UNITED STATES­­­­­

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2012

[] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ______________

Commission File Number: 000-53489

eCrypt Technologies, Inc.

 (Exact name of registrant as specified in its charter)

Colorado		32-0201472
(State or other jurisdiction of incorporation)		(IRS Employer Identification Number)
4750 Table Mesa Dr. Boulder CO, 80305
(Address of principal executive offices)
1.866.241.6868
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for 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.  [ X ] Yes   [ ] No

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

[ X ] Yes   [ ] No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ]	Accelerated filer [ ]
Non-accelerated filer [ ]  (Do not check if a smaller reporting company)	Smaller reporting company [ X ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     [  ] Yes   [ x ] No

As of February 13, 2013, the Company had 135,773,552 shares issued and outstanding.

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PART I-FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS.

The financial statements of eCrypt Technologies, Inc. (the "Company" or “eCrypt”), a Colorado corporation, included herein were prepared, without audit, pursuant to rules and regulations of the Securities and Exchange Commission (“SEC”).  Because certain information and notes normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America were condensed or omitted pursuant to such rules and regulations, these financial statements should be read in conjunction with the financial statements and notes thereto included in the audited financial statements of the Company in the Company's Form 10-K for the fiscal year ended March 31, 2012, and all amendments thereto.

eCRYPT TECHNOLOGIES, INC.

(A DEVELOPMENT STAGE COMPANY)

FINANCIAL STATEMENTS

PERIOD ENDED DECEMBER 31­­, 2012

INDEX TO FINANCIAL STATEMENTS:	Page
Balance Sheets	3
Statements of Operations	5
Statement of Stockholders’ Equity (Deficit)	7
Statements of Cash Flows	9
Notes to Unaudited Financial Statements	11 – 18

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3

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4

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5

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6

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eCrypt Technologies, Inc.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
For the Period from Inception (April 19, 2007) to December 31, 2012
(Unaudited)
No Par Value					Preferred Shares				Common Shares				Additional Paid		Stock/ Subscriptions		Retained Earnings		Total Stockholders'
					Number		Amount		Number		Amount		in Capital		Payable		(Deficit)		Equity
Balance at April 19, 2007 (Date of Inception)					-		$            -		-		$               -		$                  -		$                    -		$                    -		$                        -
Shares issued					-		-		116,015,968		55,130		-		-		-		55,130
Net loss for the period					-		-		-		-		-		-		(32,505)		(32,505)
Balance March 31, 2008 (audited)					-		-		116,015,968		55,130		-		-		(32,505)		22,625
Stock subscriptions					-		-		-		-		-		4,875		-		4,875
Shares issued					-		-		17,502,248		151,572		-		-		-		151,572
Net loss for the period					-		-		-		-		-		-		(92,111)		(92,111)
Balance March 31, 2009 (audited)					-		-		133,518,216		206,702		-		4,875		(124,616)		86,961
Stock cancelled															(4,875)				(4,875)
Stock subscriptions					-		-		-		-		-		400,000		-		400,000
Shares issued					-		-		40,455		32,768		-		-		-		32,768
Net loss for the period					-		-		-		-		-		-		(184,480)		(184,480)
Balance March 31, 2010 (audited)					-		-		133,558,671		239,470		-		400,000		(309,096)		330,374
Shares issued for cash					-		-		952,381		400,000		-		(400,000)		-		-
Shares issued for compensation					-		-		287,500		63,750		-		-		-		63,750
Net loss for the period					-		-		-		-		-		-		(693,906)		(693,906)
Balance March 31, 2011 (audited)					-		-		134,798,552		703,220		-		-		(1,003,002)		(299,782)

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Stock options issued					-		-		-		-		45,000		-		-		45,000
Shares issued for compensation					-		-		612,500		112,441		-				-		112,441
Stock subscription payable					-		-		-		-		-		178,625		-		178,625
Net loss for the period					-		-		-		-		-		-		(696,221)		(696,221)
Balance March 31, 2012 (audited)					-		-		135,411,052		815,661		45,000		178,625		(1,699,223)		(659,937)
Stock option rights issued to Thomas Trkla vested in quarter ended June 30, 2012					-		-		-		-		45,000		-		-		45,000
Shares issued for compensation					-		-		362,500		178,625		-		-		-		178,625
Share Subscription															(178,625)				(178,625)
Stock option rights issued to Thomas Trkla vested in quarter ended September 30, 2012													45,000						45,000
Stock subscription payable															13,500				13,500
Net loss					-		-		-		-		-		-		(421,328)		(421,328)
Balance December 31, 2012 (unaudited)					-		$            -		135,773,552		$   994,286		$      135,000		$          13,500		$   (2,120,551)		$          (977,765)
The accompanying notes are an integral part of these financial statements.

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9

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eCRYPT TECHNOLOGIES, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

1.

Nature of Operations

eCrypt Technologies Inc., a Colorado corporation (“the Company”), was incorporated on April 19, 2007.  The Company develops and sells encryption software which secures the transmission of, storage of, and access to digital information.  Software applications range from device based (for Personal Digital Assistants (“PDAs”), wireless handheld devices, laptop and desktop computers, pocket computers, cellular phones, smartphones, and other file storage devices), to server-based encryption software for email servers and for file-store servers.

2.

Significant Accounting Policies

Basis of Presentation

The financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles of the United States of America (“US GAAP”).

In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present fairly the financial position as of December 31, 2012, and the results of operations and cash flows presented herein have been included in the financial statements. The Company has limited operations and in accordance with FASB ASC 915-10, “Development Stage Entities”, the Company is considered a development stage company. Operating results for the three months and nine months ended December 31, 2012 are not necessarily indicative of the results that may be expected for the year ending March 31, 2013. The financial statements should be read in conjunction with the Form 10-K for the year ended March 31, 2012 of the Company.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that impact the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as at the date of the financial statements and the reported amounts of revenue and expense during the reporting period.  Actual results could differ from those estimates.

Uncertainty as a Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. However, the Company has suffered recurring losses from operations since inception (April 19, 2007) of $2,120,551, which raises substantial doubt about its ability to continue as a going concern.

The Company’s ability to continue as a going concern is dependent upon its ability to generate profitable operations in the future and/or obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has plans to seek additional capital through a private placement and public offering of its common stock. These plans, if successful, will mitigate the factors which raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.

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eCRYPT TECHNOLOGIES, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

 (UNAUDITED)

2.

Significant Accounting Policies (cont’d)

Cash, Cash Equivalents and Investments

Cash equivalents consist of highly liquid investments with original maturities at the date of purchase of three months or less.  Short term investments mature in less than one year from the balance sheet date.

The Company places its cash and short-term investments with financial institutions with high credit quality investments in accordance with its investment policy designed to protect the principal investment.  Therefore, the Company believes that its exposure due to concentration of credit risk is minimal and has not experienced credit losses on investments in these instruments to date.

Property and Equipment

Property and Equipment are stated at cost less accumulated depreciation.  Depreciation is calculated using the straight line basis over their estimated useful lives:

Computer equipment	2 years straight line basis
Computer software	1 years straight line basis
Equipment	5 years straight line basis

Revenue Recognition

Product revenue and miscellaneous income are recognized as earned.

Income Taxes

The Company accounts for income taxes as outlined in the Accounting Standards Codification ("ASC") 740 "Income Taxes”. Under ASC Topic 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC Topic 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Stock-Based Compensation

The Company accounts for share based payments in accordance with ASC 718, Compensation - Stock Compensation, which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on the grant date fair value of the award. In accordance with ASC 718-10-30-9, Measurement Objective – Fair Value at Grant Date, the Company estimates the fair value of the award using a valuation technique. For this purpose, the Company uses the Black-Scholes option pricing model. The Company believes this model provides the best estimate of fair value due to its ability to incorporate inputs that change over time, such as volatility and interest rates, and to allow for actual exercise behavior of option holders. Compensation cost is recognized over the requisite service period which is generally equal to the vesting period. Upon exercise, shares issued will be newly issued shares from authorized common stock.

ASC 505, "Compensation-Stock Compensation", establishes standards for the accounting for transactions in which an entity exchanges its equity instruments to non employees for goods or services. Under this transition method, stock compensation expense includes compensation expense for all stock-based compensation awards granted on or after January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of ASC 505.

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eCRYPT TECHNOLOGIES, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

 (UNAUDITED)

2.

Significant Accounting Policies (cont’d)

Related Parties

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions.  Parties are also considered to be related if they are subject to common control or common significant influence.

Financial Instruments

The Company’s financial instruments consist of cash and cash equivalents, accounts payable and accrued liabilities, stockholder loans. The Company does not hold or issue financial instruments for trading purposes and does not hold any derivative financial instruments.

The Company’s investment policy is to achieve, in order of importance, the financial objectives of preservation of principal, liquidity and return on investment.  Investments are made in U.S. obligations and bank securities provided the obligations are guaranteed or carry ratings appropriate for the policy.

The policy risks are primarily the opportunity cost of the conservative nature of the allowable investments.  As the Company is currently in the development stage, the Company has chosen to avoid investments of a trade or speculative nature.

Fair value of financial instruments

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2012 and 2011. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, prepaid expenses and accounts payable. Fair values were assumed to approximate carrying values for cash and payables because they are short term in nature and their carrying amounts approximate fair values or they are payable on demand.

Level 1: The preferred inputs to valuation efforts are “quoted prices in active markets for identical assets or liabilities,” with the caveat that the reporting entity must have access to that market. Information at this level is based on direct observations of transactions involving the same assets and liabilities, not assumptions, and thus offers superior reliability. However, relatively few items, especially physical assets, actually trade in active markets.

Level 2: FASB acknowledged that active markets for identical assets and liabilities are relatively uncommon and, even when they do exist, they may be too thin to provide reliable information. To deal with this shortage of direct data, the board provided a second level of inputs that can be applied in three situations.

Level 3: If inputs from levels 1 and 2 are not available, FASB acknowledges that fair value measures of many assets and liabilities are less precise. The board describes Level 3 inputs as “unobservable,” and limits their use by saying they “shall be used to measure fair value to the extent that observable inputs are not available.” This category allows “for situations in which there is little, if any, market activity for the asset or liability at the measurement date”. Earlier in the standard, FASB explains that “observable inputs” are gathered from sources other than the reporting company and that they are expected to reflect assumptions made by market participants.

Foreign Currency Translation

The measurement currency of the Company is the U.S. dollar. Transactions in foreign currencies are translated at the exchange rate in effect at the transaction date.  Monetary assets and liabilities denominated in other than the measurement currency are translated at the exchange rates in effect at the balance sheet date.  The resulting exchange gains and losses are recognized in earnings.

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eCRYPT TECHNOLOGIES, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

 (UNAUDITED)

2.

Significant Accounting Policies (cont’d)

Net Earnings (Loss) per Share

Basic and diluted net loss per share information is presented under the requirements of ASC Topic 260, Earnings per Share. Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding for the period, less shares subject to repurchase. Diluted net loss per share reflects the potential dilution of securities by adding other common stock equivalents, including stock options, shares subject to repurchase, warrants and convertible notes in the weighted-average number of common shares outstanding for a period, if dilutive. The computation of earnings (loss) per share is as follows:

	Nine Months Ended December 31, 2012			Nine Months Ended December 31, 2011
Net loss	$           (421,328)			$           (392,676)
Weighted-average number of shares outstanding
Basic	135,695,779			135,117,778
Loss per share
Basic	(0.00)			(0.00)

3.

Recent Accounting Pronouncements

The Company has adopted all recently issued accounting pronouncements. The adoption of the accounting pronouncements, including those not yet effective, is not anticipated to have a material effect on the financial position or results of operations of the Company.

4.

Property and Equipment

The components of the Company’s equipment are presented below:

		December 31, 2012	December 31, 2012	March 31, 2012
		Accumulated
	Cost	Depreciation	Net	Net
Computer equipment	$               9,812	$                    9,812	$                         0	$                    0
Computer software	14,445	14,445	0	0
Equipment	37,179	25,603	11,576	18,653
Total	$             61,436	$                  49,860	$                11,576	$           18,653

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eCRYPT TECHNOLOGIES, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

 (UNAUDITED)

4.

Property and Equipment (cont’d)

Depreciation expense for the three and nine months ended December 31, 2012 and 2011 was $1,319 and $2,516 and $5,599, and $7,239, respectively.

5.

Stockholders’ Deficit

a)

Authorized:

500,000,000 Common shares with no par value

10,000,000 Preferred shares with no par value issued or outstanding:

During the three and nine months ended December 31, 2012, the Company effected the following stock transactions

On November 8, 2011, the Company issued 37,500 shares of common stock for director compensation for a value of $21,000.  The share price is valued at the adjusted closing price on the date of vesting of the shares which was $0.56 per share.  The compensation agreement calls for a total of 150,000 shares to be issued during a 12 month period. These shares were recorded as subscription payable as of March 31, 2012. The shares were issued on May 30, 2012.

On February 9, 2012, the Company issued 250,000 shares of common stock for director compensation for a value of $117,500.  The share price is valued at the adjusted closing price on the date of vesting of the shares which was $0.47 per share.  The compensation agreement calls for a total of 1,000,000 shares to be issued during a 12 month period. These shares were recorded as subscription payable as of March 31, 2012. The shares were issued on May 30, 2012.

On February 15, 2012, the Company issued 37,500 shares of common stock for director compensation for a value of $22,875.  The share price is valued at the adjusted closing price on the date of vesting of the shares which was $0.61 per share.  The compensation agreement calls for a total of 150,000 shares to be issued during a 12 month period. These shares were recorded as subscription payable as of March 31, 2012. The shares were issued on May 30, 2012.

On March 8, 2012, the Company issued 37,500 shares of common stock for director compensation for a value of $17,250.  The share price is valued at the adjusted closing price on the date of vesting of the shares which was $0.46 per share.  The compensation agreement calls for a total of 150,000 shares to be issued during a 12 month period. These shares were recorded as subscription payable as of March 31, 2012. The shares were issued on May 30, 2012.

On July 8, 2012, the Company issued 37,500 shares of common stock for director compensation for a value of $8,250.  The share price is valued at the adjusted closing price on the date of vesting of the shares which was $0.22 per share.  The compensation agreement calls for a total of 150,000 shares to be issued during a 12 month period. These shares were recorded as subscription payable as of December 31 , 2012.

On September 25, 2012, the Company issued 37,500 shares of common stock for director compensation for a value of $5,250.  The share price is valued at the adjusted closing price on the date of vesting of the shares which was $0.14 per share.  The compensation agreement calls for a total of 150,000 shares to be issued during a 12 month period. These shares were recorded as subscription payable as of December 31, 2012.

 

6.

Warrants

There are no warrants outstanding as of December 31, 2012. The 5,476,191 of unexercised warrants issued in the prior year expired on April 19, 2012.

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eCRYPT TECHNOLOGIES, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

 (UNAUDITED)

7.

Stock options

On February 16, 2012 the company granted a non-qualified stock option to its newly appointed director, Thomas Trkla as compensation for his services. The director is entitled to purchase a total of three hundred thousand (300,000) shares of restricted common stock for a price equal to $0.30 per share (Exercise Price), exercisable over a ten-year period thereafter. The option shall be vested during the 12 month period. As to the total number of Shares with respect to which the Option is granted, the Option execution of this Agreement (ii) 50% of the Option in the aggregate may be exercised on or after the four month anniversary of the Grant Date; (iii) 75% of the Option in the aggregate may be exercised on or after the eight month anniversary of the Grant Date; and (iv) 100% of the Option in the aggregate may be exercised on or after the twelve month anniversary of the Grant Date (the twelve month period commencing on the Grant Date and ending on the twelve month anniversary of the Grant Date being referred to as the “Vesting Period”). As at December 31, 2012, the director has not exercised any right. The total fair value of these options at the date of grant was estimated to be $180,000 and was determined using the Black-Scholes option pricing model with an expected life of 10 years, a risk free interest rate of 1.99%, a dividend yield of 0% and expected volatility of 419% . Out of this $135,000 was recorded as  stock based compensation expense through  December 31, 2012 based on two hundred  twenty five thousand  (225,000) options vested.

		Number of Options		Weighted-Average Exercise Price per share		Weighted- Average Remaining Life (Years)
Outstanding at as at 4.01.2012		300,000		$                                  0.30		9.88
Granted		-		$                                        -		-
Exercised		-		$                                   NA		NA
Cancelled		-		$                                   NA		NA
Outstanding at as at 12.31.2012		300,000		$                                  0.30		9.38
Exercisable at 12.31.2012		225,000		$                                  0.30

8.

Loan - Related Party

The Company issued on January 11, 2012 a $38,000 unsecured note payable to a shareholder.  The note bears interest at 10%, compounded annually, matures in two years on January 11, 2014.  

The Company issued on December 6, 2011 a $20,000 unsecured note payable to a shareholder.  The note bears interest at 10%, compounded annually, matures in two years on December 6, 2013.  

The Company issued on October 19, 2011 a $25,000 unsecured note payable to a shareholder.  The note bears interest at 10%, compounded annually, matures in two years on October 19, 2013.  

The Company issued on September 30, 2011 a $20,000 unsecured note payable to a shareholder.  The note bears interest at 10%, compounded annually, matures in two years on September 30, 2013.  

The Company issued on September 2, 2011 a $20,000 unsecured note payable to a shareholder.  The note bears interest at 10%, compounded annually, matures in two years on September 2, 2013.  

The Company issued on August 5, 2011 a $24,000 unsecured note payable to a shareholder.  The note bears interest at 10%, compounded annually, matures in two years on August 5, 2013.  

The Company issued on July 7, 2011 a $40,000 unsecured note payable to a shareholder.  The note bears interest at 10%, compounded annually, matures in two years on July 7, 2013.  

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eCRYPT TECHNOLOGIES, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

 (UNAUDITED)

8.

Loan - Related Party (cont’d)

The Company issued on May 9, 2011 a $36,000 unsecured note payable to a shareholder.  The note bears interest at 10%, compounded annually, matures in two years on May 9, 2013.  

The Company issued on April 29, 2011 a $15,000 unsecured note payable to a shareholder.  The note bears interest at 10%, compounded annually, matures in two years on April 29, 2013.  

The Company received a $100,000 advance during the month of January 2011 from a related party.  The advance was non-interest bearing and due in six months. On June 24, 2011 the loan was modified to bear interest at 10%, compounded annually, and extended to mature in two years on June 24, 2013.

The Company issued on May 18, 2010 a $215,000 unsecured note payable to a shareholder.  The note bears interest at 10%, compounded annually, matures in two years on May 18, 2012. The note, which was originally due on May 18, 2012 bearing interest at 10%, compounded annually, now matures in one year on May 18, 2013 and bears interest at 10% due to an extension agreement entered into on July 1, 2012. All other terms remain the same as per the original agreement.

 

Interest expense for the three and nine months ended December 31, 2012 and 2011 was $15,779 and $12,302, and $46,038 and $29,969, respectively.

9.

Note Payable

The Company issued on February 21, 2012 a $99,964 unsecured note payable to a third party.  The note bears interest at 10%, compounded annually, matures in two years on February 21, 2014.  

The Company issued on June 13, 2012 a $99,970 unsecured note payable to a third party.  The note bears interest at 10%, compounded annually, matures in two years on June 13, 2014.  

The Company issued on September 27, 2012 a $49,980 unsecured note payable to a third party.  The note bears interest at 10%, compounded annually, matures in two years on September 27, 2014.  

The Company issued on October 5, 2012 a $49,980 unsecured note payable to a third party.  The note bears interest at 10%, compounded annually, matures in two years on October 5, 2014.

The Company issued on December 18, 2012 a $49,980 unsecured note payable to a third party.  The note bears interest at 10%, compounded annually, matures in two years on December 18, 2014.

Interest expense for the three and nine months ended December 31, 2012 and 2011 was $7,662 and $0, and $15,687 and $0, respectively.

10.

Advertising Costs

The Company’s policy regarding advertising is to expense advertising when incurred. The Company incurred $635 and $1,710, and $4,266 and $6,463, of advertising expense during the three and nine months ended December 31, 2012 and 2011.

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eCRYPT TECHNOLOGIES, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

 (UNAUDITED)

11.

Stock Compensation Program

On April 12, 2011, subject to shareholder approval, the Board of Directors of eCrypt Technologies, Inc. (the “Company”) approved the adoption of the eCrypt Technologies, Inc. Stock Compensation Program

 (the “Program”) under which 13,500,000 shares have been reserved for purposes of possible future issuance of incentive stock options, non-qualified stock options, and restricted stock grants to employees, directors and certain key individuals.  On April 15, 2011, pursuant to a written consent in lieu of a meeting, a majority of the Company’s shareholders approved the Program.  The purpose of the Program is to attract and retain key employees, consultants and other persons, and to provide such key individuals with an additional incentive to contribute to the success of the Company.  In order to maintain flexibility in the award of stock benefits, the Program constitutes a single “omnibus” plan, but is composed of three parts.  The first part is the Incentive Stock Option Plan (“Incentive Option Plan) which provides grants of incentive stock options under Section 422A of the Internal Revenue Code of 1986, as amended.  The second part is the Nonqualified Stock Option Plan (“Nonqualified Option Plan”) which provides grants of nonqualified stock options.  The third part is the Restricted Shares Plan (“Restricted Plan”) which provides grants of restricted shares of Company common stock. The Incentive Option Plan, the Nonqualified Option Plan and the Restricted Plan respectively comprise Plan I, Plan II, and Plan III of the Program.

12.

Subsequent Events

Management performed an evaluation of Company activity through the date the financial statements were issued, and has concluded that there are no significant subsequent events requiring disclosure.

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ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

SPECIAL NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS

CERTAIN STATEMENTS IN THIS REPORT, INCLUDING STATEMENTS IN THE FOLLOWING DISCUSSION, ARE WHAT ARE KNOWN AS "FORWARD LOOKING STATEMENTS", WHICH ARE BASICALLY STATEMENTS ABOUT THE FUTURE. FOR THAT REASON, THESE STATEMENTS INVOLVE RISK AND UNCERTAINTY SINCE NO ONE CAN ACCURATELY PREDICT THE FUTURE. WORDS SUCH AS "PLANS," "INTENDS," "WILL," "HOPES," "SEEKS," "ANTICIPATES," "EXPECTS "AND THE LIKE OFTEN IDENTIFY SUCH FORWARD LOOKING STATEMENTS, BUT ARE NOT THE ONLY INDICATION THAT A STATEMENT IS A FORWARD LOOKING STATEMENT. SUCH FORWARD LOOKING STATEMENTS INCLUDE STATEMENTS CONCERNING OUR PLANS AND OBJECTIVES WITH RESPECT TO THE PRESENT AND FUTURE OPERATIONS OF THE COMPANY, AND STATEMENTS WHICH EXPRESS OR IMPLY THAT SUCH PRESENT AND FUTURE OPERATIONS WILL OR MAY PRODUCE REVENUES, INCOME OR PROFITS. NUMEROUS FACTORS AND FUTURE EVENTS COULD CAUSE THE COMPANY TO CHANGE SUCH PLANS AND OBJECTIVES OR FAIL TO SUCCESSFULLY IMPLEMENT SUCH PLANS OR ACHIEVE SUCH OBJECTIVES, OR CAUSE SUCH PRESENT AND FUTURE OPERATIONS TO FAIL TO PRODUCE REVENUES, INCOME OR PROFITS. THEREFORE, THE READER IS ADVISED THAT THE FOLLOWING DISCUSSION SHOULD BE CONSIDERED IN LIGHT OF THE DISCUSSION OF RISKS AND OTHER FACTORS CONTAINED IN THIS REPORT ON FORM 10-Q AND IN THE COMPANY'S OTHER FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. NO STATEMENTS CONTAINED IN THE FOLLOWING DISCUSSION SHOULD BE CONSTRUED AS A GUARANTEE OR ASSURANCE OF FUTURE PERFORMANCE OR FUTURE RESULTS.

Overview & Plan of Operation

eCrypt Technologies, Inc. was incorporated in the State of Colorado on April 19, 2007.  The Company provides encryption solutions which secure the transmission of, storage of, and access to digital information. Currently the Company is a development stage Company. On September 27, 2012, Company’s amended bylaws were adopted to the amend Article three, section 3 of the original bylaws to increase the maximum number of directors of the Registrant from five (5) persons to eleven (11) persons.  

eCrypt’s primary business focus is on information security solutions which assist individuals and entities in securely transmitting, storing, and accessing information.  The Company’s business operations are oriented around the development and sale of encryption software and services.  To date the Company has earned limited revenue. The Company believes the majority of its revenues will be derived from service subscriptions of both pre-packaged solutions and custom developed solutions for data encryption.  

Currently, eCrypt develops and sells device-based encryption and security software and web-based encryption services for Personal Digital Assistants (“PDAs”), wireless handheld devices, laptop and desktop computers, pocket computers, cellular phones, smartphones, and other file storage devices. The Company has developed, and is now selling via its eCommerce website, its first product to market, eCrypt One on One, encryption software for email on BlackBerry® smartphones. As of December 31, 2012, the Company had earned limited revenue from sales of eCrypt One on One. The Company is also currently selling subscriptions to its web-based solution, eCrypt Me, a secure email, secure file storage, and secure file sharing service.  

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eCrypt is also developing and plans to sell device-based and web-based encryption and security software which protects email, Short Message Service (“SMS”), peer-to-peer (“P2P”), PIN-to-PIN, Instant Messaging (“IM”), Multimedia Message Service (“MMS”), and voice communications for users on such devices and mobile devices.  Additionally, eCrypt is developing and plans to sell device-based secure access interfaces which allow users to conduct financial activities on mobile devices, as well as secure access User Interfaces (“UIs”) for mobile devices. eCrypt has the ability to customize its device-based and web-based encryption and security solutions, as well as its secure access UIs, for the purpose of securely storing, communicating and accessing information. In addition to the device-based and web-based solutions, eCrypt is also developing and plans to sell appliance-based encryption solutions for securing email and the storage of and access to files stored on servers.

Over the next twelve (12) months, eCrypt plans to continue developing new products and existing product enhancements and strengthening strategic alliances.  In particular, eCrypt plans to add features to its web-based solution, eCrypt Me, as well as commence the development of additional mobile phone apps for the service.  The Company will also continue with the development of an appliance-based enterprise level data encryption solution.  

In addition to the foregoing, in an effort to advance the business operations of the Company, over the next twelve (12) months the Company plans to undertake the following actions in the order in which they are listed:

1.

complete development of downloadable User Interfaces for the access to eCrypt Me alternate to using a web browser, for Android and BlackBerry smartphones;

2.

commence and complete testing of  these Interfaces;

3.

commence distribution of the Interfaces;

4.

commence and complete development of enhancements to eCrypt Me; and

5.

complete development of an appliance-based enterprise level encryption solution.

The foregoing business actions are goals of the Company.  There is no assurance that the Company will be able to complete any, or all, of the foregoing actions.

Results of Operations

The following discussion and analysis provides information that we believe is relevant to an assessment and understanding of our results of operation and financial condition for the three and nine months ended December 31, 2012, as compared to the three and nine months ended December 31, 2011. The following discussion should be read in conjunction with the Financial Statements and related Notes appearing elsewhere in this Form 10-Q.

Our financial statements are stated in US Dollars and are prepared in accordance with generally accepted accounting principles of the United States (“GAAP”).

Results of Operation for eCrypt Technologies, Inc. for the Three Months Ended December 31, 2012 Compared to the Three Months Ended December 31, 2011.

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Revenue

During the three months ended December 31, 2012, the Company had revenues of $376 as compared to revenues of $505 during the three months ended December 31, 2011, a decrease of $129, or approximately 25.5%. The decrease in revenue experienced by the Company was primarily attributable to a decrease in subscriptions to eCrypt Me during the three months ended December 31, 2012.

Operating Expenses

During the three months ended December 31, 2012 the Company had operating expenses of $89,070 as compared to operating expenses of $129,255 during the three months ended December 31, 2011, a decrease of $40,185 or approximately 31.09%. The decrease in operating expenses experienced by the Company was primarily attributable to an increase in advertising and promotion, and general and administrative expenses during the three months ended December 31, 2011.

Net Loss

The Company had a net loss of $(113,613) for the three months ended December 31, 2012, as compared to a net loss of $(141,052) for the three months ended December 31, 2011, a change of $27,439 or approximately 19.45%.  The change in net loss experienced by the Company was primarily attributable to the fact that the Company experienced a decrease in operating expenses during the three months ended December 31, 2012.

Results of Operation for eCrypt Technologies, Inc. for the Nine Months Ended December 31, 2012 Compared to the Nine Months Ended December 31, 2011.

Revenue

During the nine months ended December 31, 2012, the Company had revenues of $2,051 as compared to revenues of $1,185 during the nine months ended December 31, 2011, an increase of $866, or approximately 73%. The increase in revenue experienced by the Company was primarily attributable to the commercialization of eCrypt Me.

Operating Expenses

During the nine months ended December 31, 2012 the Company had operating expenses of $360,176 as compared to operating expenses of $363,921 during the nine months ended December 31, 2011, a decrease of $3,745 or approximately 1.029%. The decrease in operating expenses experienced by the Company was primarily attributable to a decrease in amortization and depreciation, advertisement and promotion, and general and administrative expenses.

Net Loss

The Company had a net loss of $(421,328) for the nine months ended December 31, 2012, as compared to a net loss of $(392,676) for the nine months ended December 31, 2011, a change of $28,652 or approximately 7.297%.  The change in net loss experienced by the Company was primarily attributable to the fact that the Company experienced an increase in interest expenses during the six months ended December 31, 2012.

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Liquidity and Capital Resources

Currently, we have limited operating capital.  The Company anticipates that it will require approximately $5,000,000 of working capital to complete all of its desired business activity during the next twelve months.  The Company has earned limited revenue from its business operations.  Our current capital and our other existing resources will be sufficient only to provide a limited amount of working capital, and, to date, the revenues generated from our business operations have not been sufficient to fund our operations or planned growth.  Currently we have been funding our business activities through loans from a principal shareholder and notes payable to a third party. Neither of these parties has made a commitment to continue to loan funds to the Company, and as a result, there is no assurance that the Company can continue to rely on these sources of financing to continue to fund our business operations.

We will likely require additional capital to continue to operate our business, and to further expand our business.   We may be unable to obtain the additional capital required.   Our inability to generate capital or raise additional funds when required will have a negative impact on our operations, business development and financial results.   

During the next twelve months, we plan to seek to generate the necessary capital to fund our business operations and complete our desired business activity through sales of our software eCrypt One on One, and subscriptions to our web-based service eCrypt Me.  However, as of the period ended December 31, 2012, we have generated limited revenue through sales of eCrypt One on One and subscriptions to eCrypt Me.   If we are unable to generate the necessary capital through the sales of these products, we may conduct a private placement offering to seek to raise the necessary working capital to fund our business operations.  

The following discussion outlines the state of our liquidity and capital resources as of December 31, 2012:

Total Current Assets & Total Assets

Our unaudited balance sheet reflects that: i) as of December 31, 2012, we have total current assets of $46,014 as compared to total current assets of $73,197 at March 31, 2012, a decrease of $27,183, or approximately 37.137%; and ii) as of December 31, 2012, we have total assets of $57,590, compared to total assets of $91,850 as of March 31, 2012, a decrease of $34,260, or approximately 37.3%.  The decrease in the Company’s total current assets and total assets from December 31, 2012 to March 31, 2012 was primarily attributable to the fact that the Company utilized available cash for operating expenses during the period ended December 31, 2012.

Cash As of December 31, 2012, our unaudited balance sheet reflects that we have cash of $41,522, as compared to $73,197 at March 31, 2012, a decrease of $31,675, or approximately 43.274%.  The decrease in the Company’s cash from December 31, 2012 to March 31, 2012 was primarily attributable to the fact that the Company utilized available cash for operating expenses during the period ended December 31, 2012.

Total Current Liabilities

Our unaudited balance sheet reflects that: i) as of December 31, 2012, we have total current liabilities of $627,045 as compared to total current liabilities of $291,249 at March 31, 2012, an increase of $335,796 or approximately 115.295%; and ii) as of December 31, 2012, we have total liabilities of $1,035,355 as compared to total liabilities of $751,787 at March 31, 2012, an increase of $283,568 or approximately 37.719%.  The increase in the Company’s total current liabilities and total liabilities from December 31,

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2012 to March 31, 2012 was primarily attributable to the fact that the Company received loans from related and third parties, and realized an increase in the accrued interest on the loans.

Cash Flow for the Company for the Nine Month Period Ended December 31, 2012 as Compared to the Nine Month Period Ended December 31, 2011

Operating Activities During the nine month period ended December 31, 2012, the net cash used by the Company in operating activities was $(281,585) as compared to net cash used in operating activities of $(214,868) during the nine month period ended December 31, 2011, a change of $66,717 or approximately 31.05%.  The increase in our net cash used in operating activities was primarily attributable to an increase in net loss, stock options issued for compensation and interest on loans from a third and related parties.

Financing Activities During the nine month period ended December 31, 2012, the net cash provided by financing activities was $249,910 as compared to net cash provided by financing activities of $200,000 during the nine month period ended December 31, 2011, an increase of $49,910, or approximately 24.955%. The change in net cash provided by financing activities was primarily attributable to the fact that the Company received more cash via a loan from a third party.

Investing Activities During the nine month period ended December 31, 2012, the net cash used in investing activities was $nil as compared to net cash used in investing activities of $15,578 during the nine month period ended December 31, 2011, a decrease of $15,578, or 100%. The change in net cash used in investing activities from the nine month period ended December 31, 2012 and the nine month period ended December 31, 2011 was primarily attributable to a decrease in equipment purchases.

Off Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET

RISK.

Not Applicable.

ITEM 4.

CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

The Securities and Exchange Commission defines the term “disclosure controls and procedures” to mean a company's controls and other procedures of an issuer that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the issuer’s management, including its chief executive and chief financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.  The Company maintains such a system of controls and procedures in an effort to ensure that all information which it is required to disclose in the reports it files under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified under the SEC's

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rules and forms and that information required to be disclosed is accumulated and communicated to chief executive and chief financial officers to allow timely decisions regarding disclosure.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures.  Based on this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are not designed to provide reasonable assurance of achieving the objectives of timely alerting them to material information required to be included in our periodic SEC reports and of ensuring that such information is recorded, processed, summarized and reported within the time periods specified.  Our chief executive officer and chief financial officer also concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this report to provide reasonable assurance of the achievement of these objectives.  Specifically, based on the foregoing evaluation, our management has concluded that, as of December 31, 2012, the Company's disclosure controls and procedures contained a material weakness due to a failure by the Company to properly record and value stock transactions relating to stock options issued by the Company, and as a result of such material weakness, our disclosure controls and procedures were not effective as of December 31, 2012.  To remediate the weakness in our internal controls over financial reporting, we intend to: i) reconcile stock issuance transactions against the agreements underlying such stock issuance transactions to ensure that equity issuances are properly accounted for; and ii) implement a review board to review the stock issuance transactions to ensure that they are properly valued and accounted for.  Our chief executive officer and chief financial officer also concluded that our disclosure controls on accounts payable were also not effective.

 

Changes in Internal Control over Financial Reporting

There was no change in the Company's internal control over financial reporting during the period ended December 31, 2012, that has materially affected, or is likely to materially affect, the Company's internal control over financial reporting.

PART II-OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS.

The Company is not a party to any pending legal proceedings, and no such proceedings are known to be contemplated. No director, officer or affiliate of the Company and no owner of record or beneficial owner of more than 5.0% of the securities of the Company, or any associate of any such director, officer or security holder is a party adverse to the Company or has a material interest adverse to the Company in reference to pending litigation.

ITEM 1A.

 RISK FACTORS.

Not Applicable.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

On September 25, 2012, the Company issued 37,500 shares of common stock for director compensation for a value of $5,250, pursuant to the terms and conditions of a Restricted Shares Agreement; a copy of the Restricted Shares Agreement was filed as exhibit 10.12 to a Form 8-K filed by the Company with the Securities and Exchange Commission on September 26, 2012.    The share price is valued at the adjusted closing price on the date of grant which was $ 0.14 per share.  The Restricted Shares Agreement calls for

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a total of 150,000 shares to be issued during a 12 month period.  For the above share issuances, the shares were not registered under the Securities Act in reliance upon the exemptions from registration contained in Section 4(2) of the Securities Act of 1933 (the “1933 Act”).  No underwriters were used, nor were any brokerage commissions paid in connection with the above share issuances.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4.

MINE SAFETY DISCLOSURES.

None.

ITEM 5.    

OTHER INFORMATION.

None

 

ITEM 6.

EXHIBITS.

(a)

The following exhibits are filed herewith:

31.1

Certifications pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certifications pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2

Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.

SCH XBRL Schema Document.

101

INS XBRL Instance Document.

101.

CAL XBRL Taxonomy Extension Calculation Linkbase Document.

101.

LAB XBRL Taxonomy Extension Label Linkbase Document.

101.

PRE XBRL Taxonomy Extension Presentation Linkbase Document.

101.

DEF XBRL Taxonomy Extension Definition Linkbase Document.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

eCRYPT TECHNOLOGIES, INC.

By:  /S/ Brad Lever

Brad Lever, Chief Executive Officer, Chief Financial Officer

February 13, 2013

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