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EXCEL - IDEA: XBRL DOCUMENT - American BriVision (Holding) CorpFinancial_Report.xls

 

UNITED STATES

 

Securities and Exchange Commission

Washington, D.C. 20549

 

Form 10-Q

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

 

For the quarterly period ended March 31, 2015

 

 

     
o   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: 333-91436

 

 

ECOLOGY COATINGS, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

     
Nevada   26-0014658
(State or other jurisdiction of incorporation or organization)   (I.R.S. Employer Identification No.)

 

8605 Santa Monica Blvd. Suite 41336, Los Angeles, CA  90069-4109

 

(Address of principal executive offices) (Zip Code)

 

(310) 598-7872

 

(Registrant’s telephone number)

 

 

 

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 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 o No x

 

 

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Date 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).

 

Yes o No x

 

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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 definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. 

 

 

Large Accelerated Filer o Accelerated Filer  o
Non-accelerated filer  o 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 o No x

 

 

APPLICABLE ONLY TO CORPORATE ISSUERS:

 

 

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: As of March 31, 2015, the number of shares of common stock of the registrant outstanding was 54,593,032 and the number of shares of convertible preferred stock outstanding was 271.

 

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ECOLOGY COATINGS, INC.

FORM 10-Q INDEX

FOR THE QUARTER ENDED JUNE 30, 2014

 

  PART I – FINANCIAL INFORMATION Page
     
Item I FINANCIAL STATEMENTS (UNAUDITED) 4
     
  Unaudited Consolidated Balance Sheets at March 31, 2015 and September 30, 2014 4
     
  Unaudited Consolidated Statements of Operations for the Three and Six Months Ended March 31, 2015 and 2014 5
     
 

Unaudited Consolidated Statements of Cash Flows for the Six Months

Ended March 31, 2015 and 2014

6-7
     
  Notes to Unaudited Consolidated Financial Statements 8
     
ITEM 2 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 12
     
ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 13
     
ITEM 4 CONTROLS AND PROCEDURES 14
     
  PART II – OTHER INFORMATION  
     
ITEM 1 LEGAL PROCEEDINGS 14
     
ITEM 1A RISK FACTORS 14
     
ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 14
     
ITEM 3 DEFAULTS UPON SENIOR SECURITIES 14
     
ITEM 4 MINE SAFETY DISCLOSURES 14
     
ITEM 5 OTHER INFORMATION 14
     
ITEM 6 EXHIBITS 14
     
SIGNATURES   15

 

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ECOLOGY COATINGS, INC.
CONSOLIDATED BALANCE SHEETS
                   
          3/31/2015   9/30/2014
               
Assets
Current assets                  
Cash                                                    $ 0   $ 0
Accounts receivable       0     0
Inventory           795     795
     Total Current Assets                                     0     0
Property, plant and equipment, net       0     0

Intangible assets, net

 

 

      64,594     64,594
                   
Total Assets                              $ 64,594   $ 64,594
                   
Liabilities and Equity(Deficit)
                   
Accrued expenses         19,900    $ 18,030
Note payable           7,000     7,000
Related party note payable         9,000     9,000
Total liabilities subject to compromise                                                    0     0
            35,900     34,030
Commitments and Contingencies (Note 5)              
Ecology Coatings. Inc. ("ECOC") shareholders' deficit            
Preferred Stock 10,000,000 authorized at $.001 par value          
shares issued and outstanding 271 and 271            
at March 31, 2015 and September 30, 2014     1     1
Common Stock 90,000,000 authorized at $0.001 par value;          

shares issued and outstanding 54,593,032 and 54,593,032

 

         
at March 31, 2015 and September 30, 2014     54,593     54,593
Additional paid-in capital                                 0     0
Retained earnings                                       (25,900)     (24,030)
Total equity(deficit)         28,694     30,564
Total liabilities and equity(deficit)     $ 64,594   $ 64,594
                   
"The accompanying notes are an integral part of these consolidated financial statements."

 

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ECOLOGY COATINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
                           
      For the Three Months Ended   For the Six Months Ended
      3/31/2015   3/31/2014   3/31/2015   3/31/2014
                   
                           
Revenues     $ 0   $ 0   $ 0   $ 0
                           
Operating expenses                       840     30     1,870     40
                           
Net income(loss) from operations                     (840)     (30)     (1,870)     (40)
                           
Other income(expense)                          
Interest expense                            0     0     0     0
Total Other Income (Expense)                 0     0     0     0
                           
Income(loss) from continuing operations                      
before income taxes       (840)     (30)     (1,870)     (40)
                           
Income taxes                      0     0     0     0
                           
Net income(loss)                  $ (840)   $ (30)   $ (1,870)   $ (40)
                           
Basic and Diluted income per share                        
Basic and diluted income per share       (0.00)     (0.00)     (0.00)     (0.00)
                           
Weighted average number of shares                        
outstanding  basic and diluted                54,593,032     54,593,032     54,593,032     54,593,032
                           
  "The accompanying notes are an integral part of these consolidated financial statements."
                           

 

 

 

 

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ECOLOGY COATINGS, INC.
 CONSOLIDATED STATEMENTS OF CASH FLOWS
                     
            For the Six Months Ended
            3/31/2015   3/31/2014
                 
Cash flows from operating activities              
Net income (loss) from continuing operations               $ (1,870)   $ (40)
Adjustments to reconcile net loss to net cash              
used by operating activities:                
Depreciation  and amortization                                0     0
                     
(Increase) decrease in accounts receivable       0     0
(Increase) decrease in prepaid expenses                                         0     0
Increase (decrease) in accounts payable                            1,870     0
Increase (decrease) in interest payable       0     0
 Net cash used in operating activities                        0     (40)
Cash flows from investing activities                    
None             0     0
 Net cash provided(used) by investing activities                   0     0
Cash flows from financing activities              
Payments on notes payable         0     0
 Net cash provided(used) by financing activities          0     0
Net increase(decrease) in cash                                          0     (40)
                     
Cash, beginning of period                                      0     618
                     
Cash, end of period                   $ 0   $ 578
                     
  "The accompanying notes are an integral part of these consolidated financial statements."
                     

 

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ECOLOGY COATINGS, INC.
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
          For the Six Months Ended
          3/31/2015   3/1/2014
               
                   
Supplemental disclosure of cash              
flow information                
                   
 Interest paid                                           $ 0   $ 0
 Income taxes paid                                      $ 0   $ 0
                   
Supplemental disclosure of              
non-cash activities                
                   
None         $ 0   $ 0
                   
                   
                   
  "The accompanying notes are an integral part of these consolidated financial statements."
                   
                   
                   
                   

 

 

 

 

 

 

 

 

 

 

 

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ECOLOGY COATINGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  

MARCH 31, 2015 AND 2014

 

 

Note 1 — Summary of Significant Accounting Policies

 

Description of the Company.   We were originally incorporated on March 12, 1990 in California (“Ecology-CA”).  Our current entity was incorporated in Nevada on February 6, 2002 as OCIS Corp. (“OCIS”).  OCIS completed a merger with Ecology-CA on July 26, 2007 (the “Merger”). In the Merger, OCIS changed its name from OCIS Corporation to Ecology Coatings, Inc.  The Company filed for Chapter 7 bankruptcy protection on May 15, 2013 and subsequently the corporate shell emerged as its only unencumbered asset on September 19, 2014 using "fresh start" accounting under section 852-10-45-17 as of date of sale corporate shell to reflect intangible assets sale through section 363. Any business description below and all reporting results of the operating results reported in this filing for the fiscal year ending September 30, 2015 are post "fresh start" activity and not comparable to prior results. Post bankruptcy the company has been operating a web site for the sale of women's apparel.

 

Reclassifications.   Reclassifications have been made to the prior year financial statements to conform with the current year presentation.

 

Basis of Preparation. The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented in US dollars.

     

Principles of Consolidation.   The consolidated financial statements include all of our accounts and the accounts of our wholly owned subsidiary Ecology-CA.  All significant intercompany transactions have been eliminated in consolidation.

 

Use of Estimates.   The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Revenue Recognition.   The Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the sales price is fixed or determinable, (iii) collectability is reasonably assured and (iv) goods have been shipped and/or services rendered.

 

Loss Per Share. Basic loss per share is computed by dividing the net loss available to common shareholders by the weighted average number of shares of common stock outstanding during the period.  Diluted loss per share is computed by dividing the net loss available to common shareholders by the weighted average number of shares of common stock and potentially dilutive securities outstanding during the period.  Potentially dilutive shares consist of the incremental common shares issuable upon the exercise of stock options and warrants and the conversion of convertible debt and convertible preferred stock. Potentially dilutive shares are excluded from the weighted average number of shares if their effect is anti-dilutive.  None of the stock options or warrants outstanding or stock associated with the convertible debt or with the convertible preferred shares during each of the periods presented was included in the computation of diluted loss per share as they were anti-dilutive.  

 

     Property and Equipment.   Property and equipment is stated at cost less accumulated depreciation.  Depreciation is recorded using the straight-line method over the following useful lives:

 

Computer equipment 3-10 years
Furniture and fixtures 3-7 years
Test equipment 5-7 years
Signs 7 years
Software 3 years
Marketing and Promotional Video 3 years

 

Repairs and maintenance costs are charged to operations as incurred. Betterments or renewals are capitalized as incurred.

 

Patents.   It is our policy to capitalize costs associated with securing a patent.  Costs consist of legal and filing fees.  Once a patent is issued, it will be amortized on a straight-line basis over its estimated useful life.  

 

        Long-Lived Assets. We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the undiscounted future net cash flows expected to be generated by the asset.  If such assets are considered to be impaired, the impairment recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.

 

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Stock-Based Compensation.   Employee and director stock-based compensation expense is measured utilizing the fair-value method with expense charged to earnings over the vesting period on a straight-line basis.

 

We account for stock options granted to non-employees under the fair-value method with stock-based compensation expense being charged to earnings on the earlier of the date services are performed or a performance commitment exists.

 

 

Recent Accounting Pronouncements

 

We have reviewed all Accounting Standards Updates issued by the Financial Accounting Standards Board since we last issued financial statements and have determined none of them would have a material effect on the consolidated financial statements upon adoption.

 

Note 2"Fresh Start" Accounting

 

                           
ECOLOGY COATINGS, INC.
FRESH START ADJUSTMENTS
                Dr(CR)   Dr(CR)      
                Reorganization   Fresh Start      
          9/19/2014   Adjustments   Adjustments   9/19/2014
Assets
Current assets                        
Cash                                                    $ 548   (548) (1)     $ 0
Accounts receivable       1,238   (1,238) (1)       0
     Total Current Assets                                     1,786             0
Property, plant and equipment, net       37,249   (37,249) (1)       0
Intangible assets, net         192,864   (192,864) (1) 54,594 (2)   54,594
                           
Total Assets                            $ 231,899           $ 54,594
                           
Liabilities and Equity(Deficit)
                           
Total liabilities subject to compromise                                                  2,112,143   2,112,143 (1)       0
Commitments and Contingencies (Note 5)                    
Ecology Coatings. Inc. ("ECOC") shareholders' deficit                  
Predecessor Preferred Stock 10,000,000 authorized                  

at $.001 par value shares issued and outstanding 271

 

                 

at September 19, 2013

 

 

    1       (1) (3)   0
Successor Preferred Stock 10,000,000 authorized                  
      shares issued and outstanding 271 at $.001 par value                  
   at September 19, 2014               1 (2)   1
Predecessor/Successor Common Stock 90,000,000 authorized                  
   at $0.001 par value; shares issued and outstanding                  
   54,593,032 at September 19, 2014     54,593             54,593
Additional paid-in capital                               28,615,490   (1,880,244) (1) 30,495,734 (3)   0
Retained earnings                                     (30,550,328)       (30,550,328) (4)   0
Total equity(deficit)       (1,880,244)             54,594
Total liabilities and equity(deficit)   $ 231,899   $0   $0   $ 54,594
                           
 
(1) Reorganization adjustments reflect the transfer of $2,112,143 of liabilities subject to compromise and asstes to the bankruptcy trustee
accordance with the plan of bankruptcy provisions.                    
                           
(2) Fresh-start adjustments under section 852-10-45-17 as of date of sale corporate shell to reflect intangible assets sale through section 363
of the bankruptcy code.                        
                           
(3) Fresh-start adjustments under ASC 852-10-45-17 to predecessor preferred stock and APIC reflect the cancellation of the      
predecessor's preferred stock.                      
                           
(4) Fresh-start adjustment to retained earnings (accumulated deficit) resets accumulated deficit to zero.          
                           
                           

 

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  Note 3 — Related Party Transactions

 

Tere were no related party transaction during the quarter ending March 31, 2015

 

 

Note 4 — Notes Payable

 

We have the following notes as of March 31, 2015:

 

Post bankruptcy the Company acquired the assets of Seene, LLC.(a ready to operate web site business). In addition to a $3,000 deposit the Company signed a note payable for $7,000. This note is due September 24, 2015 and carries a zero percent interest rate. This note is not in default.

 

 Note 5 — Commitments and Contingencies

 

 

Contingencies.

 

All contingencies have been settled through our bankruptcy petition in September 2014 subsequent to this financial reporting period.

 

Lease Commitments.

 

None.

 

Note 6 — Equity

 

Common Stock

 

As of March 31, 2015 the Company had 90,000,000 shares of Common Stock authorized par value $0.001 and the holders of the Company's common stock are entitled to one vote per share of common stock held. and the Company had 54,593,032 shares issued and outstanding. Additionally as part of the bankruptcy sale the Company has already been authorized to effect a reverse stock split up to 5,000 for 1 and may issue up to 60,000,000 additional common shares.

 

Preferred Stock

 

As of March 31, 2015 the Company had 10,000,000 shares of Preferred Stock authorized par value $.001 and the holders of the Company's Preferred Stock can convert each share into 100,000 shares of voting Common Stock. Additionally each Preferred Share is entitled to the voting rights 100,000 common stock shares. The Company had 271 shares issued and outstanding as of September 30, 2014.

 

Note 7 — Stock Options

 

There were no stock options issued during this fiscal year. As part of our bankruptcy agreement approved on September 19, 2014 all common conversion rights of any kind including the equity compensation plan without limitation , warrants, options and convertible notes were cancelled and extinguished for the current and prior fiscal years.

 

 

Note 8 -- Income Taxes

 

As of March 31, 2015, the Company had approximately $25,900 in post bankruptcy net operating loss carry forwards for federal income tax purposes which expire between 2014 and 2032.  Generally, these can be carried forward and applied against future taxable income at the tax rate applicable at that time. We are currently using a 34% effective tax rate for our projected available net operating loss carry-forward. However, as a result of potential stock offerings and stock issuance in connection with potential acquisitions, as well as the possibility of the Company not realizing its business plan objectives and having future taxable income to offset, the Company’s use of these NOLs may be limited under the provisions of Section 382 of the Internal Revenue Code of 1986, as amended.  

 

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Components of deferred tax assets and (liabilities) are as follows:

 

  2015   2014
Net operating loss carry forwards valuation available $ 25,900   $  -0-
           
Valuation Allowances   (3,885)      -0-
Deferred Tax Asset   3,885      -0-
 Net Deferred Tax Asset  $  -0-    $  -0-

 

 

In accordance with FASB ASC 740 “Income Taxes”, valuation allowances are provided against deferred tax assets, if based on the weight of available evidence, some or all of the deferred tax assets may or will not be realized. The Company has evaluated its ability to realize some or all of the deferred tax assets on its balance sheet for the coming year and has established a valuation allowance in the amount of $3,885 at March 31, 2015 During the period ended March 31, 2015 the company did not utilize any of its NOL.

  

Note 9 – Going Concern

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. Currently, the Company has limited post bankruptcy operations and a working capital deficit as of March 31, 2015. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management believes that the Company’s capital requirements will depend on many factors including the success of the Company’s development efforts and its efforts to raise capital. Management also believes the Company needs to raise additional capital for working capital purposes. There is no assurance that such financing will be available in the future.   The conditions described above raise substantial doubt about our ability to continue as a going concern. The financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

Note 10 - Acquisitions

 

On September 25, 2014 the company entered into an agreement to buy the ready to operate business assets of Seene LLC. The cost of this acquisition was $10,000 which was allocated $795 to inventory and $9,205 to the intangible assets of the "MeTu" trade name and web site MeTuBoutique.com.

 

 

Note 11 - Subsequent Events

 

We have evaluated subsequent events and transactions that occurred through the date and time our financial statements were issued for potential recognition or disclosure in the accompanying financial statements. We did not identify any events or transactions that should be recognized or disclosed in the accompanying financial statements.

 

 

 

 

 

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Except for statements of historical fact, the information presented herein constitutes forward-looking statements. These forward-looking statements generally can be identified by phrases such as “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “foresees,” “intends,” “plans,” or other words of similar import.  Similarly, statements herein that describe our business strategy, outlook, objectives, plans, intentions or goals also are forward-looking statements.  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.  Such factors include, but are not limited to, our ability to: successfully commercialize our technology; generate revenues and achieve profitability in an intensely competitive industry; compete in products and prices with substantially larger  and better capitalized competitors; secure, maintain and enforce a strong intellectual property portfolio; attract additional capital sufficient to finance our working capital requirements, as well as any investment of plant, property and equipment; develop a sales and marketing infrastructure; identify and maintain relationships with third party suppliers who can provide us a reliable source of raw materials; acquire, develop, or identify for our own use, a manufacturing capability; attract and retain talented individuals; continue operations during periods of uncertain general economic or market conditions, and; other events, factors and risks previously and from time to time disclosed in our filings with the Securities and Exchange Commission, including, specifically, the “Risk Factors” enumerated herein.

 

Although we believe the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.  You should not place undue reliance on our forward-looking statements, which speak only as of the date of this report.  Except as required by law, we do not undertake to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

 

“Ecology”, “we”, “us”, or “our” refer to Ecology Coatings, Inc. and its wholly-owned subsidiary, Ecology Coatings, Inc., a California corporation.

 

ITEM 1.   DESCRIPTION OF BUSINESS

 

The Company filed for Chapter 7 bankruptcy protection on May 15, 2013 and subsequently the corporate shell emerged as its only unencumbered asset on September 19, 2014 using "fresh start" accounting under section 852-10-45-17 as of date of sale corporate shell to reflect intangible assets sale through section 363 of the US bankruptcy code. Any business description below and all reporting results of the operating results reported in this filing for the fiscal year ending September 30, 2014 are post "fresh start" activity and not comparable to prior results. Post bankruptcy the company has been operating a web site for the sale of women's apparel.

 

Operating Results

 

Three Months Ended March 31, 2015 and 2014

 

Revenues.   We generated $0 and $0 in revenues for the three months ended March 31, 2015 and 2014. The Company operated during the 2014 quarter in bankruptcy proceedings.

 

Operating Expenses.   Our operating expenses were $840 in the three months ended March 31, 2015 as compared to $30 for the three months ended March 31, 2014. The increased $810 in such expenses for the three months ended March 31, 2015 is the result of the operating the Company administrative operations and our web site.

 

Interest Expense.  There were no interest expense for either period

 

Net Loss.    The increase in the net loss of $810 for the three months ended March 31, 2015 compared to the three months ended March 31, 2014 is explained in the foregoing discussions of the various expense categories.

 

Six Months Ended March 31, 2015 and 2014

 

Revenues.   We generated $0 and $0 in revenues for the six months ended March 31, 2015 and 2014. The Company operated during the 2014 period in bankruptcy proceedings.

 

Operating Expenses.   Our operating expenses were $1,870 in the six months ended March 31, 2015 as compared to $40 for the six months ended March 31, 2014. The increased $1,830 in such expenses for the six months ended March 31, 2015 is the result of the operating the Company administrative operations and our web site.

 

Interest Expense.  There were no interest expense for either period

 

Net Loss.    The increase in the net loss of $1,830 for the six months ended March 31, 2015 compared to the six months ended March 31, 2014 is explained in the foregoing discussions of the various expense categories.

 

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Liquidity and Capital Resources

 

Cash as of March 31, 2015 was $0.

 

  

Off-Balance Sheet Arrangements

 

None.

   

Critical Accounting Policies and Estimates

 

Our financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles. Preparation of the statements in accordance with these principles requires that we make estimates, using available data and our judgment, for such things as valuing assets, accruing liabilities and estimating expenses. The following is a discussion of what we feel are the most critical estimates that we must make when preparing our financial statements.   

 

Revenue Recognition.   The Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the sales price is fixed or determinable, (iii) collectability is reasonably assured and (iv) goods have been shipped and/or services rendered.

 

Income from forgiveness of payables and debt.    Income from the forgiveness of payables and debt is recognized when all of the conditions associated with the forgiveness have been met.

 

Income Taxes and Deferred Income Taxes.    We use the asset and liability approach for financial accounting and reporting for income taxes. Deferred income taxes are provided for temporary differences in the bases of assets and liabilities as reported for financial statement purposes and income tax purposes and for the future use of net operating losses. We have recorded a valuation allowance against our net deferred income tax asset. The valuation allowance reduces deferred income tax assets to an amount that represents management’s best estimate of the amount of such deferred income tax assets that more likely than not will be realized.

 

Property and Equipment.    Property and equipment is stated at cost, less accumulated depreciation. Depreciation is recorded using the straight-line method over the following useful lives:

 

Computer equipment 3-10 years
Furniture and fixtures 3-7 years
Test equipment 5-7 years
Signs 7 years
Software 3 years
Marketing and promotional video 3 years

 

Repairs and maintenance costs are charged to operations as incurred. Betterments or renewals are capitalized as incurred.

 

We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset with future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.

 

 

Patents.   It is our policy to capitalize costs associated with securing a patent. Costs consist of legal and filing fees. Once a patent is issued, it is amortized on a straight-line basis over its estimated useful life. For purposes of the preparation of the audited, consolidated financial statements, we have recorded amortization expense associated with the patents based on an eight-year useful life.

 

Stock-Based Compensation.   We have a stock incentive plan that provides for the issuance of stock options, restricted stock and other awards to employees and service providers.  Employee and director stock-based compensation expense is measured utilizing the fair-value method with stock-based compensation expense being charged to earnings on the earlier of the date services are performed or a performance commitment exists. Our valuation method uses a Black-Scholes option pricing model. In so doing, we estimate certain key assumptions used in the model.

   

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

 

Not applicable since we are a smaller reporting company under applicable SEC rules.   

 

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Item 4.  Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of the design and operation of our “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) or Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934 (the “Exchange Act:”) as of the end of the period covered by this report.

 

Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have 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 that material information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.  Our Chief Executive Officer and Chief Financial Officer have reached this conclusion due to the lack of segregation of duties in financial reporting as a result of the small size of our financial staff.

 

Changes in Internal Control Over Financial Reporting

 

During the three months ended March 31, 2015, there were no changes.

 

PART II – OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

None

 

ITEM 1A. RISK FACTORS

 

As a Smaller Reporting Company, we are not required to provide the information required by this item.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

We did not repurchase any of our securities during the three months ended March 31, 2015.  Sales of unregistered securities have been previously reported on Form 8-Ks filed with the Commission.  

 

  

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

None.

 

Item 5. Other Information

 

None.

   

Item 6. Exhibits

 

None

 

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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.

 

 

Date:  May 15, 2015   ECOLOGY COATINGS, INC.
      (Registrant)
       
      By: /s/ Shulamit Lazar
      Shulamit Lazar
      Its:  Chief Executive Officer
       (Authorized Officer)
       

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Exhibit  31.1

 

CERTIFICATION

 

I, Shulamit Lazar, certify that:

 

 

1.    I have reviewed this Form 10-Q for the quarter ended March 31, 2015 of Ecology Coatings, 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;

 

 

4.    The registrant's other certifying officer(s) 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

 

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.    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

 

c.    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

 

 

d.    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

 

 

5.    The registrant's other certifying officer(s) 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.

 

May 15, 2015

 

/s/ Shulamit Lazar

Shulamit Lazar

Chief Executive Officer, Chief Financial Officer

 

 

 
 

 

EXHIBIT 32.1

 

 

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Shulamit Lazar, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Ecology Coatings, Inc. on Form 10-Q for the quarterly period ended March 31, 2015 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Report on Form 10-Q fairly presents in all material respects the financial condition and results of operations of Ecology Coatings, Inc.

 

     
By:   /s/ Shulamit Lazar
    Shulamit Lazar
   

Chief Executive Officer, Chief Financial Officer

(Authorized Officer)

May 15, 2015