AIFARM, LTD. - FORM 10-Q - November 14, 2017

Attached files

file	filename
EX-32.3 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO - AIFARM, LTD.	exhibit_32-2.htm
EX-32.1 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO - AIFARM, LTD.	exhibit_32-1.htm
EX-31.2 - CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECURITIES EXCHANGE ACT RUL - AIFARM, LTD.	exhibit_31-2.htm
EX-31.1 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECURITIES EXCHANGE ACT RUL - AIFARM, LTD.	exhibit_31-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended September 30, 2017


☐	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: 001-37630

ECO ENERGY TECH ASIA, LTD.

(Exact name of Registrant as specified in its charter)

Nevada		0100		47-3444723
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

Unit 503, 5/F, Silvercord Tower 2,

30 Canton Road, TST,

Kowloon, Hong Kong

(852) 91235575

(Address, including zip code, and telephone number, including area code,

of Registrant’s principal executive offices)

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 (Exchange Act) 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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, 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). 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 definition of “large accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer	☐	Accelerated Filer	☐

Non-accelerated Filer	☐ (Do not check if a smaller reporting company)	Smaller reporting company	Yes ☒

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of the date of filing of this report, there were outstanding 22,143,081 shares of the issuer’s common stock, par value $0.001 per share.

TABLE OF CONTENTS

		Page
PART I – FINANCIAL INFORMATION

Item 1	Consolidated Financial Statements	F-1

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3

Item 3	Quantitative and Qualitative Disclosures About Market Risk	11

Item 4	Controls and Procedures	11

PART II – OTHER INFORMATION

Item 1	Legal Proceedings	11

Item 1A	Risk Factors	11

Item 2	Unregistered Sale of Equity Securities and Use of Proceeds	11

Item 3	Defaults Upon Senior Securities	11

Item 4	Other Information	11

Item 5	Exhibits	12

	Signatures	12

PART I – FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Item Regulation S-X, Rule 10-01(c) Interim Financial Statements, and, therefore, do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, cash flows, and stockholders' equity in conformity with generally accepted accounting principles. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. Operating results for the nine months ended September 30, 2017, are not necessarily indicative of the results that can be expected for the year ended December 31, 2017.

ECO ENERGY TECH ASIA, LTD AND SUBSIDIARIES

INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Ended September 30, 2017 and 2016

CONTENTS

Unaudited Condensed Consolidated Financial Statements

Unaudited Condensed Consolidated Balance Sheets	F-2

Unaudited Condensed Consolidated Statements of Income and Comprehensive Income	F-3

Unaudited Condensed Consolidated Statements of Stockholders Deficit	F-4

Unaudited Condensed Consolidated Statements of Cash Flows	F-5

Notes to Unaudited Condensed Consolidated Financial Statements	F-6 to F-14

F-1

ECO ENERGY TECH ASIA LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Stated in US Dollars)

	September 30,	December 31,
	2017	2016
	(Unaudited)
ASSETS
Cash	$638,449	$112,923
Deposit and prepayment	-	444
Total Current Assets	638,449	113,367

Property and equipment, net	-	584,941
Total Assets	$638,449	$698,308

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Accrued expenses	$2,304	$13,501
Amount due to a director	6,607,287	6,534,040
Mortgage loans - current portion	-	16,458
Total Current Liabilities	6,609,591	6,563,999

Mortgage loans - non-current portion	-	588,810
Total Liabilities	6,609,591	7,152,809

SHAREHOLDERS' DEFICIT
Common stock ($0.001 par value;authorized 75,000,000 shares, 22,143,081 shares and 21,671,600 shares respectively issued and outstanding at September 30, 2017 and December 31, 2016)	22,143	21,672
Additional paid-in capital	508,010	192,019
Accumulated deficits	(5,464,032)	(5,565,294)
Accumulated other comprehensive income	504,599	451,097
Total Eco Energy Tech Asia, Ltd’s deficit	(4,429,280)	(4,900,506)
Non-controlling interests	(1,541,862)	(1,553,995)
Total Shareholders' Deficit	(5,971,142)	(6,454,501)
Total Liabilities and Shareholders' Deficit	$638,449	$698,308

See notes to unaudited condensed consolidated financial statements

F-2

ECO ENERGY TECH ASIA LIMITED AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(Stated in US Dollars)

	For the Three Months Ended Sep 30,		For the Nine Months Ended Sep 30,
	2017	2016	2017	2016
	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
REVENUE	$-	$-	$-	$-
COST OF REVENUES	-	-	-	-
GROSS PROFIT	-	-	-	-

OPERATING EXPENSES
General and administrative	(216,957)	(771,892)	(550,427)	(1,333,565)
LOSS FROM OPERATIONS	(216,957)	(771,892)	(550,427)	(1,333,565)
OTHER EXPENSES
Gain on disposal of fixed assets	670,915	-	670,915	-
Interest income	550	-	551	-
Interest expenses	-	(3,017)	(7,644)	(14,073)

PROFIT (LOSS) BEFORE INCOME TAX	454,508	(774,909)	113,395	(1,347,638)
Income tax expense	-	-	-	-
NET PROFIT (LOSS)	454,508	(774,909)	113,395	(1,347,638)
Net (profit) loss attributable to non-controlling interests	(35,686)	58,799	(12,133)	118,926
NET PROFIT (LOSS) ATTRIBUTABLE TO STOCKHOLDERS	418,822	(716,110)	101,262	(1,228,712)

OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustments	27,844	(217,419)	53,502	64,837
COMPREHENSIVE INCOME (LOSS)	$446,666	$(933,529)	$154,764	$(1,163,875)

NET PROFIT (LOSS) PER COMMON STOCK:
Basic	$0.019	$(0.033)	$0.005	$(0.058)
Diluted	$0.019	$(0.033)	$0.005	$(0.058)

WEIGHTED AVERAGE COMMON STOCK OUTSTANDING:
Basic	22,025,604	21,671,600	22,011,402	21,145,886
Diluted	22,025,604	21,671,600	22,011,402	21,145,886

See notes to unaudited condensed consolidated financial statements

F-3

ECO ENERGY TECH ASIA LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ DEFICIT

For the Nine Months Ended September 30, 2017 and Year Ended December 31, 2016

(Stated in US Dollars)

	Common stock		Additional		Accumulated other comprehensive	Non-
	Number of shares	Amount	paid-in capital	Accumulated deficit	income (loss)	controlling interests	Total

Balance as of December 31, 2015	20,650,000	20,650	89,859	(3,945,173)	453,178	(1,404,136)	(4,785,622)

Issuance of shares	1,021,600	1,022	102,160	-	-	-	103,182

Net loss for the year	-	-	-	(1,620,121)	-	(149,859)	(1,769,980)

Foreign currency translation adjustment	-	-	-	-	(2,081)	-	(2,081)

Balance as of December 31, 2016	21,671,600	21,672	192,019	(5,565,294)	451,097	(1,553,995)	(6,454,501)

Issuance of shares	471,481	471	315,991	-	-	-	316,462

Net profit for the period	-	-	-	101,262	-	12,133	113,395

Foreign currency translation adjustment	-	-	-	-	53,502	-	53,502

Balance as of September 30, 2017 (unaudited)	$22,143,081	$22,143	$508,010	$(5,464,032)	$504,599	$(1,541,862)	(5,971,142)

See notes to unaudited condensed consolidated financial statements

F-4

ECO ENERGY TECH ASIA LIMITED AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended September 30, 2017 and 2016

(Stated in US Dollars)

	For The Nine Months Ended September 30,
	2017	2016
	(Unaudited)	(Unaudited)
Cash Flows from Operating Activities
Net profit (loss)	$113,395	$(1,347,638)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation	10,370	22,732
Gain on disposal of fixed assets	(670,915)	-
Changes in operating assets and liabilities:
Prepaid expenses	456	(469)
Accrued expenses and other payables	(11,508)	(1,515)
Net Cash Used In Operating Activities	$(558,202)	$(1,326,890)

Cash Flows from Investing Activities
Sale proceeds of fixed assets disposal	1,261,984	-
Net Cash Provided By Investing Activities	$1,261,984	$-

Cash Flows from Financing Activities
Issuance of shares	316,462	103,182
Advances from a director	101,966	1,157,704
Repayment of mortgage loans	(622,339)	(11,709)
Net Cash (Used In) Provided By Financing Activities	$(203,911)	$1,249,177

Net Increase (Decrease) In Cash and Cash Equivalents	$499,871	$(77,713)
Effect of Exchange Rate Changes on Cash and Cash Equivalents	25,655	75,024
Cash and Cash Equivalents at Beginning of Period	112,923	89,824
Cash and Cash Equivalents at End of Period	$638,449	$87,135

Supplemental Disclosure of Cash Flow Information:
Cash paid for:
Interest expenses	$7,644	$14,073
Income taxes	$-	$-

See notes to unaudited condensed consolidated financial statements

F-5

ECO ENERGY TECH ASIA, LTD AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

(Stated in US Dollars)

NOTE 1 – ORGANIZATION AND PRINCIPAL ACTIVITIES

Eco Energy Tech Asia, Ltd (individually “ECO” and collectively with its subsidiaries, the “Company”) was incorporated under the laws of the State of Nevada on January 20, 2015.

On February 27, 2015, ECO entered into a Share Exchange Agreement with Eco Energy Tech Asia Limited (“EETA”) to issue 20,000,000 shares of its common stock to the shareholder of EETA in exchange for 100% of the EETA shares owned by the shareholder. Upon the consummation of the share exchange agreement, ECO became the holding company of EETA and EETA became a wholly-owned subsidiary of ECO.

EETA was incorporated under the laws of Hong Kong on December 27, 2012. The wholly-owned subsidiary of EETA, 3986489 Canada Inc. (“3CI”) was incorporated in Surrey, British Columbia of Canada on December 17, 2001, which acquires 60% equity interests of 7582919 Canada Inc. (“7CI”) on June 21, 2014. EETA and 3CI are engaged in investment holding.

7CI was incorporated in Surrey, British Columbia of Canada on June 21, 2010. The initial name was Renergy Foods Canada Inc. On March 6, 2012, Renergy Foods Canada Inc. changed its name to NuAgri, Inc. On October 1, 2013, NuAgri, Inc. changed its name to 7582919 Canada Inc. 7CI is engaged in developing a proprietary growing system that designs and builds custom biodomes ranging in size appropriate for global commercial agricultural concerns as well as small local producers.

On June 30, 2016, 3CI further acquired the equity interests of 7CI from 83.48% to 92.40%.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The Company maintains its general ledger and journals with the accrual method accounting for financial reporting purposes. The consolidated financial statements and notes are representations of management. Accounting policies adopted by the Company conform to generally accepted accounting principles in the United States of America and have been consistently applied in the presentation of consolidated financial statements. These financial statements include all adjustments that, in the opinion of management, are necessary in order to make them not misleading.

Principles of consolidation

The consolidated financial statements give effect to the Share Exchange Transaction as if occurred at the beginning of the periods presented and include the accounts of the Company and its wholly-owned subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation.

Use of estimates

The preparation of the financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates. Significant estimates include the useful life of property and equipment, and assumptions used in assessing impairment of long-term assets.

F-6

ECO ENERGY TECH ASIA, LTD AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

(Stated in US Dollars)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Fair value of financial instruments

The Company adopted the guidance of Accounting Standards Codification (“ASC”) 820 for fair value measurements which clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:

●

Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.

●

Level 2 - Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other then quoted prices that are observable, and inputs derived from or corroborated by observable market data.

●

Level 3 - Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.

The carrying amounts reported in the balance sheets for cash, due from related parties, other assets, accrued expenses, other payables, and due to related parties approximate their fair market value based on the short-term maturity of these instruments. The Company did not have any non-financial assets or liabilities that are measured at fair value on a recurring basis as of September 30, 2017 and December 31, 2016.

ASC 825-10 “Financial Instruments”, allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding instruments.

Cash

The Company considers all highly liquid instruments purchased with a maturity of three months or less and money market accounts to be cash equivalents.

Property and equipment

Property and equipment are carried at cost and are depreciated on a straight-line basis (after taking into account their respective estimated residual value) over the estimated useful lives of the assets. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. The Company examines the possibility of decreases in the value of fixed assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable.

The estimated useful lives are as follows:

Land and Buildings	35 years
Biodomes	10 years
Machinery and equipment	5 years

F-7

ECO ENERGY TECH ASIA, LTD AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

(Stated in US Dollars)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Impairment of long-lived assets

The Group periodically evaluates the carrying value of long-lived assets to be held and used, when events and circumstances such a review, pursuant to the guidelines established in FASB ASC 360. The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is separately identifiable and is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair market value of the long-lived asset. Fair market value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair market values are reduced for the cost to dispose.

Revenue recognition

The Company generates its revenue from sales of biodomes, sales of propagation services, and sales of produces. Pursuant to the guidance of ASC Topic 605 and ASC Topic 360, the Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the purchase price is fixed or determinable and collectability is reasonably assured, and no significant obligations remain.

Advertising

Advertising is expensed as incurred and is included in selling expenses on the accompanying consolidated statements of profit and comprehensive profit. Advertising expenses amounted to $193,638 and $305,155 for the nine months ended September 30, 2017 and 2016, respectively. And advertising expenses amounted to $51,643 and $126,665 for the three months ended September 30, 2017 and 2016, respectively.

Employee benefits

The Company’s operations and employees are located in Hong Kong and Canada. The Company makes mandatory contributions to the local government’s health, retirement benefit and unemployment funds in accordance with the relevant domestic social security laws. The costs of these payments are charged to income in the same period as the related salary costs and are not material.

Income taxes

The Company is governed by the Income Tax Law of Hong Kong and Canada. The Company accounts for income tax using the liability method prescribed by ASC 740, “Income Taxes”. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the year in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date.

The Company applied the provisions of ASC 740-10-50, “Accounting for Uncertainty in Income Taxes”, which provides clarification related to the process associated with accounting for uncertain tax positions recognized in our financial statements. Audit periods remain open for review until the statute of limitations has passed. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company’s liability for income taxes. Any such adjustment could be material to the Company’s results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. As of September 30, 2017 and December 31, 2016, the Company had no uncertain tax positions, and will continue to evaluate for uncertain positions in the future.

The Company is subject to harmonized sales tax (“HST”). The applicable HST rate is 12% for agricultural products sold in the Canada. The amount of HST liability is determined by applying the applicable tax rate to the amount of goods sold (output HST) less HST accrued on purchases made with the relevant supporting invoices (input HST).

F-8

ECO ENERGY TECH ASIA, LTD AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

(Stated in US Dollars)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Foreign currency translation

The accompanying consolidated financial statements are presented in U.S. dollars (“USD”). The reporting currency of the Company is the USD. The functional currency of EETA is Hong Kong dollars (“HKD”), the functional currency of CI located in Canada is the Canadian dollars (“CAD”). For the subsidiaries whose functional currencies are the HKD or CAD, results of operations and cash flows are translated at average exchange rates during the period, assets and liabilities are translated at the unified exchange rate at the end of the period, and equity is translated at historical exchange rates. As a result, amounts relating to assets and liabilities reported on the statements of cash flows may not necessarily agree with the changes in the corresponding balances on the balance sheets. Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining comprehensive income.

All of the Company’s revenue transactions are transacted in the functional currency. The Company does not enter any material transaction in foreign currencies and, accordingly, transaction gains or losses have not had, and are not expected to have, a material effect on the results of operations of the Company.

The exchange rates used to translate amounts in CAD into USD for the purposes of preparing the consolidated financial statements were as follows:

	September 30,	December 31,	September 30,
	2017	2016	2016
Exchange rate on balance sheet dates
USD : CAD exchange rate	1.2468	1.3443	1.3143

Average exchange rate for the period
USD : CAD exchange rate	1.3075	1.3254	1.3040

The exchange rates used to translate amounts in HKD into USD for the purposes of preparing the consolidated financial statements were as follows:

	September 30,	December 31,	September 30,
	2017	2016	2016
Exchange rate on balance sheet dates
USD : HKD exchange rate	7.8115	7.7548	7.7550

Average exchange rate for the period
USD : HKD exchange rate	7.7869	7.7624	7.7565

F-9

ECO ENERGY TECH ASIA, LTD AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

(Stated in US Dollars)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Earnings per share

ASC 260 “Earnings per Share,” requires dual presentation of basic and diluted earnings per share (“EPS”) with a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS excludes dilution. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity.

Basic net income per share is computed by dividing net income available to common shareholders by the weighted average number of shares of common stock outstanding during the period. Diluted income per share is computed by dividing net income by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period.

Accumulated other comprehensive income (loss)

Comprehensive income (loss) is comprised of net loss and all changes to the statements of stockholders’ equity, except those due to investments by stockholders, changes in paid-in capital and distributions to stockholders. For the Company, comprehensive income (loss) for the nine months ended September 30, 2017 and 2016 included net profit (loss) and unrealized loss from foreign currency translation adjustments.

Related party transactions

A related party is generally defined as (i) any person that holds 10% or more of the Company’s securities including such person’s immediate families, (ii) the Company’s management, (iii) someone that directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.

Recent accounting pronouncements

The Company has considered all new accounting pronouncements and has concluded that there are no new pronouncements that may have a material impact on results of operations, financial condition, or cash flows, based on current information.

NOTE 3 – GOING CONCERN

As shown in the accompanying unaudited condensed consolidated financial statements, the Company has generated a net profit of $113,395 for the nine months ended September 30, 2017 and an accumulated deficit of $5,464,032 as of September 30, 2017. The Company also experienced insufficient cash flows from operations and will be required continuous financial support from the shareholder. The Company will need to raise capital to fund its operations until it is able to generate sufficient revenue to support the future development. Moreover, the Company may be continuously raising capital through the sale of debt and equity securities.

The Company’s ability to achieve these objectives cannot be determined at this stage. If the Company is unsuccessful in its endeavors, it may be forced to cease operations. These consolidated financial statements do not include any adjustments that might result from this uncertainty which may include adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.

These factors have raised substantial doubt about the Company’s ability to continue as a going concern. There can be no assurances that the Company will be able to obtain adequate financing or achieve profitability. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.

F-10

ECO ENERGY TECH ASIA, LTD AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

(Stated in US Dollars)

NOTE 4 – PROPERTY AND EQUIPMENT

Property and equipment consisted of the following as of September 30, 2017 and December 31, 2016:

	September 30,	December 31,
	2017	2016
	(Unaudited)
Land and buildings	$-	$705,964
Biodomes	76,036	70,517
Machinery and equipment	11,738	10,886
	$87,774	$787,367
Less: accumulated depreciation	(52,057)	(166,709)
Less: accumulated impairment	(35,717)	(35,717)
Property and equipment, net	$-	$584,941

On December 31, 2016, the Company commits to a plan to abandon bio domes that is currently being used in operations. Due to the location and nature of the factory, it is not expected the bio domes could reasonably generate sales proceeds. The Company’s plan is to ceases to be used the bio domes immediately. The Company, acquired 5 years ago for $70,517, was initially assigned a ten-year estimated useful life. As a result of the commitment to a plan to abandon the bio domes, the Company has reduced the bio dome’s estimated remaining useful life from five years to zero and the Company will account for the change in estimate in accordance with ASC 250. Thus, under ASC 250, the Company’s carrying value of $35,717 at December 31, 2016 will be depreciated over the year.

For the year ended December 31, 2016, the Company recorded an impairment loss of bio domes in the amount of $35,717. The Company considered historical rates and current market conditions when determining the discount and growth rates to use in its analyses. If these estimates or their related assumptions change in the future, it may be required to record further impairment charges.

On July 5, 2017, land and building sold at CAD 1,650,000 equivalent to $1,261,984 and got a gain on disposal of $670,915.

For the nine months ended September 30, 2017 and 2016, depreciation expenses amounted to $10,370 and $22,732, respectively, and for the three months ended September 30, 2017 and 2016, depreciation expenses amounted to nil and $7,403, respectively.

F-11

ECO ENERGY TECH ASIA, LTD AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

(Stated in US Dollars)

NOTE 5 – ACCRUED EXPENSES

At September 30, 2017 and December 31, 2016, accrued expenses consisted of the following:

	September 30,	December 31,
	2017	2016
	(Unaudited)
Accrued property tax	$-	$2,975
Accrued professional fees	2,304	10,526
Total	$2,304	$13,501

NOTE 6 – TAXATION

The Company has not recognized an income tax benefit for its operating losses generated based on uncertainties concerning its ability to generate taxable income in future periods. The tax benefit for the periods presented is offset by a valuation allowance established against deferred tax assets arising from the net operating losses and other temporary differences, the realization of which could not be considered more likely than not. In future periods, tax benefits and related deferred tax assets will be recognized when management considers realization of such amounts to be more likely than not. For the nine months ended September 30, 2017 and 2016, the Company incurred losses, resulting from operating activities, which result in deferred tax assets at the effective statutory rates. The deferred tax asset has been off-set by an equal valuation allowance.

The Company was incorporated in the State of Nevada. The Company did not generate taxable income in the US for the nine months ended September 30, 2017 and 2016

EETA was incorporated under the laws of Hong Kong. EETA did not generate taxable income in the Hong Kong for the nine months ended September 30, 2017 and 2016

3CI and 7CI were incorporated in Surrey, British Columbia of Canada. 3CI and 7CI did not generate taxable income in the Canada for the nine months ended September 30, 2017 and 2016.

NOTE 7 – COMMON STOCK

The Company issued 20,000,000 shares of common stock pursuant to the Share Exchange Agreement on February 27, 2015, and issued a total of 650,000 shares to 41 separate foreign shareholders on April 24, 2015, pursuant to a private placement of common stock exempt from registration under Regulation S of the Securities Act of 1933, for total proceeds of approximately $6,500. On May 20, 2016, the Company issued 1,021,600 shares of common stock to five foreign (5) shareholders, pursuant to a private placement of common stock exempt from registration under Regulation S of the Securities Act of 1933, at a price of $0.10 per share, for an aggregate value of $102,160. On May 31, 2017, the Company issued 6,930 shares of common stock to ten foreign (10) shareholders, pursuant to a private placement of our common stock exempt from registration under Regulation S of the Securities Act of 1933, at a price of $1.00 per share, value of $6,930. On July 5, 2017, July 18, 2017, August 1, 2017, August 18, 2017 and September 1, 2017, the Company issued 21,110 shares, 60,250 shares, 310,751 shares, 2,000 shares and 70,440 shares respectively of common stock to total thirty-six foreign (36) shareholders, pursuant to a private placement of our common stock exempt from registration under Regulation S of the Securities Act of 1933, at a price of $1.00 per share, value of $464,551. As of September 30, 2017, there were 22,143,081 shares of common stock issued and outstanding.

F-12

ECO ENERGY TECH ASIA, LTD AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

(Stated in US Dollars)

NOTE 8 – EARNINGS PER SHARE

The following table presents a reconciliation of basic and diluted net profit (loss) per share:

	For the three months ended September 30,		For the nine months ended September 30,
	2017	2016	2017	2016
	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
Net profit (loss) available to common stockholders for basic and diluted net profit (loss) per share of common stock	$418,822	$(716,110)	$101,262	$(1,228,712)
Weighted average common stock outstanding – basic	22,025,604	21,671,600	22,011,402	21,145,886
Effect of dilutive securities	-	-	-	-
Weighted average common stock outstanding – diluted	22,025,604	21,671,600	22,011,402	21,145,886

Net profit (loss) per common stock –basic	$0.019	$(0.033)	$0.005	$(0.058)
Net profit (loss) per common stock – diluted	$0.019	$(0.033)	$0.005	$(0.058)

NOTE 9 – RELATED PARTY TRANSACTIONS

9.1 Nature of relationships with related party

Name	Relationships with the Company
Cheung Yuen May	Director

9.2 Related party balances and transactions

Amount due to Cheung Yuen May were $6,607,287 and $6,534,040 as at September 30, 2017 and December 31, 2016, respectively. The amount is unsecured, interest free and does not have a fixed repayment date.

A summary of changes in the amount due to Cheung Yuen May is as follows:

	September 30,	December 31,
	2017	2016
	(Unaudited)
At beginning of period	$6,534,040	$4,828,067
Advances from the director	73,247	1,705,973
At end of period	$6,607,287	$6,534,040

F-13

ECO ENERGY TECH ASIA, LTD AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

(Stated in US Dollars)

NOTE 10 – MORTGAGE LOANS

The mortgage loans at September 30, 2017 and December 31, 2016 is as follows:

		September 30,	December 31,
		2017	2016
	Interest rate	(Unaudited)

Farm Credit Canada	4.2% p.a.	$-	$336,359
Farm Credit Canada	4.2% p.a.	-	108,790
iFunds Mortgage	13.5% p.a.	-	160,119
Total		$-	$605,268
Mortgage loan payable-current portion		-	(16,458)
Mortgage loan payable-non-current portion		$-	$588,810

The mortgage loans were secured by the land and buildings owned by the Company.

Interest expenses incurred on the mortgage loans were $7,644 and $14,073 for the nine months ended September 30, 2017 and 2016 respectively and nil and $3,017 for the three months ended September 30, 2017 and 2016 respectively.

NOTE 11 – COMMITMENTS AND CONTINGENCIES

Operating lease commitments

As of September 30, 2017, the Company did not have commitments and contingency liability.

Legal proceeding

The Company is not currently a party to any legal proceeding, investigation or claim which, in the opinion of the management, is likely to have a material adverse effect on the business, financial condition or results of operations.

NOTE 12 – SUBSEQUENT EVENTS

There were no events or transactions other than those disclosed in this report, if any, that would require recognition or disclosure in our unaudited condensed consolidated financial statements for the nine months ended September 30, 2017.

F-14

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of such financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. On an ongoing basis, we evaluate these estimates, including those related to useful lives of real estate assets, bad debts, impairment, contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. There can be no assurance that actual results will not differ from those estimates. The analysis set forth below is provided pursuant to applicable SEC regulations and is not intended to serve as a basis for projections of future events. See “Cautionary Statement Regarding Forward Looking Statements” above.

Plan of Operations

Company Summary

Eco Energy Tech Asia, Ltd. is a development stage company. We were incorporated under the laws of the state of Nevada on January 20, 2015. We have developed a proprietary growing system that designs and builds custom biodomes ranging in size appropriate for global commercial agricultural concerns as well as small local producers; delivering greater yields per meter than traditional single level greenhouse operations resulting from our multi-tier/multi-level growing system which permits us to grow a greater number of plants. Our fiscal year end is December 31.

On February 27, 2015, we entered into a Share Exchange Agreement to acquire 100% of the outstanding capital stock of Eco Energy Tech Asia, Ltd. (“EETA”), a Hong Kong corporation formed on December 27, 2012. Pursuant to the Share Exchange Agreement, we issued 20,000,000 shares of our common stock to the sole shareholder of EETA in exchange for 1,000,000 ordinary shares of EETA. The sole shareholder of EETA, Yuen May Cheung, is also our Chief Executive Officer, President and sole Director. EETA is also the owner of 92.40% of the common stock of 7582919 Canada, Inc., a corporation originally formed pursuant to the laws of British Columbia, Canada on June 21, 2010 as Renergy Foods Canada, Inc. On March 6, 2012, Renergy Foods Canada, Inc. changed its name to NuAgri, Inc. On October 1, 2013, NuAgri, Inc. changed its name to 7582919 Canada, Inc.

Our business offices are currently located at Unit 503, 5/F Silvercord Tower 2, 30 Canton Road TST, Kowloon, Hong Kong. Our telephone number is (852) 91235575.

We have three (3) executive officers, Yuen May Cheung, our Chief Executive Officer and President, Philip K.H. Chan, our Chief Financial Officer, and Thomas Colclough, our Chief Operating Officer. Yuen May Cheung is our sole Director.

We are a development stage company that has generated no revenues and has had limited operations to date. From January 20, 2015 (date of inception) to September 30, 2017, we have incurred accumulated net losses of $5,464,032. As of September 30, 2017, we had $638,449 in current assets and current liabilities of $6,609,591. Through September 30, 2017, we have issued an aggregate of 22,143,081 shares of our common stock since our inception. We issued 20,000,000 shares of our common stock pursuant to the Share Exchange Agreement on February 27, 2015, and we issued a total of 650,000 shares to 41 separate foreign shareholders on April 24, 2015, pursuant to a private placement of our common stock exempt from registration under Regulation S of the Securities Act of 1933, for total proceeds of approximately $6,500. On May 20, 2016, we issued 1,021,600 shares of our common stock to five foreign (5) shareholders, pursuant to a private placement of our common stock exempt from registration under Regulation S of the Securities Act of 1933, at a price of $0.10 per share, for an aggregate value of $102,160. On May 31, 2016, we issued 6,930 shares of our common stock to ten foreign (10) shareholders, pursuant to a private placement of our common stock exempt from registration under Regulation S of the Securities Act of 1933, at a price of $1.00 per share, value of $6,930. On July 5, 2017, July 18, 2017, August 1, 2017, August 18, 2017 and September 1, 2017, the Company issued 21,110 shares, 60,250 shares, 310,751 shares, 2,000 shares and 70,440 shares respectively of common stock to total thirty-six foreign (36) shareholders, pursuant to a private placement of our common stock exempt from registration under Regulation S of the Securities Act of 1933, at a price of $1.00 per share, value of $464,551. As of September 30, 2017, there were 22,143,081 shares of common stock issued and outstanding.

On July 7, 2017, 7582919 Canada, Inc. (“7582919”), a subsidiary of the Company, consummated the sale of a parcel of real property located at 4174 184th St., Surrey, British Columbia V3Z 1B7, Canada. The purchase price was $1,650,000 (CN). 7582919 received $1,000,868.70 (CN) after deduction for payment of the outstanding mortgage, real estate commissions and other related closing expenses.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Our Business

Eco Energy Tech Asia, Ltd. is and end-to-end vertical farming provider that manufactures the highest quality Biodomes for vertical commercial growing solutions. The solutions include the following proprietary goods and services: Biodomes: We develop proprietary growing systems using original designs and also install different sizes of custom built Biodomes. These microgreen Biodomes enable diverse crops, vegetables and other high-end plants to be cultivated within smaller spaces than traditional greenhouses and agricultural buildings. The Biodomes for vertical farming and microgreen practice enables large and small producers to produce crops that would typically require more space, costs, and time. Our Biodomes and growing systems can deliver yields per meter of at most five times the production point of a conventional greenhouse operation. The products comprise of two systems: the containers and Biodome.

Expenditures

The following chart provides an overview of our budgeted expenditures by significant area of activity over the next twelve (12) months, assuming we are able to attract sufficient debt or equity financing. There can be no assurance that we will be able to attract financing and we may be required to scale back operations accordingly.

The following table outlines the planned use of working capital and does not take Inventory expenses into account. If we are able to attract sufficient debt or equity financing and are successful in securing manufacturing facilities for BioDomes and are able to secure orders, we will need to secure inventory financing. There can be no assurance that such financing will be available to us, and our inability to obtain such financing would materially impact our ability to execute our business plan as outlined in this Report.

	Months 1-3	Months 4 - 6	Months 7-9	Months 10-12	Total 12 months
Rental	$30,000	$30,000	$30,000	$30,000	$120,000
Payroll	$80,000	$80,000	$100,000	$120,000	$380,000
Loans	$5,000	$5,000	$5,000	$5,000	$20,000
Supplies	$50,000	$45,000	$40,000	$40,000	$175,000
Utilities	$12,000	$15,000	$18,000	$25,000	$70,000
Accounting	$10,000	$10,000	$10,000	$10,000	$40,000
Legal	$15,000	$9,000	$9,000	$9,000	$42,000
Auditing	$6,000	$6,000	$6,000	$6,000	$24,000
CFO	$15,000	$15,000	$15,000	$15,000	$60,000
VP Sales	$18,000	$21,000	$21,000	$21,000	$81,000
Consulting	$5,000	$5,000	$5,000	$5,000	$20,000
Project Management	$12,000	$12,000	$12,000	$12,000	$48,000
Product Development	$50,000	$40,000	$40,000	$40,000	$170,000
Engineering	$30,000	$30,000	$15,000	$15,000	$90,000
Mechanical	$50,000	$50,000	$30,000	$30,000	$160,000
Electrical	$30,000	$40,000	$40,000	$50,000	$160,000
Software	$30,000	$20,000	$20,000	$20,000	$90,000
Marketing	$15,000	$20,000	$30,000	$50,000	$115,000
Advertising	$50,000	$100,000	$150,000	$200,000	$500,000
Promotion	$50,000	$60,000	$80,000	$120,000	$310,000
Investor Relations	$60,000	$80,000	$100,000	$150,000	$390,000
Total Expenditures	$623,000	$693,000	$776,000	$973,000	$3,065,000

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Milestones

Months 1 through 3

During the first three (3) months we plan to:

	o	Development on the New Solar Biodome and Bio Container with solar energy factories in China
	o	Apply the application of the trademark of the Biodome mobile App
	o	Complete for Trademark registration in China and process the application of patent in
	o	Enter into contract with a factory and the contractor for the first Solar Biodome development in China
	o	Setting up the sale team for the Canada Office
	o	Hire three engineering staff in China

Biodome II

We design and builds climate-controlled Biodome with Vertical Aeroponic Growing Cabinets that mitigate the risks associated with growing vegetables, herbs, microgreens, and fruits. Biodome can be designed to incorporate retail areas and be situated at ground level, on rooftops in urban areas, or in virtually any geographic location. Revenues will be generated from the sale of Biodome, Vertical Aeroponic Growing Cabinets, nutrient solutions, and support media. It is our intention to make the necessary modifications to the system, namely the development of a BioDome II, to make the system work faster and control better, but we will need to source components, make engineering refinements, and have molds for mass production made.

Testing of Nutrition Solution

We have developed a naturally derived nutrient solution to grow healthy and good tasting produce rich in nutrients. The basic nutrients required for plant growth are divided into two main categories:

● Macronutrients: Nitrogen, calcium, potassium, magnesium, phosphorus, and Sulphur; and;

● Micronutrients: Iron, zinc, molybdenum, selenium, manganese, boron, copper, cobalt, and chlorine.

And we added up a New Pi-water system into the Nutrients for plants

We have engaged China Agricultural Labs to test the fluid and develop the system to produce the nutrition fluid.

Complete Trademark (神农殿) (means ‘God of Vega Palace’) Registration in China , we just finished three departments, still working on other two.

File for trademark protection in China to protect our business name, product names, domain names, logos and slogans still in process. We anticipate the completion of this process within three months.

Contract to build the first Biodome in Southern China

We are currently negotiating a contract with a company in Southern China for a 200 acres of agriculture land foot where we can build a 100,000 sq. ft. Green House building that can producing 400 tons of vegetables per month. We have developed a proprietary, patent-pending aeroponic growing cabinet in which crops of various sizes can be cultivated vertically in multiple layers. This growing arrangement increases plant density. Based on a variety of plant sizes, an Eco Energy Biodome will hold between 100,000 and 300,000 plants, all in a footprint comprising less than a third of an acre.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Development the third Generation of the Biodome III

We presently are working with Trina Solar to Install Photovoltaic System in the New Biodome III and Bio Container to develop the new Biodome III drawing for a large size greenhouse on engineering, manufacturing, and tooling. During this period, we intend on securing all work in process inventory, design documentation, prototypes and all intellectual property

Financial/Sales/Engineering Staff

We plan on hiring three engineers. One engineer for hardware, one for software, and one for mechanical. If in the event, we are unable to secure engineers with the required skills necessary we will continue to outsource such functions. We believe, however, that having in house engineers will significantly reduce the amount of time we spend going back and forth with outsourced service providers.

In addition, we expect that during months one (1) through three (3) that we will hire a VP of sales to handle product sales to distributors and retailers for the vegetable markets.

Months 4 through 6

During the following three (3) months, we expect to achieve the following:

	o	Hiring the architecture company for the new design for Biodome III in China
	o	Seek more suppliers for the materials for lighting and nutrition fluids
	o	Compete the Agreement with Zaklad Budowy Maszin from Poland
	o	Finish the agriculture drawing for Biodome working with microgreen china
	o	Developing the mobile end user system for wechat and other social media platforms in china.

Hiring the Architecture Company for the new design for Biodome III in China Project

Eco Energy will use ETFE pillows as cladding for its Biodome with the pillows held in place by aluminum keder tracks and compression plates. Structural movement is absorbed within each panel. A significant architectural feature of the Eco Energy Biodome is that they are largely sealed and equipped with air-lock doors. These features limit the venting of carbon dioxide (which is added as a plant growth accelerant) and keep insects and pathogens out.

Developing the mobile end user system for WeChat and other social media platforms in china.

The new App will allow Chinese customers to contact ECO Energy Asia directly and find out about the variety of goods available and produced in the Biodome. The customer can then choose any item and quantity for his personal needs and have it sent to their home address. With this procedure, Chinese customers can easily pick fresh and organic foods in a comfortable way. China today counts 1.3 Bio. mobile subscribers using Android or Apple's iPhone technology.

Engage the engineering company to design the Controlled Atmosphere Storages

The ideal oxygen level for storing pears must be between 1 and 3%; for some varieties of apples, however, it must be lower than 1%. Storage under such O2 conditions is referred to as Ultra Low Oxygen (ULO) storage. ULO storage takes place in gas-tight cells and is used for the long-term storage of apples, pears, blue berries and kiwis. We shall be engaging a European engineering company to develop storage system to protect the fast-growing products.

Compete the Agreement with Zaklad Budowy Maszin from Poland

The partners will now enter into marketing activities to sell agricultural technology systems developed and successfully invented by Eco Energy. A sales team has been established and the first contacts to potential clients have been made. Over many years Eco Energy developed and tested different technologies which are applied in the operation of vertical farming. These technologies are used to save energy and water in an isolated mini-climate as it is provided in a Biodome. The use of these systems facilitates the operation of a Biodome and allows to increase profitability by decreasing costs for water and energy used.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Months 7 through 9

During the following three (3) months, we expect to achieve the following:

	o	Complete the agreement with Mathias Stecher GmbH from Swiss
	o	Finish the design in China project and start to order the materials
	o	Finish the third level of Biodome and Solar system design
	o	Begin Engineering on Controlled Atmosphere Storage
	o	Starting the develop the AI system to control the nutrition, lighting and temperature for the Biodome

Complete the agreement with Mathias Stecher GmbH from Swiss

The agreement is designed to elaborate a cooperation between ECO Energy and Mathias Stecher GmbH to sell the agricultural technology systems developed by Eco Energy in Switzerland and central Europe This agreement completes the marketing alliance with European partners as Eco Energy lately already signed another marketing cooperation with the company Zaklad of Poland to sell it`s technology in eastern Europe.

Distributor Sale Teams in Europe

If we are successful in previous months, it is anticipated that in months seven (7) through nine (9) we will have the first contracts with the distributors and local market suppliers in Swiss and Poland. During our discussions with distributors, are evaluated and tested by a committee and then taken to retailers to gauge interest. Retailer interest determines initial order levels.

Finish the design for China project and start to order the materials

We are currently negotiating a contract with Microgreen in South Chain to develop a 100,000 sq. ft. Biodome industrial area. When we successfully enter this contract, we shall complete the architectural drawings and order the materials, most of which can be purchased in China.

Months 10 through 12

	o	Start to install the equipment in the China Biodome
	o	Design the package for the products for the Asia market
	o	Seeking the products seeds sources for China markets
	o	Testing the Controlled Atmosphere Storage

Begin advertising / promotion campaign

During the following three (3) months, we expect to achieve the following:

Start to install the equipment in the China Biodome

We will start to install the first artificial intelligence (AI) enabled augmented reality crop management system may be coming soon on the whole system including the following functions:

●

Artificial Light Control System: Measures available light conditions and automatically switches supplemental lighting on/off, when necessary;

●

Carbon Dioxide Control System: RGB cameras to monitors and automatically adjusts carbon dioxide levels for optimal plant growth when the Biodome is sealed;

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

●

Climate Control System: RGB cameras to monitors a variety of climate control parameters, automatically activating the appropriate HVAC equipment in order to heat, cool, or dehumidify the Biodome;

●

Energy Control System: RGB cameras to monitors both the availability and energy requirements in the Biodome;

●

ETFE Control System: Measures parameters such as interior and exterior temperatures, wind velocity, and snow loads and automatically inflate or deflate the Biodome pneumatic ETFE pillows in order to maintain structural integrity and interior climate conditions.

●

Nutrient Control System: RGB cameras to monitors, activates and maintain the release of plant nutrients and oxygen;

●

Plant Productivity System: RGB cameras to monitors, manages, and forecasts crop growing / harvest parameters;

●

Video Monitoring System: RGB cameras to monitors and activates video cameras in and around the Biodome including in the AI system

●

Water Test System: Water Quality Testing Equipment Monitors the testing of water in pH

Design the package for the products for the Online Customers

We believe the fruity packaging designs are offering consumers some eye-catching ways to feel more health-conscious about the products they are using. Today, people are often concerned about the dietary ingredients and health effects of certain foods and beverages they consume. That is why marketing a product to consumers that visually seems healthier or nutritious is an inventive way to stand out from competitors.

Testing the Controlled Atmosphere Storage

●	Controlled Atmosphere Storage is a system for holding respiratory produce in an atmosphere that differs from normal air in respect of CO2 and O2 levels. Practical advantages of storage under Controlled Atmosphere:
■	Considerable decrease in fruit respiration rate.
■	A reduction in the effect of ethylene on metabolism.
■	An extension in storage life and excellent firmness of flesh.

Begin advertising / promotion campaign

If we are successful in previous months, it is anticipated that in months seven (7) through nine (9) we will have the first crop of products and send samples to our End-user, by using the mobile app for marketing to approach our customers. This is the way we and avoid the middle companies and lose the control. More customers we have, we can create more products to enter the market. It is our understanding is that new products are evaluated and tested by a committee and then taken to retailers to gauge interest. Retailer interest determines initial order levels.

Seek on-going associations and industry group approvals and marketing support. We intend to get needed industry and association and government approvals and seek their help in securing potential industry and government access as well as any needed sponsorships and support.

Work with other complimentary vertical farming product providers.

Work with other firms to assist in optimizing its products for certain verticals where needed.

Sign additional sub-license agreements or joint venture agreements with strategic partners. Central to the Company’s strategy is to sign large (i.e., multi-million dollar) “vertical markets” agreements with commercial partners.

We do not currently have any arrangements for financing and we can provide no assurance to investors we will be able to find such financing. There can be no assurance that additional financing will be available to us, or on terms that are acceptable. Consequently, we may not be able to proceed with our intended business plans or complete the development and commercialization of our product.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Liquidity and Results of Operations

Comparison for the Nine Months Ended September 30, 2017 and 2016

Revenues and Gross Profit

Revenues and Gross Profit for the nine months ended September 30, 2017 and 2016 are zero. The Company is a development stage company and has incurred significant costs in research and development activities. See discussion below for further information. As of September 30, 2017, the Company had incurred an accumulated deficit of $5,464,032 since inception.

Costs and Expenses

Total operating cost and expenses decreased to $216,957 for the three months ended September 30, 2017, as compared to $771,892 for the three months ended September 30, 2016. And total operating cost and expenses decreased to $550,427 for the nine months ended September 30, 2017, as compared to $1,333,565 for the nine months ended September 30, 2016. These decreases were primarily due to decreasing costs associated with General Administrative Expenses

Other Income and Expenses

Interest expense was nil in the three months ended September 30, 2017 as compared to $3,017 for the three months ended September 30, 2016. And interest expense was $7,644 in the nine months ended September 30, 2017 as compared to $14,073 for the nine months ended September 30, 2016.

Income Taxes

The Company had no income tax expenses or income tax benefit for each of the three months ended September 30, 2017, and September 30, 2016 and for the nine months ended September 30, 2017, and September 30, 2016, due to incurrence of net operating loss in each of these periods. There are no income tax refund opportunities currently available.

Effect of Inflation

Inflation has not had a significant impact on the Company’s operations or cash flows.

Liquidity and Capital Resources

Long-Term Debt / Note Payable and Other Commitments

On July 5, 2017, land and building sold at CAD 1,650,000 equivalent to $1,261,984 and got a gain on disposal of $670,915. The funds mortgage loan was paid off by Yuen May Cheung.

Cash Flow Information

The Company had working capital deficit of approximately $5,971,142 and a current ratio of 0.097 as of September 30, 2017. And the Company had working capital deficit of $6,450,632 and a current ratio of 0.017 at December 31, 2016. The increase in working capital and the current ratio at September 30, 2017, as compared to December 31, 2016, was primarily due to the use of working capital for operations as well as marketing expenses and on July 5, 2017, land and building sold at CAD1,650,000 equivalent to $1,261,984 and got a gain on disposal of $670,915.The Company believes it has insufficient cash resources to meet its liquidity requirements for the next twelve (12) months.

During the three months ended September 30, 2017, the Company had cash and cash equivalents of approximately $638,449 as compared to cash and cash equivalents of $112,923 as of December 31, 2016. This represents a slight increase in cash of $525,526.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Cash used in Operating Activities

The Company used approximately $558,202 of cash for operating activities in the nine months ended September 30, 2017, as compared to used $1,326,800 of cash for operating activities in the nine months ended September 30, 2016. This resulted in a decrease in cash used in operating activities of $768,688. The expenses consisted of filing fees, professional fees and other general expenses.

Cash provided by Investing Activities

The Company provided $1,261,984 of cash by investing activities in the nine months ended September 30, 2017 as compared to use $nil of cash for investing activities in the nine months ended September 30, 2016. The company sold the land and building on July 5, 2017.

Cash (Used in) Provided by Financing Activities

Financing activities in the nine months ended September 30, 2017, used approximately $(203,911) of cash as compared to $1,249,177 of cash provided by the nine months ended September 30, 2016. The Company did not incur any debt issuance costs in 2016.

The Company’s principal sources and uses of funds are investments from accredited investors. The Company would need to raise additional capital in order to meet its business plan. Management intends to secure additional funds using borrowing or the further sale of securities to accredited investors in the future. There is no assurance that we may secure funding, or whether it can do so on terms acceptable to us, or at all, and its liquidity would be severely compromised.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern which contemplates, amongst other things, the realization of assets and satisfaction of liabilities in the course of business.

We anticipate that our future liquidity requirements will arise from the need to fund our growth, pay our current obligations and future capital expenditures. The primary sources of funding for such requirements are expected to be cash generated from operations and raising additional funds from private sources and/or debt financing.

Going Concern Consideration

Our independent auditors included an explanatory paragraph in their report on the accompanying financial statements expressing concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Critical Accounting Policies

The preparation of our financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses and related disclosures about contingent assets and liabilities. We base these estimates and assumptions on historical experience and on various other information and assumptions that are believed to be reasonable under the circumstance. Estimates and assumptions about future events and their effects cannot be perceived with certainty and, accordingly, these estimates may change as additional information is obtained, as more experience is acquired, as our operating environment changes and as new events occur. Our critical accounting policies are listed in the notes to our audited financial statements included in of this registration Statement

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “smaller reporting company”, we are not required to provide the information required by this Item.

ITEM 4. CONTROLS AND PROCEDURES

Evaluations of Disclosure Controls and Procedures

Under the supervision and with the participation of our management team, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended, as of December 31, 2004. Based on this evaluation, we concluded that our disclosure controls and procedures are effective in timely alerting them to material information required to be included in our periodic reports.

Changes in Internal Control over Financial Reporting

During the period covered by this report, there has been no change in our internal control over financial reporting that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

The Company has no knowledge of existing or pending legal proceedings against the Company, nor is the Company involved as a plaintiff in any proceeding or pending litigation. There are no proceedings in which any of the Company’s directors, officers or any of their respective affiliates, or any beneficial stockholder, is an adverse party or has a material interest adverse to our interest.

ITEM 1A. RISK FACTORS

As a “smaller reporting company”, we are not required to provide the information required by this Item.

ITEM 2. UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS

During the three month period ending September 30, 2017, we issued 464,551 shares of our common stock to 36 foreign investors at a price of $1.00 per share, for a total value to the Company of $464,551. All investors were non US residents and the issuances were issued in a a private placement exempt from registration pursuant to Regulation S under the Securities Act of 1933.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable

ITEM 4. OTHER INFORMATION

None

ITEM 5. EXHIBITS

INDEX TO EXHIBITS

Exhibit		Description
31.1		Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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
32.2		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

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

ECO ENERGY TECH ASIA, LTD. (Registrant)

Signature	Title	Date

/s/ Yuen May Cheung
Yuen May Cheung	Chief Executive Officer	November 14, 2017
	Principal Executive Officer
/s/ Philip K.H. Chan
Philip K.H. Chan	Chief Financial Officer Principal Financial Officer	November 14, 2017

AIFARM, LTD. - FORM 10-Q - November 14, 2017

Attached files

AIFARM, LTD. Reports