, licenses and exploration rights
to
incorporate
these new deposits into our existing business either through co-operation
or incorporation.
·
We
are mainly export orientated as better margins can be achieved and
these
markets
are larger.
In
export
markets, mainly Europe, there are not many suppliers of guano at the moment.
However,
we assume that further supplies will enter the market as the market develops,
as
guano is not exclusive
to Angola. This
risk
can be countered by:
·
Ecoland
has a slight time advantage in that we have performed considerable
marketing and
research and have an existing customer base upon which to
expand.
·
Ecoland
will
be
first to the market, inasmuch as there is very little guano in the
European market in the form we envisage.
In addition, we have satisfied customers using the product at present
in
the United Kingdom.
·
The
market is big enough to support many producers. It could be a slight
advantage
as the market is bigger than the supplies of guano. Thus, allowing
guano
to become
a niche product at a premium price.
Country
Risk.
Our
business currently operates in two countries with extraction taking place
in
Angola
and processing taking place in South Africa. South
Africa is an accepted international investor destination. Standard and Poors
(S&P) gave South Africa a risk rating A-/Stable/A-2 BBB/Stable/A-3. This is
based on the fact that the government has implemented sensible fiscal policies
and has managed to bring spending under control. For a full review of South
Africa risk profile, see http://www.mbendi.co.za/land/af/sa/p0005.htm. Angola
has no sovereign rating. However, Angola has a fast-growing economy largely
due
to a major oil boom, but it also ranks in the bottom 10 of most socioeconomic
indicators. See http://www.buyusa.gov/southafrica/en/416.html, for a full
economic review of Angola. Although we are not in those industries, our risk
is
limited to a basic extraction infrastructure. The value added aspects of the
business, i.e.,
packaging takes place outside Angola in South Africa.
Legislation
Risk.
In
South Africa, the fertilizer industry is controlled by the Fertilizer Act 36
of
1947.
Our
guano is a registered Group 2 fertilizer under this Act, Registration Number
B3429. In Europe, the legislation governing guano is considerably less onerous
than South Africa and
there
are no restrictions on importation. We currently import guano into the United
Kingdom satisfying all import requirements of the European Union. In
Angola, guano falls under the Department of Geology and Mines and we have all
of
the necessary licenses for export.
Operations.
Our
current
technology used is simple and by design easy
to
utilize and operate. There is no “cutting edge” technology involved. As we do
not want to harm the ecological environment, the guano is removed by hand.
This
is a risk as
it
does not pose a significant barrier to entry for other companies. However,
we
are already in operation and new entrants would have to obtain the necessary
rights to extract and export the product.
Business. Our
business has been set up in order to diversify risks at the
development stage of the business. We will operate in two countries and although
this
will
add to the costs of running the business it has many advantages as well.
Primarily, we know the guano can be transported to South Africa and once in
this
country all the
required materials are available to produce the final product. That is,
packaging, labeling, plastic
containers, efficient transport, good communications in a reasonable cost
environment.
We
aim to
be mainly export orientated and the most critical part of this is meeting
the
export and local customers’ requirements of timely delivery. From South Africa,
we can do this because of the established infrastructure.
5
Risks
Relating to Our Stock
You
may be unable to sell your common stock at or above your purchase price, which
may result in substantial losses to you.
The
following factors may add to the volatility in the price of our common stock:
actual or anticipated variations in our quarterly or annual operating results;
government regulations, announcements of significant acquisitions, strategic
partnerships or joint ventures; our capital commitments; and additions or
departures of our key personnel. Many of these factors are beyond our control
and may decrease the market price of our common stock, regardless of our
operating performance. We cannot make any predictions or projections as to
what
the prevailing market price for our common stock will be at any time, including
as to whether our common stock will sustain its price of $0.02 per share on
the
date of this prospectus, or as to what effect that the sale of shares or the
availability of common stock for sale at any time will have on the prevailing
market price.
Our
chief executive officer, David Wallace, and another stockholder own
approximately 90 percent of our common stock. This concentration of ownership
could discourage or prevent a potential takeover of Ecoland that might otherwise
result in your receiving a premium over the market price for your common
stock.
Mr.
Wallace and Robert Russell own in the aggregate 40,000,000 shares of our common
stock, which represent approximately 90 percent of our issued and outstanding
common stock as of the date of this prospectus. The result of the ownership
of
our common stock by Messrs. Wallace and Russell is that they have voting control
on all matters submitted to our stockholders for approval and are able to
control our management and affairs, including extraordinary transactions such
as
mergers and other changes of corporate control, and going private transactions.
Additionally, this concentration of voting power could discourage or prevent
a
potential takeover of Ecoland that might otherwise result in your receiving
a
premium over the market price for your common stock.
Our
issuance of additional common stock in exchange for services or to repay debt,
would dilute your proportionate ownership and voting rights and could have
a
negative impact on the market price of our common stock.
Our
board
may generally issue shares of our common stock to pay for debt or services,
without further approval by our stockholders based upon such factors as our
board of directors may deem relevant at that time. From inception until August31, 2007, we issued no shares to reduce our debt obligations.
From
inception until May 31, 2007, we issued a total of 20,000,000 shares of our
common stock to Mr. Russell in payment for services rendered and an additional
20,000,000 shares to Mr. Wallace in exchange for his transfer of ownership
in
our subsidiary, Guano Distributors (Pty) Ltd.
We
may
issue additional securities to pay for services and reduce debt in the future
or
under such other circumstances we may deem appropriate at the time. Such
issuance of our equity securities may dilute your proportionate ownership and
voting rights as our stockholders.
Dividend
risk.
At
present, we are not in a financial position to pay dividends on our common
stock
and future dividends will depend on our profitability. Investors are advised
that until such time the return on our common stock is restricted to an
appreciation in the share price.
Anti-takeover
provisions may impede the acquisition of Ecoland.
Certain
provisions of the Nevada Revised Statutes have anti-takeover effects and may
inhibit a non-negotiated merger or other business combination. These provisions
are intended to encourage any person interested in acquiring Ecoland to
negotiate with, and to obtain the approval of, our board of directors in
connection with such a transaction. As a result, certain of these provisions
may
discourage a future acquisition of Ecoland, including an acquisition in which
the stockholders might otherwise receive a premium for their
shares.
6
Our
common stock is subject to the “penny stock” rules of the Securities and
Exchange Commission, and the trading market in our common stock is limited,
which makes transactions in our stock cumbersome and may reduce the investment
value of our stock.
Our
shares of common stock are “penny stocks” because they are not registered on a
national securities exchange or listed on an automated quotation system
sponsored by a registered national securities association, pursuant to Rule
3a51-1(a) under the Exchange Act. For any transaction involving a penny stock,
unless exempt, the rules require:
·
That
a broker or dealer approves a person’s account for transactions in penny
stocks; and
·
That
the broker or dealer receives from the investor a written agreement
to the
transaction, setting forth the identity and quantity of the penny
stock to
be purchased.
The
broker or dealer must also deliver, prior to any transaction in a penny stock,
a
disclosure schedule prescribed by the Securities and Exchange Commission
relating to the penny stock market, 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.
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 cause a decline in the market value of our
stock.
Disclosure
also has to be made about the risks of investing in penny stocks in both public
offerings and in secondary trading and about the commissions payable to both
the
broker-dealer and the registered representative, current quotations for the
securities and the rights and remedies available to an investor in cases of
fraud in penny stock transactions. Finally, monthly statements have to be sent
disclosing recent price information for the penny stock held in the account
and
information on the limited market in penny stocks.
Stockholders
should be aware that, according to Securities and Exchange Commission Release
No. 34-29093, the market for penny stocks has suffered in recent years from
patterns of fraud and abuse. Such patterns include:
·
Control
of the market for the security by one or a few broker-dealers that
are
often related to the promoter or
issuer;
·
Manipulation
of prices through prearranged matching of purchases and sales and
false
and misleading press releases;
·
Boiler
room practices involving high-pressure sales tactics and unrealistic
price
projections by inexperienced sales
persons;
·
Excessive
and undisclosed bid-ask differential and markups by selling
broker-dealers; and
·
The
wholesale dumping of the same securities by promoters and broker-dealers
after prices have been manipulated to a desired level, along with
the
resulting inevitable collapse of those prices and with consequential
investor losses.
The
occurrence of these patterns or practices could increase the volatility of
our
share price. Although we do not expect to be in a position to dictate the
behavior of the market or broker-dealers who participate in the market,
management will strive within the confines of practical limitations to prevent
the described patterns from being established with respect to our
stock.
7
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
In
this
prospectus, we make a number of statements, referred to as “forward-looking
statements” which are intended to convey our expectations or predictions
regarding the occurrence of possible future events or the existence of trends
and factors that may impact our future plans and operating results. We note,
however, that these forward-looking statements are derived, in part, from
various assumptions and analyses we have made in the context of our current
business plan and information currently available to Ecoland and in light of
our
experience and perceptions of historical trends, current conditions and expected
future developments and other factors we believe to be appropriate in the
circumstances.
You
can
generally identify forward-looking statements through words and phrases such
as
“seek,”“anticipate,”“believe,”“estimate,”“expect,”“intend,”“plan,”“budget,”“project,”“may be,”“may continue,”“may likely result,” and similar
expressions. When reading any forward-looking statement you should remain
mindful that all forward-looking statements are inherently uncertain as they
are
based on current expectations and assumptions concerning future events or future
performance of Ecoland, and that actual results or developments may vary
substantially from those expected as expressed in or implied by that statement
for a number of reasons or factors, including those relating to:
·
Whether
or not markets for our dry bar cave bat guano develop and, if they
do
develop, the pace at which they
develop;
·
Our
ability to attract and retain the qualified personnel to implement
our
growth strategies;
·
Our
ability to fund our short-term and long-term financing
needs;
·
Competitive
factors;
·
General
economic conditions;
·
Changes
in our business plan and corporate strategies;
and
·
Other
risks and uncertainties discussed in greater detail in the sections
of
this prospectus, including those captioned “Risk Factors” and
“Management’s Discussion and Analysis or Plan of
Operation.”
Each
forward-looking statement should be read in context with, and with an
understanding of, the various other disclosures concerning Ecoland and our
business made elsewhere in this prospectus as well as other pubic reports filed
with the Securities and Exchange Commission. You should not place undue reliance
on any forward-looking statement as a prediction of actual results or
developments. We are not obligated to update or revise any forward-looking
statement contained in this prospectus to reflect new events or circumstances
unless and to the extent required by applicable law.
USE
OF PROCEEDS
This
prospectus relates to shares of our common stock that may be offered and sold
from time to time by the selling stockholders. We will not receive any proceeds
from the sale of shares of our common stock described in this
prospectus.
MARKET
FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
As
of the
date of this prospectus, the shares of our common stock are not quoted for
sale
on any public market. We currently have 44,650,000 shares of our common stock
issued and outstanding, which are held of record and beneficially owned by
49
persons.
8
As
for
our shares which we have agreed to register for resale by means of this
prospectus and our shares which may be sold subject to the provisions of Rule
144 under the Securities Act, please see “Selling Stockholders” and “Shares
Eligible for Future Sale.”
Securities
Authorized for Issuance under Equity Compensation Plans
We
do not
have any equity compensation plans as of the date of this
prospectus.
DESCRIPTION
OF BUSINESS
Company
Overview
David
Wallace, our chief executive officer, chief financial officer and sole director,
on April 15, 2005 formed Guano Distributors (Pty) Ltd., a South African
registered company, for the purpose of selling dry bar cave bat guano. Business
operations commenced on April 15, 2005. On May 15, 2005, Mr. Wallace, in
exchange for an option granted by our board of directors to acquire 20,000,000
shares of our common stock, agreed to transfer all of his ownership interest
in
Guano Distributors (Pty) Ltd. to Guano Distributors, Inc., a Nevada corporation,
which was incorporated by Robert Russell on June 24, 2005. Inasmuch as Mr.
Russell owned 20,000,000 shares of our common stock, which he acquired in
exchange for $20,000 worth of services, Messrs. Wallace and Russell equally
owned all of the shares of our issued and outstanding common stock after the
transfer by Mr. Wallace of his ownership interest in Guano Distributors (Pty)
Ltd. and the exercise of his options on May 15, 2005, in exchange for services
valued at $20,000.
On
May18, 2006, we amended our articles of incorporation to increase our authorized
common stock from 25,000,000, par value $0.001 per share to 500,000,000 shares
and to further authorize the issuance of 50,000,000 shares of preferred stock,
par value $0.001 per share. On June 28, 2006, we further amended our articles
of
incorporation to change the name of Guano Distributors, Inc. to Ecoland
International, Inc., in order to avoid confusion with the name of our
subsidiary, Guano Distributors (Pty) Ltd., with the parent company. There were
no management changes at that time. However, Mr. Russell resigned as an officer
and director of Ecoland on November 4, 2006 in order to pursue other personal
interests. Mr. Russell desired to leave a fully-dedicated management team in
place to further develop our business.
Asset
Sale Agreement. On
May15, 2005, Guano Distributors, Inc, a to be formed Nevada corporation, Guano
Distributors (Pty) Ltd., a South African limited company, and David Wallace
executed an Asset Sale Agreement whereby Guano Distributors, Inc. acquired
all
the outstanding capital stock of Guano Distributors (Pty) Ltd. owned by Mr.
Wallace in exchange for the assumption of all associated debts and liabilities
of Guano Distributors (Pty) Ltd., an option to purchase 20,000,000 shares of
our
common stock at $0.001 per share discussed above, and appointment of Mr. Wallace
to our board of directors.
The
total
assets Guano Distributors (Pty) Ltd. as of May 15, 2005 were ZAR149,811
(approximately $21,401) consisting primarily of inventory and two non-exclusive
letter agreements with Sociaf LDA, discussed below, and liabilities of
ZAR209,689 (approximately $29,955) represented by stockholder and other loans.
Guano Distributors (Pty) Ltd. had a loss of $8,554 at the date of
agreement.
On
May11, 2005, Guano Distributors (Pty) Ltd. executed two non-exclusive letter
agreements with Sociaf, LDA, an Angolan company, which provided Ecoland with
the
non-exclusive right to distribute Sociaf’s dry bar cave bat guano in the United
States, Europe, South Africa, Asia and the Middle East. Our distribution rights
have a lifespan of three years beginning May 11, 2005, and are renewable for
three year periods thereafter, upon agreement by the parties. Our pre-existing
distribution rights for Africa continued, even though not mentioned in the
written May 11, 2005 letter agreements. See “Description of Business -
Non-Exclusive Letter Agreements.”
Sociaf,
which was established in 1989, has a license from the Angolan government to
an
estimated 350,000 tons of dry bar cave bat guano in 54 caves located on the
properties in which Ecoland’s distribution rights are held. Sociaf had conducted
limited operations in Angola since its inception, mostly selling dry bar cave
bat guano regionally in Angola. However, Sociaf had difficulty in developing
any
significant market for its dry bar cave bat guano due to a lack of capital,
management expertise and the very restrictive business environment in Angola
in
which it operates.
9
Consequently,
in 2002, Derek Coburn and David Wallace, our chief executive officer, chief
financial officer and sole director, were invited by the controlling owners
of
Sociaf to provide consulting services for the purpose of overcoming the many
obstacles in the business environment in Angola, and to help expand the
business. In August 2003, Messrs. Coburn and Wallace completed a business plan
that involved implementation of selling dry bar cave bat guano into the South
African market. The business plan identified that the best potential for the
guano would be to export it out of Angola to countries that had developed
markets for the product, mainly the United States and Europe.
Messrs.
Coburn and Wallace determined that since the Angolan economy is not very
sophisticated by First World standards, it would be possible to achieve a higher
price and sales volumes for the bat guano by exporting it and adding value
to
the raw material by packaging the product and selling it under the brand name
“Ecoland Guano.”
We
currently market and sell the dry bar cave bat guano, which we are licensed
to
distribute, in Europe, mainly the United Kingdom, and in South Africa. The
logistics of distribution have been arranged in such a way that the bat guano
is
transported, using local trucking contractors, to shipping ports in Angola,
and
shipped via cargo ships. There are no contracts between Ecoland and shipping
lines, presently. However, we intend to approach shipping lines to obtain
contracts once sufficient volume of bat guano sales has been
achieved.
At
present the guano is extracted from the caves where it is subject to screening
to remove any extraneous items from the guano, such as stones and wood. The
guano is then packaged into woven polypropylene bags and loaded into containers
which are shipped to South Africa. Although Ecoland does not own the bat guano
deposits, we are involved with Sociaf in terms of extracting the guano to ensure
the extraction is performed in an environmentally friendly manner to preserve
the bats environment and the long term sustainability of supply.
In
order
to import the guano into South Africa, an import permit is required which
requires that the guano be registered with the Department of Agriculture as
a
fertilizer pursuant to South African law. We possess the requisite permit which
registers our bat guano as a Group 2 fertilizer. Once the guano is in South
Africa, it is then repackaged according to customer requirements both for the
local market and for the export market.
Ecoland
bat guano is then exported to the United Kingdom where it is subject, in terms
of European Union Regulations, to a search at the port of entry. Since we have
met all the regulatory requirements, once the guano has entered into the
European Union it can then be transported to any country within the EU free
of
any further customs or veterinary checks.
We
have
also sent an exploratory sample package to a company in California for the
purposes of establishing import requirements and as samples for potential
customers.
In
summary, as part of our business plan and current operations, we are developing
existing channels and exploring new channels to expand our current business
both
within South Africa and into other First World markets.
History
of Guano
The
word
guano originated from the Quichua language of the Inca civilization. Bat guano
was widely used by the native populations of pre-Columbian Latin America for
centuries as a fertilizer to increase crop yields. However, it was not until
the
early 1800s that bat guano was rediscovered by the Europeans to have valuable
agricultural benefits as a fertilizer. See, www.american.edu/ted/guano.htm.
10
Dry
bar
cave bat guano is distinct among all other organic fertilizers, as it is broken
down over many years by the microbial activity that is indigenous to the dark,
humid environment found inside caves. This biological process results in a
stable, natural, odorless fertilizer. Dry bar cave bat guano contains live
microbial flora, which when incorporated in the soil, acts on the organic matter
to make nutrients available to the plants. The nutrients found in dry bar cave
bat guano are the same that are artificially added to modern chemical
fertilizer, including nitrogen, phosphates, potassium, calcium and magnesium.
As
an added bonus, bat guano also contains other beneficial trace elements that
are
non-chemical and are naturally occurring through the breakdown process, with
no
man-made interventions. The dry bar cave bat guano is so-called because the
guano comes from insect eating bats and is found in a dry form in caves. Guano
from fruit-eating bats is generally not collectible as those bats live under
trees. The above paragraph is a summary of information contained in various
journal articles. See, New
Life Journal,
August,
2005 and Steele, D. Bernie, Bats,
Bacteria and Biotechnology. BATS,
vol. 7,
No. 1:3-4 website, http://www.batcon.org/batsmag/v7n1-1.html.
With
the
expansion of organic farming, and the increased demand for organically grown
fruits and vegetables from consumers in South Africa, Europe, and the United
States, bat guano fertilizer is once again becoming a valuable commodity. See
“Description of Business - Statistics” for a full discussion of the development
and demand for organic products in these markets. We believe the dry bar bat
guano found on the Sociaf properties in Angola is some of the freshest dry
bar
cave bat guano in the world, since the guano has not been used for any purpose
for over a quarter of a century, when it was first discovered. The guano is
in
effect re-discovered and exists in sufficient quantities to make commercial
exploitation viable in terms of selling a value added product. Dry bar cave
bat
guano cannot be manufactured and its usage is dependent upon finding new guano
deposits or managing existing deposits. See,
http://www.realestatejournal.com/homegarden/20030806-chapman.html.
The
dry
bar cave bat guano which we have a license to distribute is considered a slow
release fertilizer which saves valuable time and money for farmers, since the
use of it helps avoid multiple fertilizer applications. Research conducted
at
the University of California at Davis has found that “Slow release fertilizers,
sometimes called water-insoluble types, release nitrogen over time. They are
often applied at higher rates and less frequently than quick release formulas.
The initial response of turf is slower than quick release types but these
materials continue to provide nutrients over a period of 8 to 10 weeks or more.
They will not burn the turf even if applied at high rates and are not prone
to
leaching. These products are a little more expensive and include certain
synthetic fertilizer products and all natural organic fertilizers.” See,
http://www.ipm.ucdavis.edu/Tools/Turf/Siteprep/
amenfert.html.
Research conducted by Bayer Chemical Portugal in 1999 for Sociaf on dry bar
cave
bat guano tested its effectiveness against modern chemical fertilizers. The
results found the guano to be equally effective in providing the necessary
nutrients to soil.
In
our
opinion, the dry bar cave bat guano which we have a license to distribute is
resurfacing as the most logical, effective and affordable choice for farmers
that make up the rapidly growing organic market. We plan to produce a
granulated, coated fertilizer under the Ecoland
Guano
label,
which will be marketed in plastic tubs of one, two and five kilograms, as well
as in bags up to 25 kilograms. At present we sell guano in a powder form in
the
same package sizes under the Ecoland
Guano
label.
One kilogram equals approximately 2.2 pounds.
The
dry
bar cave bat guano which we have a license to distribute contains no man-made
fertilizer chemicals which is ideal for organic farming, since the central
point
behind organic agriculture as established in regulations formulated by the
United States Department of Agriculture and by the European Union is that no
artificially produced fertilizers or pesticides can be used in organic farming.
See, USDA
National Organic Standards, October 21, 2002and
EU
Regulation EU2092/91.
Non-Exclusive
Letter Agreements
Pursuant
to our non-exclusive letter agreements with Sociaf, we acquired the
non-exclusive right to distribute the dry bar cave bat guano controlled by
Sociaf in the United States, Europe, Asia, and the Middle East. The term of
each
agreement is from the date of execution until May 11, 2008 and is renewable
subject to written approval by both parties within 30 days prior to May 11,2008. Our pre-existing distribution rights for Africa, which included South
Africa, continued even though not mentioned in the written May 11, 2005 letter
agreements.
Sociaf
will continue to own the land, machinery, licenses, product and harvesting
rights for the bat guano. Ecoland will provide:
·
First
line call support for receiving of orders and first line service
calls
from customers.
11
·
Qualified
manpower, support and information to work sales
representatives.
·
Letters
of credit or similar financial instrument for each purchase order
within
seven days upon approval from
Sociaf.
Bat
Guano Harvesting, Sterilization and Packaging
The
harvesting of bat guano is a simple process requiring no sophisticated
techniques. In fact, due to local community and environmental concerns, we
plan
to continue working with Sociaf in collecting the bat guano strictly by hand,
utilizing the abundant, cost-effective labor work force in Angola. Harvesting
bat guano on a manual basis avoids disrupting the bat’s natural environment and
harming the bats in anyway, which only ensures future guano supply. This
environmentally friendly aspect of the business will remain a central focus
of
our marketing campaign.
While
the
guano will originate in Angola, we intend to process it in South Africa or
another low-cost environment. The underlying reasons for this are:
·
A
lack of suitable infrastructure in Angola, primarily sterilization
facilities, packaging equipment and printing supplies, financial
institutions for trade finance, communications and processing equipment
(granulation and coating
equipment).
·
The
cost of doing business in Angola is very high. Rent, communications,
logistics, expert personnel and even food are all in found in limited
supply in Angola. South Africa or some other strategic, modernized
country
will have the necessary infrastructure and should be cost-effective
for
Ecoland to conduct operations.
·
Diversification
of risk between Angola and South Africa. Although we classify the
risk in
Angola as medium, we would prefer to have our assets spread over
two
countries. Two distinct operations need to occur, harvesting, which
occurs
in Angola, and then processing/marketing, which occurs in South Africa.
Placing these two different aspects of the business separate of one
another helps to ensure survival and ultimately
success.
·
We
established a small stockpile of bat guano in South Africa for the
purposes of test marketing the product. In the future we will establish
a
more significant stockpile to help cover a portion of any outstanding
liabilities.
Intentionally
Left Blank.
12
Market
Analysis
Ecoland
intends to target markets in South Africa, Europe, the United Kingdom, and
the
United States. The market size for garden fertilizers in Germany, France and
the
U.K. is estimated to be over almost $1.93 billion per year alone.
See,
The
Focus Wickes Gardening Monitor: April 2004, page
78
for size of UK garden market.
RETAIL
SALES OF GARDEN PRODUCTS
2003
%
change
Sector
€ million
%
share
2003/2002
2003/1998
Outdoor
plants, seeds and bulbs
1,117
19.8
%
1
%
15
%
Indoor
plants
487
8.6
%
-9
%
13
%
Fertilisers,
soil conditioners / chemicals
701
12.4
%
-2
%
26
%
Motorised
cultivators/lawnmowers
676
12.0
%
-9
%
5
%
Consumables
*
569
10.1
%
10
%
21
%
Garden
furniture and barbecues
541
9.6
%
8
%
22
%
Garden
decoration and leisure goods**
399
7.1
%
12
%
53
%
Fencing
378
6.7
%
7
%
19
%
Power
tools
318
5.6
%
-6
%
8
%
Plant
containers
292
5.2
%
-3
%
7
%
Hand
tools
171
3.0
%
2
%
15
%
TOTAL
5,649
100.0
%
0.3
%
18
%
See,
“The
French Market for Garden Supplies,”UK
Department of Trade and Industry,
July
2004, page 4.
13
Chart
2:
Market according to product group 2003/2004 in EUR billion (Market share
in
%)
See,
“The
German Market for Lawn and Garden Supplies,”US
Commercial Service, Germany,
July
2005, page 2.
In
a 1986
survey carried out by the Council for Scientific and industrial Research (CSIR),
as quoted in the Fertilizer Handbook of the Fertilizer Society of South Africa
(FSSA, 2003), it is estimated that approximately 350,000 tons of chicken manure
are generated in various forms, most of which was used as fertilizer at the
time. Cattle feedlots also generate considerable quantities of manure. The
same
survey estimates that 75,000 tons of composted cattle manure was sold as
fertilizer. See, Fertilizer
use by crop in South Africa,
discussed in http://www.fao.org/docrep/008/y5998e/y5998e08.htm - bm08.3. There
is no established market for bat guano in South Africa. Consequently, there
are
no statistics or national accounts to estimate the size of the market
there.
Our
management team has, based on the usage figure from the United Nations Food
and
Agricultural Organization’s research discussed above of animal by products used
as a fertilizer in South Africa, has concluded that converting a small
proportion (approximately five percent) of the current users to bat guano would
yield a market size of 12,000 metric tons. Our assumptions underlying converting
current animal by-product users to guano are based on the benefits, discussed
earlier, of the product, primarily, the microbial flora included in the product.
Ecoland will aim for sales of 500-2,000 metric tons per annum which, based
upon
our current prices actually achieved in South Africa, would provide a
satisfactory revenue stream for a new product. Ecoland has imported into South
Africa approximately 65 metric tons which has been used for the purpose of
test
marketing and introducing the product to commercial farmers and retail
nurseries. The full amount has been utilized for the purposes of research and
sales by May 31, 2007.
We
aim to
grow the volume of sales in the range of 20 percent per annum from this level
for the first five years. Additional bat guano can be sold through retail garden
centers and nurseries. We have based our estimated market size for bat guano
at
five percent of the combined chicken and cattle manure markets annual
consumption in South Africa. Our management believes this is conservative for
two reasons, firstly, the above figures do not include the market use of compost
fertilizers that are not animal based, e.g.,
mushroom compost and garden refuse compost, and secondly, there are restrictions
on the use of animal by-products in organic farming, especially where the
manures are coming from cattle feedlots and battery chicken production, as
these
are considered artificial. Essentially, organic farms can only use organically
produced animal by-product manures. The animals cannot have been fed growth
hormones or genetically modified feed.
As
previously mentioned there is no developed market for dry bar cave bat guano
in
South Africa. However, from our actual sales experience to date, we have
established in Guano Distributors (Pty) Ltd., the selling price of dry bar
cave
bat guano at $1.75 per pound ($3.85 per Kilogram)in two to four pound
containers. On a commercial larger scale basis, the price per ton is less but
the delivery size is larger.
14
For
sales
outside Africa, we are currently achieving a price of $2.00 in the United
Kingdom per pound ($4.40 per kilogram). Our research shows that the current
retail price in United States is between $6 to $8 per pound ($13.20 - $17.60
per
kilogram) at the retail level, which translates to around $2.00 per pound ($4.40
per kilogram) at the supply/importer level. The selling price of guano in the
United States can be verified by visiting any web site that sells garden
products. We have not included these references for propriety reasons, inasmuch
as organic fertilizer products do carry a premium over chemical fertilizers.
“As
oil prices increase and the price of fertilizer rises, there will be a premium
on closing the nutrient cycle and replacing synthetic fertilizer with organic
waste.” See, http://www.peopleandplanet.net/doc.php?id=2532, and the earlier
reference to the University of California at Davis research with respect to
the
premium for using organic products.
As
the
dry bar cave bat guano which we have a license to distribute is processed in
the
low cost environment of South Africa, we feel the margins between our cost
and
the above mentioned prices are attractive and profitable. The exact margin
has
not been specified for competitive reasons.
Our
costs
of sale estimates for regions where the bat guano is to be shipped are
conservative as the largest portion of our cost is allocated to shipping (or
freight). However, we believe that as Angola produces very little products
for
export and imports most of its requirements by container ship, we will be in
a
position to negotiate lower freight rates by utilizing the unused containers
at
the port of Luanda and Lobito, both located in Angola, to export the bat guano
competitively to other countries.
The
best
margin is obtained for guano fertilizer sold regionally in Angola. The cost
of
sales for product delivered to Luanda, Angola is $0.11 per kilogram, with a
current selling price of $1.14 per kilogram. This is a margin of 90.4 percent
on
sales. The underlying reason for the high margin in Angola is that there are
no
export shipping costs to other countries, as these are domestic sales. However,
the potential to take advantage of this is limited as there is no developed
agricultural market in Angola that could utilize the bat guano as a fertilizer,
since most of the farming is subsistence and small scale.
Opportunities;
Organic Farming on the Rise
We
feel
that the international market for bat guano fertilizer will grow rapidly, since
the markets that Ecoland is targeting all have organic farming components,
and
have been certifying organically grown fruits and vegetables for several years
now. South Africa, Europe, the United Kingdom, and the United States all have
agencies that are either monitoring and/or certifying the practices of organic
farmers and the use of the term organic in marketing.
Bat
guano
fertilizer is considered organic by agencies and farmers in all regions, and
these organic farmers first and foremost require an organic means of building
healthy soils. To have healthy soils, farmers must nourish the living components
of their soil, the microbial inhabitants that release, transform, and transfer
nutrients. We feel that adding bat guano fertilizer to soil is one of the most
effective means to achieve this result since the guano contains microbial flora
that assist the living components of the soil. See, Steele, D. Bernie, 1989,
Bats,
Bacteria and Biotechnology.
BATS,
Vol. 7, No 1:3-4 and earlier references.
Organic
legislation started in Europe in 1991 with EU Regulation 2092/91. The United
Kingdom translated the regulation into its own national legislation the
following year, known as the UK Organic Products Regulation. These laws specify
how organic food is produced, processed and packaged, in order to qualify for
the description “organic.” Organic farming was defined as a way of growing crops
without utilizing artificial pesticides or fertilizers. Unfortunately, this
legislation only covered crop products (fruit, vegetables, and cereals)
initially, but in August 1999, the EU organic regulations were extended to
cover
livestock production (meat, eggs, poultry, and dairy products), with the U.K.
following suit the same year.
The
agency in the United Kingdom that certifies organically grown fruits and
vegetables is the Organic Farmers & Growers which also carries out the
inspection and licensing of organic farming, and food processing, across the
U.K.
In
South
Africa, the Agricultural Research Council is the government body that regulates
the organic markets. South Africa has adopted policies similar to the EU
Regulation 2092/91.
15
The
organic fruits and vegetables market in the United States has also been
monitored since October 21, 2002, when the United States Department of
Agriculture made it a federal offense to label any food product as “organic”
unless it has been certified as required by the U.S.D.A. regulations. All uses
of the labeling term “organic” for food are strictly regulated in the U.S. See,
http://www.ers.usda.gov/AmberWaves/February06/
Features/feature1.htm,
for a
discussion on the implementation of organic standards from the Organic Food
Production Act of 1990 through to the U.S.D.A. National Organic Standards which
were implemented on October 21, 2002, replacing the prior patchwork system
of
state organic standards. In essence, the continued growth in the size of the
organic market has reached a point where it has become necessary to introduce
regulations.
Statistics
Following
are some statistics regarding the organic foods market:
·
The
Organic Trade Association reports that the value of U.S. organic
food
sales in 2003 was $10.4 billion, up 20 percent from 2002, continuing
a
growth pattern of between 17 percent and 21 percent since 1997. Organic
food sales were 1.9 percent of total
food sales in 2003, an increase from 1.6 percent in 2002. Per capita
consumption of organic food was over $35 per person in 2003, nearly
double
the value in 1999.
Source:
OTA; Forecast: FAS; U.S. Market Profile for Organic Food Products, February22,2005, published by the United States Department of Agriculture, executive
summary page 3. We do not have reported information for a later
period.
·
Seven
in ten Americans express some concerns about the health risks of
pesticides, hormones, antibiotics and other chemicals used in food
production, according to a national consumer opinion poll conducted
by
Roper Public Affairs on behalf of Organic Valley Family of Farms.
See
their report located on their Internet web site at www.organicvalley.coop.
·
Almost
one-third of the U.S. population currently buys organically grown
food
products. The most frequently purchased product groups are vegetables,
fruits, and cereals/grains. See, The
U.S. Market Profile for Organic Food Products,February 22, 2005,
published by the United States Department of Agriculture, executive
summary page 3.
·
The
study shows that nearly 31 million hectares are currently certified
according to organic standards. Australia continues to account for
the
largest certified organic surface area, with 11.8 million hectares,
followed by Argentina (3.1 million hectares), China (2.3 million
hectares)
and the USA (1.6 million hectares). The global market for organic
products
reached a value of 25.5 billion euros in 2005, with the vast majority
of
products being consumed in North America and Europe.” A hectare is a
metric unit of area equal to 2.471 acres. See,
http://www.ifoam.org/press/press/Statistics_2007.html.
Ecoland
feels that the dry bar cave bat guano fertilizer which we have a license to
distribute promises to be a part of the demand related to the growth of organic
foods, since it is 100 percent organic.
We
feel
we have a development plan that will reward the local economy and the Angolan
people in the region where our dry bat cave bat guano rights are held. The
two
tenets of our plan are environmental and social responsibility, which
essentially require the bat guano to be harvested using technologies that do
not
disturb the bats and their environment,
i.e.,
no
pollution or construction of a non-temporary nature. The local community is
incorporated into our harvesting through the provision of labor and similar
services but also through consultations with community leaders so we do not
encroach upon existing land uses and issues. The caves are extremely large
and
have the potential to be used as tourist sites, with the aim of the development
plan to preserve these caves along with their natural formations of stalactite
and stalactmites for this purpose.
16
Competition
The
worldwide market for organic fertilizers is limited more by supply, than it
is
by demand and as fossil fuel prices continue to rise so to will the price of
fossil fuel based fertilizers. That is, for the energy required to produce
chemical based fertilizers, such as nitrogen and the by-products of fossil
fuel
processing, comparative analyses of organic farming show that it requires about
half the amount of energy to produce the same quantity of food. Source,
http://www.energybulletin.net/19160.html. In our opinion, the implication is
that the demand for organic fertilizers will increase in the coming years as
fossil fuels run out and prices rise. Bat guano is harvested and sold around
the
world in small quantities by a variety of import/export companies.
In
the
opinion of management, relatively little competition exists, at least in the
United Kingdom and in South Africa as there is no developed bat guano market.
With the organic foods boom in all of the markets we are targeting, there
appears to be an ample market for our bat guano fertilizer. This has been
established by our own research in these two markets. See, “Description of
Business - Statistics” in this prospectus.
Within
the United States the situation is different as there is a developed market
for
bat guano. However, the restriction is on supply. For example, one of the
biggest suppliers of bat guano, Bracken Caves, located in San Antonio, Texas
is
only able to supply 50 tons a year. See, www.batcon.org.
Our
advantage is access to a significant supply which can be sold in bulk or in
smaller packages as a value added product.
Key
Personnel
Our
future financial success depends to a large degree upon the personal efforts
of
our key personnel. In our formative period as a new enterprise, David Wallace,
our current chief executive officer, chief financial officer and sole director,
has played and is expected to continue to play the major role in developing
our
business strategy. The loss of the services of Mr. Wallace could have an adverse
effect on our business and our chances for profitable operations.
While
we
intend to employ additional management personnel in order to minimize the
critical dependency upon any one person, it is possible that we will not be
successful in attracting and retaining the persons needed. If we do not succeed
in retaining and motivating our current employees and attracting new high
quality employees, our business could be adversely affected.
Private
Placement
On
May14, 2006, we closed a private placement of 4,650,000 shares of our common stock
with 47 purchasers, resulting in gross proceeds of $93,000. Thirty-four of
our
subscribers were non-U.S. persons. The 13 U.S. investors were composed of six
accredited investors and seven non-accredited investors, as defined in the
Securities Act. We have agreed with the investors to file with the SEC a
registration statement covering the resale of all of our shares of common stock
issued in the private placement. Accordingly, we have included these shares
in a
registration statement on Form SB-2, of which this prospectus forms a
part.
Directors
and Management Personnel
The
directors and management of publicly traded corporations are increasingly
concerned with the extent of their personal exposure to lawsuits and stockholder
claims, as well as governmental and creditor claims which may be made against
them, particularly in view of recent changes in securities laws imposing
additional duties, obligations and liabilities on management and directors.
Due
to these perceived risks, directors and management are also becoming anxious
about the availability of liability insurance coverage for directors and
officers and other indemnification arrangements. We currently carry limited
liability insurance for our directors and officers which has recently become
much more expensive to obtain and maintain. If we are unable to continue or
provide liability insurance for our directors and officers at affordable rates
or at all, it may become increasingly more difficult to attract and retain
qualified outside directors to serve on our board of directors.
17
We
may
lose potential independent board members and management candidates to other
companies that have greater liability insurance coverage for directors and
officers or to companies that have revenues or have received greater funding
to
date which can offer greater compensation packages. The fees of directors are
also rising in response to their increased duties, obligations and liabilities
as well as increased exposure to such risks. As a company with a limited
operating history and limited resources, we will have a more difficult time
attracting and retaining management and outside independent directors than
a
more established company due to these enhanced duties, obligations and
liabilities.
Our
Financial Results May Be Affected by Factors Outside of Our
Control
Our
future operating results may vary significantly from quarter to quarter due
to a
variety of factors, many of which are outside our control. Our anticipated
expense levels are based, in part, on our estimates of future revenues and
may
vary from our projections. We may be unable to adjust spending rapidly enough
to
compensate for any unexpected revenue shortfall. Accordingly, any significant
shortfall in revenues in relation to our planned expenditures would materially
adversely affect our business, operating results, and financial
condition.
We
cannot
predict with certainty our revenues and operating results. Further, we believe
that period-to-period comparisons of our operating results are not necessarily
a
meaningful indication of future performance.
Legislative
Actions
There
have been regulatory changes, including the Sarbanes-Oxley Act of 2002, and
there may potentially be new accounting pronouncements or additional regulatory
rulings which will have an impact on our future financial position and results
of operations. The Sarbanes-Oxley Act of 2002 and other rule changes as well
as
proposed legislative initiatives have increased our general and administrative
costs as we have incurred increased legal and accounting fees to comply with
such rule changes. Further, proposed initiatives are expected to result in
changes in certain accounting rules, including legislative and other proposals
to account for employee stock options as a compensation expense. These and
other
potential changes could materially increase the expenses we report under U.S.
generally accepted accounting principles, and adversely affect our operating
results.
Limitation
of Monetary Liability
Our
articles of incorporation contain provisions which eliminate the liability
of
our directors for monetary damages to Ecoland and our stockholders. We may
also
have contractual indemnification obligations under our agreements with our
directors, officers and employees. The foregoing indemnification obligations
could result in Ecoland incurring substantial expenditures to cover the cost
of
settlement or damage awards against directors, officers and employees, which
we
may be unable to recoup. These provisions and resultant costs may also
discourage Ecoland from bringing a lawsuit against directors, officers, and
employees for breaches of their fiduciary duties, and may similarly discourage
the filing of derivative litigation by our stockholders against our directors,
officers, and employees even though such actions, if successful, might otherwise
benefit Ecoland and our stockholders.
Issuance
of Additional Shares
Our
articles of incorporation authorize the issuance of up to 50,000,000 shares
of
“blank check” preferred stock with such designations, rights and preferences as
may be determined from time to time by our board of directors. Accordingly,
our
board of directors is empowered, without stockholder approval, to issue
preferred stock with dividend, liquidation, conversion, voting or other rights
which could adversely affect the voting power or other rights of our
stockholders. In the event of issuance, the preferred stock could be utilized,
under certain circumstances, as a method of discouraging, delaying or preventing
a change in control, which could have the effect of discouraging bids for
Ecoland and thereby prevent stockholders from receiving the maximum value for
their shares. We have no present intention to issue any shares of preferred
stock in order to discourage or delay a change of control. However, we may
do so
at some time in the future.
18
We
are
authorized to issue 500,000,000 shares of common stock, of which as of the date
of this prospectus, 44,650,000 shares are issued and outstanding. As a result,
we will be left with 455,350,000 authorized shares of common stock that remain
unissued. Our board may generally issue shares of common stock, or options
or
warrants to purchase those shares, without further approval by our stockholders
based upon such factors as our board of directors may deem relevant at that
time. We may issue a large amount of additional securities to raise capital
to
further our development. We may also issue a large amount of additional
securities to directors, officers, employees and consultants as compensatory
grants in connection with services, both in the form of stand-alone grants
or
under stock plans which we may adopt. Such issuance of our equity securities
may
dilute your proportionate ownership and voting rights as our stockholders.
The
issuance of large numbers of shares, possibly at below market prices, is
likely
to result in substantial dilution to the interests of our stockholders. In
addition, issuances of large numbers of shares may adversely affect the market
price of our common stock.
Trading
Issues for Our Shares
If
our
shares of common stock are ever listed for trading on the OTC Bulletin Board,
the shares will most likely be sporadically or thinly traded, meaning that
the
number of persons interested in purchasing our common stock at or near ask
prices at any given time may be relatively small or none. This situation
could
be attributable to a number of factors, including the fact that we are a
small
company which is relatively unknown to stock analysts, stock brokers,
institutional investors and others in the investment community that generate
or
influence sales volume. Even if Ecoland came to the attention of such persons,
they tend to be risk-averse and would be reluctant to follow an unproven
company
such as Ecoland or purchase or recommend the purchase of our shares until
such
time as we became more seasoned and viable.
Moreover,
if our shares of common stock are ever listed for trading on the OTC Bulletin
Board, the market for our common stock will likely be characterized by
significant price volatility when compared to seasoned issuers, and we expect
that our share price will continue to be more volatile than a seasoned issuer
for the indefinite future. The volatility in our share price could be
attributable to a number of factors. First, as noted above, the shares of
our
common stock will most likely be sporadically or thinly traded. As a consequence
of this lack of liquidity, the trading of relatively small quantities of
shares
by our stockholders may disproportionately influence the price of our shares
in
either direction. Our stock price could, for example, decline precipitously
in
the event that a large number of shares of our common stock are sold on the
market without commensurate demand, as compared to a seasoned issuer which
could
better absorb those sales without adverse impact on its share
price.
Secondly,
we are a speculative or risky investment due to our limited operating history,
no profits to date, and uncertainty of future market acceptance for our dry
bar
cave bat guano. As a consequence of this enhanced risk, more risk-averse
investors may, under the fear of losing all or most of their investment in
the
event of negative news or lack of progress, be more inclined to sell their
shares on the market more quickly and at greater discounts than would be
the
case with the stock of a seasoned issuer.
Finally,
if our shares of common stock are ever listed for trading on the OTC Bulletin
Board, as stated above, the market for our common stock will likely be
characterized by significant price volatility when compared to seasoned issuers,
and we expect that our share price would continue to be more volatile than
a
seasoned issuer for the indefinite future. In the past, plaintiffs have often
initiated securities class action litigation against a company following
periods
of volatility in the market price of its securities. We may in the future
be the
target of similar litigation. Securities litigation could result in substantial
costs and liabilities and could divert our management’s attention and
resources.
19
Sale
of Shares by Selling Stockholders
After
the
registration statement of which this prospectus forms a part is declared
effective by the SEC, the selling stockholders may sell in the public market
up
to all of the shares of our common stock being registered in this offering.
That
means that up to 4,650,000 shares of our common stock may be sold. Without
taking into account any other issuance of common stock by Ecoland in the
future,
the number of shares being registered in this offering represents approximately
10.2 percent of our currently issued and outstanding shares. The mere prospect
of resales by the selling stockholders could depress the market price for
our
common stock. The significant downward pressure on our stock price caused
by the
sale of a significant number of shares by the selling stockholders may allow
short sellers of our stock an opportunity to take advantage of any decrease
in
the value of our common stock, and material amounts of short selling could
further contribute to progressive price declines in our common stock. We
will
comply with Corporation Finance Telephone Interpretation A.65 to avoid possible
violations of Section 5 of the Securities Act.
Employees
As
of the
date of this prospectus, we employed one full-time employee and five casual
employees on an ad hoc basis to assist in test marketing the product. None
of
these employees are currently represented by a labor union or are covered
under
a collective bargaining agreement. As we grow, we will need to attract an
unknown number of additional employees. We have experienced no work stoppages
and believe our relationships with our employees are good. We do not expect
that
we will have any difficulty in locating additional employees to support our
growth.
Description
of Property
Our
administrative offices are located at 4425 Venture Canyon Avenue, Suite 105,
Sherman Oaks, California91423, which is owned by a part-time employee, Marcia
Perlstein. This space is being utilized on a temporary basis free of charge.
There is no indication how long this arrangement will continue. We believe
that
all of our facilities are adequate for our current operations. We expect
that we
could locate other suitable facilities at satisfactory rates, should we need
more or alternative space.
Legal
Proceedings
We
are
not engaged in any litigation, and are unaware of any material claims or
complaints that could result in future litigation. We will seek to minimize
disputes with our customers but recognize the inevitability of legal action
in
today’s business environment as an unfortunate price of conducting
business.
MANAGEMENT’S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The
following discussion should be read in conjunction with our consolidated
financial statements and notes to those statements. In addition to historical
information, the following discussion and other parts of this prospectus
contain
forward-looking information that involves risks and uncertainties.
Total
revenues, from sales of bat guano were $2,030 for the three months ended
August31, 2007 compared to revues of $7,020 for the three months ended August 31,2006. Our gross profit for the three months ended August 31, 2007 was $1,326
compared to a gross profit of $5,508 for the three months ended August 31,2006.
Operating
expenses for the three months ended August 31, 2007 was $25,116 compared
to
$37,364 for the three months ended August 31, 2006. This led to an operating
loss of $23,790 for the period ended August 31, 2007 compared to an operating
loss of $31,856 for the period ended August 31, 2006. The interest expense
of
$7,876 for the period ended August 31, 2007 compared to interest expense
of
$2,096 for the period ended August 31, 2006 resulted in a net loss of $31,666
for the period ended August 21, 2007 and $33,952 for the period ended August31,2007.
Revenue
for the 12 months ended May 31, 2006 was $10,461 compared to $21,104 for
the 12
months ended May 31, 2007.
Cost
of
revenue was $21,057 for the year ended May 31, 2006, compared to $9,918 for
the
year ended May 31, 2007.
Total
expenses were $76,590 for the 12 months ended May 31, 2006, compared to $145,913
for the 12 months ended May 31, 2007. Consulting, legal and professional
expenses were $25,000 for the 12 months ended May 31, 2006 compared to $120,000
for the 12 months ended May 31, 2007 due to our efforts for complete our
registration statement.
Liquidity
and Capital Resources
Based
upon our recurring losses from operations as of August 31, 2007, our current
rate of cash consumption and the uncertainty of liquidity related initiatives
described below, there is substantial doubt as to our ability to continue
as a
going concern. Therefore, we will in all likelihood, have to rely on external
financing for some or all of our capital requirements. Future losses are
likely
to continue unless we successfully implement our business plan, which calls
for
Ecoland to secure both debt and equity financing while expanding our operations.
In addition to the $93,000 we received form the private placement of shares
our
common stock in April and May 2006, we raised $100,000 in December 2006 from
two
convertible promissory notes for face value of $120,000 from Raymond Russell,
the brother of Robert Russell one of our founders, and Stephen Treanor to
implement our business plan and expand operations, each of which is due on
December 15, 2007. However, at the election of the holder of each note, the
holder may convert the balance owing on his note at any time into shares
of our
common stock on the basis of one share valued at $0.02 or 50 shares per dollar
advanced to the company, based on the gross amount of $120,000.
Ecoland
does not have any fixed contract expenditures either of a capital nature
or
other. There are no fixed rental agreements or lease agreements. Our
expenditures are of a variable nature and so will fluctuate with the level
of
business.
At
present, we have a monthly expenditure rate of $8 - $10,000, which can be
met
from cash resources and from working capital and any shortfall will be met
by
current shareholders. Messrs. Russell and Wallace have committed to covering
the
operating expenses for the extended twelve months ending May 31,2008.
Accordingly,
we believe that we will have sufficient funds to enable the business to continue
operations until May 31, 2008. As of August 31, 2007, we had a deficiency
in
working capital of $173,036. Excluding the amounts payable to Messrs. Russell
and Wallace, we have a working capital deficit of $26,564.
Our
audited financial statements have been prepared on a basis that contemplates
our
continuation as a going concern and the realization of assets and liquidation
of
liabilities in the ordinary course of business. Our audited financial statements
do not include any adjustments relating to the recoverability and classification
of recorded asset amounts or the amounts and classification of liabilities
that
might be necessary should we be unable to continue as a going
concern.
Capital
Expenditures Commitments
As
of
August 31, 2007, we did not have any material capital expenditures commitments.
However, since that time, our capital requirements have been and will continue
to be significant as our plan of operation calls for additional capital to
facilitate growth and support our long-term development strategy marketing
programs. As discussed above, it is likely that we will have to seek additional
financing through future public or private sales of our securities, including
debt or equity securities. We may also seek funding for the development and
marketing of our dry bar cave bat guano through strategic partnerships and
other
arrangements with investment partners. Any such additional financing may
result
in significant dilution to existing stockholders. If adequate funds are not
available we may be required to curtail one or more of our future programs.
Our
ability to obtain such additional financing and to achieve our operating
goals
is uncertain.
21
Going
Concern
As
of
August 31, 2007, Ecoland had a $173,036 working capital deficit with a limited
borrowing capacity. The present condition continues to create uncertainty
as to
Ecoland’s ability to continue as a going concern in the absence of additional
capital and/or financing, particularly in light of our historic operating
losses. We are currently making the following efforts to improve our overall
financial condition:
·
Increasing
revenues, while maintaining or improving gross margins in the
process;
·
Control,
and in some cases reduce, general and administrative expenses that
will
not impede growth; and
·
Seek
additional sources of working capital through both debt and equity
transactions to fund daily
operations.
Specifically,
we believe our hoped for access to the capital markets will result in additional
working capital that will enable Ecoland to increase revenue generating
activities and access to any expertise which may be needed.
Quantitative
and Qualitative Disclosure About Market Risk
We
believe that we do not have any material exposure to interest or commodity
risks. We are exposed to certain economic and political changes in international
markets where we compete, such as inflation rates, recession, foreign ownership
restrictions, and trade policies and other external factors over which we
have
no control.
Our
financial results are quantified in U.S. dollars and a majority of our
obligations and expenditures with respect to our operations are incurred
in U.S.
dollars. Although we do not believe we currently have any materially significant
market risks relating to our operations resulting from foreign exchange rates,
if we enter into financing or other business arrangements denominated in
currency other than the U.S. dollars, variations in the exchange rate may
give
rise to foreign exchange gains or losses that may be significant.
We
currently have no material long-term debt obligations. We do not use financial
instruments for trading purposes and we are not a party to any leverage
derivatives.
As
discussed by our accountants, our revenue is currently insufficient to cover
our
costs and expenses. We anticipate raising any necessary capital from outside
investors coupled with bank or mezzanine lenders. As of the date of this
prospectus, we have not entered into any negotiations with any third parties
to
provide such capital.
Our
independent certified public accountants have stated in their report included
in
our May 31, 2007 financial statement, that we have incurred operating losses
in
the last two years, and that we are dependent upon management’s ability to
develop profitable operations. These factors among others may raise substantial
doubt about our ability to continue as a going concern.
Use
of Estimates and Significant Risks
The
preparation of consolidated financial statements in conformity with accounting
principles generally accepted in the United States 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 consolidated financial statements, and the reported amounts of revenues
and
expenses during the reporting periods. Actual results could differ from those
estimates.
22
Critical
Accounting Policies
Accounts
Receivable.
The
allowance for doubtful accounts is established as losses are estimated to
have
occurred through a provision for bad debt charged to earnings. Losses are
charged against the allowance when management believes the uncollectibility
of a
receivable is probable. Subsequent recoveries, if any, are credited to the
allowance. The allowance for doubtful accounts is evaluated on a regular
basis
by management and is based on historical experience and specifically identified
questionable receivables. The evaluation is inherently subjective, as it
requires estimates that are susceptible to significant revision as more
information becomes available. Allowance for doubtful accounts was and $1,200
and $0 at May 31, 2006 and 2007, respectively.
Income
Taxes.
We
account for income taxes using an asset and liability approach that requires
the
recognition of deferred tax assets and liabilities for the expected future
tax
consequences of events that have been recognized in our financial statements
or
tax returns. In estimating future tax consequences, we consider all expected
future events other than enactment of or changes in the tax law or rates.
The
deferred asset for the potential benefit of the net operating loss carryovers
has been offset by a valuation allowance in full. The actual benefit of the
net
operating loss carryovers will be dependent upon the realization of taxable
income.
Stock-Based
Compensation.
We
follow 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, Ecoland currently accounts for share-based payments
to
employees and non employees using the fair market value method and recognizes
compensation cost for employee stock options at fair market value.
Off-Balance
Sheet Arrangements
We
have
not entered into any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes
in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources and would be considered material
to
investors.
MANAGEMENT
Directors
and Executive Officers
Our
sole
director and executive officer is:
Name
Age
Position(s)
Position(s)
Held Since
David
Wallace
43
Chief
Executive Officer, Chief
Financial
Officer and Director
September
2005
The
members of our board of directors are subject to change from time to time
by the
vote of the stockholders at special or annual meetings to elect directors.
The
number of the directors may be between one and five members fixed from time
to
time by resolution duly passed by our board. Our board has fixed the number
of
our directors at one.
Each
director will hold office for the term for which elected and until his successor
is elected and qualified or until his earlier death, resignation or removal.
Vacancies and newly created directorships resulting from any increase in
the
number of authorized directors may generally be filled by a majority of the
directors then remaining in office. The directors elect officers annually.
There
are no family relationships among the directors and officers of
Ecoland.
We
may
employ additional management personnel, as our board of directors deems
necessary. Ecoland has not identified or reached an agreement or understanding
with any other individuals to serve in management positions. We do not
anticipate any problem in employing qualified staff.
23
Mr.
Wallace graduated from the University of Cape Town, South Africa, with a
Bachelors of Business Science and Bachelors of Commerce. Mr. Wallace is a
chartered accountant and belongs to the South African Institute of Chartered
Accountants. His trade experience comes from living in Hong Kong and Thailand.
He also has extensive networking contacts in Asia and Russia, where he ran
his
own import/export company. From March 2005 to the date of this prospectus,
Mr.
Wallace was the managing director of our wholly-owned subsidiary, Guano
Distributors (Pty) Ltd. and the chief executive officer, chief financial
officer
and director of Ecoland. From June 2004 until February, 28, 2005, he was
a
consultant to Sociaf’s export development project. From April 2004 until May 31,2005, he was employed by Ice Blue Solutions Ltd. located in the United Kingdom,
performing financial management for a software development company. From
1997 to
March 2004, he was a director of Covco (Hong Kong) Limited, and was involved
in
sourcing safety products from countries in the Far East, mainly China, for
export to Europe.
Code
of Ethics
We
have
adopted a code of ethics that applies to our principal executive officer,
principal financial officer, principal accounting officer or controller,
or
persons performing similar functions. The code of ethics is designed to deter
wrongdoing and to promote:
·
Honest
and ethical conduct, including the ethical handling of actual or
apparent
conflicts of interest between personal and professional
relationships;
·
Full,
fair, accurate, timely, and understandable disclosure in reports
and
documents that we file with, or submit to, the SEC and in other
public
communications made by us;
·
Compliance
with applicable governmental laws, rules and
regulations;
·
The
prompt internal reporting of violations of the code to an appropriate
person or persons identified in the code;
and
·
Accountability
for adherence to the code.
We
will
provide to any person without charge, upon request, a copy of our code of
ethics. Any such request should be directed to our corporate secretary at
4425
Ventura Canyon Avenue, Suite 105, Sherman Oaks, California91423. A copy
of our
code of ethics has been filed as an exhibit to the registration statement
of
which this prospectus is a part.
Once
this
prospectus become effective, under Section 16(a) of the Securities Exchange
Act
of 1934, as amended, our directors and certain of our officers, and persons
holding more than 10 percent of our common stock will be required to file
forms
reporting their beneficial ownership of our common stock and subsequent changes
in that ownership with the Securities and Exchange Commission. Such persons
will
also be required to furnish Ecoland with copies of all forms so
filed.
24
Outstanding
Equity Awards at Fiscal Year-End
The
following table provides information relating to equity awards to the named
executive officers as of the end of our last completed fiscal year.
Option
Awards
Stock
Awards
Name
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
Equity
Incentive Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
Option
Exercise
Price ($)
Option
Expiration Date
Number
of
Shares
or Units
of Stock
That
Have
Not
Vested
Market
Value of Shares or Units of Stock That Have Not
Vested
Equity
Incentive Plan Awards: Number of Unearned Shares, Units or Other
Rights That Have Not Vested
Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares,
Units or Other Rights That Have Not Vested
($)
Robert
Russell (1)
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
David
Wallace (2)
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
(1) Our
former chief executive officer.
(2) Our
current chief executive officer.
Employment
Agreements
We
do not
currently have employment agreements with any of our employees.
Equity
Compensation Plans
The
following table provides information regarding the Company’s equity compensation
plans as of
May
31, 2007.
Plan
Category
Number of securities (in
thousands) to be issued
upon exercise of
outstanding options,
warrants and rights
Weighted-average exercise
price of outstanding
options,warrants and
rights
Number of securities (in
thousands) remaining
available for future issuance
under equity compensation
plans
Equity
compensation plans approved by security holders
-0-
-0-
-0-
Equity compensation plans not
approved by security holders
-0-
-0-
-0-
Total
-0-
-0-
-0-
Summary
of Cash and Certain Other Compensation
At
present we have only one executive officer. The compensation program for
future
executives will consists of three key elements which will be considered by
a
compensation committee to be appointed:
·
A
base salary;
·
A
performance bonus; and
·
Periodic
grants and/or options of our common
stock.
25
Base
Salary.
Our
chief executive officer and all other senior executive officers receive
compensation based on such factors as competitive industry salaries, a
subjective assessment of the contribution and experience of the officer,
and the
specific recommendation by our chief executive officer.
Performance
Bonus.
A
portion of each officer’s total annual compensation is in the form of a bonus.
All bonus payments to officers must be approved by our compensation committee
based on the individual officer’s performance and company
performance.
Stock
Incentive.
Stock
options are granted to executive officers based on their positions and
individual performance. Stock options provide incentive for the creation
of
stockholder value over the long term and aid significantly in the recruitment
and retention of executive officers. The compensation committee considers
the
recommendations of the chief executive officer for stock option grants to
executive officers (other than the chief executive officer) and approves,
disapproves or modifies such recommendation.
Summary
Compensation Table
The
following table sets forth, for the two completed fiscal years ended May31,2007 and 2006.
Name
and Principal Position
Year
Salary
Bonus
($)
Stock
Awards ($)
Option
Awards ($)
Non-Equity
Incentive Plan Compensation ($)
Nonqualified
Deferred Compensation ($)
All
Other Compensation ($)
Total
($)
Robert
Russell (1)
2007
$
-0-
$
-0-
$
-0-
$
-0-
$
-0-
$
-0-
$
-0-
$
-0-
2006
$
-0-
$
-0-
$
20,000
$
-0-
$
-0-
$
-0-
$
-0-
$
20,000
David
Wallace (2)
2007
$
18,000
$
-0-
$
-0-
$
-0-
$
-0-
$
-0-
$
-0-
$
18,000
Chief
Executive Officer,
Chief
Financial Officer,
Principal
Accounting
Officer
and Director
2006
$
-0-
$
-0-
$
20,000
$
-0-
$
-0-
$
-0-
$
-0-
$
20,000
(1) Our
former chief executive officer.
(2) Our
current chief executive officer.
PRINCIPAL
STOCKHOLDERS
The
following table sets forth, as of the date of this prospectus, information
concerning ownership of our securities by:
·
Each
person who owns beneficially more than five percent of the outstanding
shares of our common stock;
·
Each
director;
·
Each
named executive officer; and
·
All
directors and officers as a group.
Common Stock Beneficially
Owned (2)
Name
and Address of Beneficial Owner (1)
Number
Percent
Robert
Russell
20,000,000
44.8
%
David
Wallace
20,000,000
44.8
%
All
directors and officers as a group (one person)
20,000,000
44.8
%
*
Less
than one percent.
(1)
Unless
otherwise indicated, the address for each of these stockholders
is c/o
4425 Ventura Canyon Avenue, Suite 105, Sherman Oaks, California91423.
Also, unless otherwise indicated, each person named in the table
above has
the sole voting and investment power with respect to his shares of our
common stock beneficially owned.
(2)
Beneficial
ownership is determined in accordance with the rules of the SEC.
For
purposes of calculating the percentage beneficially owned, the
number of
shares of our common stock deemed outstanding is 44,650,000 as
of the date
of this prospectus.
26
There
has
been no significant change in the ownership of Ecoland since its inception.
Mr.
David Wallace acquired 20,000,000 shares of our common stock pursuant to
an
exercise of an option granted and exercised by Mr. Wallace on May 15, 2005
in
exchange for the transfer of all of his ownership interest in Guano Distributors
(Pty) Ltd. See Note 3: Common Stock: Notes to the Consolidated Financial
Statements contained in this prospectus. Mr. Russell acquired his 20,000,000
shares on June 30, 2005 in consideration of service rendered in connection
with
the formation of Ecoland. The only other shares of our common stock to be
issued
were in connection with a private placement of our common stock in April
and May
2006 to 47 purchasers. See “Description of Business - Private Placement” and
“Selling Stockholders.”
Other
than as stated herein, there are no arrangements or understandings, known
to us,
including any pledge by any person of our securities:
·
The
operation of which may at a subsequent date result in a change
in control
of Ecoland; or
·
With
respect to the election of directors or other
matters.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
As
compensation for services performed in the formation of Ecoland, we have
issued
shares of our common stock to Messrs. Wallace and Russell. In addition, as
a
result of the Asset Sale Agreement, Mr. Wallace was elected as our chief
executive officer, chief financial officer and a director.
On
May15, 2005, Mr. Wallace agreed to transfer all of his ownership interest in
Guano
Distributors (Pty) Ltd., a South African registered company, to Guano
Distributors, Inc. in exchange for options authorized by our board of directors
to purchase 20,000,000 shares of our common stock valued $0.001 per share.
The
options were exercised on May 15, 2005. On June 30, 2005, Mr. Russell was
issued
20,000,000 shares of our common stock for services valued at $0.001 per share
which was expensed at $20,000 during our fiscal year ended May 31,2006.
DESCRIPTION
OF SECURITIES
The
authorized capital stock of Ecoland consists of 500,000,000 shares of common
stock, par value $0.001 per share, and 50,000,000 shares of preferred stock,
par
value $0.001 per share. As of the date of this prospectus, 44,650,000 shares
of
our common stock were issued and outstanding. We have not issued any shares
of
preferred stock.
Common
Stock
The
holders of our common stock are entitled to one vote for each share held
of
record on all matters submitted to a vote of our stockholders, including
the
election of directors. Our stockholders do not have cumulative voting rights.
Subject to preferences that may be applicable to any then outstanding series
of
our preferred stock, holders of our common stock are entitled to receive
ratably
dividends, if any, as may be declared by our board of directors out of legally
available funds. Upon our liquidation, dissolution, or winding up, the holders
of our common stock will be entitled to share ratably in the net assets legally
available for distribution to our stockholders after the payment of all our
debts and other liabilities, subject to the prior rights of any series of
our
preferred stock then outstanding. The holders of our common stock have no
preemptive or conversion rights or other subscription rights and there are
no
redemption or sinking fund provisions applicable to our common stock. All
outstanding shares of our common stock are fully paid and
nonassessable.
Preferred
Stock
Our
board
of directors has the authority, without further action by our stockholders,
to
provide for the issuance of shares of our preferred stock in one or more
series
and to fix the number of shares, designations, preferences, powers and relative,
participating, optional or other special rights and the qualifications or
restrictions on the rights. The holders of our preferred stock do not have
any
cumulative voting rights or preemptive or subscription rights by virtue of
their
ownership of our preferred stock. The preferences, powers, rights and
restrictions of different series of our preferred stock may vary with respect
to
dividend rates, amounts payable on liquidation, voting rights, conversion
rights, redemption provisions, sinking fund provisions, purchase funds, and
other matters. The issuance of a series of our preferred stock could decrease
the amount of earnings and assets available for distribution to holders of
our
common stock or affect adversely the rights and powers, including voting
rights,
of the holders of our common stock. Likewise, any issuance may have the effect
of delaying, deferring or preventing a change in control of
Ecoland.
27
Transfer
Agent
The
transfer agent of our common stock is Interstate Transfer Company, whose
address
is 6084 South 900 East, Suite 101, Salt Lake City, Utah84121, telephone
(801)
281-9746, and facsimile (801) 281-9750.
Provisions
of our articles of incorporation and bylaws concern matters of corporate
governance and the rights of our stockholders, such as the ability of our
board
of directors to issue shares of our common and preferred stock and to set
the
voting rights, preferences, and other terms of our preferred stock without
further stockholder action. These provisions could also delay or frustrate
the
removal of incumbent directors or the assumption of control of our board
of
directors by our stockholders, and may be deemed to discourage takeover
attempts, mergers, tender offers, or proxy contests not first approved by
our
board of directors, which some stockholders may deem to be in their best
interests.
Board
of Directors
The
business and affairs of Ecoland are managed under the direction of our board
of
directors, which currently consists of one member. The number of directors
shall
be neither more than five nor less than one. The number of directors is to
be
fixed by vote of the stockholders.
Newly
created directorships resulting from any increase in the number of directors
and
any vacancies on our board of directors resulting from death, resignation,
disqualification, removal or other causes shall be filled by the affirmative
vote of a majority of the remaining directors then in office, even though
less
than a quorum of the board of directors. Any director elected in accordance
with
the preceding sentence shall hold office for the remainder of the full term
for
which the new directorship was created or the vacancy occurred and until
the
director’s successor shall have been elected and qualified or until his earlier
death, resignation, or removal. No decrease in the number of directors
constituting the board of directors shall shorten the term of any incumbent
director.
Whenever
the holders of any class or series of our capital stock are entitled to elect
one or more directors under any resolution or resolutions of our board of
directors designating a series of our preferred stock, vacancies and newly
created directorships of a class or series may be filled by a majority of
the
directors then in office elected by the applicable class or series, by a
sole
remaining director so elected, or by the unanimous written consent, or the
affirmative vote of a majority of the outstanding shares of the class or
series
entitled to elect the directors.
Subject
to any rights of the holders of preferred stock to elect directors as a class,
a
director may be removed only for cause and only by the affirmative vote of
the
holders of 80 percent of the combined voting power of the then outstanding
shares of stock entitled to vote generally in the election of directors,
voting
together as a single class.
Meetings
of Stockholders
Except
as
otherwise required by law and subject to the rights of the holders of the
preferred stock, special meetings of stockholders may be called only
by:
28
·
Our
president or secretary.
·
Our
president or secretary at the request in writing of a majority of
the
board of directors, or at the request in writing of stockholders
owning a
majority of our voting capital
stock.
Special
stockholder meetings may not be called by any other person or in any other
manner. Our bylaws provide that only those matters set forth in the notice
of
the special meeting may be considered or acted upon at the special meeting.
Further, our bylaws provide that any action, which may be taken by the vote
of
the stockholders at a meeting, may be taken without a meeting if authorized
by
the written consent of stockholders holding at least a majority of the voting
power, unless the provisions of the statutes or of the articles of incorporation
require a greater proportion of voting power to authorize such action in which
case such greater proportion of written consents shall be required.
The
next
annual meeting of our stockholders will be held in 2007, on a date and at a
place and time designated by our board of directors.
Limitation
of Liability
Our
articles of incorporation provide that any director or officer of Ecoland shall
not be personally liable to Ecoland or its stockholders for damages as a result
of any act or failure to act in his capacity as a director or officer; provided,
however, the provision shall not eliminate or limit the liability of a director
or officer:
·
If
it is proven that his act or failure to act constituted a breach
of his
fiduciary duties and such breach involved intentional misconduct,
fraud or
a knowing violation of law, or
·
Under
the Nevada Revised Statutes.
Indemnification.
Our
articles of incorporation provide that Ecoland shall indemnify anyone who was
or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or
investigative, except an action by Ecoland or in its right, by reason of the
fact that he is or was a director, officer, employee, or agent of Ecoland,
or is
or was serving at our request as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses, including attorneys’ fees, judgments fines and amounts paid in
settlement actually and reasonably incurred by him in connection with the
action, suit or proceeding, if:
·
The
liability did not result from any act or failure to act which constituted
a breach of that person’s fiduciary duties in his capacity as a director
or officer, and involved intentional misconduct, fraud, or a knowing
violation of law; or
·
The
person acted in good faith and in a manner which he reasonably believed
to
be in, or not opposed to, our best interests, and with respect to
any
criminal action or proceeding, he had no reasonable cause to believe
his
conduct was unlawful.
Further,
our articles of incorporation permit Ecoland to indemnify any person who was
or
is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by Ecoland or in its right, to procure a judgment
in
its favor by reason of the fact that he is or was a director, officer, employee,
or agent of Ecoland, or is or was serving at our request as a director, officer,
employee, or agent of another corporation, partnership, joint venture, trust,
or
other enterprise, against expenses, including amounts paid in settlement and
attorneys’ fees actually and reasonably incurred by him in connection with
defense or settlement of the action or suit, if:
·
The
liability did not result from any act or failure to act which constituted
a breach of that person’s fiduciary duties in his capacity as a director
or officer, and involved intentional misconduct, fraud or a knowing
violation of law; or
29
·
The
person acted in good faith and in a manner which he reasonably believed
to
be in, or not opposed to, our best
interests.
However,
we are prohibited from indemnifying any person with respect to any action,
suit,
or proceeding by a court of competent jurisdiction, if he has been finally
adjudged to be liable to Ecoland, unless, and only to the extent that, the
court
of competent jurisdiction determines upon application that the person is fairly
and reasonably entitled to indemnification in view of all the circumstances
of
the case.
Under
our
articles of incorporation, our bylaws may be amended by our board of directors
or by the affirmative vote of the holders of at least a majority of the combined
voting power of the outstanding shares of our capital stock then outstanding
and
entitled to vote, voting together as a single class.
Disclosure
of Commission Position on Indemnification for Securities Act
Liabilities
Our
articles of incorporation permit Ecoland to limit the liability of our directors
to the fullest extent permitted under the Nevada Revised Statutes. As permitted
by the Nevada Revised Statutes, our articles of incorporation include provisions
that eliminate the personal liability of each of our officers and directors
for
any obligations arising out of any acts or conduct of such officer or director
performed for or on behalf of Ecoland. To the fullest extent allowed by the
Nevada Revised Statutes, we will defend, indemnify and hold harmless our
directors or officers from and against any and all claims, judgments and
liabilities to which each director or officer becomes subject to in connection
with the performance of his duties and will reimburse each such director or
officer for all legal and other expenses reasonably incurred in connection
with
any such claim of liability. However, we will not indemnify any officer or
director against, or reimburse for, any expense incurred in connection with
any
claim or liability arising out of the officer’s or director’s own negligence or
misconduct in the performance of duty.
The
provisions of our articles of incorporation regarding indemnification are not
exclusive of any other right we have to indemnify or reimburse our officers
or
directors in any proper case, even if not specifically provided for in our
articles of incorporation or bylaws.
We
believe that the indemnity and the limitation of liability provisions contained
in our articles of incorporation are necessary to attract and retain qualified
persons for these positions. Other than as disclosed in “Description of
Business – Legal Proceedings” in this prospectus, no pending material
litigation or proceeding involving our directors, executive officers, employees
or other agents as to which indemnification is being sought exists, and we
are
not aware of any pending or threatened material litigation that may result
in
claims for indemnification by any of our directors or executive
officers.
Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers or persons controlling Ecoland pursuant to
the
foregoing provisions, we have been informed that, in the opinion of the SEC,
such indemnification is against public policy as expressed in the Securities
Act
and is therefore unenforceable.
SHARES
ELIGIBLE FOR FUTURE SALE
Future
sales of a substantial number of shares of our common stock in the public market
could adversely affect market prices prevailing from time to time. Under the
terms of this offering, the shares of our common stock offered may be resold
without restriction or further registration under the Securities Act, except
that any shares purchased by our “affiliates,” as that term is defined under the
Securities Act, may generally only be sold in compliance with Rule 144 under
the
Securities Act.
30
Sale
of Restricted Shares
Certain
shares of our outstanding common stock were issued and sold by Ecoland in
private transactions in reliance upon exemptions from registration under the
Securities Act and have not been registered for resale. Such shares may be
sold
only pursuant to an effective registration statement filed by Ecoland or an
applicable exemption, including the exemption contained in Rule 144 promulgated
under the Securities Act.
In
general, under Rule 144 as currently in effect, a stockholder, including one
of
our affiliates, may sell shares of our common stock after at least one year
has
elapsed following the time such shares were acquired from Ecoland or our
affiliate.
The
number of shares of our common stock which may be sold within any three-month
period is limited to the greater of:
·
One
percent of our then outstanding common stock,
or
·
The
average weekly trading volume in our common stock during the four
calendar
weeks preceding the date on which notice of such sale was filed under
Rule
144.
Certain
other requirements of Rule 144 concerning availability of public information,
manner of sale and notice of sale must also be satisfied. In addition, a
stockholder who is not our affiliate, who has not been our affiliate three
months prior to the sale, and who has beneficially owned shares acquired from
Ecoland or our affiliate for over two years may resell the shares of our common
stock without compliance with many of the foregoing requirements under Rule
144.
SELLING
STOCKHOLDERS
Each
selling stockholder may from time to time offer and sell any or all of its
shares that are registered under this prospectus. Because no selling stockholder
is obligated to sell its shares, and because the selling stockholders may also
acquire publicly traded shares of our common stock, we can only estimate how
many shares each selling stockholder will own after the offering. In this
prospectus, the term “selling stockholder” includes each stockholder, and its
transferees, pledgees, donees, assignees, or other successors in
interest.
All
expenses incurred with respect to the registration of our common stock covered
by this prospectus will be borne by Ecoland, but we will not be obligated to
pay
any underwriting fees, discounts, commissions or other expenses incurred by
any
selling stockholder in connection with its sale of shares.
All
of
the securities being offered by this prospectus are being offered by the selling
stockholders, who may from time to time offer and sell pursuant to this
prospectus up to an aggregate of 4,650,000 shares of our common stock. The
selling stockholders all purchased their shares in a private placement of our
common stock.
During
the last five years, none of the selling stockholders has been convicted in
a
criminal proceeding, or been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such
laws.
No
selling stockholder is a registered broker-dealer or an affiliate of a
registered broker-dealer. Further, there has been no material relationship
between any selling stockholder and Ecoland.
The
following table sets forth, with respect to each selling
stockholder:
·
The
number of shares of our common stock beneficially owned as of the
date of
this prospectus and prior to the offering contemplated
hereby;
31
·
The
maximum number of shares of our common stock which may be sold by
the
selling stockholder under this prospectus;
and
·
The
number and percentage of shares of our common stock which will be
owned
after the offering by the selling stockholder, assuming that all
of the
shares offered are sold by the selling
stockholder.
Name
of Stockholder
Relationship
Common Stock
Owned Before
the Offering
Common Stock
Which May Be
Offered
Common Stock
Owned After the
Offering
Percent of Common
Stock Owned After
the Offering
Adrian
McIvor
Stockholder
100,000
100,000
-0-
0
%
Alan
Wright
Stockholder
100,000
100,000
-0-
0
%
Andrea
Shustarich
Stockholder
100,000
100,000
-0-
0
%
Andrew
Russell
Stockholder
100,000
100,000
-0-
0
%
Annemarie
Rogers
Stockholder
100,000
100,000
-0-
0
%
Ben
McCormack
Stockholder
150,000
150,000
-0-
0
%
Brendan
Carroll
Stockholder
100,000
100,000
-0-
0
%
Bruce
Feith
Stockholder
100,000
100,000
-0-
0
%
Christopher
Taylor
Stockholder
100,000
100,000
-0-
0
%
Ciaran
Smith
Stockholder
100,000
100,000
-0-
0
%
Cimmiron
Capital
Stockholder
100,000
100,000
-0-
0
%
Coleen
McKeown
Stockholder
100,000
100,000
-0-
0
%
Darren
Rogers
Stockholder
100,000
100,000
-0-
0
%
Dennis
Rogers
Stockholder
50,000
50,000
-0-
0
%
Dianne
Shmit
Stockholder
100,000
100,000
-0-
0
%
Dimi
Dedes
Stockholder
150,000
150,000
-0-
0
%
Dion
Elliotte
Stockholder
50,000
50,000
-0-
0
%
Dion
West Elliot
Stockholder
50,000
50,000
-0-
0
%
Dolares
McCormack
Stockholder
100,000
100,000
-0-
0
%
Donna
Kelly
Stockholder
100,000
100,000
-0-
0
%
Elisa
Blackborough
Stockholder
100,000
100,000
-0-
0
%
EuroSwiss
Equities
Stockholder
100,000
100,000
-0-
0
%
Gordon
Jones
Stockholder
100,000
100,000
-0-
0
%
Hugh
Duncan
Stockholder
100,000
100,000
-0-
0
%
Jill
Feith
Stockholder
100,000
100,000
-0-
0
%
Jim
Joe McCullagh
Stockholder
100,000
100,000
-0-
0
%
Jonathon
Payne
Stockholder
100,000
100,000
-0-
0
%
Jonathon
Pearlstein
Stockholder
150,000
150,000
-0-
0
%
Kelly
Collins
Stockholder
50,000
50,000
-0-
0
%
Kieran
O’Brian
Stockholder
100,000
100,000
-0-
0
%
Lea
Treanor
Stockholder
100,000
100,000
-0-
0
%
Lee
Ann Shmit
Stockholder
100,000
100,000
-0-
0
%
Lorenzo
Martinez
Stockholder
100,000
100,000
-0-
0
%
Marcia
Pearlstein
Stockholder
100,000
100,000
-0-
0
%
Margaret
Brennan
Stockholder
100,000
100,000
-0-
0
%
Margaret
R. Brennan
Stockholder
50,000
50,000
-0-
0
%
Maribel
Figueroa
Stockholder
100,000
100,000
-0-
0
%
Mark
Brown
Stockholder
100,000
100,000
-0-
0
%
Mark
Herald
Stockholder
100,000
100,000
-0-
0
%
Marrin
Rice
Stockholder
100,000
100,000
-0-
0
%
Marzac
Productions
Stockholder
100,000
100,000
-0-
0
%
Michelle
Ishio
Stockholder
100,000
100,000
-0-
0
%
Rent-A-Hubby,
Inc.
Stockholder
100,000
100,000
-0-
0
%
Richard
Labikas
Stockholder
100,000
100,000
-0-
0
%
Rosalie
Zweigel
Stockholder
100,000
100,000
-0-
0
%
Tiffany
Pearlstein
Stockholder
150,000
150,000
-0-
0
%
Zachary
Holland
Stockholder
100,000
100,000
-0-
0
%
Total
4,650,000
4,650,000
-0-
0
%
32
PLAN
OF DISTRIBUTION
The
selling stockholders, or their pledgees, donees, transferees, or any of their
successors in interest selling shares received from the named selling
stockholders as a gift, partnership distribution or other non-sale-related
transfer after the date of this prospectus (all of whom may be a selling
stockholder) may sell all or a portion of our common stock offered by this
prospectus from time to time in market transactions through any market on which
our common stock is then traded, in negotiated transactions or otherwise, and
at
a price of $0.02 per share until such time as our shares are quoted for sale
on
the OTC Bulletin Board as described in this prospectus, and thereafter, at
prices and on terms that will be determined by the then prevailing market price
or at privately negotiated prices directly or through a broker or brokers,
who
may act as agent or as principal or by a combination of such methods of sale.
The selling stockholders may sell our common stock by one or more of the
following methods, without limitation:
·
Block
trades in which the broker or dealer so engaged will attempt to sell
our
common stock as agent but may position and resell a portion of the
block
as principal to facilitate the
transaction;
·
An
exchange distribution in accordance with the rules of any stock exchange
on which our common stock is
listed;
·
Ordinary
brokerage transactions and transactions in which the broker solicits
purchases;
·
Privately
negotiated transactions;
·
In
connection with short sales of our
shares;
·
Through
the distribution of our common stock by any selling stockholder to
its
partners, members or stockholders;
·
By
pledge to secure debts of other
obligations;
·
In
connection with the writing of non-traded and exchange-traded call
options, in hedge transactions and in settlement of other transactions
in
standardized or over-the-counter
options;
·
Purchases
by a broker-dealer as principal and resale by the broker-dealer for
its
account; or
·
In
a combination of any of the above.
These
transactions may include crosses, which are transactions in which the same
broker acts as an agent on both sides of the trade. The selling stockholders
may
also transfer our common stock by gift. We do not know of any arrangements
by
the selling stockholders for the sale of any of our common stock.
The
selling stockholders may engage brokers and dealers, and any brokers or dealers
may arrange for other brokers or dealers to participate in effecting sales
of
our common stock. These brokers or dealers may act as principals, or as an
agent
of a selling stockholder. Broker-dealers may agree with a selling stockholder
to
sell a specified number of the stock at a stipulated price per share. If the
broker-dealer is unable to sell our common stock acting as agent for a selling
stockholder, it may purchase as principal any unsold shares at the stipulated
price. Broker-dealers who acquire common stock as principals may thereafter
resell the shares from time to time in transactions in any stock exchange or
automated interdealer quotation system on which our common stock is then listed,
at prices and on terms then prevailing at the time of sale, at prices related
to
the then-current market price or in negotiated transactions. Broker-dealers
may
use block transactions and sales to and through broker-dealers, including
transactions of the nature described above.
33
The
selling stockholders may also sell our common stock in accordance with Rule
144
or Rule 144A under the Securities Act, rather than pursuant to this prospectus.
In order to comply with the securities laws of some states, if applicable,
the
shares of our common stock may be sold in these jurisdictions only through
registered or licensed brokers or dealers.
From
time
to time, one or more of the selling stockholders may pledge, hypothecate or
grant a security interest in some or all of the shares owned by them. The
pledgees, secured parties or person to whom the shares have been hypothecated
will, upon foreclosure in the event of default, be deemed to be selling
stockholders. The number of a selling stockholder’s shares offered under this
prospectus will decrease as and when it takes such actions. The plan of
distribution for that selling stockholder’s shares will otherwise remain
unchanged. In addition, a selling stockholder may, from time to time, sell
the
shares short, and, in those instances, this prospectus may be delivered in
connection with the short sales and the shares offered under this prospectus
may
be used to cover short sales.
To
the
extent required under the Securities Act, the aggregate amount of the selling
stockholders’ shares being offered and the terms of the offering, the names of
any agents, brokers, dealers or underwriters, any applicable commission and
other material facts with respect to a particular offer will be set forth in
an
accompanying prospectus supplement or a post-effective amendment to the
registration statement of which this prospectus is a part, as appropriate.
Any
underwriters, dealers, brokers or agents participating in the distribution
of
our common stock may receive compensation in the form of underwriting discounts,
concessions, commissions or fees from a selling stockholder and/or purchasers
of
the selling stockholders’ shares, for whom they may act (which compensation as
to a particular broker-dealer might be less than or in excess of customary
commissions). Neither Ecoland nor any selling stockholder can presently estimate
the amount of any such compensation.
The
selling stockholders and any underwriters, brokers, dealers or agents that
participate in the distribution of our common stock will be deemed to be
“underwriters” within the meaning of the Securities Act, and any discounts,
concessions, commissions or fees received by them and any profit on the resale
of the securities sold by them may be deemed to be underwriting discounts and
commissions. If a selling stockholder is deemed to be an underwriter, the
selling stockholder may be subject to certain statutory liabilities including,
but not limited to Sections 11, 12 and 17 of the Securities Act and Rule 10b-5
under the Exchange Act. Selling stockholders who are deemed underwriters within
the meaning of the Securities Act will be subject to the prospectus delivery
requirements of the Securities Act. The SEC staff is of a view that selling
stockholders who are registered broker-dealers are deemed to be underwriters
under the Securities Act while affiliates of registered broker-dealers may
be
underwriters under the Securities Act. We will not pay any compensation or
give
any discounts or commissions to any underwriter in connection with the
securities being offered by this prospectus.
A
selling
stockholder may enter into hedging transactions with broker-dealers and the
broker-dealers may engage in short sales of our common stock in the course
of
hedging the positions they assume with that selling stockholder, including,
without limitation, in connection with distributions of our common stock by
those broker-dealers. A selling stockholder may enter into option or other
transactions with broker-dealers, who may then resell or otherwise transfer
our
common stock. A selling stockholder may also loan or pledge our common stock
offered hereby to a broker-dealer and the broker-dealer may sell our common
stock offered by this prospectus so loaned or upon a default may sell or
otherwise transfer the pledged common stock offered by this
prospectus.
The
selling stockholders and other persons participating in the sale or distribution
of our common stock will be subject to applicable provisions of the Exchange
Act, and the rules and regulations under the Exchange Act, including Regulation
M. This regulation may limit the timing of purchases and sales of any of our
common stock by the selling stockholders and any other person. The
anti-manipulation rules under the Exchange Act may apply to sales of common
stock in the market and to the activities of the selling stockholders and their
affiliates. Regulation M may restrict the ability of any person engaged in
the
distribution of our common stock to engage in market-making activities with
respect to the particular common stock being distributed for a period of up
to
five business days before the distribution. These restrictions may affect the
marketability of our common stock and the ability of any person or entity to
engage in market-making activities with respect to our common
stock.
34
We
have
agreed to indemnify the selling stockholders and any brokers, dealers and agents
who may be deemed to be underwriters, if any, of our common stock offered by
this prospectus, against specified liabilities, including liabilities under
the
Securities Act. The selling stockholders have agreed to indemnify Ecoland
against specified liabilities.
Our
issued and outstanding common stock offered by this prospectus was originally
issued to the selling stockholders pursuant to an exemption from the
registration requirements of the Securities Act. We agreed to register our
common stock issued or to be issued to the selling stockholders under the
Securities Act, and to keep the registration statement of which this prospectus
is a part effective until all of the securities registered under this
registration statement have been sold. We have agreed to pay all expenses
incident to the registration of our common stock held by the selling
stockholders in connection with this offering, but all selling expenses related
to the securities registered shall be borne by the individual holders of such
securities pro rata on the basis of the number of shares of securities so
registered on their behalf.
We
cannot
assure you that the selling stockholders will sell all or any portion of our
common stock offered by this prospectus. In addition, we cannot assure you
that
a selling stockholder will not transfer the shares of our common stock by other
means not described in this prospectus.
LEGAL
MATTERS
The
validity of our common stock has been passed upon by Glast, Phillips &
Murray, P.C., Houston, Texas.
EXPERTS
Our
financial statements for the period from inception through May 31, 2007 included
in this prospectus have been so included in reliance on the reports of Moore
& Associates, certified public accountants, given on that firm’s authority
as experts in auditing and accounting.
REPORTS
TO STOCKHOLDERS
We
will
furnish our stockholders with an annual report which describes the nature and
scope of our business and operations for the prior year and which will contain
a
copy of our audited financial statements for our most recent fiscal year. In
addition, we will furnish our stockholders with a proxy statement as required
by
the Exchange Act covering matters to be voted upon at our annual meeting of
stockholders.
WHERE
YOU CAN FIND MORE INFORMATION
We
have
filed with the SEC under the Securities Act a registration statement on Form
SB-2 with respect to the shares being offered in this prospectus. This
prospectus does not contain all of the information set forth in the registration
statement, certain items of which are omitted in accordance with the rules
and
regulations of the SEC. The omitted information may be inspected and copied
at
the Public Reference Room maintained by the SEC at 100 F Street N.E.,
Washington, D.C. 20549. Copies of such material can be obtained from the public
reference section of the SEC at prescribed rates.
For
further information with respect to Ecoland and the securities being offered
hereby, reference is hereby made to the registration statement, including the
exhibits thereto and the financial statements, notes, and schedules filed as
a
part thereof.
35
No
person
is authorized to give you any information or make any representation other
than
those contained or incorporated by reference in this prospectus. Any such
information or representation must not be relied upon as having been authorized.
Neither the delivery of this prospectus nor any sale made hereunder shall,
under
any circumstances, create any implication that there has been no change in
our
affairs since the date of the prospectus.
Once
this
prospectus becomes effective, we will be subject to the informational
requirements of the Exchange Act, and must file reports, proxy statements and
other information with the SEC, such as current, quarterly and annual reports
on
Forms 8-K, 10-QSB and 10-KSB. Our executive officers, directors and beneficial
owners of 10 percent or more of our common stock will also file reports relative
to the acquisition or disposition of shares of our common stock or acquisition,
disposition or exercise of any of our common stock purchase options or warrants.
These filings will be a matter of public record and any person may read and
copy
any materials we file with the SEC at the SEC’s Public Reference Room at 100 F
Street N.E., Washington, D.C. 20549. You may obtain information on the operation
of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Further,
the
SEC maintains an Internet web site at http://www.sec.gov that contains reports,
proxy and information statements, and other information regarding issuers,
including us, that file electronically with the SEC.
Consolidated
Statements of Stockholders’ Equity (Deficit)
F-13
Consolidated
Statements of Cash Flows
F-14
Notes
to the Consolidated Financial Statements
F-15
Intentionally
Left Blank.
MOORE
& ASSOCIATES, CHARTERED
ACCOUNTANTS
AND ADVISORS
PCAOB
REGISTERED
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the
Board of Directors
Ecoland
International Inc.
(Formerly
Guano Distributors, Inc )(A Development Stage Company)
Las
Vegas, Nevada
We
have
audited the accompanying balance sheet of Ecoland International Inc. (Formerly
Guano Distributors, Inc) (A Development Stage Company) as of May 31, 2007,
and
the related statements of operations, stockholders’ equity and cash flows for
the years ended May 31, 2007 and May 31, 2006 and for the period from inception
on April 15, 2005 through May 31, 2007. These financial statements are the
responsibility of the Company’s management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We
conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan
and perform the audits 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
audits 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 Ecoland International Inc.,
(Formerly Guano Distributors, Inc) (A Development Stage Company) as of May31,2007 and the results of its operations and its cash flows for the years ended
May 31, 2007 and May 31, 2006 and for the period from inception on April 15,2005 through May 31, 2007, in conformity with accounting principles generally
accepted in the United States of America.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 2 to the financial
statements, the Company’s lack of operations and net losses as of May 31, 2007
raise substantial doubt about its ability to continue as a going concern.
Management’s plans concerning these matters are also described in Note 2. The
financial statements do not include any adjustments that might result from
the
outcome of this uncertainty.
Adjustments
to reconcile net loss to net cash used by operating
activities:
Depreciation
and amortization
763
109
872
Common
stock issued for services
-
53,000
53,000
Changes
in operating assets and liabilities
Increase
in accounts receivable
(4,717
)
(8,786
)
(13,503
)
Increase
in prepaid expenses and deposits
943
(1,306
)
(364
)
Increase
in account payable and accrued expenses
10,020
16,672
12,792
Net
Cash Used by Operating Activities
(150,765
)
(28,744
)
(222,537
)
CASH
FLOWS FROM INVESTING ACTIVITIES
Purchase
of fixed assets
-
(1,525
)
(1,525
)
Net
Cash Used by Investing Activities
-
(1,525
)
(1,525
)
CASH
FLOWS FROM FINIANCING ACTIVITIES
Common
stock issued for cash
20,000
60,000
80,015
Proceeds
from issuance of notes payable
17,737
18,300
36,037
Proceeds
from issuance of notes payable - related parties
98,823
10,804
132,640
Net
Cash Provided by Financing Activities
136,560
89,104
248,692
NET
DECREASE IN CASH
(14,205
)
58,835
24,630
CASH
AT BEGINNING OF PERIOD
38,835
-
-
CASH
AT END OF PERIOD
$
24,630
$
58,835
$
24,630
The
accompanying notes are an integral part of these consolidated financial
statements.
F-5
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. 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.
F-6
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 (Continued)
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.
Deferred
taxes are provided on a liability method whereby deferred tax assets are
recognized for deductible temporary differences and operating loss and tax
credit carry forwards and deferred tax liabilities are recognized for taxable
temporary differences. Temporary differences are the differences between the
reported amounts of assets and liabilities and their tax bases. Deferred tax
assets are reduced by a valuation allowance when, in the opinion of management,
it is more likely that not that some portion or all of the deferred tax assets
will not be realized. Deferred tax assets and liabilities are adjusted for
the
effects of changes in tax laws and rates on the date of enactment.
F-7
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 (Continued)
Net
deferred tax assets consist of the following components as of:
The
income tax provision differs from the amount of income tax determined by
applying the U.S. federal income tax rate of 39% to pretax income from
continuing operations for the periods ended:
At
May31, 2007, the Company had net operating loss carry forwards of approximately
$205,000 that may be offset against future taxable income through the year
2027.
No tax benefit has been reported in the May 31, 2007 financial statements since
the potential tax benefit is offset by a valuation allowance of the same
amount.
Due
to
the change in ownership provisions of the Tax Reform Act of 1986, net operating
loss carryforwards for Federal income tax reporting purposes are subject to
annual limitations. Should a change in ownership occur, net operating loss
carry
forwards may be limited as to use in the future.
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.
F-8
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 (Continued)
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.
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.
F-9
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.
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.
Adjustments
to reconcile net loss to net cash used by operating
activities:
Depreciation
and amortization
60
60
932
Common
stock issued for services
-
-
53,000
Services
contributed by officers and directors
1,485
-
1,485
Changes
in operating assets and liabilities
Increase
in accounts receivable
11,638
2,114
(1,865
)
Increase
in prepaid expenses and deposits
(1,637
)
(155
)
(2,001
)
Increase
in account payable and accrued expenses
5,210
-
18,002
Net
Cash Used by Operating Activities
(14,910
)
(31,933
)
(237,447
)
CASH
FLOWS FROM INVESTING ACTIVITIES
Purchase
of fixed assets
-
-
(1,525
)
Net
Cash Used by Investing Activities
-
-
(1,525
)
CASH
FLOWS FROM FINIANCING ACTIVITIES
Common
stock issued for cash
-
-
80,015
Proceeds
from issuance of notes payable
-
-
36,037
Proceeds
from issuance of notes payable - related parties
(3,651
)
-
128,989
Net
Cash Provided by Financing Activities
(3,651
)
-
245,041
NET
DECREASE IN CASH
(18,561
)
(31,933
)
6,069
CASH
AT BEGINNING OF PERIOD
24,630
38,835
-
CASH
AT END OF PERIOD
$
6,069
$
6,902
$
6,069
F-14
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.
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.
F-15
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 (Continued)
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.
F-16
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 (Continued)
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.
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.
F-17
ECOLAND
INTERNATIONAL, INC.
(Formerly
Guano Distributors, Inc.)
(A
Development Stage Company)
Notes
to
the Consolidated Financial Statements
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.
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.
F-18
Dates Referenced Herein and Documents Incorporated by Reference
