UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
[x] | Annual Report under Section 13 or 15(d) of the Securities Exchange Act of 1934 | |
For the fiscal period ended: December 31, 2007 | ||
[ ] | Transition Report under Section 13 or 15(d) of the Exchange Act of 1934 | |
For the transition period from to | to |
Commission File Number: 000-51213
ECOLOCAP SOLUTIONS INC.
(Formerly Known As XL GENERATION INTERNATIONAL INC.)
(Name of Small Business Issuer as specified in its charter)
NEVADA
|
20-0909393
|
740, St-Maurice Street
Suite 102
Montreal H3C 1L5
(Address of principal executive offices)
514-876-3907
(Issuers telephone number, including area code)
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act: Common Stock, par value $.001 per share
Check whether the Issuer is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes [ ] No [x]
Check whether the Issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [x] No [ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [x] No [ ]
State issuer's revenues for its most recent fiscal year: $0
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of a specified date within the past 60 days: $19,108,270 as of March 30, 2008
The Issuer had 39,068,268 shares of Common Stock, par value $.001, outstanding as of March 30, 2008.
Documents incorporated by reference: None.
Transitional Small Business Disclosure format (Check one): Yes [ ] No [x]
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TABLE OF CONTENTS | ||
PART I | ||
Item 1. | Description of Business | 6 |
Item 2. | Description of Property | 9 |
Item 3. | Legal Proceedings | 9 |
Item 4. | Submission of Matters to a Vote of Security Holders | 11 |
PART II | ||
Item 5. | Market for Common Equity, Related Stockholder Matters and Small Business | 12 |
Issuer Purchases of Equity Securities | ||
Item 6. | Managements Discussion and Analysis or Plan of Operation | 14 |
Item 7. | Financial Statements | 18 |
Item 8. | Changes in and Disagreements with Accountants on Accounting and Financial | 31 |
Disclosure | ||
Item 8A. | Controls and Procedures | 31 |
Item 8B. | Other Information | 33 |
PART III | ||
Item 9. | Directors, Executive Officers, Promoters and Control Persons; Compliance with | 33 |
Section 16(a) of the Exchange Act | ||
Item 10. | Executive Compensation | 36 |
Item 11. | Security Ownership of Certain Beneficial Owners and Management and Related | 41 |
Stockholder Matters | ||
Item 12. | Certain Relationships and Related Transactions | 42 |
Item 13. | Exhibits | 43 |
Item 14. | Principal Accountant Fees and Services | 47 |
SIGNATURES | 49 |
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FORWARD LOOKING STATEMENTS
This Annual Report on Form 10-KSB (this Annual Report) includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements can be identified by the use of forward-looking terminology, including the words believes, contemplates, continues, estimates, anticipates, expects, intends, may, will or should, or, in each case, their negative or other variations or comparable terminology. You should read statements that contain these words carefully because they:
discuss future expectations;
contain projections of future results of operations or financial condition; or
state other forward-looking information.
We believe it is important to communicate our expectations to our stockholders. However, there may be events in the future that we are not able to predict accurately or over which we have no control. The risk factors and cautionary language discussed in this Annual Report provide examples of risks, uncertainties and events that may cause actual results to differ materially from the expectations described by us in such forward-looking statements, including among other things:
the impact of legislative and regulatory actions and reforms and regulatory, supervisory or enforcement actions of government actions relating to the Company;
changes in political, economic or industry conditions, the interest rate environment or financial and capital markets, which could result in changes in demand for products or services;
terrorist activities and international hostilities, which may adversely affect the general economy, financial and capital markets;
our business strategy and plans;
the introduction, withdrawal, success and timing of business initiatives and strategies;
harm to our reputation;
fluctuations in customer demand;
management of rapid growth;
the impact of increased competition;
the impact of future acquisitions; and
the ability to attract and retain highly talented professionals.
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By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and developments in the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this Annual Report. In addition, even if our results of operations, financial condition and liquidity, and developments in the industry in which we operate, are consistent with the forward-looking statements contained in this Annual Report, those results or developments may not be indicative of results or developments in subsequent periods. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of such statements.
All forward-looking statements included herein are expressly qualified in their entirety by the cautionary statements contained or referred to in this Annual Report. Except to the extent required by applicable laws and regulations, our company undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the date of this Annual Report or to reflect the occurrence of unanticipated events.
Unless otherwise provided in this Annual Report, references to the Company, the Registrant, the Issuer, we, us, and our refer to EcoloCap Solutions Inc.
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
EcoloCap Solutions Inc. is in the business of reducing carbon emissions. We plan to develop economically feasible renewable energy and carbon reduction initiatives.
History of the Business
We were incorporated in the State of Nevada on March 18, 2004, as Cygni Systems Corporation. We were originally formed with the intent of raising funds and entering into business as a software design company. From the date of our incorporation until June 17, 2005, we were in the development stage of online and network security management software and online and network security consulting services.
A change of control occurred on June 17, 2005. On August 19, 2005, we entered into and closed a Share Exchange Agreement (the "XL Share Exchange Agreement") with XL Generation AG. Pursuant to the terms of the XL Share Exchange Agreement, we acquired all of the issued and outstanding shares of common stock of XL Generation AG. On August 23, 2005, we filed a Certificate of Amendment with the State of Nevada, changing our name to "XL Generation International Inc."
XL Generation was the holding company of a Swiss entity, XL Generation AG, which was the marketer of an artificial sport surface called XL Turf. We aspired to become a leading global force in the artificial turf and flooring markets by building both the strength of the XL brand and strategic partnerships with key regional turf and flooring providers. Our vision was to develop a variety of products other than for sports, aimed at all types of play space, including for landscape and playgrounds. However, due to litigation, described in detail in Item 3 of this Annual Report, and because of the severe deterioration of our brand name and the poor quality of the products produced at XL Generation AGs request, our board of directors decided that it was in our best interest to initiate a complete and total withdrawal from the artificial flooring sector, artificial turf and all related business.
Following our withdrawal from the artificial flooring sector, artificial turf and all related business and after identifying new business opportunities, we changed our name from XL Generation International Inc. to Ecolocap Solutions Inc.
On November 13, 2007, we filed a Certificate of Amendment with the State of Nevada, changing our name to "EcoloCap Solutions Inc." Our shares of common stock are traded on the Bulletin Board operated by the Financial Industry Regulatory Authority under the symbol ECOS.
Our Business
We intend to engage in the business of reducing carbon emission.
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Kyoto Protocol & Voluntary Markets
The Kyoto Protocol established various exchange mechanisms in order to achieve its targeted reduction in carbon emission. As both world populations and economies continue to grow, substantial changes in energy use as well as advances in efficiency and technological innovations will be required in order to fight the global warming of the earth phenomenon and help reduce pollutant emissions. It is from this global movement that the Kyoto Protocol was born, bringing new words and new concepts such as Carbon Markets, Carbon Finances, Carbon Credits and Carbon Trading. Adopted in 1997, the Kyoto Protocol requires that industrialized countries agree to limit their Greenhouse Gases (GHG) emissions in the period 2008-2012 at 5.2% below their 1990 emissions levels. Increasingly, countries and companies not bound by Kyoto Protocol are voluntarily creating national schemes and offsetting their emissions associated to their normal activities as part of their corporate responsibility.
Under Kyoto, carbon credits are acquired by organizations and governments to comply with their emission reduction target set under the Kyoto Protocol or other compliance initiatives (for example, the EU Emission Trading Scheme). Carbon trading takes place following a cap and trade approach, which is an administrative approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants.
Two project-based mechanisms were designed to lower the overall cost of participating countries in meeting their domestic emission reduction targets and to help developing countries and countries in transition in their sustainable development by encouraging technology transfer:
Clean Development Mechanisms (CDM)
A project-based financing mechanism, where eligible developed countries may purchase carbon credits - Certified Emission Reductions (CERs) - generated by projects hosted in developing countries. Purchasing these credits may be done either to fulfill compliance requirements, or for investment purposes, as is the case for US companies.
Joint Implementation (JI)
It encourages the realization of emissions abatement and the issuance of carbon credits - Emission Reduction Units (ERUs) - by the implementation of projects by a developed country (or entity) in another developed country. Outside Kyoto, organizations around the world have started to use carbon credits as a voluntary way to reduce their carbon emissions. This has created a voluntary carbon credit market (for example, the Chicago Climate Exchange) which has seen rapid growth in the past 3 years, driven primarily by increasing public awareness of climate change. The Kyoto Protocol established various exchange mechanisms in order to achieve its targeted reduction in carbon emission .One of these mechanisms is the Clean Development Mechanism or CDM, which is an investment or activity in a developing country that reduces emissions of Greenhouse gases. The carbon credits resulting from CDM projects, referred to as Certified Emission Reductions (CERs) may then be sold to governments or companies in the industrialized world, allowing them to meet their Kyoto compliance targets
In addition to the targets set by Kyoto, countries and companies not bound by the Kyoto Protocol are voluntarily creating national schemes and offsetting their emissions associated to their normal activities as part of their corporate responsibility.
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Our Vision & Mission Statement
Our vision is to be recognized as a leading provider of emission reduction solutions, ecotechnologies and services which generate financial gains from greenhouse gas emissions reduction.
Our mission is to build a best in class portfolio of solutions, technologies and services leading to the generation of carbon credits earned from the reduction of fugitive emissions thereby achieving greenhouse gas emissions reduction goals with a positive economic impact.
Our Approach
Recognizing the opportunity these new mechanisms represent, we are developing an integrated development approach that focuses upon both existing and needed infrastructure facilities to produce substantial new value in the form of tradable CERs while at the same time maximizing alternative energy generation co-products. Our partners with owners of facilities emitting the harmful greenhouse gas as well as with all other environmental projects owners in developing countries, to capitalize on the opportunities afforded by the emerging market in carbon credit trading turning potential liabilities into lucrative resources while maximizing available possibilities for clean and renewable energy production.
We bring together all the elements - capital, engineering, network and know-how - required to successfully operate in the emerging carbon market; our integrated solutions gives us the necessary flexibility to develop stand alone or joint venture carbon projects.
Emission Trades
An emission trade typically occurs when a country or company seeking to meet its emissions allowances purchases emissions credits from a country or company that has reduced its emissions beyond its requirement to do so. This transaction can benefit both participants. Purchasers are able to reach goals that require more emissions reductions than they can cost-effectively achieve through their own operational changes and they do not then incur financial penalties. Sellers are rewarded financially for their investments in emission reductions.
Operative Agreements
In February 2008, we entered into an exclusive Service Agreement with United Best Technology Limited of Hong Kong, we also executed a Consulting Agreement with Sodexen Inc. (Sodexen) pursuant to which, Sodexen is providing the services of its representative, Dr. Tri Vu Truong to serve in the capacity of President and Chief Executive Officer of our company. Under the terms of the above agreements Dr. Truong and United Best have committed to deliver to us a yearly minimum production of 3,600,000 (Three Million Six Hundred Thousand) fully tradable CERs. The geographically exclusivity of the Service Agreement provides the Company with United Bests services within the regions of the world with the greatest potential for economically feasible Renewable Energy and Carbon Reduction initiatives. These include, but are not limited to, China, Brazil, India and Vietnam. Further, beyond the period of exclusivity the agreement provides a trailing non-compete provision that will permit the company to bring its own development resources to bear without competition from United Best.
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As of February 12, 2008, we entered into an agreement with United Best Technology Limited (United). The agreement is a five (5) year renewable Service Agreement (the Agreement) pursuant to which United shall provide advice to undertake for and consult with us concerning certain operational areas and shall review and advise us regarding Carbon Credits (CER) and Clean Development Mechanism projects as well as our overall progress, needs and condition in those areas, find, negotiate and close contracts and projects for a minimum of Three Million Six Hundred Thousand (3,600,000) CERs that could be certified, traded and delivered and to assist the execution of said contracts or projects by us or one of our affiliates. To devote all Uniteds intellectual property, knowledge, technology and Uniteds contacts related to the CER and Clean Development Mechanism projects exclusively for the development of our business in an exclusive and define territory. United for the exclusivity of its services was granted Three Million Five Hundred Thousand (3,500,000) restricted shares of our common stock, out of said Three Million Five Hundred Thousand (3,500,000) restricted shares, One Million (1,000,000) restricted shares will be put in escrow as provided in the executed Escrow Agreement.
As of February 12, 2008, the December 7, 2007 Consulting Agreement (the Agreement) entered by and between us and Sodexen Inc. (Sodexen) pursuant to which, Sodexen is providing the services of its representative, Dr. Tri Vu Truong (the Representative), who will serve our for the Engagement Period in its capacity of President and Chief Executive officer (CEO), have been revised (the Revised Consulting Agreement) to reduce the Engagement Period to one year, and became effective as of February 1, 2008.
As of February 12, 2008, we entered into an Escrow Agreement (the Escrow) with United Best Technology Limited (United) and Pellerin, Lawyers pursuant to which out of the Three Millions Five Hundred Thousand shares of our common stock issued to United granted under the Service agreement, One Million Shares will be deposited in escrow ( the Escrow Securities) and delivered within the Delivery Period as follow: Five Hundred Thousand when the first contracts or projects permitting the issuance of a total of Six Hundred Thousand CERs are delivered; One Hundred Thousand for the following contract or project permitting the issuance for each of an additional Six Hundred Thousand CERs. At the end of the prescribe period for the CERs deliverance, all shares remaining in escrow, shall be cancelled.
ITEM 2.
DESCRIPTION OF PROPERTY
The Company does not own any real estate. The Company does not plan on investing in real estate in the near future.
On February 15, 2008, the Company entered into a lease for office space in Montreal City expiring on February 14, 2014, with a base rent of $5,317.00 per month.
ITEM 3.
LEGAL PROCEEDINGS
At the date of this Annual report on Form 10KSB, there are no known pending or threatened litigation, claims, or assessments against us for our acts or omission. Several claimants have approach us to settle claims, or assessments against our former subsidiary XL Generation AG. During the period covered by this Annual Report, we have been a party to the following legal proceedings:
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WKF/5 Ltd-Settled on April 24, 2007
On October 26, 2006, the Company filed a motion against WKF/5 Ltd, the Alain Lemieux Trust (Jersey) and Professional Trust Company Limited in the Canadian Federal Court of the District of Montreal (court file number T-1872-06). The Company claimed that the Register of Trade-marks relating to registration no. 671 108 (application no. 1 266 983) for the trade-mark XLGENERATION, registered on August 24, 2006, be struck on the grounds that at the date of the application or at the date of registration, the entry as it appears on the Register did not accurately express or define the existing rights of the person appearing to be the registered owner of the mark. Furthermore, the Company asked for an order declaring that WKF/5 Ltd was not entitled to obtain registration of any trade-mark containing the word XLGENERATION on the claim that the registration in the name of WKF/5 Ltd of the trade-mark XLGENERATION was contrary to the Companys rights. Pursuant to the settlement agreement dated April 24, 2007, the Company has agreed to relinquish its license to manufacture products utilizing the technology patented by WKF/5 Ltd, retroactively effective October 2, 2006. For up to six (6) months from April 24, 2007, the Company was allowed to continue to utilize (i) the technology created by WKF/5 Ltd; and (ii) the trademark XL Generation. Thereafter, the Company had no rights to use either the technology owned by WKF/5 Ltd or the trademark XL Generation. The Company has agreed that for a period of five (5) years thereafter, the Company and its subsidiaries may not engage in any business related to the production of artificial turf.
Solutions Highmedia Interactif Inc.-Settled on April 24, 2007
On November 10, 2006, the Company filed a motion seeking injunctive relief against Solutions Highmedia Interactif Inc. and Domenico Malatesta, in the Quebec Superior Court of the District of Montreal (court file number 500-17-033768-063) to forbid the selling, and prevent the cession of the internet domain name and emails of the Company and its affiliates, and to reactivate the Companys and its affiliates related internet services. In a related matter, on November 16, 2006, Solutions Highmedia Interactif Inc. filed a motion for monetary claim against the Company, XL Generation AG and XL Canada, in the Quebec Court of the District of Montreal (court file number 500-22-129010-065) totalling $54,418 CAD covering expenses for webdesign, printing, translation, and webhosting mandates performed towards the website of the Company and its affiliates between January 1, 2006 and August 15, 2006. Pursuant to the settlement agreement dated April 24, 2007, Solutions Highmedia Interactif Inc. and Domenico Malatesta have agreed to release the Company from any amounts owed. The Company has agreed that the Companys domain name will become the property of WKF/5 Ltd.
Share Exchange Agreement-Settled on April 24, 2007
On November 14, 2006, the Company filed a motion seeking the annulment of the Share Exchange Agreement signed on August 19, 2005 between the Company and XL Generation AG. In addition, this action seeks to require certain of the Companys former management and affiliated parties to pay $11,000,000 in damages and to order the escrow agent and Pacific Stock Transfer Company to deposit the 13,500,000 shares of the Company issued to the Alain Lemieux Trust and Professional Trust Company Limited at the Quebec Superior Court of the District of Montreal (court file number 500-17-033823-066). This action alleged misconduct by former officers and directors of the Company, including unjustified and irresponsible spending of the Companys financial resources. Pursuant to the settlement agreement dated April 24, 2007, all claims for damages and for the annulment of the Share Exchange Agreement have been dropped, and the Alain Lemieux Trust was permitted to receive the disputed 13,500,000 shares of the Companys common stock, and sell such shares to a third party for $500,000.
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Polyprod Litigation
XL Generation AG has ceased pursuing judicial proceedings seeking injunctive and other relief against Polyprod Inc. in the Quebec Superior Court of the District of Montreal (court file number 500-17-032933-064) to allow XL Generation AG to halt Polyprod Inc. from locking XL Generation AG out of the production site, and to force Polyprod Inc. to allow XL Generation AG access to said production site.
Bankruptcy Dismissed on May 11, 2007
On May 11, 2007 the Bankruptcy division of the Québec Superior Court of the District of Montreal (court file number 500-11-029010-069) dismissed claims made by XL Generation AG seeking to have Polyprod Inc. declared bankrupt pursuant to applicable law for an unpaid claim totalling $1,052,069 CAD. This amount represented monetary advances towards the production of artificial turf and related products, made by XL Generation AG to Polyprod Inc. from January 5, 2006 to October 10, 2006. Neither party was awarded costs.
XL Generation AG Wind up
In May 2007, the Directors of the Companys wholly-owned Swiss subsidiary XL Generation AG gave their resignation and the Company was unable to replace such Directors (required by law to be Swiss residents). This situation was reported to the Cantonal Commerce Register Office in Zug, Switzerland which, after a statutory waiting period when public notices concerning the matter were posted, delivered the XL Generation AG entity to the Swiss courts in order to wind up its affairs. Swiss Counsel has advised the Company that under Swiss law concerning such matters, a shareholders liability is limited to the amount of stated capital of the entity as in the case of XL Generation AG, where all of the stated capital had been paid in by the shareholder, the law does not provide for further claims against the shareholder. Counsel has also advised that while Swiss law does not provide for further liabilities and/or claims against the shareholder when stated capital is fully paid, aggrieved parties may from time to time file claims in Swiss courts against the former management and directors of the entity whose affairs are being settled by the Court as well as its former shareholder. At the moment of the decision of the Swiss court XL Generation AG was facing pending and threatened litigation, claims and assessments. The Company has no intention to intervene in these said litigations or claims, and no litigations or claim were filed against the Company by XL Generation AGs creditors following XL Generation AGs wind up.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On September 25, 2007, our Board of Directors decided to seek the approval of the Shareholders of the Company to change the name of the Company from XL Generation International Inc. to Ecolocap Solutions Inc., a name more representative of the our business
On October 10, 2007, our Board of Directors filed a definitive proxy statement on Form 14A, calling for a special meeting of the shareholders on October 25, 2007 for the purpose of considering and acting upon the proposed amendment of our Certificate of Incorporation to change the name of the corporation from XL Generation International Inc. On October 25, 2007, the shareholders then present by proxies approved the name change of the corporation from XL Generation International Inc. to Ecolocap Solutions Inc.
The resolution passed by the following vote: 22,374,444 FOR: none AGAINST; and, none ABSTAINED (out of 35,568,268 shares of common stock, 22,374,444 were presenting person or by proxy).
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PART II
ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Our shares of common stock are traded on the Bulletin Board operated by the Financial Industry Regulatory Authority (FINRA) under the symbol ECOS.
The following table sets forth for the periods indicated the high and low close prices for the Common Shares in U.S. Dollars. These quotations reflect only inter dealer prices, without retail mark up, mark down or commissions and may not represent actual transactions.
Quarter Ended | High | Low | |
March 31, 2006 | $ | 2.75 | 2.65 |
June 30, 2006 | $ | 2.21 | 2.2 |
September 30, 2006 | $ | 0.78 | 0.75 |
December 31, 2006 | $ | 0.42 | 0.42 |
March 31, 2007 | $ | 0.35 | 0.35 |
June 30, 2007 | $ | 1.34 | 0.25 |
September 30, 2007 | $ | 0.55 | 0.32 |
December 31, 2007 | $ | 1.88 | 0.55 |
Holders
As of March 30, 2008, we had twelve stockholders of record.
Dividends
We have never declared or paid cash dividends. There are currently no restrictions which limit our ability to pay dividends in the future.
Securities authorized for issuance under equity compensation plans
On March 30, 2006, we adopted the 2006 Equity Incentive Plan (the Plan), effective as of March 24, 2006. Under the Plan, we may issue options, stock appreciation rights, restricted shares, deferred shares or performance shares. The maximum number of such shares of our common stock that may be issued under the Plan is 2,000,000 shares. Our officers, directors, employees and consultants, as well as those of our subsidiaries, may participate in the Plan, as our Compensation Committee may deem to be advisable and in our best interests. No one individual may be awarded options to purchase more than 500,000 shares in any one fiscal year. No one individual may be granted more than 250,000 shares in any one fiscal year. The terms and conditions of each grant shall be as set forth in an award agreement approved by the Compensation Committee.
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Equity Compensation Plan Information | |||
Number of securities | |||
remaining available for | |||
Number of securities | Weighted-average | future issuance under | |
issued upon exercise of | exercise price of | equity compensation plans | |
outstanding options, | outstanding options, | (excluding securities | |
Plan category | warrants and rights | warrants and rights | reflected in column (a)) |
(a) | (b) | (c) | |
Equity compensation | 0 | 0 | 0 |
plans approved by | |||
security holders | |||
Equity compensation | 340,000 | 0 | 1,540,000 |
plans not approved by | |||
security holders | |||
Total | 340,000 | 0 | 1,540,000 |
Recent Sales of Unregistered Securities
Not Applicable.
Purchases of Equity Securities by the Company and Affiliated Purchasers
None.
Section 15(g) of the Securities Exchange Act of 1934
Our companys shares are covered by Section 15(g) of the Securities Exchange Act of 1934, as amended that imposes additional sales practice requirements on broker/dealers who sell such securities to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouses). For transactions covered by the Rule, the broker/dealer must make a special suitability determination for the purchase and have received the purchasers written agreement to the transaction prior to the sale. Consequently, the Rule may affect the ability of broker/dealers to sell our securities and also may affect your ability to sell your shares in the secondary market.
Section 15(g) also imposes additional sales practice requirements on broker/dealers who sell penny securities. These rules require a one page summary of certain essential items. The items include the risk of investing in penny stocks in both public offerings and secondary marketing; terms important to in understanding of the function of the penny stock market, such as bid and offer quotes, a dealers spread and broker/dealer compensation; the broker/dealer compensation, the broker/dealers duties to its customers, including the disclosures required by any other penny stock disclosure rules; the customers rights and remedies in causes of fraud in penny stock transactions; and, the NASDs toll free telephone number and the central number of the North American Administrators Association, for information on the disciplinary history of broker/dealers and their associated persons.
The application of the penny stock rules may affect your ability to resell your shares.
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ITEM 6. |
MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION |
Operations |
The following discussion of the financial condition and results of our operations should be read in conjunction with the financial statements and the related notes thereto included elsewhere in this Annual Report on Form 10-KSB for the period ended December 31, 2007 (this Report). This Report contains certain forward-looking statements and our future operating results could differ materially from those discussed herein. Certain statements contained in this Report, including, without limitation, statements containing the words "believes", "anticipates," "expects" and the like, constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). However, as we issue penny stock, as such term is defined in Rule 3a51-1 promulgated under the Exchange Act, we are ineligible to rely on these safe harbor provisions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. We disclaims any obligation to update any such factors or to announce publicly the results of any revisions of the forward-looking statements contained or incorporated by reference herein to reflect future events or developments.
In May 2007, the directors of our wholly-owned Swiss subsidiary XL Generation AG gave their resignation and we were unable to replace such Directors (required by law to be Swiss residents). This situation was reported to the Cantonal Commerce Register Office in Zug, Switzerland which, after a statutory waiting period when public notices concerning the matter were posted, delivered the XL Generation AG entity to the Swiss courts in order to wind up its affairs. Before its wind up XL Generation AG, was based in Zug, Switzerland, and was designing specific flooring products for sports, recreational and commercial markets. XL Generation AG developed new artificial turf systems for sports fields. XL Generation AG held the worldwide commercial and manufacturing rights for the "XL technology." The XL technology consisted of six patents owned by WKF5/Ltd. However, on October 2, 2006, WKF5/Ltd served a notice to XL Generation AG terminating the usage of the XL Technology. This Notice claimed that WKF/5 Ltd has the right to terminate the License, and claimed the alleged insolvency of XL Generation AG as the cause of such right of termination.
On November 13, 2007, we changed our name from XL Generation International Inc. to Ecolocap Solutions Inc. Our shares of common stock are traded on the Bulletin Board operated by the Financial Industry Regulatory Authority under the symbol ECOS.
Business Plan
The Kyoto Protocol established various exchange mechanisms in order to achieve its targeted reduction in carbon emission. In addition to the targets set by Kyoto, countries and companies not bound by the Kyoto Protocol are voluntarily creating national schemes and offsetting their emissions associated to their normal activities as part of their corporate responsibility.
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Recognizing the opportunity these new mechanisms represent, we are developing an integrated development approach that focuses upon both existing and needed infrastructure facilities to produce substantial new value in the form of tradable CERs while at the same time maximizing alternative energy generation co-products. Our partners with owners of facilities emitting the harmful greenhouse gas as well as with all other environmental projects owners in developing countries, to capitalize on the opportunities afforded by the emerging market in carbon credit trading turning potential liabilities into lucrative resources while maximizing available possibilities for clean and renewable energy production.
Our initial geographical focus will be Vietnam and China followed by expansions into Africa and Latin America. These areas have been identified by leading authorities as representing substantial opportunities for remediation of greenhouse gasses and therefore represent the greatest opportunities for the production of CERs. They also represent geographies in which we can develop efficient operating scale thereby enhancing potential profitability.
Results of Operations
For the Twelve Month Periods ended December 31, 2007
Overview
We posted net profit of $6,306,507 for the year ended December 31, 2007 as compared to net loss of $17,748,354 last year. Our net profits followed and resulted from the May 2007, our wholly-owned Swiss subsidiary XL Generation AGs directors resignation that provoked the wind up of XL Generation AGs affairs. The gain on settlement of debts-foreign subsidiary related to the winding up of the affairs of XLG AG. amounted to $8,013,125 (see note 13).
Sales
For the year ended December 31, 2007, we had no gross revenues. This compared to $4,846,157 for last year. The decrease in our revenues results from the exit from our former line of business as part of our effort to redeploy our assets into a new line of business.
Total Cost and Expenses
For the year ended December 31, 2007, we incurred total cost and expenses of $(6,306,507). This compared to $22,594,511 for last year. The decrease in total cost and expenses was caused by the gain on settlement of debts-foreign subsidiary related to the winding up of the affairs of XLG AG. We decided to leave the manufacturing and distribution of environmentally sound artificial playing field surfaces and have currently developed an integrated development approach that focuses upon both existing and needed infrastructure facilities to produce substantial new value in the form of tradable CERs.
Selling, General and Administration
For the year ended December 31, 2007, we incurred selling, general and administration expenses of $341,860. This compared to $8,288,058 for last year. The decrease was due to the layoff of all of our staff. We have undertaken a review of corporate overhead and implemented measures to reduce corporate overhead to a level more sustainable in relation to current revenue volume and managements expectations.
Interest
We calculate interest in accordance with the respective note payable. For the year ended December 31, 2007, we charged $190,474. This compared to $302,085 for last year. This significant decrease mirrors the decrease liabilities which we assumed to finance our operations.
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Liquidity and Capital Resources
At December 31, 2007, we have $166,470 in cash, as opposed to $128,607 in cash at December 31, 2006. Total cash requirements for operations for the twelve month period ended December 31, 2007 was $341,860. As a result of certain measures implemented to reduce corporate overhead, management estimates that cash requirements through the end of fiscal 2008 will be between $3.0 million to $4.5 million. As of the date of this report, we do not have available resources sufficient to cover the expected cash requirements through the end of the second quarter 2008 or the balance of the year. As a result, there is substantial doubt that we can continue as an ongoing business without obtaining additional financing. Management's plans for maintaining our operations and continued existence include selling additional equity securities and borrowing additional funds to pay operational expenses with enhanced efforts to market and sell our products. There is no assurance that we will be able to generate sufficient cash from operations, sell additional shares of common stock or borrow additional funds. Our inability to obtain additional cash could have a material adverse effect on our financial position, results of operations and our ability to continue our existence. If our losses continue and we are unable to secure additional financing, we may ultimately be required to seek protection from creditors under applicable bankruptcy laws.
At December 31, 2007, we had total assets of $166,470 compared to total assets of $199,304 at December 31, 2006. The decrease is mainly due to general and administration expenses.
At December 31, 2007, we had total current liabilities and total liabilities of $3,116,402 compared to total current liabilities and total liabilities of $11,611,577 at December 31, 2006. The liabilities are mainly due to (i) accrued operational costs and (ii) loan notes from shareholders and suppliers.
On December 31, 2006, we received loans from Capex Investments Limited, a shareholder, in the amount of $2,068,474. In 2007, we received additional loans from Capex Investments Limited in the amount of $950,858. These loans carried an interest of 10% and are payable on demand as agreed in a memorandum of agreement executed by and between us and Capex Investments Limited on March 21, 2008 and effective as December 1, 2007.
Our financial condition raises substantial doubt about our ability to continue as a going concern. Management's plan for our continued existence includes selling additional stock through private placements and borrowing additional funds to pay overhead expenses while maintaining marketing efforts to raise our sales volume. Our future success is dependent upon our ability to achieve profitable operations, generate cash from operating activities and obtain additional financing. There is no assurance that we will be able to generate sufficient cash from operations, sell additional shares of common stock or borrow additional funds. Our inability to obtain additional cash could have a material adverse effect on our financial position, results of operations and our ability to continue as a going concern.
Off-Balance Sheet Arrangements
We are not a party to any off-balance sheet arrangements.
16
Off-Balance Sheet Arrangements
We are not a party to any off-balance sheet arrangements.
Recently Issued Accounting Standards
In February 2007, the FASB issued SFAS No. 159 (SFAS 159), The Fair Value Option for Financial Assets and Financial Liabilities Including an Amendment of FASB Statement No. 115. This Statement provides companies with an option to measure, at specified election dates, many financial instruments and certain other items at fair value that are not currently measured at fair value. A company that adopts SFAS 159 will report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. This Statement also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. This Statement is effective for fiscal years beginning after November 15, 2007. The Company is currently evaluating the effect that the adoption of SFAS 159 will have on its results of operations and financial position.
In December 2007, FASB issued SFAS No. 160 (SFAS 160), Interests in Consolidated Financial Statements an amendment of ARB No. 51, which impacts the accounting for minority interest in the consolidated financial statements of filers. The statement requires the reclassification of minority interest to the equity section of the balance sheet and the results from operations attributed to minority interest to be included in net income. The related minority interest impact on earnings would then be disclosed in the summary of other comprehensive income. The statement is applicable for all fiscal years beginning on or after December 15, 2008 and earlier adoption is prohibited. The adoption of this standard will require prospective treatment. The Company is currently evaluating the effect that the adoption of SFAS 160 will have on its results of operations and financial position. However, the adoption of SFAS 160 is not expected to have a material impact on the Companys financial statements.
In December 2007, FASB issued SFAS No. 141R (SFAS 141R), Business Combinations, which impacts the accounting for business combinations. The statement requires changes in the measurement of assets and liabilities required in favor of a fair value method consistent with the guidance provided in SFAS 157 (see above). Additionally, the statement requires a change in accounting for certain acquisition related expenses and business adjustments which no longer are considered part of the purchase price. Adoption of this standard is required for fiscal years beginning after December 15, 2008. Early adoption of this standard is not permitted. The statement requires prospective application for all acquisitions after the date of adoption. The Company is currently evaluating the effect that the adoption of SFAS 141R will have on its results of operations and financial position. However, the adoption of SFAS 141R is not expected to have a material impact on the Companys financial statements.
17
ITEM 7. FINANCIAL STATEMENTS
Board of Directors
Ecolocap Solutions, Inc. (formerly known as XL Generation, Inc.)
Montreal, Canada
We have audited the accompanying balance sheet of Ecolocap Solutions, Inc., (formerly know as XL Generation International, Inc). as of December 31, 2007 and 2006, and the related statements of operations, stockholders deficiency, and cash flows for the years then ended. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provided 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 Ecolocap Solutions, Inc., (formerly known as XL Generation International, Inc.) as of December 31, 2007 and 2006, and the results of their operations and their cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has suffered recurring net losses and as of December 31, 2007 its current liabilities and its total liabilities exceeded its current assets and total assets by $2,949,932. These factors, among others, raise substantial doubt about the Companys ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
PARITZ & COMPANY, P.A.
Paritz & Company, P.A.
March 26, 2008
Hackensack, New Jersey
18
ECOLOCAP SOLUTIONS INC.
(Formally known as XL GENERATION INTERNATIONAL INC.)
BALANCE SHEET
December 31
19
ECOLOCAP SOLUTIONS INC. | ||||||||||||||
(Formally known as XL GENERATION INTERNATIONAL INC.) | ||||||||||||||
STATEMENTS OF STOCKHOLDERS DEFICIENCY | ||||||||||||||
Year ended December 2007 and 2006 | ||||||||||||||
Stockholders Deficiency | ||||||||||||||
Common stock | ||||||||||||||
Authorized | ||||||||||||||
100,000,000 | Other | |||||||||||||
Stockholders | Shares, | Additional paid | Accumulated | Comprehensive | ||||||||||
Deficiency | Shares | Par value $0,001 | in Capital | Deficit | Income (Loss) | Total | ||||||||
January 1,2006 | 29,999,333 | $ | 92,923 | $ | 4,195,467 | $ | (7,311,239 | ) | $ | 262,403 | $ | (2,760,446 | ) | |
Proceeds from | ||||||||||||||
the issuance of | ||||||||||||||
common stock | 3,342,111 | 3,342 | 8,449,254 | - | - | 8,452,596 | ||||||||
Shares issued for | ||||||||||||||
settlement of a debt | 1,236,824 | 1,237 | 1,237 | |||||||||||
Stock options | 684,634 | 684,634 | ||||||||||||
Net Loss | - | - | (17,748,354 | ) | (17,748,354 | ) | ||||||||
Other comprehensive | ||||||||||||||
Loss | (41,940 | ) | (41,940 | ) | ||||||||||
December 31,2006 | 34,578,268 | $ | 97,502 | $ | 13,329,355 | $ | (25,059,593 | ) | $ | 220,463 | $ | (11,412,273 | ) | |
Proceeds from | ||||||||||||||
the issuance of | ||||||||||||||
Common stock | 990,000 | 990 | 1,002,410 | - | - | 1,003,400 | ||||||||
Stock options | 1,372,897 | 1,372,897 | ||||||||||||
Net Gain | - | - | 6,306,507 | 6,306,507 | ||||||||||
Other comprehensive | ||||||||||||||
Income | (220,463 | ) | (220,463 | ) | ||||||||||
December 31,2007 | 35,568,268 | $ | 98,492 | $ | 15,704,662 | $ | (18,753,086 | ) | $ | - | $ | ( 2,949,932 | ) |
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ECOLOCAP SOLUTIONS INC. | |||||||||
(Formally known as XL GENERATION INTERNATIONAL INC.) | |||||||||
STATEMENTS OF OPERATIONS | |||||||||
Year ended December 2007, 2 006 and 2005 | |||||||||
2007 | 2006 | 2005 | |||||||
SALES | $ | - | $ | 4,846,157 | $ | 2,892,513 | |||
COSTS AND EXPENSES: Cost of sales | - | 5,121,762 | 2,067,412 | ||||||
Selling, general and administrative | 341,860 | 8,288,058 | 5,989,302 | ||||||
Provision for note receivable | - | 5,946,531 | |||||||
Gain on settlement of debts-foreign | |||||||||
Subsidiary | (8,013,125 | ) | |||||||
Compensation expense-Note 8 | 1,372,897 | 684,634 | |||||||
Interest | 190,474 | 302,085 | 158,774 | ||||||
Foreign exchange gain | (198,613 | ) | (62,751 | ) | 33,306 | ||||
Loss on settlement of debt | 2,314,192 | ||||||||
TOTAL COSTS AND EXPENSES | (6,306,507 | ) | 22,594,511 | 8,248,794 | |||||
NET GAIN (LOSS) | $ | 6,306,507 | $ | (17,748,354 | ) | $ | (5,356,281 | ) | |
Net Gain (Loss) Per Share | $ | 0.18 | $ | (0.53 | ) | $ | (0.56 | ) | |
Average weighted Number of Shares | 34,579,388 | 33,779,448 | 9,533,903 |
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ECOLOCAP SOLUTIONS INC. | ||||||
(Formally known as XL GENERATION INTERNATIONAL INC.) | ||||||
STATEMENTS OF CASH FLOWS | ||||||
Year ended December 31, 2007 and 2006 | ||||||
2007 | 2006 | |||||
Net gain (loss) | $ | 6,306,507 | $ | (17,748,354 | ) | |
Adjustment to reconcile net income to net cash used in | ||||||
operating activities | ||||||
Depreciation and amortization | - | 16,776 | ||||
Write off of related party | ||||||
note receivable | - | 5,946,531 | ||||
Stock based compensation | 1,372,897 | 684,634 | ||||
Unrealized foreign exchange | (220,463 | ) | (41,940 | ) | ||
Proceeds (repayments) of loans from suppliers | (5,061,880 | ) | - | |||
Changes in operating assets and liabilities: | ||||||
Inventory | - | 54,971 | ||||
Prepaid expenses and sundry current assets | 41,345 | 115,999 | ||||
Accrued expenses and sundry current liabilities | (3,264,295 | ) | 2,341,297 | |||
Net cash used by operating activities | $ | (825,889 | ) | $ | (8,630,086 | ) |
Investing activities | ||||||
Acquisitions of property and equipment | 29,352 | - | ||||
Net cash used in investing activities | $ | 29,352 | $ | - | ||
Financing activities | ||||||
Stock payable | (1,000,000 | ) | 1,000,000 | |||
Advances to related party | - | (4,898,888 | ) | |||
Advances to shareholders | ||||||
Sale of common stock | 1,003,400 | 8,453,833 | ||||
Proceeds of loans payable shareholder | 831,000 | 1,211,459 | ||||
Proceeds (repayments) of loans from suppliers | - | 2,729,843 | ||||
Net cash provide by financing activities | $ | 834,400 | $ | 8,496,247 | ||
Increase (decrease) in cash | 37,863 | (133,839 | ) | |||
Cash- beginning of period | 128,607 | 262,446 | ||||
Cash - end of period | $ | 166,470 | $ | 128,607 | ||
Supplemental Disclosure of Cash Flow information | ||||||
Non cash items: | ||||||
Write off of related party | ||||||
note receivable | 5,946,531 | |||||
Stock based compensation | 1,372,897 | 684,634 | ||||
Unrealized foreign exchange | (220,463 | ) | (41,940 | ) |
22
ECOLOCAP SOLUTIONS INC.
(Formally known as XL GENERATION INTERNATIONAL INC.)
NOTE 1-NATURE OF BUSINESS
XL Generation International Inc. was the holding company of a Swiss entity, XL Generation AG, which was the manufacturer of an artificial sport surface called XL Turf. XL Turf is designed to reduce accidents while reproducing the natural feeling of playing on grass. Until September 2006, the Company aspired to become a leading global force in the artificial turf and flooring markets by building on the strength of the XL Generation brand and developing strategic partnerships with key regional turf and flooring providers. However, because of worsening financial conditions, irregularities regarding registration of certain intellectual property rights and deterioration of the brand name of the Company, and the windup of its wholly own subsidiary, XL Generation AG, the Board of Directors have decided that it is in the Companys and the stockholders best interest to initiate a complete and total withdrawal from the artificial flooring sector, artificial turf and all related business.
Recognizing both the limitations of its artificial playing surface market in late 2006 and the opportunities created by the Kyoto Protocol Exchange Mechanisms, management has begun the process of redeploying its assets, identifying business strategies that offers above average profit potential and identifying the resources necessary to successfully execute it new strategic direction. At the end of 2007 the Company has developed an executable business plan.
Recognizing the opportunity this new market represents, EcoloCap Solutions Inc. (hereinafter EcoloCap or the Company) has developed an integrated development approach that focuses upon both existing and needed infrastructure facilities to produce substantial new value in the form of tradable CERs. EcoloCap brings together the know-how, capital, technology.
NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid debt instruments with original maturities not exceeding three months to be cash equivalents.
INCOME TAXES
The asset and liability approach is used to account for income taxes by recognizing deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. The Company records a valuation allowance to reduce the deferred tax assets to the amount that is more likely than not to be realized.
LOSS PER COMMON SHARE
The basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding.
Diluted net loss per common share is computed by dividing the net loss, adjusted on an "as if converted" basis, by the weighted average number of common shares outstanding plus potential dilutive securities.
23
USE OF ESTIMATES
In preparing financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheet and revenue and expenses in the income statement. Actual results could differ from those estimates.
STOCK BASED COMPENSATION
The Company accounts for stock options and similar equity instruments issued in accordance with SFAS No. 123(revised), " Share-Based Payment". Accordingly, compensation costs attributable to stock options or similar equity instruments granted are measured at the fair value at the grant date, and expensed over the expected vesting period. Transactions in which goods or services are received in exchange for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. SFAS No. 123(revised) requires excess tax benefits be reported as a financing cash inflow rather than as a reduction of taxes paid.
NOTE 3--GOING CONCERN
The Company's consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities and commitments in the normal course of business. The Company posted net profit of $6,306,507 for the year ended December 31, 2007 as compared to net loss of $17,748,354 last year. The Company has negative working capital of $2,949,932 and $11,412,273 at December 31, 2007 and 2006, respectively and a stockholders deficiency of $ 2,949,932 and $11,412,273 at December 31, 2007 and 2006. These factors among others raise substantial doubt about the Company's ability to continue as a going concern.
Management's plans for the Company's continued existence include selling additional stock and borrowing additional funds to pay overhead expenses.
With the opportunities created by the Kyoto Protocol Exchange Mechanisms, management has begun the process of redeploying its assets, identifying business strategies that offers above average profit potential and identifying the resources necessary to successfully execute it new strategic direction.
Recognizing the opportunity this new market represents, the Company has developed an integrated development approach that focuses upon both existing and needed infrastructure facilities to produce substantial new value in the form of tradable CERs.
The Company's future success is dependent upon its ability to achieve profitable operations, generate cash from operating activities and obtain additional financing. There is no assurance that the Company will be able to generate sufficient cash from operations, sell additional shares of common stock or borrow additional funds.
The Company's inability to obtain additional cash could have a material adverse effect on its financial position, results of operations and its ability to continue in existence. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
24
NOTE 4 --PROPERTY & OFFICE EQUIPMENT
Equipment is stated at cost. Depreciation is computed using the straight-line method over 3 to 10 years.
December 31 | December 31, | ||||
2007 | 2006 | ||||
Computer equipment--3 yrs | $ | 0 | $ | 2,904 | |
Furniture & fixtures--5 yrs | 0 | 46,364 | |||
$ | 0 | $ | 49,268 | ||
Less: accumulated depreciation | 0 | $ | (19,916 | ) | |
Balance December 31, 2007 | $ | 0 | $ | 29,352 |
The Company received a deposit of five hundred thousand dollars ($500,000) from Aton Select Fund Ltd on July 6, 2006 to purchase from the Company (i) 250,000 shares of the Company's common stock. The shares were issued on June 26, 2007. The Company received a deposit of five hundred thousand dollars ($500,000) from Emper Overseas S.A. on August 10, 2006 to purchase from the Company (i) 400,000 shares of the Company's common stock; and (ii) Series A Warrants to purchase up to an additional 400,000 shares of the company's common stock at an exercise price initially set at $1.25 per share. The shares were issued on May 22, 2007.
NOTE 7--PAYABLE STOCKHOLDERS
Mr. Albert Beerli, a significant stockholder, advanced funds and then was repaid by the Company during the year ended December 31, 2007. The total note balance at December 31, 2007 was $0 ($119,858 as of December 31, 2006).
On December 30, 2006, the Company had received loans from CAPEX Investment Limited, a shareholder, in the amount of $2,068,474. In 2007, the Company received additional loans from CAPEX Investment Limited in the amount of $950,858. These loans carry an interest of 10% and are payable on demand. The loan is convertible, over a three year period, into common shares at a ratio of one share per dollar of debt.
25
Amounts owed to stockholders at December 31 are as follows:
2007 | 2006 | |||
Payable A.Beerli | $ | - | $ | 119,858 |
Payable Capex Investment Ltd | 3,019,332 | 2,068,474 | ||
Payable stockholders | $ | 3,019,332 | $ | 2,188,332 |
NOTE 8 -CAPITAL STOCK
The company is authorized to issue 100,000,000 shares of common stock (par value $0.001) of which 35,568,268 were issued and outstanding at of December 31, 2007.
NOTE 9-STOCK-BASED COMPENSATION EXPENSE
During the year ended December 31, 2007, the Company issued 425,000 stock options to officers and directors of the Company with an average exercise price of $1.25 per share. Of the stock options issued, 425, 000 were vested on December 12, 2007. These options expire on December 12, 2012. The options had a fair value of $ of $530,543 at the date of grant. The Company valued these options using the Black-Scholes option -pricing valuation model. The model uses market sourced inputs such as interest rates, stock prices, and option volatilities, the selection of which requires Company managements judgment, and which may impact the value of the options. The assumptions used in the Black-Scholes valuation model were: a risk-free interest rate of 4,7%; the current stock price at date of issuance of $1.25 per share; the exercise price of the options of $1.25 per share; the term of 5 years; volatility of 285% . For the year ended December 31, 2007, the Company recorded compensation expense of $530,543. As of December 31, 2007, there was no unrecognized compensation cost related to non-vested share-based compensation.
A summary of option activity for the year ended December 31, 2007 is presented below:
Weighted- | |||||||
Weighted- | Average | ||||||
Average | Remaining | ||||||
Exercise | Contractual | ||||||
Options | Shares | Price | Term | ||||
Outstanding at December 31, 2006 | 1,455,000 | $ | 1.48 | 5.72 | |||
Granted | 425,000 | 1.25 | 4.92 | ||||
Exercised, forfeited, or expired | 340,000 | 1,09 | - | ||||
$ | |||||||
Outstanding at December 31, 2007 | 1,540,000 | 1.10 | 5.47 | ||||
$ | |||||||
Exercisable at December 31, 2007 | 1,390.000 | 1.10 | 5.47 |
The weighted-average grant-date fair value of options granted during the period ended December 31, 2007 was $1.25 per share.
26
NOTE 10 -INCOME TAXES
As of December 31, 2006 the company had net operating loss carryforwards of approximately $7,300,000. These net operating losses are being utilized against the reported income for the year ended December 31, 2007. This results in no tax expense or provision for the year.
Components of deferred tax assets and liabilities at December 31, 2007 are as follows:
2007 | 2006 | |||||
Deferred tax asset | $ | 623,000 | $ | 2,768,000 | ||
Valuation allowance | (623,000 | ) | (2,768,000 | ) | ||
Net deferred tax asset | $ | 0 | $ | 0 |
The Company has recorded a full valuation allowance against its deferred tax asset since it believes it is more likely than not that such deferred tax asset will not be realized.
NOTE 11 -COMMITMENTS AND CONTINGENCIES
The Company is a party to a lease for its Montreal office, at a minimum annual rental of approximately $64,000 per year.
NOTE 12 -RELATED PARTY TRANSACTIONS
Mr. Albert Beerli, a significant stockholder, advanced funds and then was repaid by the Company during the year. The total note balance at December 30, 2007 was $0 ($119,858 as of December 31, 2006). The note carried an interest of 4.5% and was payable on demand.
NOTE 13-SETTLEMENT OF LITIGATION AND RELATED MATTERS
The Company has experienced a number of unresolved matters regarding certain individuals and entities involved in the August 2005 reverse takeover (RTO) through which it entered the artificial turf business. Efforts to resolve these matters lead to the filing of five actions against these individuals and entities in Quebec Provincial or Canadian Federal courts between September and November 2006 seeking a variety of relief and remedies. Discussions subsequent to these filings resulted in settlement of all matters of controversy and in April 2007 notices of settlement and discharge were filed with the courts.
The cancellation of various operating agreements and understandings referred to above lead to the May 2007 resignation of the Directors of the Companys wholly-owned Swiss subsidiary XL Generation AG (XLG AG) and the inability of the Company to replace such Directors (required by law to be Swiss residents). This situation was reported to the Cantonal Commerce Register Office in Zug, Switzerland which, after a statutory waiting period when public notices concerning the matter were posted, delivered the XLG AG entity to the Swiss courts in order to wind up its affairs. Swiss Counsel has advised the Company that under Swiss law concerning such matters a shareholders liability is limited to the amount of stated capital of the entity being delivered to the Swiss Courts and, as in the case of XLG AG, where all of the stated capital had been paid in by the shareholders, the law does not provide for further claims against the shareholders. Counsel has also advised that while Swiss law does not provide for further liabilities and/or claims against the shareholders when stated capital is fully paid, aggrieved parties may from time to time file claims in Swiss courts against the former management and directors of the entity whose affairs are being settled by the Court as well as its former shareholders.
27
In accounting for the above settlements and possible legal actions in Switzerland the Company has (1) recognized the winding up of the affairs of XLG AG by the Swiss courts and (2) provided for the possible costs of litigation. The effects of these actions beyond the Companys exit from the artificial turf business within the Companys balance sheet at June 30, 2007 are summarized below. The Company has recognized approximately $8,000,000 in gain on settlement of debts-foreign subsidiary.
Effects of settlement | ||||
Before | After | |||
Outstanding common shares | 34,578,268 | 34,578,268 | ||
Wind up of XLG AG affairs | ||||
Assets | 77,372 | 0 | ||
Liabilities | 11,758,979 | 2,649,148 | ||
Shareholders Deficiency | (11,681,607 | ) | (2,649,148 | ) |
Note 14 - SUBSEQUENT EVENTS
In February 2008, the Company entered into an exclusive Service Agreement with United Best Technology Limited of Hong Kong and that it executed a Consulting Agreement with Sodexen Inc. (Sodexen) pursuant to which, Sodexen is providing the services of its representative, Dr. Tri Vu Truong to serve in the capacity of President and Chief Executive Officer of the company. Under the terms of the above agreements Dr. Truong and United Best have committed to deliver to the Company a yearly minimum production of 3,600,000 (Three Million Six Hundred Thousand) fully tradable CERs.
As of February 12, 2008, the Company entered into an agreement with United Best Technology Limited (United). The agreement is a five (5) year renewable Service Agreement (the Agreement) pursuant to which United shall provide advice to undertake for and consult with the Company concerning certain operational areas and shall review and advise the Company regarding Carbon Credits (CER) and Clean Development Mechanism projects as well as the Companys overall progress, needs and condition in those areas, find, negotiate and close contracts and projects for a minimum of Three Million Six Hundred Thousand (3,600,000) CERs that could be certified, traded and delivered and to assist the execution of said contracts or projects by the Company or one of its affiliates. United for the exclusivity of its services was granted Three Million Five Hundred Thousand (3,500,000) restricted shares of the Companys common stock, out of said Three Million Five Hundred Thousand (3,500,000) restricted shares, One Million (1,000,000) restricted shares will be put in escrow as provided in the executed Escrow Agreement.
As of February 12, 2008, the December 7, 2007 Consulting Agreement (the Agreement) entered by and between the Company and Sodexen Inc. (Sodexen) pursuant to which, Sodexen is providing the services of its representative, Dr. Tri Vu Truong (the Representative), who will serve during the Engagement Period in its capacity of President and Chief Executive officer (CEO), have been revised (the Revised Consulting Agreement) to reduce the Engagement Period to one year, and became effective as of February 1, 2008.
As of February 12, 2008, the Company entered into an Escrow Agreement (the Escrow) with United Best Technology Limited (United) and Pellerin, Lawyers pursuant to which out of the Three Millions Five Hundred Thousand shares of the Companys common stock issued to United granted under the Service agreement, One Million Shares will be deposited in escrow ( the Escrow Securities) and delivered within the Delivery Period as follow: Five Hundred Thousand when the first contracts or projects permitting the issuance of a total of Six Hundred Thousand CERs are delivered; One Hundred Thousand for the following contract or project permitting the issuance for each of an additional Six Hundred Thousand CERs. At the end of the prescribe period for the CERs deliverance, all shares remaining in escrow, shall be cancelled.
28
Note 15 - RECENTLY ISSUED ACCOUNTING STANDARDS
In February 2007, the FASB issued SFAS No. 159 (SFAS 159), The Fair Value Option for Financial Assets and Financial Liabilities Including an Amendment of FASB Statement No. 115. This Statement provides companies with an option to measure, at specified election dates, many financial instruments and certain other items at fair value that are not currently measured at fair value. A company that adopts SFAS 159 will report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. This Statement also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. This Statement is effective for fiscal years beginning after November 15, 2007. The Company is currently evaluating the effect that the adoption of SFAS 159 will have on its results of operations and financial position.
In December 2007, FASB issued SFAS No. 160 (SFAS 160), Interests in Consolidated Financial Statements an amendment of ARB No. 51, which impacts the accounting for minority interest in the consolidated financial statements of filers. The statement requires the reclassification of minority interest to the equity section of the balance sheet and the results from operations attributed to minority interest to be included in net income. The related minority interest impact on earnings would then be disclosed in the summary of other comprehensive income. The statement is applicable for all fiscal years beginning on or after December 15, 2008 and earlier adoption is prohibited. The adoption of this standard will require prospective treatment. The Company is currently evaluating the effect that the adoption of SFAS 160 will have on its results of operations and financial position. However, the adoption of SFAS 160 is not expected to have a material impact on the Companys financial statements.
In December 2007, FASB issued SFAS No. 141R (SFAS 141R), Business Combinations, which impacts the accounting for business combinations. The statement requires changes in the measurement of assets and liabilities required in favor of a fair value method consistent with the guidance provided in SFAS 157 (see above). Additionally, the statement requires a change in accounting for certain acquisition related expenses and business adjustments which no longer are considered part of the purchase price. Adoption of this standard is required for fiscal years beginning after December 15, 2008. Early adoption of this standard is not permitted. The statement requires prospective application for all acquisitions after the date of adoption. The Company is currently evaluating the effect that the adoption of SFAS 141R will have on its results of operations and financial position. However, the adoption of SFAS 141R is not expected to have a material impact on the Companys financial statements.
Note 16 LITIGATION
As of the filling of the present Annual report on form 10KSB, the Company considers there was no pending or threatened litigation, claims, or assessments against the Company for its acts or omission. Several claimants have approach the Company to settle claims, or assessments against its former subsidiary XL Generation AG. During the period covered by this Annual Report, the Company has been a party to the following legal proceedings:
WKF/5 Ltd-Settled on April 24, 2007
On October 26, 2006, the Company filed a motion against WKF/5 Ltd, the Alain Lemieux Trust (Jersey) and Professional Trust Company Limited in the Canadian Federal Court of the District of Montreal (court file number T-1872-06). The Company claimed that the Register of Trade-marks relating to registration no. 671 108 (application no. 1 266 983) for the trade-mark XLGENERATION, registered on August 24, 2006, be struck on the grounds that at the date of the application or at the date of registration, the entry as it appears on the Register did not accurately express or define the existing rights of the person appearing to be the registered owner of the mark. Furthermore, the Company asked for an order declaring that WKF/5 Ltd was not entitled to obtain registration of any trade-mark containing the word XLGENERATION on the claim that the registration in the name of WKF/5 Ltd of the trade-mark XLGENERATION was contrary to the Companys rights. Pursuant to the settlement agreement dated April 24, 2007, the Company has agreed to relinquish its license to manufacture products utilizing the technology patented by WKF/5 Ltd, retroactively effective October 2, 2006. For up to six (6) months from April 24, 2007, the Company was allowed to continue to utilize (i) the technology created by WKF/5 Ltd; and (ii) the trademark XL Generation. Thereafter, the Company had no rights to use either the technology owned by WKF/5 Ltd or the trademark XL Generation. The Company has agreed that for a period of five (5) years thereafter, the Company and its subsidiaries may not engage in any business related to the production of artificial turf.
Solutions Highmedia Interactif Inc.-Settled on April 24, 2007
On November 10, 2006, the Company filed a motion seeking injunctive relief against Solutions Highmedia Interactif Inc. and Domenico Malatesta, in the Quebec Superior Court of the District of Montreal (court file number 500-17-033768-063) to forbid the selling, and prevent the cession of the internet domain name and emails of the Company and its affiliates, and to reactivate the Companys and its affiliates related internet services. In a related matter, on November 16, 2006, Solutions Highmedia Interactif Inc. filed a motion for monetary claim against the Company, XL Generation AG and XL Canada, in the Quebec Court of the District of Montreal (court file number 500-22-129010-065) totalling $54,418 CAD covering expenses for webdesign, printing, translation, and webhosting mandates performed towards the website of the Company and its affiliates between January 1, 2006 and August 15, 2006. Pursuant to the settlement agreement dated April 24, 2007, Solutions Highmedia Interactif Inc. and Domenico Malatesta have agreed to release the Company from any amounts owed. The Company has agreed that the Companys domain name will become the property of WKF/5 Ltd.
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Share Exchange Agreement-Settled on April 24, 2007
On November 14, 2006, the Company filed a motion seeking the annulment of the Share Exchange Agreement signed on August 19, 2005 between the Company and XL Generation AG. In addition, this action seeks to require certain of the Companys former management and affiliated parties to pay $11,000,000 in damages and to order the escrow agent and Pacific Stock Transfer Company to deposit the 13,500,000 shares of the Company issued to the Alain Lemieux Trust and Professional Trust Company Limited at the Quebec Superior Court of the District of Montreal (court file number 500-17-033823-066). This action alleged misconduct by former officers and directors of the Company, including unjustified and irresponsible spending of the Companys financial resources. Pursuant to the settlement agreement dated April 24, 2007, all claims for damages and for the annulment of the Share Exchange Agreement have been dropped, and the Alain Lemieux Trust was permitted to receive the disputed 13,500,000 shares of the Companys common stock, and sell such shares to a third party for $500,000.
Polyprod Litigation
XL Generation AG has ceased pursuing judicial proceedings seeking injunctive and other relief against Polyprod Inc. in the Quebec Superior Court of the District of Montreal (court file number 500-17-032933-064) to allow XL Generation AG to halt Polyprod Inc. from locking XL Generation AG out of the production site, and to force Polyprod Inc. to allow XL Generation AG access to said production site.
Bankruptcy Dismissed on May 11, 2007
On May 11, 2007 the Bankruptcy division of the Québec Superior Court of the District of Montreal (court file number 500-11-029010-069) dismissed claims made by XL Generation AG seeking to have Polyprod Inc. declared bankrupt pursuant to applicable law for an unpaid claim totalling $1,052,069 CAD. This amount represented monetary advances towards the production of artificial turf and related products, made by XL Generation AG to Polyprod Inc. from January 5, 2006 to October 10, 2006. Neither party was awarded costs.
XL Generation AG Wind up
In May 2007, the Directors of the Companys wholly-owned Swiss subsidiary XL Generation AG gave their resignation and the Company was unable to replace such Directors (required by law to be Swiss residents). This situation was reported to the Cantonal Commerce Register Office in Zug, Switzerland which, after a statutory waiting period when public notices concerning the matter were posted, delivered the XL Generation AG entity to the Swiss courts in order to wind up its affairs. Swiss Counsel has advised the Company that under Swiss law concerning such matters, a shareholders liability is limited to the amount of stated capital of the entity as in the case of XL Generation AG, where all of the stated capital had been paid in by the shareholder, the law does not provide for further claims against the shareholder. Counsel has also advised that while Swiss law does not provide for further liabilities and/or claims against the shareholder when stated capital is fully paid, aggrieved parties may from time to time file claims in Swiss courts against the former management and directors of the entity whose affairs are being settled by the Court as well as its former shareholder. At the moment of the decision of the Swiss court XL Generation AG was facing pending and threatened litigation, claims and assessments. The Company has no intention to intervene in these said litigations or claims, and no litigations or claim were filed against the Company by XL Generation AGs creditors following XL Generation AGs wind up.
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ITEM 8. |
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
|
CONTROLS AND PROCEDURES |
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures, as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the Exchange Act), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. We conducted an evaluation (the Evaluation), under the supervision and with the participation of our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the design and operation of our disclosure controls and procedures (Disclosure Controls) as of the end of the period covered by this report pursuant to Rule 13a-15 of the Exchange Act. Based on this Evaluation, our CEO and CFO concluded that our Disclosure Controls were effective as of the end of the period covered by this report.
Changes in Internal Controls
We have also evaluated our internal controls for financial reporting, and there have been no significant changes in our internal controls or in other factors that could significantly affect those controls subsequent to the date of their last evaluation.
Limitations on the Effectiveness of Controls
Our management, including our CEO and CFO, does not expect that our Disclosure Controls and internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management or board override of the control.
The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
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CEO and CFO Certifications
Appearing immediately following the Signatures section of this report there are Certifications of the CEO and the CFO. The Certifications are required in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 (the Section 302 Certifications). This Item of this report, which you are currently reading is the information concerning the Evaluation referred to in the Section 302 Certifications and this information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.
Managements Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). The Companys internal control over financial reporting is a process designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.
Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. All internal control systems, no matter how well designed, have inherent limitations, including the possibility of human error and the circumvention of overriding controls. Accordingly, even effective internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2007. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework . Based on our assessment, we believe that, as of December 31, 2007, the Companys internal control over financial reporting was effective based on those criteria.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Managements report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only managements report in this annual report.
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ITEM 8B. OTHER INFORMATION
None.
PART III |
|
ITEM 9. | DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; |
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT |
The following table presents information with respect to our officers, directors and significant employees as of the date of this Report:
Name | Age | Position |
Alexander C. Gilmour CVO | 75 | Chairman of the Board |
Tri Vu Truong | 61 | Chief Executive Officer |
Arthur Rawl | 65 | Director |
Claude Pellerin | 38 | Director |
Albert Beerli | 65 | Director |
Michel St-Pierre | 45 | Acting Chief Financial Officer |
Each director serves until our next annual meeting of the stockholders or unless they resign earlier. The Board of Directors elects officers and their terms of office are at the discretion of the Board of Directors.
Each of our directors serves until his or her successor is elected and qualified. Each of our officers is elected by the board of directors to a term of one (1) year and serves until his or her successor is duly elected and qualified, or until he or she is removed from office. The board of directors has a nominating, corporate governance and compensation committee consisting of Mr. Gilmour and Mr. Rawl. At the present time, members of the board of directors are not compensated for their services to the board. The board has an audit committee consisting of Mr. Rawl. Mr. Rawl currently serves as the audit committee financial expert.
Biographical Information Regarding Officers and Directors
Alexander Clement Gilmour, Director and Chairman of the Board . Mr. Gilmour has served as a director of the Company since August 2005. Mr. Gilmour has worked as a corporate finance stockbroker with Joseph Sebag and Carr Sebag from 1957 until 1982. They were official brokers among others to Shell, Royal Dutch, Philips nv , GEC , Racal , Sun Alliance , Tesco , Beechams and Sears. Since then he has served on the Board of several companies in the United Kingdom and Hungary, including Konzum, from 1996 until 2000, and Pharma Ltd. from 1997 until 1999. His other activities include serving as a Governor of the London School of Economics for over 25 years (he is now an Honorary Fellow and Emeritus Governor), Chairman of the National Playing Fields Association for 13 years, President of the South London Chamber of Commerce, Director of the Tate Gallery Foundation, as well as being associated with the Community Foundation movement and other charities in the United Kingdom. For his volunteer work he was made a Commander of the Royal Victorian Order (CVO). He is an Associate of the British Garden in Hanover Square, New York
Dr. Tri Vu Truong, Chief Executive Officer and President. Dr. Truong has served as a director, chief executive officer and president of the Company since February 14, 2008. He has worked in the environmental sector since 1970, upon completion of his B. Engineering degree, complemented by a Master's degree in Chemical Engineering in 1971 and a Ph.D. degree in Civil Engineering with Environmental Option in 1975. His professional career includes the realization of many major scientific and technical studies and projects. Dr. Truong was responsible in 1977 for the creation and operation of the Permits & Inspections
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Division of the Montreal Urban CommunityEnvironment Department. He has taught several post-graduate courses at the prestigious Université de Montréal's École Polytechnique. As President of the Sodexen Environmental Engineering Group since 1981, Dr. Truong has managed numerous major environmental impact projects, including: Comparative study of the environmental impact of dust-palliatives (MTQ 1988, 1989, 1990); Environmental decommissioning of a polystyrene production complex (BASF, 1988-1990); Solid waste management study relating to the closure of the Miron landfill (Montréal, 1988-90), as well as various research & development projects in the area.
Arthur Rawl, Chairman of the Audit Committee . Mr. Rawl has served as Chairman of the Companys Board of Directors since September 2006. Mr. Rawl has been Chairman and Chief Executive Officer of Rawl & Associates, a private strategic consulting firm, since May 2003. From September 1999 until May 2003, he was President and Chief Executive Officer of Brazil American Auto Group, Inc., a Sao Paulo-based consolidator of South American automotive retailers. From 1997 to 1999, Mr. Rawl was a consultant to Chrysler Financial Corp. in connection with the development of a new structured financial product line. From 1994 to 1997, he was Executive Vice President and Chief Financial Officer of United Auto Group, Inc., a consolidator and operator of automobile dealerships and related businesses. From 1990 to 1994, Mr. Rawl was Executive Vice President of Hanlin Group, Inc., a chemical and PVC products manufacturer. Prior to that time, he had a 23 year tenure at Deloitte & Touche LLP, including 12 years as a partner. Mr. Rawl is a Director of Quipp Inc. Mr. Rawl is the Board Chairman of the British Memorial Garden Trust, Inc., a public charity. Mr. Rawl is a certified public accountant.
Claude Pellerin, Director . Mr. Pellerin is a corporate attorney and a partner in the law firm of Pellerin Lawyers S.N. Between December 2003 and July 2007 Mr. Pellerin was partner in the law firm of Hovington Pellerin S.e.n.c. Since 2002, Mr. Pellerin has served as Director, President, Treasurer and Secretary of Capex Investments (Canada) Limited, an investments and financing corporation based in Montreal, Quebec. From 2001-2002, Mr. Pellerin served as a Secretary for Equilar Capital Corporation, an Ontario Corporation listed on the Toronto Stock exchange. Between 2002 and 2004, Mr. Pellerin served as Vice President for legal affairs for Manaris Corporation, a Nevada corporation listed on the OTCBB. Since 2003, Mr. Pellerin has served as Secretary of Gourmet Flash Inc., a Quebec corporation, and from 2004-2005 served as a Director to Canadian Security Agency (2004) Inc. Mr. Pellerin served as the Company's President, Secretary and Treasurer from June 17, 2005 until August 19, 2005, at which time he resigned as an officer but remained a director of the Company.
Albert Beerli, Director . Mr. Beerli has served as a director of the Company since March 2006. Mr. Beerli is a scientist, having received his Ph.D in chemical engineering in 1969. Since 1988 Mr. Beerli has been the Chief Executive Officer of Zenwex AG in Zug, Switzerland. Zenwex AG provides consulting services on scientific and technical matters.
Michel St-Pierre, Acting Chief Financial Officer . Mr. St-Pierre has served as an officer of the Company since July 2006. Mr. St-Pierre is a registered chartered accountant in Quebec, Canada. Before working for the Company, Mr. St-Pierre has served as Chief Financial Officer of a public shell company, Tiger Renewable Energy Limited (formerly known as Tiger Ethanol International Inc. and Arch Management) since January, 2007 and held positions as the Finance Director (comparable to Corporate Treasurer) at SPB Canada Inc. from 2004-2006, Symbior Technologies Inc. from 2003-2004, and Boulangeries Comas Inc. from 2000-2003.
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Compliance With Section 16(a) Of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers and directors, and persons who beneficially own more than 10% of our equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, directors and greater than 10% shareholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file. Based on our review of the copies of such forms we received, we believe that during the fiscal year ended December 31, 2007 all such filing requirements applicable to our officers and directors were complied with, except that reports were filed late by the following persons:
Name and principal | Transactions Not Timely Known Failures to File a | ||
position | Number of Late Reports | Reported | Required Form |
Kim Friesen(1) | 2 | 2 | 0 |
Andrea Meakin(2) | 2 | 2 | 0 |
Albert Beerli(3) | 1 | 1 | 0 |
Arthur Rawl(4) | 1 | 1 | 0 |
(1) |
Kim Freisen was an officer, director and 10% shareholder of the Company until June 17, 2005, at which time Kim Freisen sold all of his shares of the Companys common stock to DT Crystal Holdings Ltd. and resigned as an officer and director of the Company. Mr. Freisen did not file a Form 3 in connection with his status as an officer, director and 10% shareholder of the Company until March 1, 2006, which Form 3 was subsequently amended on March 20, 2006. Mr. Freisen did not file a Form 4 in connection with the June 17, 2005 sale of his shares of the Companys common stock and his resignation as an officer and director of the Company until March 1, 2006, which Form 4 was subsequently amended on March 20, 2006. |
|
(2) |
Andrea Meakin was an officer, director and 10% shareholder of the Company until June 17, 2005, at which time Ms. Meakin sold all of her shares of the Companys common stock to DT Crystal Holdings Ltd. and resigned as an officer and director of the Company. Ms. Meakin did not file a Form 3 in connection with her status as an officer, director and 10% shareholder of the Company until March 1, 2006, which Form 3 was subsequently amended on March 20, 2006. Ms. Meakin did not file a Form 4 in connection with the June 17, 2005 sale of her shares of the Companys common stock and her resignation as an officer and director of the Company until March 1, 2006, which Form 4 was subsequently amended March 20, 2006. |
|
(3) |
Albert Beerli is a director and shareholder of the Company. Albert Beerli was appointed to the Board of directors of XL Generation International Inc. on March 17, 2006. |
|
(4) |
Arthur Rawl became a director of XL Generation International Inc. on May 24, 2006. |
|
Our board currently has an Audit Committee and a Nominating, Corporate Governance and Compensation Committee. Our Audit Committee consists of Arthur Rawl whom is independent director. The members of the Nominating, Corporate Governance Committee and Compensation Committee are Messrs. Alexander Gilmour and Arthur Rawl, both of whom are independent directors.
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Audit Committee
We have a separately-designated audit committee of the board. Our audit committee is responsible for: (1) selection and oversight of our independent accountant; (2) establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal controls and auditing matters; (3) establishing procedures for the confidential, anonymous submission by our employees of concerns regarding accounting and auditing matters; (4) engaging outside advisors; and, (5) funding for the outside auditory and any outside advisors engagement by the audit committee. A copy of our audit committee charter is filed as an exhibit to this report. Our Audit Committee consists of Arthur Rawl whom is independent director.
Compensation Committee
We have a Compensation Committee. This committee acts on behalf of our board of directors to approve compensation arrangements for our management and review the compensation paid to our board of directors. A copy of our Compensation Committee Charter is filed herewith.
Nominating and Corporate Governance Committee
We have a Nominating and Corporate Governance Committee. This committee acts on behalf of our board of directors and generally to identify and recommend nominees for our board and our committees, identify and recommend candidates for senior management, review and recommend to the board, or independently take, action on various company corporate governance issues, receive and respond to certain complaints raised by our employees regarding alleged illegal acts or behavior-related conduct by board members in violation of our Code of Business Conduct and Ethics, supervise our chief financial officer in the context of the Ethics Code and carry-out other assignments as designated by our board. A copy of the Nominating and Corporate Governance Committee is filed herewith.
Code of Ethics
We adopted a code of ethics on March 26, 2008. We adopted eight Corporate Values (Focus, Respect, Excellence, Accountability, Teamwork, Integrity, Very Open Communications and Enjoying Our Work) to provide a framework for all employees in conducting themselves in their jobs. These policies are not intended to substitute for those Values, but will serve as guidelines in helping employee to conduct our business in accordance with its Values. Compliance requires meeting the spirit, as well as the literal meaning, of the law, the policies and the Values. It is expected that employee will use common sense, good judgment, high ethical standards and integrity in all their business dealings.
As of March 30, 2008, we had five directors. Our board determined that Messrs. Gilmour and Rawl are independent. We have adopted those standards for independence contained in the Nasdaq Marketplaces Rules, Rule 4350(d) and Rule 4200(a)(15). Messrs. Truong, Beerli and Pellerin are not independent.
ITEM 10.
EXECUTIVE COMPENSATION
Compensation of Officers
Option award compensation is the fair value for stock options vested during the period, a notional amount estimated at the date of the grant using the Black-Scholes option-pricing model. The actual value received by the executives may differ materially and adversely from that estimated. A summary of cash and other compensation paid in accordance with management consulting contracts for our Principal Executive Officer and other executives for the most recent two years is as follows:
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Nonqualified | |||||||||
Name and | Non-Equity | Deferred | All | ||||||
Principal | Stock | Option | Incentive Plan | Compensation | other | ||||
Position | Year | Salary | Bonus | Awards | Awards | Compensation | Earnings | Comp. | Total |
($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) |
Tri Vu Truong (2) | 2007 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Chief Executive Officer | 2006 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
and President | 2005 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Alain Lemieux (3) 4) | 2007 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Director, President and | 2006 | 240,000 | 0 | 0 | 0 | 0 | 0 | 0 | 240,000 |
CEO | 2005 | 65,000 | 0 | 0 | 0 | 0 | 0 | 0 | 65,000 |
Claude Pellerin (5) | 2007 | 0 | 0 | 0 | 124,834 | 0 | 0 | 0 | 124,834 |
Director, President and | 2006 | 0 | 0 | 0 | 103,997 | 0 | 0 | 0 | 103,997 |
CEO | 2005 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Daniel Courteau(6) | 2007 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Director, Vice-President | 2006 | 175,000 | 0 | 0 | 0 | 0 | 0 | 0 | 175,000 |
and Secretary | 2005 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Flemming Munck (7) | 2007 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Director, and CFO | 2006 | 150,000 | 0 | 0 | 22,458 | 0 | 0 | 0 | 22,458 |
Eric Giguère (8) | 2007 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
COO | 2006 | 150,000 | 0 | 0 | 51,917 | 0 | 0 | 0 | 51,917 |
Michel St-Pierre (9) | 2007 | 100,000 | 0 | 0 | 124,834 | 0 | 0 | 0 | 124,834 |
CFO | 2006 | 150,000 | 0 | 624,000 | 0 | 0 | 0 | 624,000 | |
Alexander Clement | 2007 | 0 | 0 | 0 | 156,042 | 0 | 0 | 0 | 156,042 |
Gilmour (10) | 2006 | 0 | 0 | 0 | 129,997 | 0 | 0 | 0 | 129,997 |
Kim Friesen (11) | 2005 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Director, President and | |||||||||
CEO |
(1) |
Prior to the acquisition of XL Generation AG, the Company's fiscal year ended April 30th. XL Generation AG, our wholly-owned subsidiary, had a fiscal year ending December 31st. Following the acquisition of XL Generation AG, we adopted the fiscal year end of XL Generation AG. |
(2) |
Mr. Truong has been appointed president and CEO on February 1, 2008. |
(3) |
Mr. Lemieux was our president and CEO between August 19, 2005 and August 18, 2006. He was president and CEO of XL Generation AG. |
(4) |
Mr. Lemieux was paid $65,000 in the year ended December 31, 2005 by XL Generation AG. |
(5) |
Mr. Pellerin was our president, CEO and a director from June 17, 2005 until August 19, 2005. He remains a director of our company. |
(6) |
Mr. Courteau was our director, vice-president legal affairs and secretary until his resignation on September 14, 2006. |
(7) |
Flemming Munck was one of our directors and chief financial officer until his formal resignation on August 16, 2006. |
(8) |
Mr. Giguère was our chief operating officer until his resignation on June 1, 2006. |
(9) |
Mr. St-Pierre is one of our directors and has been our chief financial officer since July 28, 2006. |
(10) |
Mr. Gilmour served as our principal executive office from August 22, 2007 to February 14, 2008. |
(11) |
Ms. Friesen was the Company's President, CEO and a Director from the date of its inception, on March 18, 2004, until her resignation on June 17, 2005. |
During the fiscal year ended 2007, Mr. Alexander Gilmour served as our chairman and CEO. He received 125,000 stock options for his work. Mr. Arthur Rawl and Mr. Claue Pellerin each received 100,000 stock options as compensation for their services as directors, Mr.St-Pierre served as our chief financial officer. Mr. St-Pierre was paid a salary of $100,000 and did not have an employment contact. Mr. St-Pierre received 100,000 stock options.
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Employment Contracts
During the fiscal year ended December 31, 2007, we had no employment agreements with our employees or directors.
Other Executive Officers
During 2007, other than those disclosed above, no other employment contracts have been executed by our company for any other executive officer.
Outstanding Equity Awards at Fiscal Year End for Named Executives | |||||||||
Equity | |||||||||
Equity | Incentive | ||||||||
Incentive | Plan Awards: | ||||||||
Equity | Market | Plan Awards: | Market or | ||||||
Incentive | Number | Value of | Number of | Payout Value | |||||
Plan Awards: | of Shares | Shares or | Unearned | of Unearned | |||||
Number of | Number of | Number of | or Units | Units of | Shares, Units | Shares, Units | |||
Securities | Securities | Securities | of Stock | Stock | or Other | or Other | |||
Underlying | Underlying | Unexercised | Option | Option | That | That | Rights That | Rights That | |
Unexercised | Unexercised | Unearned | Exercise | Expiration | Have Not | Have | Have Not | Have Not | |
Name | Options(1) | Options | Options | Price | Date | Vested | Vested | Vested | Vested |
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) |
Exercisable | Unexercisable | ||||||||
Alexander Gilmour | 125,000 | 0 | 0 | 1.05 | 09-06-2013 | 0 | 0 | 0 | 0 |
125,000 | 0 | 0 | 1.25 | 12-12-2012 | 0 | 0 | 0 | 0 | |
Arthur Rawl | 115,000 | 0 | 0 | 1.05 | 09-06-2013 | 0 | 0 | 0 | 0 |
115,000 | 0 | 0 | 1.25 | 12-12-2012 | 0 | 0 | 0 | 0 | |
Claude Pellerin | 100,000 | 0 | 0 | 1.05 | 09-06-2013 | 0 | 0 | 0 | 0 |
100,000 | 0 | 0 | 1.25 | 12-12-2012 | 0 | 0 | 0 | 0 | |
Albert Beerli | 100,000 | 0 | 0 | 1.05 | 09-06-2013 | 0 | 0 | 0 | 0 |
Michel St-Pierre | 250,000 | 0 | 0 | 0.01 | 09-06-2013 | 0 | 0 | 0 | 0 |
200,000 | 0 | 0 | 0.01 | 09-06-2013 | 0 | 0 | 0 | 0 | |
0 | 150,000 | 0 | 0.01 | 09-06-2013 | 150,000 | 156,000 | 0 | 0 | |
100,000 | 0 | 0 | 1.25 | 12-12-2012 | 0 | 0 | 0 | 0 |
(1) |
340,000 options were awarded as Director's Compensation |
(2) |
Options shall expire 30 days from termination of association with the Company. |
Retirement, Resignation or Termination Plans
We sponsor no plan, whether written or verbal, that would provide compensation or benefits of any type to an executive upon retirement, or any plan that would provide payment for retirement, resignation, or termination as a result of a change in control of our company or as a result of a change in the responsibilities of an executive following a change in control of our company.
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Directors = Compensation
We compensate each director by granting them stock options. The exercise price is equal to the closing price of our common stock on the date of the grant with the options vesting over a one year period in equal quarterly amounts. No director received any other compensation for services as a director in 2007.
Option award compensation is the fair value for stock options vested during the period, a notional amount estimated at the date of the grant using the Black-Scholes option-pricing model. The actual value received by the directors may differ materially and adversely from that estimated.
The following table sets forth the compensation paid to all persons who served as members of our board of directors, including named executive officers who received compensation for services as an officer:
Name | Fees | Non-Qualified | |||||
Earned | Non-Equity | Deferred | |||||
or Paid | Stock | Option | Incentive Plan | Compensation | All Other | ||
in Cash | Awards | Awards | Compensation | Earnings | Compensation | Total | |
($) | ($) | ($) | ($) | ($) | ($) | ($) | |
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) |
Alexander Gilmour | 0 | 0 | 156,042 | 0 | 0 | 0 | 156,042 |
Arthur Rawl | 0 | 0 | 124,834 | 0 | 0 | 0 | 124,834 |
Claude Pellerin | 0 | 0 | 124,834 | 0 | 0 | 0 | 124,834 |
The following table sets forth our current scheduled payments for members of the board of directors:
Fees for Non- | ||||
Executive Committee | ||||
Chairs (Compensation | ||||
Fees for Non- | Committee and | |||
All Non- | Executive | Nominating and | ||
Executive | Committee Chairs | Corporate Governance | ||
Cash Compensation | Directors | Chairman | (Audit Committee) | Committee) |
Cash Retainer | 10,000.00 | 12,000.00 | 6,000.00 | 6,000.00 |
Board Meeting Fees | ||||
In Person | 1,000.00 | None | None | None |
Phone | 400.00 | None | None | None |
Committee Meeting | ||||
Fees | ||||
In Person | 500.00 | None | None | None |
Phone | 200.00 | None | None | None |
Stock Options | ||||
Initial Grant Shares | 60,000 | 30,000 | 10,000 | 10,000 |
Annual Grant | ||||
Shares | 10,000 | 10,000 | 5,000 | 5,000 |
39
Options Granted in Last Fiscal Year (Individual Grants)
The following table provides the information regarding options granted in 2007 to the named executive officers and directors. We have never granted any stock appreciation rights.
Number of | ||||
Securities | Percent of Total | |||
Underlying | Options | |||
Options | Granted in Fiscal | Exercise of Base | ||
Name | Granted (#) | Year | Price ($/Sh) | Expiration Date |
Alexander C.Gilmour | 125,000 | 29.41% | 1.25 | 12/12/12 |
Chairman of the | ||||
Board of Directors | ||||
Arthur Rawl | 100,000 | 23.53% | 1.25 | 12/12/12 |
Director | ||||
Claude Pellerin | 100,000 | 23.53% | 1.25 | 12/12/12 |
Director | ||||
Michel St-Pierre | 100,000 | 23.53% | 1.25 | 12/12/12 |
CFO |
Indemnification
Pursuant to the articles of incorporation and bylaws of the corporation, we may indemnify an officer or director who is made a party to any proceeding, including a law suit, because of his position, if he acted in good faith and in a manner he reasonably believed to be in its best interest. In certain cases, we may advance expenses incurred in defending any such proceeding. To the extent that the officer or director is successful on the merits in any such proceeding as to which such person is to be indemnified, we must indemnify him against all expenses incurred, including attorney = s fees. With respect to a derivative action, indemnity may be made only for expenses actually and reasonably incurred in defending the proceeding, and if the officer or director is judged liable, only by a court order. The indemnification is intended to be to the fullest extent permitted by the laws of the State of Nevada.
Regarding indemnification for liabilities arising under the Securities Act of 1933 which may be permitted for directors or officers pursuant to the foregoing provisions, we are informed that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy, as expressed in the Act and is therefore unenforceable.
40
ITEM 11. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND |
MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
The following table sets forth certain information regarding the beneficial ownership of our common stock as of the date of this Report by (i) each of our directors, (ii) each of our officers named in the Summary Compensation Table, (iii) each person who is known by us to be the beneficial owner of more than five percent of our outstanding common stock, and (iv) all directors and executive officers as a group. Except as otherwise indicated below, each person named has sole voting and investment power with respect to the shares indicated. The percentage of ownership set forth below reflects each holder's ownership interest in the 39,068,268 shares of our common stock outstanding as of March 30, 2008.
(1) |
The mailing address for each of the listed individuals is c/o XL Generation International Inc., 740 St-Maurice, local 102,Montreal, Quebec, Canada, H3C 1L5. |
(2) |
Owner of 5% or more of our common stock. Mr. Truong, Chief Executive Officer, is the President and Chief Executive Officer of United Best Technology Limited. |
(3) |
Chairman of the Board of Directors. |
(4) |
Director. |
(5) |
Director. |
(6) |
Director |
(7) |
Chief Financial Officer. |
(8) |
Owner of 5% or more of our common stock. Mr. Alan Cole, sole director and sole shareholder of Redcorn Consultants Limited, and Mme. Michelle Bain, Sole Officer of Redcorn Consultants Limited, the sole officer and director of DT Crystal Limited, has voting and investment control over the securities held by DT Crystal Limited, and are therefore deemed to be the beneficial owner of such securities. |
(9) |
Owner of 5% or more of our common stock. Mr. Robert Clarke, President and Sole Director of Capex Investments Limited, has voting and investment control over the securities held by Capex Investments Limited, and is therefore deemed to be the beneficial owner of such securities. |
(10) |
Owner of 5% or more of our common stock. |
41
Securities Authorized For Issuance under Equity Compensation Plans
Equity Incentive Plan
On March 31, 2006, our Board of Directors adopted the 2006 Equity Incentive Plan, which authorizes us to issue options for the purchase of up to 2,000,000 shares of our common stock, pursuant to the terms and conditions set forth therein. The Equity Incentive Plan authorizes the issuance of incentive stock options (ISO) and non-qualified stock options (NQOs) to our employees, directors or consultants.
During the year ended December 31, 2006, we issued 1,455,000 stock options to our officers and directors with an average exercise price of $1.05 per share. Of the stock options issued, 320,000 were vested on September 6, 2006, 150,000 were vested on September 7, 2006, 25,000 were vested on September 15, 2006, 150,000 were vested on December 25, 2006, 660,000 will vest on September 6, 2007 and the balance will vest on September 6, 2008. These options expire on September 6, 2008 (240,000), September 15, 2008 (25,000), December 25, 2006 (150,000), September 6, 2013 (440,000) and September 6, 2016 (600,000). The options had a fair value of $1,526,989 at the date of grant.
During the month of December 2007, we issued 425,000 stock options to our officers and directors with an average exercise price of $1.25 per share. All of the stock options issued vested on December 12, 2007. The options had a fair value of $530,543 at the date of grant.
As of March 28, 2008, we had approximately six directors and officers eligible to receive options under the Equity Incentive Plan. Options to buy 1,540,000 shares of common stock were outstanding under the Equity Incentive Plan and 120,000 shares remained available for grants under this plan.
ITEM 12.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Advances from Albert Beerli
Since the date of its formation and until the resignation of its directors, Albert Beerli and Pascal Beerli in May 2007, XL Generation AG has received advances from Mr. Albert Beerli to cover general overhead and running costs of XL Generation AG's offices in Zug, Switzerland. Mr. Beerli provided XL Generation AG office space at his personal offices, for which he was charging 2,000 Swiss Francs per month (approximately US $1,538). Mr. Beerli undertook to advance payments on our behalf during the year to cover general overhead items related to the running cost of the Zug office until his resignation as XL Generation AGs directors. The balance as of March 31, 2008 was $0.
Transactions with Capex Investments Limited
In 2007, we received loans from CAPEX Investment Limited in the amount of $950,858. These loans carry an interest of 10% and are payable on demand. As of March 30, 2008, total loans from CAPEX Investment Limited amounted to $3,269,332.
Law Firm of Hovington Pellerin
In the fiscal year ended December 31, 2007, the law firm of Hovington Pellerin (Montreal) received CAD $50,767 (approximately US$51,346) from our company for legal services rendered. In the fiscal year ended December 31, 2007, the law firm of Pellerin Attorneys (Montreal) received CAD$18,000 (approximately US $18,237) from our company for legal services rendered by Pellerin Lawyers S.N. Mr. Claude Pellerin, one of our directors, was partner of the law firm of Hovington Pellerin up until its wind up on July 20, 2007, he is the owner of his own law firm since then.
42
ITEM 13. | EXHIBITS | ||||
Exhibit Index | |||||
Incorporated by reference | |||||
Filed | |||||
Exhibit No. | Description of Exhibits | Form | Date | Number | herewith |
3.1 | Articles of Incorporation, as amended. | SB-2 | 5/28/04 | 3.1 | |
3.2 |
Bylaws. | SB-2 | 5/28/04 | 3.2 | |
3.3 | Certificate of Amendment to Articles of | 10-QSB | 12/30/05 | 3.3 | |
Incorporation. | |||||
3.4 | Bylaws, as amended on March 17, 2006. | 10-KSB | 4/13/06 | 3.4 | |
10.1 | Letter of Intent with XL Generation AG. | 8-K | 7/06/05 | 99.1 | |
10.2 | Share Exchange Agreement with XL | 8-K | 8/19/05 | 99.1 | |
Generation AG. | |||||
10.3 | Loan Agreement with Capex Investments | 8-K | 9/14/05 | 99.1 | |
Limited. | |||||
10.4 | Form of Indemnification Agreement with | 8-K/A | 11/1/05 | 10.4 | |
XL Generation International Inc. | |||||
10.5 | Common Stock Purchase Agreement with | 8-K | 11/15/05 | 10.5 | |
Capex Investments Limited. | |||||
10.6 | Common Stock Purchase Agreement with | 8-K | 11/15/05 | 10.6 | |
Aton Select Fund Limited. | |||||
10.7 | Common Stock Purchase Agreement with | 8-K | 11/15/05 | 10.7 | |
Asset Protection Fund Limited. | |||||
10.8 | Series A Warrant to Purchase Shares of | 8-K | 11/15/05 | 10.8 | |
Common Stock to Capex Investments | |||||
Limited. | |||||
10.9 | Series A Warrant to Purchase Shares of | 8-K | 11/15/05 | 10.9 | |
Common Stock to Aton Select Fund | |||||
Limited. | |||||
10.10 | Series A Warrant to Purchase Shares of | 8-K | 11/15/05 | 10.10 | |
Common Stock to Asset Protection Fund | |||||
Limited. |
43
1 0.11 | Registration Rights Agreement with Capex | 8-K | 11/15/05 | 10.11 | |
Investments Limited. | |||||
10.12 | Registration Rights Agreement with Aton | 8-K | 11/15/05 | 10.12 | |
Select Fund Limited. | |||||
10.13 | Registration Rights Agreement with Asset | 8-K | 11/15/05 | 10.13 | |
Protection Fund Limited. | |||||
10.14 | Amendment to the Common Stock | 8-K | 12/08/05 | 10.14 | |
Purchase Agreement with Aton Select Fund | |||||
Limited. | |||||
10.15 | Amendment to the Common Stock | 8-K | 12/08/05 | 10.15 | |
Purchase Agreement with Asset Protection | |||||
Fund Limited. | |||||
10.16 | Lease Agreement with 866 U.N. Plaza | 10-QSB | 12/30/05 | 10.16 | |
Associates LLC. | |||||
10.17 | Exclusive Manufacturing License |
10-QSB |
12/30/05 | 10.17 | |
Agreement and Non Exclusive Distribution | |||||
Agreement with APW Inc. | |||||
10.18 | Common Stock Purchase Agreement with | SB-2 | 1/13/06 | 10.18 | |
Professional Trading Services SA. | |||||
10.19 | Series B Warrant to Purchase Shares of | SB-2 | 1/13/06 | 10.19 | |
Common Stock to Professional Trading | |||||
Services SA. | |||||
10.20 | Registration Rights Agreement with | SB-2 | 1/13/06 | 10.20 | |
Professional Trading Services SA. | |||||
10.21 | Amended and Restated Common Stock | SB-2 | 1/13/06 | 10.21 | |
Purchase Agreement with Bank Sal. | |||||
Oppenheim jr. & Cie. (Switzerland) | |||||
Limited. | |||||
10.22 | Series B Warrant to Purchase Shares of | SB-2 | 1/13/06 | 10.22 | |
Common Stock to Bank Sal. Oppenheim jr. | |||||
& Cie. (Switzerland) Limited. | |||||
10.23 | Agreement of Withdrawal from Stadium | SB-2 | 1/13/06 | 10.23 | |
SA. | |||||
10.24 | License Agreement with WKF/5 Ltd. | SB-2 | 1/13/06 | 10.24 |
44
10.25 | Amendment to License Agreement with | SB-2 | 1/13/06 | 10.25 | |
WKF/5 Ltd and Alain Lemieux. | |||||
10.26 | Form of Subscription Agreement. | SB-2 | 5/28/04 | 99.1 | |
10.27 | Employment Agreement with Alain | 10-KSB | 4/13/06 | 10.27 | |
Lemieux. | |||||
10.28 | Employment Agreement with Daniel | 10-KSB | 4/13/06 | 10.28 | |
Courteau. | |||||
10.29 | Employment Agreement with Flemming | 10-KSB | 4/13/06 | 10.29 | |
Munck. | |||||
10.30 | Employment Agreement with Eric Giguère. | 10-KSB | 4/13/06 | 10.30 | |
10.31 | Endorsement Agreement with La Societe | 10-KSB | 4/13/06 | 10.31 | |
421 Productions. | |||||
10.32 | Summary of terms and conditions of Oral | 10-KSB | 4/13/06 | 10.32 | |
Consulting Agreement with Greendale | |||||
Consulting Limited. | |||||
10.33 | Exclusive Manufacturing License | 10-KSB | 4/13/06 | 10.33 | |
Agreement with Polyprod Inc. | |||||
10.34 | Management Fee Arrangement with | 10-KSB | 4/13/06 | 10.34 | |
Polyprod Inc. | |||||
10.35 | Supply Contract with Febra-Kunststoffe | 10-KSB | 4/13/06 | 10.35 | |
GmbH and BASF Aktiengesellschaft. | |||||
10.36 | Loan Agreement with Fiducie Alain | 10-KSB | 4/13/06 | 10.36 | |
Lemieux. | |||||
10.37 | Confirmation of Debt. | 10-KSB | 4/13/06 | 10.37 | |
10.38 | Agreement with Daniel Courteau regarding | 10-KSB | 4/13/06 | 10.38 | |
Repayment of loans to Symbior | |||||
Technologies Inc. | |||||
10.39 | 2006 Equity Incentive Plan. | 10-KSB | 4/13/06 | 10.39 | |
10.40 | Loan Agreement with Albert Beerli. | 10-KSB | 4/13/06 | 10.40 | |
10.41 | Summary of terms and conditions of Loan | 10-KSB | 4/13/06 | 10.41 | |
Agreement with Albert Beerli. | |||||
10.42 | Lease Agreement with Albert Beerli. | 10-KSB | 4/13/06 | 10.42 |
45
10.43 | Memorandum regarding XL Generation | 10-KSB | 4/13/06 | 10.43 | |
Canada Inc. | |||||
10.44 | Stock Purchase Agreement with XL | 10-KSB | 4/13/06 | 10.44 | |
Generation AG and Stadium SA. | |||||
10.45 | Common Stock Purchase Agreement with | 10-QSB | 9/13/06 | 10.45 | |
Poma Management SA. | |||||
10.46 | Common Stock Purchase Agreement with | 10-QSB | 9/13/06 | 10.46 | |
Aton Select Fund Limited. | |||||
14.1 | Code of Ethics | X | |||
21.1 | Subsidiaries of XL Generation International | 10-KSB | 4/17/07 | 21.1 | |
Inc. | |||||
31.1 | Certification of Chief Executive Officer | X | |||
pursuant to Section 302 of the Sarbanes- | |||||
Oxley Act of 2002. | |||||
31.2 | Certification of Principal Financial Officer | X | |||
pursuant to Section 302 of the Sarbanes- | |||||
Oxley Act of 2002. | |||||
32.1 | Certification of the Chief Executive Officer | X | |||
pursuant to 18 U.S.C. Section 1350, as | |||||
adopted pursuant to Section 906 of the | |||||
Sarbanes-Oxley Act of 2002. | |||||
32.2 | Certification of the Chief Financial Officer | X | |||
pursuant to 18 U.S.C. Section 1350, as | |||||
adopted pursuant to Section 906 of the | |||||
Sarbanes-Oxley Act of 2002. | |||||
99.1 | Audit Committee Charter | X | |||
99.2 | Executive Committee Charter | X | |||
99.3 | Nominating and Corporate Governance | X | |||
Committee Charter | |||||
99.4 | Stock Option Plan | X |
46
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(1) Audit Fees
The aggregate fees billed for each of the last three fiscal years for professional services rendered by the principal accountant for our audit of annual financial statements and reviews of our interim financial statements included in our Form 10-QSBs and Form 10-KSBs or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years was:
2007 | $ | 10,675 | |
2006 | $ | 33,000 | |
2005 | $ | 25,000 |
(2) Audit-Related Fees
The aggregate fees billed in each of the last three fiscal years for assurance and related services by the principal accountants that are reasonably related to the performance of the audit or review of our financial statements and are not reported in the preceding paragraph:
2007 | $ | 0 | |
2006 | $ | 13,000 | |
2005 | $ | 15,000 |
(3) Tax Fees
The aggregate fees billed in each of the last three fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning was:
2007 | $ | 0 | |
2006 | $ | 0 | |
2005 | $ | 0 |
(4) All Other Fees
The aggregate fees billed in each of the last three fiscal years for the products and services provided by the principal accountant, other than the services reported in paragraphs (1), (2), and (3) was:
2007 | $ | 0 | |
2006 | $ | 0 | |
2005 | $ | 0 |
(5) Our audit committee = s pre-approval policies and procedures described in paragraph (c) (7) (i) of Rule 2-01 of Regulation S-X were that the audit committee pre-approves all accounting related activities prior to the performance of any services by any accountant or auditor.
(6) The percentage of hours expended on the principal accountant ' s engagement to audit our financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant = s full time, permanent employees, to the best of our knowledge, was 0%.
47
Audit Committee Pre-Approval Policies
Our Audit Committee reviewed the audit and non-audit services rendered by Paritz & Company, P.A. during the periods set forth above and concluded that such services were compatible with maintaining the auditors independence. All audit and non-audit services performed by our independent accountants are pre-approved by our Audit Committee to assure that such services do not impair the auditors independence from us.
48
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ECOLOCAP SOLUTIONS INC.
March 31, 2008
By:
TRI VU TRUONG
Name: Tri Vu Truong
Title: Principal Executive Officer
By:
MICHEL ST-PIERRE
Name: Michel St-Pierre
Title: Principal Financial Officer and
Principal Accounting Officer
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
ALEXANDER C. GILMOUR, CVO
Name: Alexander C. Gilmour, CVO
Title: Chairman of the Board
Dated: March 31, 2008
TRI VU TRUONG
Name: Tri Vu Truong
Title: Director
Dated: March 31, 2008
CLAUDE PELLERIN
Name: Claude Pellerin
Title: Director
Dated: March 31, 2008
ALBERT BEERLI
Name: Albert Beerli
Title: Director
Dated: March 31, 2008
ARTHUR RAWL
Name: Arthur Rawl
Title: Director
Dated: March 31, 2008
49
Exhibit Index | |||||
Incorporated by reference | |||||
Filed | |||||
Exhibit No. | Description of Exhibits | Form | Date | Number | herewith |
3.1 | Articles of Incorporation, as amended. | SB-2 | 5/28/04 | 3.1 | |
3.2 |
Bylaws. | SB-2 | 5/28/04 | 3.2 | |
3.3 | Certificate of Amendment to Articles of | 10-QSB | 12/30/05 | 3.3 | |
Incorporation. | |||||
3.4 | Bylaws, as amended on March 17, 2006. | 10-KSB | 4/13/06 | 3.4 | |
10.1 | Letter of Intent with XL Generation AG. | 8-K | 7/06/05 | 99.1 | |
10.2 | Share Exchange Agreement with XL | 8-K | 8/19/05 | 99.1 | |
Generation AG. | |||||
10.3 | Loan Agreement with Capex Investments | 8-K | 9/14/05 | 99.1 | |
Limited. | |||||
10.4 | Form of Indemnification Agreement with | 8-K/A | 11/1/05 | 10.4 | |
XL Generation International Inc. | |||||
10.5 | Common Stock Purchase Agreement with | 8-K | 11/15/05 | 10.5 | |
Capex Investments Limited. | |||||
10.6 | Common Stock Purchase Agreement with | 8-K | 11/15/05 | 10.6 | |
Aton Select Fund Limited. | |||||
10.7 | Common Stock Purchase Agreement with | 8-K | 11/15/05 | 10.7 | |
Asset Protection Fund Limited. | |||||
10.8 | Series A Warrant to Purchase Shares of | 8-K | 11/15/05 | 10.8 | |
Common Stock to Capex Investments | |||||
Limited. | |||||
10.9 | Series A Warrant to Purchase Shares of | 8-K | 11/15/05 | 10.9 | |
Common Stock to Aton Select Fund | |||||
Limited. | |||||
10.10 | Series A Warrant to Purchase Shares of | 8-K | 11/15/05 | 10.10 | |
Common Stock to Asset Protection Fund | |||||
Limited. |
50
1 0.11 | Registration Rights Agreement with Capex | 8-K | 11/15/05 | 10.11 | |
Investments Limited. | |||||
10.12 | Registration Rights Agreement with Aton | 8-K | 11/15/05 | 10.12 | |
Select Fund Limited. | |||||
10.13 | Registration Rights Agreement with Asset | 8-K | 11/15/05 | 10.13 | |
Protection Fund Limited. | |||||
10.14 | Amendment to the Common Stock | 8-K | 12/08/05 | 10.14 | |
Purchase Agreement with Aton Select Fund | |||||
Limited. | |||||
10.15 | Amendment to the Common Stock | 8-K | 12/08/05 | 10.15 | |
Purchase Agreement with Asset Protection | |||||
Fund Limited. | |||||
10.16 | Lease Agreement with 866 U.N. Plaza | 10-QSB | 12/30/05 | 10.16 | |
Associates LLC. | |||||
10.17 | Exclusive Manufacturing License |
10-QSB |
12/30/05 | 10.17 | |
Agreement and Non Exclusive Distribution | |||||
Agreement with APW Inc. | |||||
10.18 | Common Stock Purchase Agreement with | SB-2 | 1/13/06 | 10.18 | |
Professional Trading Services SA. | |||||
10.19 | Series B Warrant to Purchase Shares of | SB-2 | 1/13/06 | 10.19 | |
Common Stock to Professional Trading | |||||
Services SA. | |||||
10.20 | Registration Rights Agreement with | SB-2 | 1/13/06 | 10.20 | |
Professional Trading Services SA. | |||||
10.21 | Amended and Restated Common Stock | SB-2 | 1/13/06 | 10.21 | |
Purchase Agreement with Bank Sal. | |||||
Oppenheim jr. & Cie. (Switzerland) | |||||
Limited. | |||||
10.22 | Series B Warrant to Purchase Shares of | SB-2 | 1/13/06 | 10.22 | |
Common Stock to Bank Sal. Oppenheim jr. | |||||
& Cie. (Switzerland) Limited. | |||||
10.23 | Agreement of Withdrawal from Stadium | SB-2 | 1/13/06 | 10.23 | |
SA. | |||||
10.24 | License Agreement with WKF/5 Ltd. | SB-2 | 1/13/06 | 10.24 |
51
10.25 | Amendment to License Agreement with | SB-2 | 1/13/06 | 10.25 | |
WKF/5 Ltd and Alain Lemieux. | |||||
10.26 | Form of Subscription Agreement. | SB-2 | 5/28/04 | 99.1 | |
10.27 | Employment Agreement with Alain | 10-KSB | 4/13/06 | 10.27 | |
Lemieux. | |||||
10.28 | Employment Agreement with Daniel | 10-KSB | 4/13/06 | 10.28 | |
Courteau. | |||||
10.29 | Employment Agreement with Flemming | 10-KSB | 4/13/06 | 10.29 | |
Munck. | |||||
10.30 | Employment Agreement with Eric Giguère. | 10-KSB | 4/13/06 | 10.30 | |
10.31 | Endorsement Agreement with La Societe | 10-KSB | 4/13/06 | 10.31 | |
421 Productions. | |||||
10.32 | Summary of terms and conditions of Oral | 10-KSB | 4/13/06 | 10.32 | |
Consulting Agreement with Greendale | |||||
Consulting Limited. | |||||
10.33 | Exclusive Manufacturing License | 10-KSB | 4/13/06 | 10.33 | |
Agreement with Polyprod Inc. | |||||
10.34 | Management Fee Arrangement with | 10-KSB | 4/13/06 | 10.34 | |
Polyprod Inc. | |||||
10.35 | Supply Contract with Febra-Kunststoffe | 10-KSB | 4/13/06 | 10.35 | |
GmbH and BASF Aktiengesellschaft. | |||||
10.36 | Loan Agreement with Fiducie Alain | 10-KSB | 4/13/06 | 10.36 | |
Lemieux. | |||||
10.37 | Confirmation of Debt. | 10-KSB | 4/13/06 | 10.37 | |
10.38 | Agreement with Daniel Courteau regarding | 10-KSB | 4/13/06 | 10.38 | |
Repayment of loans to Symbior | |||||
Technologies Inc. | |||||
10.39 | 2006 Equity Incentive Plan. | 10-KSB | 4/13/06 | 10.39 | |
10.40 | Loan Agreement with Albert Beerli. | 10-KSB | 4/13/06 | 10.40 | |
10.41 | Summary of terms and conditions of Loan | 10-KSB | 4/13/06 | 10.41 | |
Agreement with Albert Beerli. | |||||
10.42 | Lease Agreement with Albert Beerli. | 10-KSB | 4/13/06 | 10.42 |
52
10.43 | Memorandum regarding XL Generation | 10-KSB | 4/13/06 | 10.43 | |
Canada Inc. | |||||
10.44 | Stock Purchase Agreement with XL | 10-KSB | 4/13/06 | 10.44 | |
Generation AG and Stadium SA. | |||||
10.45 | Common Stock Purchase Agreement with | 10-QSB | 9/13/06 | 10.45 | |
Poma Management SA. | |||||
10.46 | Common Stock Purchase Agreement with | 10-QSB | 9/13/06 | 10.46 | |
Aton Select Fund Limited. | |||||
14.1 | Code of Ethics | X | |||
21.1 | Subsidiaries of XL Generation International | 10-KSB | 4/17/07 | 21.1 | |
Inc. | |||||
31.1 | Certification of Chief Executive Officer | X | |||
pursuant to Section 302 of the Sarbanes- | |||||
Oxley Act of 2002. | |||||
31.2 | Certification of Principal Financial Officer | X | |||
pursuant to Section 302 of the Sarbanes- | |||||
Oxley Act of 2002. | |||||
32.1 | Certification of the Chief Executive Officer | X | |||
pursuant to 18 U.S.C. Section 1350, as | |||||
adopted pursuant to Section 906 of the | |||||
Sarbanes-Oxley Act of 2002. | |||||
32.2 | Certification of the Chief Financial Officer | X | |||
pursuant to 18 U.S.C. Section 1350, as | |||||
adopted pursuant to Section 906 of the | |||||
Sarbanes-Oxley Act of 2002. | |||||
99.1 | Audit Committee Charter | X | |||
99.2 | Executive Committee Charter | X | |||
99.3 | Nominating and Corporate Governance | X | |||
Committee Charter | |||||
99.4 | Stock Option Plan | X |
53
Exhibit 14.1
ECOLOCAP SOLUTIONS INC.
CODE OF ETHICS
TOPICS
1. Statement of Policy
2. Implementation and Enforcement
3. Relations with Competitors and Other Third Parties
4. Insider Trading, Securities Compliance and Public Statements
5. Financial Reporting
6. Human Resources
7. Environmental, Health and Safety
8. Conflicts of Interest
9. International Trade
10. Government Relations
11. Contractors, Consultants, and Temporary Workers
12. Conclusion
1. STATEMENT OF POLICY
The Company has adopted eight Corporate Values (Focus, Respect, Excellence, Accountability, Teamwork, Integrity, Very Open Communications and Enjoying Our Work) to provide a framework for all employees in conducting ourselves in our jobs. These policies are not intended to substitute for those Values, but will serve as guidelines in helping you to conduct the Company's business in accordance with our Values. Compliance requires meeting the spirit, as well as the literal meaning, of the law, the policies and the Values. It is expected that you will use common sense, good judgment, high ethical standards and integrity in all your business dealings.
If you encounter a situation you are not able to resolve by reference to these policies, ask for help. Contact Tri Vu Truong , Chief Executive Officer, who has been identified as responsible for overseeing compliance with these policies.
Violations of the law or the Company's policies will subject employees to disciplinary action, up to and including termination of employment. In addition, individuals involved may subject themselves and the Company to severe penalties including fines and possible imprisonment. Compliance with the law and high ethical standards in the conduct of Company business should be a top priority for each employee, officer and director.
2. IMPLEMENTATION AND ENFORCEMENT.
Mr. Truong, our Chief Executive Officer, has been appointed as Compliance Officer of the Company, responsible for overseeing compliance with, and enforcement of, all Company policies.
1
Employees are expected to be familiar with these policies as they apply to their duties. They should consult with their managers if they need assistance in understanding or interpreting these policies. Each employee is required to follow these policies and to comply with their terms. A refusal by any employee to agree to be bound by these policies shall be grounds for discipline up to and including dismissal.
Any employee who, in good faith, has reason to believe a Company operation or activity is in violation of the law or of these policies must call the matter to the attention of Mr. Truong , our Chief Executive Officer. All reports will be reviewed and investigated and as necessary under the circumstances, and the reporting employee should provide sufficient information to enable a complete investigation to be undertaken.
Any employee who makes an allegation in good faith reasonably believing that a person has violated these policies or the law, will be protected against retaliation.
3. RELATIONS WITH COMPETITORS AND OTHER THIRD PARTIES.
The Company's policy is to comply fully with competition and antitrust laws throughout the world. These laws generally prohibit companies from using illegal means to maintain, obtain or attempt to obtain a monopoly in a market. They also prohibit companies from engaging in unfair trade practices. "Unfair trade practices" include fixing prices, dividing markets, agreeing with competitors not to compete, or agreeing to boycott certain customers. It is advised that you consult with the Mr. Truong before attending a meeting with a party who may be viewed as a competitor.
4. INSIDER TRADING, SECURITIES COMPLIANCE AND PUBLIC STATEMENTS.
Securities laws prohibit anyone who is in possession of material, non-public information ("Insider Information") about a company from purchasing or selling stock of that company, or communicating the information to others. Information is considered "material" if a reasonable investor would consider it to be important in making a decision to buy or sell that stock. Some examples include financial results and projections, new products, acquisitions, major new contracts or alliances prior to the time that they are publicly announced. Employees who become aware of such Inside Information about the Company must refrain from trading in the shares of the Company until the Inside Information is publicly announced.
Employees must also refrain from disclosing that information to persons who do not have a Company need to know, whether they are inside the Company or outside, such as spouses, relatives or friends.
The Company makes regular formal disclosures of its financial performance and results of operations to the investment community. We also regularly issue press releases. Other than those public statements, which go through official Company channels, employees are prohibited from communicating outside the Company about the Company's business, financial performance or future prospects. Such communications include questions from securities analysts, reporters or other news media, but also include seemingly innocent discussions with family, friends, neighbors or acquaintances.
2
5. FINANCIAL REPORTING.
The Company is required to maintain a variety of records for purposes of reporting to the government. The Company requires all employees to maintain full compliance with applicable laws and regulations requiring that its books of account and records be accurately maintained. Specifics of these requirements are available from Mr. Truong.
6. HUMAN RESOURCES.
The Company is committed to providing a work environment that is free from unlawful harassment and discrimination, and respects the dignity of its employees. The Company has policies covering various aspects of its relationship with its employees, as well as employees relationships with each other. For more detailed information, you should consult Mr. Truong . Each employee is expected to be familiar with these policies and to abide by them.
7. ENVIRONMENTAL, HEALTH AND SAFETY.
The Company is committed to protecting the health and safety of our employees, as well as the environment in general. The Company expects employees to obey all laws and regulations designed to protect the environment, and the health and safety of our employees, and to obtain and fully observe all permits necessary to do business.
At the very least, all employees should be familiar with and comply with safety regulations applicable to their work areas. The Company will make, to the extent possible, reasonable accommodations for the known physical or mental limitations of our employees. Employees who require an accommodation should contact Mr. Truong. The Company will then engage in an interactive process to determine what reasonable accommodations may exist.
8. CONFLICTS OF INTEREST.
Each employee is expected to avoid any activity, investment or association that interferes with the independent exercise of his or her judgment in the Company's best interests ("Conflicts of Interest"). Conflicts of Interest can arise in many situations. They occur most often in cases where the employee or the employee's family obtains some personal benefit at the expense of the Company's best interests.
No employee, or any member of employee's immediate family, shall accept money, gifts of other than nominal value, unusual entertainment, loans, or any other preferential treatment from any customer or supplier of the Company where any obligation may be incurred or implied on the giver or the receiver or where the intent is to prejudice the recipient in favor of the provider. Likewise, no employee shall give money, gifts of other than nominal value, unusual entertainment or preferential treatment to any customer or supplier of the Company, or any employee or family members thereof, where any obligation might be incurred or implied, or where the intent is to prejudice the recipient in favor of the Company. No such persons shall solicit or accept kickbacks, whether in the form of money, goods, services or otherwise, as a means of influencing or rewarding any decision or action taken by a foreign or domestic vendor, customer, business partner, government employee or other person whose position may affect the Company's business.
3
No employee shall use Company property, services, equipment or business for personal gain or benefit.
Employees may not: (1) act on behalf of, or own a substantial interest in, any company or firm that does business, or competes, with the Company; (2) conduct business on behalf of the Company with any company or firm in which the employee or a family member has a substantial interest or affiliation. Exceptions require advance written approval from the Legal Department.
Employees should not create the appearance that they are personally benefitting in any outside endeavor as a result of their employment by the Company, or that the Company is benefitting by reason of their outside interests. Any employee who is not sure whether a proposed action would present a conflict of interest or appear unethical should consult with Mr. Truong.
9. INTERNATIONAL TRADE.
The Company must comply with a variety of laws around the world regarding its activities. In some cases, the law prohibits the disclosure of information, whether the disclosure occurs within the U.S. or elsewhere, and whether or not the disclosure is in writing.
Payments or gifts to non-U.S. government officials are prohibited by law and by Company policy. The Foreign Corrupt Practices Act precludes payments to non-U.S. government officials for the purpose of obtaining or retaining business, even if the payment is customary in that country. This law applies anywhere in the world to U.S. citizens, nationals, residents, businesses or employees of U.S. businesses. Because Ecolocap Solutions Inc. is a U.S. company, this law applies to the Company and all of its subsidiaries. Any questions on this policy should be directed to Mr. Truong.
10. GOVERNMENT RELATIONS.
The Company is prohibited by law from making any contributions or expenditures in connection with any U.S. national election. This includes virtually any activity that furnishes something of value to an election campaign for a federal office. Use of the Company's name in supporting any political position or ballot measure, or in seeking the assistance of any elected representative, requires the specific approval of the Chairman and Chief Executive Officer of the Company. Political contributions or expenditures are not to be made out of Company funds in any foreign country, even if permitted by local law, without the consent of the Company's Chairman and Chief Executive Officer.
U.S. law also prohibits giving, offering, or promising anything of value to any public official in the U.S. or any foreign country to influence any official act, or to cause an official to commit or omit any act in violation of his or her lawful duty. Company employees are expected to comply with these laws.
11. VENDORS, CONTRACTORS, CONSULTANTS AND TEMPORARY WORKERS.
Vendors, contractors, consultants or temporary workers who are acting on the Company's behalf, or on Company property, are expected to follow the law, Company policies and honor Company Values. Violations will subject the person or firm to sanctions up to and including loss of the contract, contracting or consulting agreement, or discharge from temporary assignment.
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12. CONCLUSION.
This Code of Ethics is not intended to cover every possible situation in which you may find yourself. It is meant to give you the boundaries within which the Company expects you to conduct yourself while representing Ecolocap Solutions Inc. You may find yourself in a situation where there is no clear guidance given by this Code of Ethics. If that occurs, return to the foundations stated earlier: common sense, good judgment, high ethical standards and integrity. And refer to the Company's Values. In addition, there are many resources upon which you may rely: your management chain, Human Resources, Legal or other Ecolocap Solutions Inc. departments, and the CEO. Together we can continue to make Ecolocap Solutions Inc. a company that sets a standard for economically feasible renewable energy and carbon reduction initiatives.
Employee |
5
ECOLOCAP SOLUTIONS INC.
VALUES
FOCUS We exist only because we are involved in developing economically feasible Renewable energy and carbon reduction initiatives.
RESPECT We value all people, treating them with dignity at all times.
EXCELLENCE We strive for "Best in Class" in everything we do.
ACCOUNTABILITY We do what we say we will do and expect the same from others.
TEAMWORK We believe that cooperative action produces superior results.
INTEGRITY We are honest with ourselves, each other, our customers, our partners and our shareholders
VERY OPEN COMMUNICATION We share information, ask for feedback, acknowledge good work, and encourage diverse ideas.
ENJOYING OUR WORK We work hard, are rewarded for it, and maintain a good sense of perspective, humor and enthusiasm.
6
Reportable Violations - Anonymous Reporting Program
Accounting Error
Accounting Omissions
Accounting Misrepresentations
Auditing Matters
Compliance/Regulation Violations
Corporate Scandal
Domestic Violence
Discrimination
Embezzlement
Environmental Damage
Ethics Violation
Fraud
Harassment
Industrial Accidents
Misconduct
Mistreatment
Poor Customer Service
Poor Housekeeping
Sabotage
Securities Violation
Sexual Harassment
Substance Abuse
Theft
Threat of Violence
Unfair Labor Practice
Unsafe Working Conditions
Vandalism
Waste
Waste of Time and Resources
Workplace Violence
7
Exhibit 31.1
SARBANES-OXLEY SECTION 302(a) CERTIFICATION
I, Tri Vu Truong , certify that:
1. |
I have reviewed this 10-KSB for the year ended December 31, 2007 of Ecolocap Solutions Inc. ; |
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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4. |
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)): |
|
a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
b. |
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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c. |
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
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5. |
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
|
a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
|
b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
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Date: | March 31, 2008 | TRI VU TRUONG |
Tri Vu Truong, Principal Executive Officer |
Exhibit 31.2
SARBANES-OXLEY SECTION 302(a) CERTIFICATION
I, Michel St-Pierre , certify that:
1. |
I have reviewed this 10-KSB for the year ended December 31, 2007 of Ecolocap Solutions Inc. ; |
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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4. |
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)): |
|
a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
b. |
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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c. |
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
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5. |
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
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a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
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b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
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Date: | March 31, 2008 | MICHEL ST-PIERRE |
Michel St-Pierre, Principal Financial Officer |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. Section 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Ecolocap Solutions Inc. (the "Company") on Form 10-KSB for the year ended December 31, 2007 , as filed with the Securities and Exchange Commission on the date here of (the "report"), I, Tri Vu Truong , Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) |
The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Dated this 31 st day of March, 2008. |
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TRI VU TRUONG |
Tri Vu Truong, Chief Executive Officer |
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. Section 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Ecolocap Solutions Inc. (the "Company") on Form 10-KSB for the year ended December 31, 2007 , as filed with the Securities and Exchange Commission on the date here of (the "report"), I, Michel St-Pierre , Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) |
The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Dated this 31 st day of March, 2008. |
MICHEL ST-PIERRE |
Michel St-Pierre, Chief Financial Officer |
Exhibit 99.1
XL GENERATION INTERNATIONAL INC.
AUDIT COMMITTEE CHARTER
I. CHARTER; PURPOSE AND FUNCTION OF COMMITTEE
This document shall be the official Charter of the Audit Committee (the "Committee") of the Board of Directors (the "Board") of XL Generation International Inc., a Nevada corporation (the "Company"). The primary function of the Committee is to assist the Board in fulfilling its oversight responsibilities by reviewing: (a) the financial reports and other financial information provided by the Company to any governmental body or the public; (b) the Companys systems of internal controls regarding finance, accounting, legal compliance and ethics that management and the Board have established; and (c) the Companys auditing, accounting and financial reporting processes generally. Consistent with this function, the Committee should encourage continuous improvement of, and should foster adherence to, the Companys policies, procedures and practices at all levels. The Committee shall be accountable and responsible to the full Board. The Committees primary duties and responsibilities are to:
(i) Serve as independent and objective party to monitor the Companys financial reporting process and internal control systems;
(ii) Review and appraise the audit efforts of the Companys independent accountants and internal auditing department; and
(iii) Provide open channels of communication among the Companys independent accountants, financial and senior management, the internal auditing department and the Board.
The Committee will primarily fulfill these responsibilities by carrying out the activities enumerated in Section IV of this Charter.
II. COMPOSITION; QUALIFICATIONS OF COMMITTEE MEMBERS
A. Composition: The Committee shall be comprised of two (2) or more Independent Directors (as defined below) which number shall be determined by the Board from time to time in its discretion.
B. Qualifications: Each Independent Director serving on the Committee shall have Financial Knowledge (each such term as defined herein), and shall be free from any relationship that, in the judgment of the Board, would interfere with the exercise of his or her independent judgment as a member of the Committee. At least one (1) member of the Committee shall have Financial Experience (as defined herein) .
III. ELECTION AND MEETINGS
A. Election. The initial members of the Committee shall be appointed by the Board. Thereafter, the Board shall appoint the members of the Committee annually, which shall otherwise serve until their successors shall be duly elected and qualified. Unless a Chairman of the Committee is appointed by the Board, the members of the Committee may designate a Chairman by majority vote of the full Committee.
B. Meetings. The Committee shall meet at least three times annually, or more frequently as circumstances require in the discretion of the Committee and the Board. As an element of its duties to encourage and facilitate open communication, the Committee should meet at least annually with representatives from the Companys executive management, internal auditing department and its independent accountants in separate sessions to discuss any matters that the Committee or any of these groups believe should be discussed. In addition, the Committee or at least its Chairman (if one exists) should meet with the independent accountants and a representative(s) of the Companys management at least quarterly to review the Companys financial statements consistent with the provisions of Section IV - Documents/Reports Review below.
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties, the Committee shall:
A. With respect to Documents/Reports Review:
1. Review, and if it deems necessary or appropriate, update this Charter periodically, at least annually.
2. Review the Companys annual financial statements and any reports or other financial information submitted to any governmental body, or to the public, including any certification, report, opinion or review rendered by the Companys independent accountants.
3. Review the regular internal reports to management prepared by the Companys internal auditing/accounting department and managements response to such reports.
4. Review with the Companys financial management and its independent accountants, prior to filing with the Securities and Exchange Commission, all 10-Q Quarterly Reports, 10-K Annual Reports, 8-K Current Reports and other reports that contain financial information and other reports containing financial disclosures. The Chairman of the Committee may represent the entire committee for purposes of these reviews.
B. With respect to Independent Accountants :
5. Recommend to the Board the Committees selection of an independent accounting firm, considering independence and effectiveness and other factors it deems appropriate and in the best interests of the Company, and approve the fees and other compensation to be paid to such independent accounting firm. On at least an annual basis, the Committee should receive from the independent accounting firm a formal written statement delineating and describing all relationships between the Company and such firm, consistent with the Independence Standards Boards Standard 1. The Committee should review and discuss with the independent accounting firm all such identified relationships or services to examine and determine the independence and objectivity of the accounting firm. The Committee shall take all appropriate action, or recommend to the Board such appropriate actions, to oversee the independence of such accounting auditors .
6. Review and evaluate the performance of the independent accounting firm, and when appropriate, recommend to the Board or implement a discharge and replacement of the accounting firm when circumstances warrant.
7. Periodically consult with the independent accounting firm out of the presence of the Companys management regarding internal controls and the fullness and accuracy of the Companys financial statements.
C. With respect to Financial Reporting Process :
8. In consultation with the independent accounting firm and the Companys internal accounting personnel/auditors, review the integrity of the Companys financial reporting process, both internal and external.
9. Consider the independent accounting firms judgments about the quality and appropriateness of the Companys accounting principles as applied to its financial reporting.
10. Consider and approve, if appropriate, major changes to the Companys auditing and accounting principles and practices as suggested by the independent accounting firm, management of the Company and/ or its internal accounting department.
D. With respect to Process and Organizational Improvements :
11. Establish regular and separate systems of reporting to the Committee by each of management, the independent accounting firm, and the Companys internal accounting department regarding any significant judgments made in managements preparation of the financial statements and the view of each as to the appropriateness of such judgments.
12. Following completion of the annual audit, review separately with each of management, the independent accounting firm and the Companys internal accounting department any significant difficulties encountered during the course of the audit, including any restrictions on the scope of work or access to required information.
13. Review any significant disagreement among management and the independent accounting firm or the Companys internal accounting department in connection with the preparation of the financial statements.
14. Review with the independent accounting firm, the Companys internal accounting department and management the extent to which changes or improvements in financial or accounting practices, as approved by the Committee, have been implemented. This review should be conducted at an appropriate time subsequent to implementation of changes or improvements, as determined by the Committee.
15. Review the organizational structure of the Companys internal auditing department and the qualifications of the managers of such department, and recommend any appropriate changes to the Companys management.
E. With respect to Legal Compliance; General :
16. Review, with the Companys outside legal counsel, legal compliance matters, including corporate securities trading policies.
17. Review, with the Companys outside legal counsel, any legal matter that could have a significan t impact on the Companys financial statements.
18. Perform any other activities consistent with this Charter, the Companys Bylaws and governing law, as the Committee or the Board deems necessary or appropriate.
V. DEFINITIONS
"Independent Director" means a person other than an officer or employee of the Company or any of its subsidiaries or any other individual having a relationship which, in the opinion of the Companys Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The following persons shall not be considered independent for these purposes:
(a) a director who is employed by the Company or any of its affiliates for the current year or any of the past three (3) years;
(b) a director who accepts any compensation from the Company or any of its affiliates in excess of $60,000 during the previous fiscal year, other than compensation for Board service, benefits under a tax-qualified retirement plan or other non-discretionary compensation;
(c) a director who is a member of the immediate family of an individual who is, or has been in any of the past three (3) years, employed by the Company or any of its affiliates as an executive officer. Immediate family members include a persons spouse, parents, children, siblings, mother-in-law, father-in-law, brother-in-law, sister-in-law, son-in-law, daughter-in-law and anyone who resides in such persons home;
(d) a director who is a partner in, or a controlling shareholder or an executive officer of, any for-profit business organization to which the Company made, or from which the Company received, payments (other than those arising solely from investments in the Companys securities) that exceed 5% of the Companys or business organizations consolidated gross revenues for that year, or $200,000, whichever is more, in any of the past three (3) years;
(e) a director who is employed as an executive of another entity where any of the Companys executives serve on that entitys compensation committee.
Pursuant to Nasdaq Rule 4310 one director who is not an Independent Director as defined above and who is not a current employee or an immediate family member of such employee, may be appointed to the Audit Committee if the full Board of Directors, under exceptional and limited circumstances, determines that membership on the Committee by the individual is required in the best interests of the Company and its stockholders, and the Board of Directors discloses, in the next annual proxy statement subsequent to such determination, the nature of the relationship and the reasons for that determination.
"Financial Knowledge" means a working familiarity with basic finance and accounting practices, including the ability to read and understand fundamental financial statements, including balance sheets, income statements and cash flow statements. Persons who will become so qualified within a reasonable period of time after his or her appointment to the Audit Committee also comply with this provision. Committee members may enhance their familiarity with finance and accounting by participating in educational programs conducted by the Company or an outside consultant.
"Financial Experience" means past employment experience in finance or accounting, requisite professional certification in accounting, or any other comparable experience or background which results in the individual's financial sophistication, including being or having been a chief executive officer, chief financial officer or other senior officer with financial oversight responsibilities.
# # # # #
Exhibit 99.2
Ecolocap Solutions Inc.
EXECUTIVE COMPENSATION COMMITTEE CHARTER
(The Committee)
(Adopted December____2007)
PURPOSES
The primary responsibility of the Committee shall be to approve the compensation arrangements for the Company's senior management and to periodically review the compensation paid to the Board, as such responsibilities are more specifically identified below.
COMPOSITION
The size of the Committee shall be determined by the Board, provided that the Committee shall always have at least two (2) members.
Each Committee member will be "independent" as defined in the Company's Nominating and Corporate Governance Charter. Specifically, the members of the Committee shall be independent of management and free from any relationship that, in the opinion of the Board, could interfere with the exercise of independent judgment for the purpose of determining the fairness of compensation arrangements for senior management and providing the recipients of compensation the protection afforded by such independent oversight.
The Board selects Committee members and the Committee chair. Each Committee member will serve at the pleasure of the Board for such term as the Board may decide or until such Committee member is no longer a Board member.
DUTIES AND RESPONSIBILITIES
The following are the duties and responsibilities of the Committee:
In consultation with senior management, the Committee shall develop and implement the Company's compensation program for executive officers, including determination of amounts paid out under the Company's Equity incentive plan ("EIP").
The Committee shall review and approve, at least annually, corporate goals and objectives relating to the compensation of the CEO and the other executive officers of the Company and evaluate the CEO performances in light of those goals and make recommendations to the Board with respect to the Company's EIP and other equity-based plans. The Committee will set the compensation of the CEO, the Company's executive officers, and selected other senior managers.
The Committee shall review and approve the Company's equity incentive Plans (EIP) and grants of stock options and other equity or equity-based awards, in the manner and on such terms and conditions as may be prescribed by the Company's equity incentive plans.
The Committee shall review issues relating to management succession, as appropriate.
In consultation with senior management, the Committee shall oversee regulatory compliance with respect to compensation matters.
The Committee shall review and, as appropriate, make recommendations to the Board regarding the compensation paid to the non-employee members of the Board. In its periodic evaluation of Board compensation, the Committee will refer to the policy statement on Board compensation attached to this charter as Attachment A.
The Committee shall report its activities to the Board in such manner and at such times as the Committee or the Board deem appropriate.
MEETINGS
The Committee shall meet as frequently as necessary to carry out its responsibilities under this charter. The Committee chair shall conduct the meetings and shall have such other responsibilities as the Committee or the Board may designate from time to time.
The Committee may request any officer of the Company, or any representative of the Company's advisors, to attend a meeting or to meet with any member or representative of the Committee.
RESOURCES AND AUTHORITY
The Committee shall have appropriate resources and authority to discharge its responsibilities, including reasonable funding to compensate any consultants and any independent advisors retained by the Committee. The Committee shall have the authority to engage compensation consultants to assist in the evaluation of director or executive officer compensation and the authority to set the fees and other retention terms of such compensation consultants.
COMPENSATION COMMITTEE REPORT
The Committee, with the assistance of management and any outside consultants the Committee deems appropriate, shall prepare a report for inclusion in the Company's proxy statement relating to the Company's annual meeting of shareholders.
ANNUAL REVIEW
At least annually, the Committee shall review this charter and evaluate its performance against the requirements of this charter. The Committee shall conduct its review and evaluation in such manner as it deems appropriate .
Exhibit 99.3
ECOLOCAP SOLUTIONS INC.
NOMINATING AND CORPORATE GOVERNANCE
COMMITTEE CHARTER
Purpose
The purpose of the Nominating and Corporate Governance Committee ("Committee") is to act on behalf of the board of directors ("Board") of ECOLOCAP SOLUTIONS INC. (the "Company") and generally to carry out the following and as further described in this charter:
Nominations - Identify and recommend nominees for the Board and its committees.
Corporate Governance - Review and recommend to the Board, or independently take, action on various Company corporate governance issues.
Complaints - Receive and respond to certain complaints ("Complaints") raised by Company employees regarding alleged illegal acts or behavior-related conduct by Board members in violation of the Company's Code of Business Conduct and Ethics ("Ethics Code").
Supervision - Supervise the Company's Chief Financial Officer ("Chief Financial Officer") in the context of the Ethics Code.
Other - Carry-out other assignments as designated by the Board.
MEMBERSHIP
The following are prerequisites for, and conditions on, membership on the Committee:
Number, Qualifications - The Committee shall consist of at least two (2), and no more than seven (7), Board members meeting the following qualifications:
Independence - Each member of the Committee must be an independent director as the term is defined in this charter ("Independent Director").
Term - Subject to the terms of this charter
Member Appointment - Members of the Committee shall be appointed by the Board and shall serve at the pleasure of the Board for such term as the Board may determine, taking into account the recommendations of the Committee.
Chair Selection - The Committee chair shall be selected by the Committee members or, if the Board directs, by the Board, taking into account the recommendations of the Committee.
Independent Director - An Independent Director is one that meets the definition of an"independent director" as prescribed by Nasdaq Stock Market Rule 4200(a)(15) ("Nasdaq Independence Rule") which reads as follows:
"means a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship, which, in the opinion of the company's board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
The following persons shall not be considered independent:
(A) a director who is, or at any time during the past three years was, employed by the company or by any parent or subsidiary of the company;
(B) a director who accepted or who has a Family Member who accepted any payments from the company or any parent or subsidiary of the company in excess of $60,000 during the current or any of the past three fiscal years, other than the following:
(i) compensation for board or board committee service;
(ii) payments arising solely from investments in the company's securities;
(iii) compensation paid to a Family Member who is a non-executive employee of the company or a parent or subsidiary of the company;
(iv) benefits under a tax-qualified retirement plan, or non-discretionary compensation;
or
(v) loans permitted under Section 13(k) of the Securities Exchange Act of 1934 ("Exchange Act"). Provided, however, that audit committee members are subject to additional, more stringent requirements under Nasdaq Stock Market ("Nasdaq") Rule 4350(d).
(C) a director who is Family Member of an individual who is, or at any time during the past three years was, employed by the company or by any parent or subsidiary of the company as an executive officer;
(D) a director who is, or has a Family Member who is, a partner in, or a controlling shareholder or an executive officer of, any organization to which the company made, or from which the company received, payments for property or services in the current or any of the past three fiscal years that exceed 5% of the recipient's consolidated gross revenues for that year, or $200,000, whichever is more, other than the following:
(i) payments arising solely from investments in the company's securities; or
(ii) payments under non-discretionary charitable contribution matching programs.
(E) a director of the listed company who is, or has a Family Member who is, employed as an executive officer of another entity where at any time during the past three years any of the executive officers of the listed company serve on the compensation committee of such other entity; or
(F) a director who is, or has a Family Member who is, a current partner of the company's outside auditor, or was a partner or employee of the company's outside auditor who worked on the company's audit at any time during any of the past three years.
(G) In the case of an investment company, in lieu of paragraphs (A)-(F), a director who is an "interested person" of the company as defined in section 2(a)(19) of the Investment Company Act of 1940, other than in his or her capacity as a member of the board of directors or any board committee."
Lack of Independence - The following conditions are incompatible with a director being independent under the Nasdaq Independence Rule, unless they have been absent for three years.
- Company Employment, Family Member - Being employed by the Company, any parent, or any subsidiary of the Company, or having a "Family Member" who is employed as an executive officer of any of those entities.
The Nasdaq Independence Rule defines "Family Member" as "a person's spouse, parents, children and siblings, whether by blood, marriage or adoption, or anyone residing in such person's home."
- Company Payments - Receiving more than $60,000 in payments from the Company (including any parent or subsidiary of the Company) or having a Family Member who received payments in that amount. The payments referred to here exclude director and committee fees, payments from investments in the Company's securities, compensation to a family member who is not an executive officer of the Company (or a parent or subsidiary of the Company), loans permitted under Section 13(k) of the Exchange Act, and pension or other deferred compensation for prior service that is not contingent on continued service.
- Service on Compensation Committee - Being an executive officer of another entity that has had any of the Company's executive officers serve on its compensation committee or having a family member who was an executive officer of another entity under such conditions.
- External Auditor Partner - Being a current partner of the Company's independent external auditor ("External Auditor") or partner or employee of the External Auditor who worked on the Company's audit any time in the past three years or having a family member who has such a relationship.
- Principal of Service Provider - Being a partner, controlling shareholder, or executive officer of another company that pays or receives from the Company, in any single year, amounts exceeding the greater of $200,000 or 5% of the recipient company's consolidated gross revenues (or having a family member that makes or receives such payments). The requirement excludes payments from investment in the Company's securities and payments under non-discretionary charitable contribution matching programs.
Removal and Replacement - Subject to Nevada law, a Committee member may be removed or replaced by, and any vacancies on the Committee may be filled by, the Board, taking into account recommendations of the Committee.
Operating Principles
The Committee shall fulfill its responsibilities within the context of the following overriding principles:
Meetings - The Chair of the Committee, in consultation with Committee members, shall determine the frequency and schedule of Committee meetings, provided the Committee will meet at least two times per year. Committee meetings and matters relating to them are subject to the provisions of the Company's Bylaws ("Bylaws").
The Committee may ask members of management or others whose advice and counsel are relevant to the issues then being considered by the Committee to attend any meetings and to provide such information as the Committee may request.
Agenda - The Chair of the Committee shall develop the Committee's agenda, in consultation with other Committee members. Each member of the Board and members of management are free to suggest the inclusion of items on the agenda. The agenda and information concerning the business which shall be conducted at each Committee meeting shall, to the extent practicable, be distributed to Committee members sufficiently in advance of each meeting to permit meaningful review.
Quorum - A majority of the authorized number of Committee members, regardless of possible vacancies, shall constitute a quorum. The Committee may act by a majority of the members present at a meeting of the Committee at which at least a quorum is present.
Delegation - The Chair of the Committee may, through the Committee by resolution, delegate authority to act on behalf of the Chair.
The Committee may, by resolution, delegate authority to subcommittees or individual members of the Committee as it deems appropriate.
Communications - The chair and others on the Committee shall, to the extent appropriate, have contact throughout the year with senior management, other committee chairs, other key committee advisors, the External Auditor, etc., as applicable, to strengthen the Committee's knowledge of relevant current and prospective business issues.
Committee Meeting Attendees - The Committee shall request members of management, counsel, and the External Auditor, as applicable, to participate in Committee meetings, as necessary to carry out Committee responsibilities. The External Auditor or counsel may, at any time, request a meeting with the Committee or its chair, with or without management in attendance.
Reporting to the Board of Directors - The Committee, through the Committee chair, shall report periodically, as deemed necessary, but at least annually, to the full Board. In addition, summarized minutes from Committee meetings shall be available to each Board member at least one week prior to the subsequent meeting of the Board.
Resource and Authority - The Committee shall have the resources and authority to discharge its duties and responsibilities, including the authority to retain counsel and other experts or consultants. The Committee shall have the sole authority to select and retain a consultant or search firm to identify director candidates, to terminate any such consultant or search firm retained by it, and to approve the consultant or search firm's fees and other retention terms.
Primary Responsibilities
The Committee shall have primary responsibility for the following:
Nominating Matters - Addressing nominating matters.
Corporate Governance Matters - Addressing corporate governance matters.
Complaints - Addressing Complaints on certain alleged illegal acts and unethical behavior-related conduct by Board members in violation of the Ethics Code.
Chief Financial Officer - Supervising Chief Financial Officer on the Companys Ethics Code.
Performance Evaluation - Conducting perfor mance evaluation ("Executive Compensation Committee).
Addressing Nominating Matters
The Committee shall have the following nominating responsibilities:
Seek Out Prospective Board Members - The Committee shall, from time to time, seek out candidates as prospective Board members through the efforts of its individual members and, in the Committee's discretion, through consultants as otherwise provided in this charter.
- Management Recommendations - The Committee may, but is not required to do so, consider recommendations for candidates proposed by Company management.
- Shareholder Recommendations - The Committee may at its sole discretion consider certain Company shareholder recommendations ("Shareholder Recommendations").
Board Skills and Characteristics - The basic skills and characteristics required as prerequisites for each member, unless otherwise specified, on the Board ("Board Skills and Characteristics") are as follows:
- Knowledge, Skills and Experience - Knowledge, skills and experience in at least one of the primary industries in which the Company operates.
- Fundamental Financial Statements - Ability to read and understand fundamental financial statements, including the Company's balance sheet, income statement, and cash flow statement, and at least familiarity with the underlying accounting rules and practice.
- Business and Financial Risks - Ability to understand key business and financial risks of the Company.
- Changing Needs of Society - Appreciation of the relationship of the Company's business to the changing needs of society.
- Financial Sophistication - With respect to at least one Board member, skills, attributes, and financial sophistication of an Audit Committee Financial Expert as the term is defined in the Company's Audit Committee Charter.
- Independent Director - With respect to at least a simple majority of the authorized members of the Board, each an Independent Director.
- Other Specifications - Other skills and characteristics specifically identified and approved by the Committee.
Review Board Skills and Characteristics - As a part of the Company's assessment of strategic direction, review with the Board on at least an annual basis the Board Skills and Characteristics and recommend appropriate amendments to, or changes of, them
Recommend Existing Board Members - In the sole discretion of the Committee, recommend to the Board for renomination one or more of those existing Board members whose positions are up for election after considering all of the following criteria as applied to each such member`.
- Board Size - Appropriate size of the Board.
- Skills and Characteristics - Level of Board Skills and Characteristics.
- Company Strategic Direction - Committee's understanding of the strategic direction requirements of the Company.
- Board Compositional Needs - Specific compositional needs of the Board, including, but not limited to, specific talents and experience involving technology, business, finance, administration or public service, in light of prevailing business conditions and the Board Skills and Characteristics already possessed by other members of the Board.
- Annual Evaluation - Results of annual evaluation.
- Personal Preference - Wishes of affected existing Board member to be re-nominated.
Identify and Recommend Proposed Board Member Vacancies - Identify, from time to time, one or more individuals satisfying all of the following criteria as applied to the individual and recommend that the Board select the individual as a nominee to stand for election to the Board by the shareholders or, in the case of a vacancy on the Board, recommend that the Board fill the vacancy with that individual, subject to the individual's standing for election by the shareholders at the then next shareholder meeting:
Recommend Proposed Committee Members - Identify and recommend for appointment by the Board, Board members qualified to fill vacancies on any committee of the Board, including the Committee. In nominating a candidate for a committee membership, the Committee shall take into consideration the factors set forth in the charter for that committee, if any, or as required by law or regulation, as well as any other factors it deems appropriate, including but not limited to, experience, skill and background.
Issue Committee Reports - Report to the Board periodically on the status of the Committee's efforts on Board and committee nominations.
Invite Prospective Board Member - Chair of the Committee, in conjunction with the Company's Chief Executive Officer ("Chief Executive Officer"), Chairman of the Board and the Board, generally, shall extend an invitation to the selected candidate to join the Board.
Review Significant Change in Director Status - Upon a significant change in a director's personal circumstances, including a change of principal occupation, or in the event a significant ongoing time commitment arising which may be inconsistent with a director's service on the Board, review, as appropriate and, in light of the then-current Board policies, the continued Board membership of that director and make an appropriate recommendation to the Board.
Consider Shareholder Recommendations - A shareholder having at least the minimum requisite ownership in the Company ("Recommending Shareholder") may make a Shareholder Recommendation, i.e., recommend to the Committee a candidate for nomination and election to the Board at a Company annual shareholder meeting. The Committee shall consider that Shareholder Recommendation, subject to the following -
- Timely Receipt of Recommendation Statement - The Shareholder Recommendation must be received by the Committee, timely, along with a statement in support of the recommendation ("Recommendation Statement") to ensure the Committee's consideration of it.
A Shareholder Recommendation, including the Recommendation Statement, to be "received by the Committee" must be delivered to the Company at its principal business address:
ATTN: Chair, Nominating and Corporate Governance Committee (Year of Meeting:
__________, Annual Meeting Recommendation) 6600, Trans-Canada, suite 519, Pointe-Claire, Quebec, Canada, H9R 4S2
To be "timely," the Committee must receive the Shareholder Recommendation not earlier than, and not later than the dates as prescribed in the Company's Bylaws (Article III, Section 4) pertaining to submission of a shareholder proposal in conjunction with an annual meeting.
A Recommending Shareholder is a shareholder who, as of the date of the Shareholder Recommendation and the record date for the annual meeting, is a beneficial owner of at least one share of voting securities of the Company, i.e., one share of Common stock, voting rights directly or indirectly on an equivalent as-converted basis in common stock of the Company.
- Content of Recommendation Statement - The Recommendation Statement must set forth the following -
For each candidate recommended
The candidate's name, age, business and residential address and principal occupation or employment.
The class and number of shares of Company capital stock beneficially owned by the Recommending Shareholder on the date of the Shareholder Recommendation.
A description of all arrangements or understandings between the Recommending Shareholder and the candidate and the name of any other person pursuant to which the recommendation is to be made.
All other information relating to the candidate that is required to be disclosed in solicitation of proxies for election of directors or is otherwise required in each case pursuant to Regulation 14A adopted pursuant to the Exchange Act.
Written consent of the candidate to being recommended as a candidate and nominee, in the event the Committee and the Board should accept the recommendation, in the Company's proxy statement and to serve as a director if so elected.
As to the Recommending Shareholder (and the beneficial owner if different from the registered holder of the underlying Company voting common stock) -
The Recommending Shareholder's name and address as appears on the Company's books (and also that of that beneficial owner).
The class and number of shares of Company capital stock owned beneficially and of record by the Recommending Shareholder (and also that of that beneficial owner).
Other information as may be requested by the Committee on the Recommending Shareholder or the Recommended Candidate.
- Review and Evaluation - A Shareholder Recommendation shall be reviewed and evaluated by the Committee, and the Committee's determination on that recommendation shall be subject to the application of the same criteria as shall be the case for a determination by the Committee on existing Board members standing for re-election.
- Significant Shareholder Recommendation - In the event the Committee shall have received, by a date (month, day) not later than the 120th calendar day before the date (month, day) of the Company's proxy statement released to its shareholders in connection with the previous year's annual meeting, a Shareholder Recommendation from a significant Recommending Shareholder -
The Committee shall identify in the Company's management proxy statement for the anticipated annual meeting the candidate who is the subject of the Shareholder Recommendation and the significant Recommending Shareholder and shall disclose whether the Committee chose to nominate the candidate -
However, no such identification or disclosure is required without submission to the Committee of written consents by both the significant Recommending Shareholder and the candidate.
Here, "significant Recommending Shareholder" means a shareholder of the Company who has been a beneficial owner of more than 5% of the Company's voting common stock for at least one year as of the date the Shareholder Recommendation was made, or was a group of such shareholders that beneficially owned in the aggregate more than 5% of that Company voting common stock with each of the securities used to calculate that ownership held for at least one year from that date.
In the event the date of the anticipated annual meeting shall have been changed by more than 30 days from the date of the previous year's annual meeting, the Company's obligation to consider a Shareholder Recommendation will arise where the Company shall receive the Shareholder Recommendation a reasonable time before the Company shall have begun to print and mail its proxy materials.
- Report of Categories - In the event the Committee shall approve a Shareholder Recommendation for inclusion on the Company's management proxy card (other than nominees who are directors standing for re-election), the Committee shall report in the proxy statement accompanying that card which one or more of the following categories of persons or entities recommended that candidate: security holder, non-management director, chief executive officer, other executive officer, third-party search firm, or other specified source.
Consultant Fee - In the event the Company shall pay a fee to a third party to identify or evaluate, or to assist in identifying or evaluating potential nominees, the function performed by each such party shall be disclosed in the corresponding Company management proxy statement describing that nominee for election as a director.
Other Duties - Carry out other duties or responsibilities expressly delegated, from time to time, to the Committee by the Board relating to nomination of Board and committee members.
Addressing Corporate Governance Matters
The Committee shall have the following corporate governance responsibilities:
Review and Recommend Changes To Code of Conduct - Review and make recommendations at least once a year to the Board regarding the content, structure and scope of, and compliance with, the Code of Conduct.
Develop Corporate Governance Principles - Develop and recommend to the Board a set of corporate governance principles applicable to the Company ("Corporate Governance Principles"), and review those principles at least once a year. The Corporate Governance Principles shall include, but not be limited to -
- Standards - Director qualification standards.
- Responsibilities - Director responsibilities.
- Access To Management - Director access to management and, as necessary and appropriate, independent advisors.
- Compensation - Director compensation.
- Continuing Education - Director orientation and continuing education.
- Succession - Management succession.
- Performance Evaluation - Annual performance evaluation of the Board.
Advise on Legal Developments - Advise the Board periodically with respect to significant developments in the law and practice of corporate governance as well as the Company's compliance with the Corporate Governance Principles and applicable laws and regulations.
Recommend Corporate Governance Action - Make recommendations to the Board, from time to time, on all matters of corporate governance and corrective action to be taken as the Committee deems appropriate.
Review Structure of Board Committees - Review on an annual basis the Board's committee structure and recommend to the Board for its approval directors to serve as members of each committee.
Establish Criteria for Annual Performance Self-Evaluation -Establish criteria and process for, and lead the Board and each Board committee in, its annual performance self-evaluation. Each such evaluation will be discussed with the full Board following the end of each calendar year, will focus on contributions to the Company by the Board and each Board committee, and will specifically focus on areas in which a better contribution could be made.
Carry Out Other Duties - Carry out other duties or responsibilities expressly delegated, from time to time, to the Committee by the Board relating to corporate governance.
Addressing Complaints on Certain Alleged Illegal Acts, Unethical Behavior, Other Matters
The Committee shall have the following special duties:
Complaints - The Committee, from time to time, when it shall receive a Complaint, i.e., an inquiry or complaint or when the Committee independently shall decide in accordance with this charter, shall review and make a determination and recommend appropriate action to be taken by the Board on the Complaint, subject to the following -
- Specific Meaning - In this context, "Complaint" shall mean, unless the context otherwise requires, a matter pertaining to alleged illegal activity involving a person or unethical behavior-related violation of the Code of Conduct by a person ("Unethical Conduct"), where the person is a director on the board of directors of the Company or of any its directly or indirectly wholly-owned subsidiaries ("Director"), or other matters as designated by the Board.
- Other Complaints - In the event the Complaint shall relate to an allegation of illegal activity or unethical behavior-related violation of the Ethics Code by an officer, director, or employee of the Company or any of its directly or indirectly wholly-owned subsidiaries ("Employee") pertaining to Company accounting, internal controls on accounting, or audit matters ("Accounting Violation") or to confidential, anonymous or other submission by an Employee of concern regarding an alleged Company questionable accounting or audit practice ("Questionable Accounting Practice"), the Complaint shall be handled separate from the Committee as set forth in this section.
Other Complaint-Related Matters - The Committee shall address other Complaint-related matters as designated by the Board.
Procedure - The following shall constitute the Company's procedure for receipt, retention and treatment of Complaints regarding Accounting Violations and Questionable Accounting Practices by an Employee, and Unethical Conduct by a Director or by an Employee who is not a Director -
- Specific Allegations - Topics that may be addressed in Complaints must relate to specific alleged Accounting Violations, Questionable Accounting Practices, Unethical Conduct, Internal Accounting Controls or Auditing Matters (collectively, Questionable Accounting Practices).
- Accounting Violations and Questionable Accounting Practices -A Complaint regarding Accounting Violations or Questionable Accounting Practices must be directed to the Audit Committee for response or investigation. Topics that may be addressed in such Complaints include, but are not limited to the following -
Allegations of fraud or deliberate error in the preparation of the Company financial statements.
Allegations of fraud or deliberate error in the review or audit of Company financial statements.
Allegations of fraud or deliberate error in maintaining Company financial records.
Deficiencies in internal control, or violations of internal control policies.
False statements by a senior officer or accountant regarding matters included in financial reports or records.
False statements made to independent auditors.
Other information that can have a material impact on the fairness of the Company's financial statements.
- Director Unethical Conduct Complaint - A Complaint regarding Unethical Conduct by a Director must be directed to the following committee for response and investigation, if any, as conditioned -
Audit Committee, should the Complaint relate to an Accounting Violation by an Employee, with a copy of the Complaint delivered to the chair of the Nominating and Corporate Governance Committee.
Nominating and Corporate Governance Committee, should the Complaint relate to Unethical Conduct by a Director which does not involve an Accounting Violation, with a copy of the Complaint delivered to the chair of the Audit Committee.
Audit Committee and Nominating and Corporate Governance Committees, should the Complaint relate to both an Accounting Violation by an Employee, and Unethical Conduct by the Director which does not involve an Accounting Violation.
- Employee (Not Director) Unethical Conduct - A Complaint regarding Unethical Conduct by an Employee who is not a Director must be directed to the Employee's supervisor or the Chief Financial Officer for response or investigation. Should the Complaint be submitted to the Employee's supervisor, a copy must be directed to the Chief Financial Officer, unless the Complaint pertains to that officer, in which case the copy must be directed to the Chief Executive Officer.
- Written Complaint - A Complaint must be in writing and contain sufficient detail to provide a basis for the investigator to make an independent determination as to whether an Accounting Violation, Questionable Accounting Practice or Unethical Conduct has occurred.
- Signature, Date - A Complaint must be signed and dated by the complainant-Employee in the case of an Accounting Violation-or Unethical Conduct-related Complaint.
- Signature Not Required on Confidential or Anonymous Questionable Accounting Practice Complaint - A Questionable Accounting Practice-related Complaint need not be signed, should the complainant be seeking confidential or anonymous treatment of the Complaint. However, it must be dated.
- Delivery of Complaint To a Committee - A Complaint directed to the Audit Committee or the Nominating and Corporate Governance Committee must be addressed and mailed or otherwise delivered to the chair of the appropriate committee at the Company's corporate offices as follows -
CONFIDENTIAL
ATTN: Chair, Audit Committee
(Complaint)
ECOLOCAP SOLUTIONS INC.
xxxxx
or
CONFIDENTIAL
ATTN: Chair, Nominating and Corporate Governance Committee
ECOLOCAP SOLUTIONS INC.
xxxxx
- Delivery of Complaint To the Chief Financial Officer - A Complaint directed to the Chief Financial Officer must be addressed and mailed or otherwise delivered to that officer at the Company's corporate offices as follows -
CONFIDENTIAL
ATTN: Chief Financial Officer
(Complaint)
ECOLOCAP SOLUTIONS INC.
xxxxx
- Other Forms of Delivery - The Chief Financial Officer, in conjunction with the chairs of the Audit Committee and the Nominating and Corporate Governance Committee, shall review and, in the event they shall reach consensus, recommend to the Board other possible means by which a complainant shall deliver a Complaint to the Company, including, but not limited to, an internet address or a toll-free telephone number.
- Complaint Filing System - The Chief Financial Officer, in conjunction with the chairs of the Audit Committee and the Nominating and Corporate Governance Committee, shall establish a procedure compatible with the charters of both committees and the Code of Conduct and providing for the corresponding investigator of a Complaint, or complaint relating to an Accounting Matter or to a Questionable Accounting Practice (for purposes of describing these procedures further in this charter and unless the context otherwise requires, "Complaint" refers to all such complaints), to log the Complaint into a filing system specifically established to retain, process, and otherwise provide for the treatment of Complaints ("Complaint Filing System").
The Complaint Filing System will be used by each of these investigators in the separate duties of each in addressing a Complaint.
- Processing of a Complaint - The recipient (investigator) of a Complaint will log the Complaint into the Complaint Filing System, subject to the following -
Should the Complaint be in the nature of an allegation of an Accounting Violation, a Questionable Accounting Practice or Unethical Conduct, the investigator must -
Determine, based upon the information provided in the Complaint and independent investigation which the investigator, in the investigator's sole discretion, deems appropriate given the nature of the Complaint, whether there is a reasonable basis for the allegation made in the Complaint.
Investigate the Complaint.
Decide whether to hold a hearing on the matter and, should the investigator choose to hold such a hearing, give notice of, and hold the hearing on, the Complaint, request witnesses to appear at the hearing, and otherwise gather evidence necessary for the investigator to render a determination on the Complaint.
Submit a written determination to, and recommend appropriate action by, the Board.
Should the Complaint be in the nature of a Questionable Accounting Practice where the Complaint is unsigned or where the Complainant has otherwise indicated the Complaint is presented as a confidential, anonymous submission to the investigator, the investigator must -
Determine, based upon the information provided in the Complaint and independent investigation which the investigator, in the investigator's sole discretion, deems appropriate given the nature of the Complaint, whether there is a reasonable basis for the allegation made in the Complaint.
Render a written determination on the Complaint.
Submit the written determination to, and recommend appropriate action by, the Board.
Should the Complaint be in the nature of an inquiry without allegation of an Accounting Violation, Questionable Accounting Practice or Unethical Conduct, the recipient may in the recipient's sole discretion do either of the following -
Respond directly to the complainant.
Recommend to the Board appropriate action.
The investigator will, regardless of the nature of the Complaint, seek to process it in a timely manner.
The investigator shall be informed of the receipt of Complaints at least on a weekly basis. In the event the Complaint shall be directed to a committee, the chair of the committee shall be informed of the receipt of the Complaint within not more than two business days.
A Complaint pertaining to one or more executive officers or Directors must receive especially timely review by the corresponding investigator.
Each investigator will decide, upon initial review of a Complaint, whether a formal investigation shall be initiated and the extent of it, including who shall carry out the investigation, and the resources which shall be deemed necessary to carry it out.
All signed Complaints will be acknowledged as received by the investigator. In the event the signed Complaint shall be directed to a committee, the chair of the committee, or the chair's designee, shall acknowledge receipt of the Complaint.
In the event the investigator shall conclude a Complaint as not one subject to the scope of the investigator's responsibilities under a committee charter or otherwise but as one raising legitimate issues, the investigator shall forward the matter to the Chief Financial Officer for direct action or referral to the appropriate person for review and action.
- Annual Status Reports - The Audit Committee, the Nominating and Corporate Governance Committee, and the Chief Financial Officer, as investigators of Complaints, will at least annually each provide reports to the Board on the status of Complaints received, including, but not limited to -
A brief description of each.
The status of each.
Recommended action, if any, on each by the Board which may take the form any of the following -
Affirmative relief.
Dismissal of the Complaint.
Closure of the file on the Complaint for which the investigator has not received additional requested information from the complainant within a reasonable time which the investigator deems necessary to make a determination in the matter.
- Retention of Closed File - A Complaint file, once closed, will be retained for a time period of 10 years and in accordance with the Company's appropriate records retention policy, after which the file will be destroyed. Unless specifically provided otherwise in that policy, the Chief Financial Officer or that officer's designee is the custodian of a closed Complaint file.
- Confidential Treatment - An investigator will be particularly sensitive to the confidential nature of Complaints, especially ones where the complainant has made the Complaint through a confidential or anonymous submission. Complaint files will not be available generally to Employees except with the permission of the investigator and only in accordance with the Company's policy on confidential records, if any, pertaining to the subject matter of the Complaint.
- Committee Review - In the event the investigator shall be the Audit Committee or the Nominating and Corporate Governance Committee, a Complaint shall be reviewed initially by the committee's chair, or the chair's designee, and an initial analysis submitted to the committee. Any formal action taken by the committee on the Complaint must be at a duly scheduled meeting at which at least a quorum of its members is present, and a determination on the Complaint must be by vote of at least a majority of the committee present, subject further to the procedural requirements of the Bylaws.
- Other Procedures - The Committee shall adopt such other procedures, subject to prior Board approval, as may be necessary to carry out the Committee's responsibilities in addressing Complaints and other matters addressed in this section.
Supervising Chief Financial Officer on Code Conduct
The Committee shall supervise the Chief Financial Officer in the context of the Code of Conduct. However, the Chief Financial Officer shall have primary authority and responsibility for enforcement of the Code of Conduct, except as expressly provided in the Code of Conduct.
Conducting Committee Performance Evaluation
The Committee shall each year conduct a Committee Performance Evaluation, i.e., it shall review, discuss, and assess its own performance, as well as the Committee's purpose and responsibilities, seeking responses from senior management, the full Board, and others. Changes, if any, in the Committee's purpose or responsibilities, or, generally, changes to this charter shall be recommended to the full Board for approval.
Other Matters
The foregoing provisions of this charter are not intended to be exhaustive. The Committee may, in addition, perform such other functions as may be necessary or appropriate for the performance of its purposes and responsibilities.
Nothing in this charter is intended to, and must not be construed as, creating any responsibility or liability of the members of the Committee except to the extent otherwise provided under applicable State of Nevada law which continues to set the legal standard for the conduct of the Committee members.
The foregoing has been duly adopted by the board of directors of the Company as of this___ day of December, 2007 and entered into the minutes of the Company.
Corporate Secretary |
Exhibit 99.4
ECOLOCAP SOLUTIONS INC.
2007 QUALIFIED STOCK OPTION PLAN
ARTICLE I
PURPOSE
ECOLOCAP SOLUTIONS INC. (the "Company"), is largely dependent for the successful conduct of its business on the initiative, effort and judgment of its officers and employees. This Stock Option Plan (the "Plan") is intended to provide the key employees of the Company an incentive through stock ownership in the Company and encourage them to remain in the Company's employ. Moreover, since the Incentive Stock Options and Non-Qualified Stock Options provided for in the Plan are subject to various alternative provisions of the Internal Revenue Code of 1986, as amended (the "Code"), the Committee (as hereinafter defined) will have considerable latitude in shaping options granted under the Plan to the particular circumstances of the optionee, thus recognizing the full incentive value of the option.
ARTICLE II
ADMINISTRATION
The Plan shall be administered by the Executive Committee (the "Committee") of the Board of Directors (the "Board") of the Company. The Board, at its option, may delegate the administration of the Plan to another committee of the Board subject to the provisions of this Article II. All members of the Committee shall be Directors of the Company and shall be selected by (and serve at the pleasure of) the Board. All members of the Committee shall be "disinterested persons" within the meaning of Rule 16b-3 of the general rules and regulations under the Securities and Exchange Act of 1934, as amended. Subject to the express provisions of the Plan, the Committee shall have plenary authority, in its discretion, to recommend to the Board the individuals within the class set forth in Article IV to whom, and the time and price per share at which, options shall be granted, and the number of shares to be subject to each option. In making such determination, the Committee may take into account the nature of the services rendered by the respective employees, their present and potential contributions to the Company's success and such other factors as the Committee in its discretion shall deem relevant. Subject to the express provisions of the Plan, the Committee shall also have plenary authority to interpret the Plan, to prescribe, amend and rescind rules and regulations regulating it, to recommend to the Board the terms and provisions of the respective options (which need not be identical) and to make all other determinations necessary or advisable for the administration of the Plan. The Committee's determination on the matters referred to in this Article II shall be final, conclusive and binding upon all optionees.
ARTICLE III
AMOUNT OF STOCK AND DURATION OF PLAN
The aggregate amount (subject to adjustment as provided in Article VIII) of stock which may be purchased pursuant to options granted under this Plan shall be 1,000,000 shares of the Company's Common Stock. Any option granted hereunder must be granted within ten (10) years from the date of approval of adoption of the Plan by the Board or the date on which this Plan is approved by the Company's shareholders, whichever is earlier. Shares subject to options under the Plan may, in the sole discretion of the Board, be either authorized and unissued shares or issued shares which have been acquired by the Company and are being held in its treasury. When options have been granted under the Plan and have lapsed unexercised or partially unexercised, the shares which were subject thereto may be reoptioned under the Plan.
ARTICLE IV
ELIGIBILITY AND PARTICIPATION
All officers and employees of the Company shall be eligible to receive Stock Options under the Plan; provided, however, that no member of the Committee shall be entitled to receive an option under this Plan while serving as a member of the Committee.
ARTICLE V
TERMS AND CONDITIONS OF OPTIONS
Each option granted under the Plan shall be evidenced by a Stock Option Agreement (the "Agreement"), the form of which shall have been approved by the Committee and Counsel to the Company. The Agreement shall be executed by the Company and the optionee and shall set forth the terms and conditions of the option, which terms and conditions shall include, but not by way of limitation, the following:
1. Option Price . The option price shall be determined by the Committee, but shall not in any event be less than the greater of the (i) par value of the Company's Common Stock or (ii) the fair market value of the Company's Stock on the date that the option is granted.
2. Term of Option. The term of the option shall be selected by the Committee, but in no event shall such term exceed ten (10) years.
3. Transferability. Options granted hereunder shall not be transferable otherwise than by will or operation of the laws of descent and distribution. During the lifetime of the optionee, options granted hereunder shall be exercisable only by the optionee.
4. Termination of Employment . In the event of an optionee's termination of employment with the Company for any reason other than death, all options granted hereunder shall thereupon terminate. The Committee may, in its discretion, direct that certain Agreements contain provision permitting exercise of an option after an optionee's retirement. Upon the termination of an optionee's employment by reason of his death, such optionee's option(s) shall terminate to the extent it was not exercisable at the date of his death. To the extent such options were then exercisable by the optionee, optionee's estate or the beneficiaries thereof shall be entitled to exercise such options for a period of three (3) months from the date of his death, (unless the option(s) should sooner terminate according to its own provisions) but not thereafter. Notwithstanding the other provisions of this subparagraph 4, no option shall be exercised more than ten (10) years from the date upon which it is granted.
5. Other Conditions . At its sole discretion, the Committee may impose other conditions upon the options granted hereunder, including, but not by way of limitation, percentage limitations upon the exercise of options granted hereunder.
If the Plan and the shares of Common Stock reserved for options hereunder have not been registered under the Securities Act of 1933, as amended (the "Act"), the Committee shall satisfy itself that the exemption from registration afforded by Section 4(2) of the Act will be available.
ARTICLE VI
INCENTIVE STOCK OPTIONS
The Committee and the Board, in recommending and granting stock options hereunder, shall have the discretion to determine that certain options shall be Incentive Stock Options, as defined in Section 422A of the Code and the regulations thereunder, while other options shall be Non-Qualified Stock Options. Neither the members of the Committee, the members of the Board nor the Company shall be under any obligation or incur any liability to any person by reason of the determination by the Committee or the Board whether an option granted under the Plan shall be an Incentive Stock Option or a Non-Qualified Stock Option. The provisions of this Article VI shall be applicable to all Incentive Stock Options at any time granted or outstanding under the Plan.
All Incentive Stock Options granted or outstanding under the Plan shall be granted and held subject to and in compliance with the terms and conditions specifically set forth in Articles II, III, IV, and V hereof and, in addition, subject to and in compliance with the following further terms and conditions:
1. The option price of all Incentive Stock Options shall not be less than one hundred percent (100%) of the fair market value of the Company's Common Stock at the time the option is granted (notwithstanding any provision of Article V hereof to the contrary);
2. No Incentive Stock Option shall be granted to any person who, at the time of the grant, owns stock possessing more than ten percent (10%) of the total combined voting power of the Company. Such ownership limitation will be waived if (i) the option price is at least one hundred ten percent (110%) of the fair market value of the Company's Common Stock at the time the option is granted; and (ii) the option by its terms must not be exercisable more than five (5) years from the date it is granted; and,
3. The aggregate fair market value of all shares of Common Stock (determined at the time of the grant of the option) exercisable for the first time by an employee during any calendar year shall not exceed $100,000.
ARTICLE VII
EXERCISE OF OPTIONS
Options granted hereunder may be exercised only by tendering to the Company written notice of exercise accompanied by the aggregate purchase price for the shares with respect to which the option is being exercised. No option shall be exercisable unless the shares issuable on the exercise thereof have been registered under the Act, or the Company shall have first received the opinion of its counsel that registration under the Act is not required in connection with such issuance. At the time of exercise, if the shares with respect to which the option is being exercised have not been registered under the Act, the Company may require the optionee to give the Company whatever written assurance counsel for the Company may require that the shares are being acquired for investment and not with a view to the distribution thereof, and that the shares will not be disposed of without the written opinion of such counsel that registration under the Act is not required. Share certificates issued to the optionee upon exercise of the option shall bear a legend to the foregoing effect to the extent counsel for the Company deems it advisable. The purchase price of shares of Common Stock of the Company acquired upon the exercise of any Non-Qualified Stock Option or Incentive Stock Option granted under the Plan may be paid by an optionee by the payment of cash, or by the assignment to the Company of shares of the Company's Common Stock theretofore owned by the optionee having a value equal to such option price, or by any combination thereof. For purposes of the Plan, shares of Common Stock shall be deemed to have a value equal to the average of the closing bid and asked price for a share for the trading day upon which such value is being determined.
ARTICLE VIII
ADJUSTMENTS
Subject to any required action by the Company's Directors and shareholders, the number of shares provided for in each outstanding option and the price per share thereof, and the number of shares provided for in the Plan, shall be proportionately adjusted for any increase of decrease in the number of issued shares of the Company Common Stock resulting from a subdivision or consolidation of shares or the payment of a stock dividend (but only on the Common Stock) or any other increase or decrease in the number of such shares effected without receipt of consideration by the Company. Subject to any required action by the Company's Directors and shareholders, if the Company shall be the surviving corporation in any merger or consolidation, each outstanding option hall pertain to and apply to the securities to which a holder of the number of shares of the Company's
Common Stock subject to the option would have been entitled. In the event (hereinafter collectively referred to as an "Event of Sale or Liquidation") of: (a) a dissolution or liquidation of the Company; (b) a merger or consolidation in which the Company is not the surviving corporation; (c) a sale of all or substantially all of the assets of the Company; or (d) a sale of all or substantially all of the outstanding Common Stock of the Company to on purchaser, then each outstanding option shall terminate, provided, however, that in such event, each optionee shall have the right immediately prior to any Event of Sale of Liquidation to exercise his option with respect to the full number of shares covered thereby, without regard to any installment provision contained in this Agreement. In the event of a change in the Company's Common Stock which is limited to a change of all of its authorized shares with par value into the same number of shares with a different par value or without par value, the shares resulting from any such change shall be deemed to be Common Stock within the meaning of the Plan. The aforesaid adjustment shall be made by the Committee whose determination in that respect shall be final, binding and conclusive. Except as hereinbefore expressly provided in this Article VIII, the optionee shall have no rights by reason of subdivision or consolidation of shares of stock of any class or payment of any stock dividend or any other increase or decrease in the number of shares of any class or by reason of any Event of Sale or Liquidation, or spin-off of assets or stock of another corporation; and any issue by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, or securities convertible into shares of stock of any class, shall not affect and no adjustment by reason thereof shall be made with respect to the number or price of shares of the Company's Common Stock subject to any option. The grant of an option pursuant to the Plan shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure or to merge or to consolidate or to dissolve or liquidate or sell or transfer all or any part of its business or assets.
ARTICLE IX
AMENDMENT OR DISCONTINUANCE
The Board may at any time amend, rescind or terminate the Plan, as it shall deem advisable, provided, however, that no change may be made in options theretofore granted under the Plan (without the consent of the optionees) which should impair the optionee's rights. Provided, however, that no amendment to the Plan will be effective unless and until such amendment has been approved by the holders of a majority of the Company's outstanding voting stock (voting as a single class) present, or represented, and entitled to vote at a duly constituted meeting of such shareholders.
ARTICLE X
SHAREHOLDER APPROVAL
The Plan shall be effective (the "Effective Date") when it has received the approval of a majority of the Board of Directors. However, the Plan and all options granted under the Plan shall be void if the Plan is not approved by the holders of a majority of the outstanding voting stock of the Company (voting as a single class) within twelve (12) months of the Effective Date.
ECOLOCAP SOLUTIONS INC. |
BY: __________________________________________________________ |
Robert Wilder, President |
ATTEST: |
Secretary |
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT is made and entered into by and between ECOLOCAP SOLUTIONS INC. (the "Company") and ____________________ ("______________").
WHEREAS, _______________ is a valuable and trusted employee of the Company and the Company considered it desirable and in the Company's best interests that ________________ be given an inducement to acquire a propriety interest in the Company and an added incentive to advance the interests of the Company by possessing an option to purchase stock of the Company in accordance with the Incentive Stock Option Plan (the "Plan") adopted by the Board of Directors (the "Board") of the Company on _______________, 2007.
NOW THEREFORE, in consideration of the promises, it is agreed by and between the parties as follows:
1. Grant of Option . The Company hereby grants to _______________the right, privilege, and option to purchase _______________ shares of the Company's Common Stock at the purchase price of $ __________ per share, in the manner and subject to the conditions hereinafter provided and Article VI of the "Stock Option Plan."
2. Time of Exercise of Options. The aforesaid option may, until the termination thereof as provided in paragraph 4, be exercised in any increments, subject to Article VI(1) of the "Stock Option Plan."
Provided that for this purpose any such previously granted option not having been exercised in full shall be deemed to remain outstanding until the expiration of the period during which under its initial term it could have been exercised.
3. Method of Exercise . The option shall be exercise by written notice (the "Notice") from _______________ to the Executive Committee (the "Committee") of the Board. The Notice shall specify the number of shares of stock for which the option is being exercised and by accompanied by a cashier's check for payment in full of the option price for the number of shares specified. The option shall be deemed exercised as of the time the Notice is actually received by the Company. The Company shall make immediate delivery of such shares, provided that if any law or regulation required the Company to take any action with respect to the shares specified in such Notice before the issuance thereof, then the date of delivery of such shares shall be extended for the period necessary to take such action.
4. Termination of Option . Except as otherwise provided, the option to the extent nor already exercised or expired by its own terms shall terminate upon the first to occur of the of the following dates:
(a) |
Ninety days following the date on which _______________, employment (or position as an officer or director) by the Company is terminated except if such termination is caused by reason of death or permanent and total disability. |
(b) |
The expiration of twelve (12) months after the date on which _______________' employment (or position as an officer or director) by the Company is terminated, if such termination is caused by _______________' death or _______________' permanent and total disability. |
(c) |
Midnight _______________, 20_____. |
5. Adjustments . Subject to any required action by the Company's Directors and shareholders, the number of shares provided for in this option, and the price thereof, shall be adjusted proportionately upward or downward in accordance with the provisions of Article VII of the Plan.
6. Rights prior to Exercise of Option. This option is nontransferable by _______________ otherwise than by will or the laws of descent and distribution, and is exercisable _______________' during _______________' lifetime only by _______________. _______________ shall have no rights as a stockholder with respect to the option shares until payment of the option price and delivery to him of such shares as herein provided.
7. Restriction of Disposition. All shares acquired by _______________ pursuant to this Incentive Stock Option Agreement may be subject to restriction on sale, encumbrance and other dispositions pursuant to state or federal law.
8. Notices. The addresses to which all notices required to be given hereunder shall be sent are, if to the Company:
and if to _________:
Either party may change his address by giving written notice to the other party at the indicated address. All notices given hereunder shall be deemed received when actually delivered to the indicated address.
9. Stock Option Plan . This Agreement is subject to and incorporated by reference to all the terms and conditions set forth in the Plan. In the event of any conflict between the terms of this Agreement and the Plan, the terms and conditions of the Plan shall control.
10. Binding Effect. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, administrators, successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of _______________, 20___.
ECOLOCAP SOLUTIONS INC. | |
BY: | |
President |
ATTEST: |
(Seal) |
Secretary |