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EXPLANATARY NOTE

Overview

Background on the Restatement

On September 21, 2017, the Board of Directors concluded, based on the recommendation of management, that the Company's financial statements as of and for the year ended December 31, 2016, as filed with the Securities and Exchange Commission, should be restated to correct an error related to warrants that were not accounted for including, accounting for such warrants as derivative instruments under the guidance found in ASC 815 Derivatives and Hedging.  The effect of the correction will be to increase the amount of the net loss reported in the December 31, 2016 annual period affected.  The effect of the correction in the affected period is to increase the accumulated deficit and to increase the derivative liabilities as of December 31, 2016 by $779,351.

 

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·	Reduces Odor and disease-causing organisms

·	Eliminate Lagoons

·	Eliminates ground and water contamination

·	Hides animal decomposition from public view

·	Produces a fertilizer that can be used as a soil enhancement

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To the Board of Directors and Stockholders

EcoloCap Solutions, Inc.

Barrington, Illinois

/s/ MaloneBailey, LLP

www.malonebailey.com

Houston, Texas

August 24, 2017, except for Notes 3, 4, 8, 9, 10 and 13 as to which the date is November 13, 2017

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NOTE 1 – NATURE OF BUSINESS

Ecolocap Solutions, Inc. ("we", "our", and "the Company") is an integrated and complementary network of environmentally focused technology that utilize advanced nanotechnology to design, develop and sell cleaner alternative energy products. Our business approach combines science, innovation, and market-ready solutions to achieve environmentally sustainable and economically advantageous, power and energy management practices in the following areas:

M-Fuel

The Company, through its subsidiary Micro Bubble Technologies Inc. (MBT), developed M-Fuel, an innovative suspension fuel that is designed to offer fully scalable and customizable fuel solutions that will increase efficiency, lower operating costs, and reduce emissions. M-Fuel is a suspension mixture of 60% heavy oil, 40% H plus O2 molecules, and a 0.3% stabilizing additive. The production of M-Fuel takes place in our Nano Processing Units (NPU), a self-contained device that is sized for output. The NPU's can be configured to operate in conjunction with an engine or burner to sully M-Fuel on demand, or pre-manufactured for delivery.

ECOS/BIO-ART

ECOS/Bio-ART is a patented air injected high-speed aerobic biological fermentation technology, utilizing uniquely cultured Bacillus, and incorporated into a specifically designed in-vessel unit. The remediation process takes seven days and reduces moisture content to an average between 12%-25% on an output equal to 1/3 the input. The output can be used as organic fertilizer, animal feed, animal bedding or biomass. The computer controlled process monitors the temperature on 3 different levels. The technology reduces the costs associated with food waste disposal and in the process reduces the environmental impact or methane greenhouse gas production.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company and its subsidiaries Micro Bubble Technologies Inc. and Ecos Bio-Art, LLC. All significant inter-company accounts and transactions have been eliminated.

CASH

The Company maintains cash balances at various financial institutions. Accounts at each institution are insured by the Federal Deposit Insurance Corporation up to $250,000. The Company's accounts at these institutions may, at times, exceed the federally insured limits. The Company has not experienced any losses in such accounts.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company adopted the provisions of ASC Topic 820, "Fair Value Measurements and Disclosures", which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements.

The estimated fair value of certain financial instruments, including cash, accrued expenses and sundry current liabilities, notes payable and convertible notes payable are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments.

ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. 820 describes three levels of inputs that may be used to measure fair value:

INCOME TAXES

We use the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, "Income Taxes." Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity's financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.

ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented.

USE OF ESTIMATES

In preparing financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheet and revenue and expenses in the income statement. Actual results could differ from those estimates.

CONVERTIBLE INSTRUMENTS

We evaluate and account for conversion options embedded in convertible instruments in accordance with ASC 815 "Derivatives and Hedging Activities".

Applicable GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.

We account for convertible instruments (when we have determined that the embedded conversion options should not be bifurcated from their host instruments) as follows: We record when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption.

LOSS PER COMMON SHARE

The basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding.

Diluted net loss per common share is computed by dividing the net loss, adjusted on an "as if converted" basis, by the weighted average number of common shares outstanding plus potential dilutive securities. For the years ended December 31, 2016 and 2015, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share.

STOCK BASED COMPENSATION

We recognize compensation expense for stock-based compensation for employees in accordance with ASC Topic 718 and ASC 505 for non-employees. For employee stock-based awards, we calculate the fair value of the award on the date of grant using the Black-Scholes method for stock options and the quoted price of our common stock for unrestricted shares; the expense is recognized over the service period over which the awards are expected to vest. For non-employee stock-based awards, we calculate the fair value of the award on the date of grant in the same manner as employee awards, however, the awards are revalued at the end of each reporting period and the pro rata compensation expense is adjusted accordingly until such time the nonemployee award is fully vested, at which time the total compensation recognized to date equals the fair value of the stock-based award as calculated on the measurement date, which is the date at which the award recipient's performance is complete. The estimation of stock-based awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from original estimates, such amounts are recorded as a cumulative adjustment in the period estimates are revised. We consider many factors when estimating expected forfeitures, including types of awards, employee class, and historical experience.

RECENT ACCOUNTING PRONOUNCEMENTS

The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company's results of operation, financial position or cash flows.

NOTE 3 – GOING CONCERN

The Company's consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities and commitments in the normal course of business. The Company incurred a net loss of $10,053,894 for the year ended December 31, 2016.The Company has negative working capital of $16,017,600 and a stockholders' deficit of $16,017,600 at December 31, 2016. These factors among others raise substantial doubt about the Company's ability to continue as a going concern.

Management's plans for the Company's continued existence include selling additional stock and borrowing additional funds to pay overhead expenses.

With the opportunities created by the ECOS BIO-ART and M Fuel, management has begun the process of redeploying its assets, identifying business strategies that offers above average profit potential and identifying the resources necessary to successfully execute it new strategic direction.

Recognizing the opportunity this new market represents, the Company has developed an integrated development approach that focuses upon both existing and needed infrastructure facilities to produce substantial new value.

The Company's future success is dependent upon its ability to achieve profitable operations, generate cash from operating activities and obtain additional financing. There is no assurance that the Company will be able to generate sufficient cash from operations, sell additional shares of common stock or borrow additional funds.

The Company's inability to obtain additional cash could have a material adverse effect on its financial position, results of operations and its ability to continue in existence. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

NOTE 4 – RESTATEMENT OF FINANCIAL STATEMENTS

On September 21, 2017, the Board of Directors concluded, based on the recommendation of management, that the Company's financial statements as of and for the year ended December 31, 2016, as filed with the Securities and Exchange Commission, should be restated to correct an error related to warrants that were not accounted for including, accounting for such warrants as derivative instruments under the guidance found in ASC 815 Derivatives and Hedging.  The effect of the correction will be to increase the amount of the net loss reported in the December 31, 2016 annual period affected.  The effect of the correction in the affected period is to increase the accumulated deficit and to increase the derivative liabilities as of December 31, 2016 by $779,351 (Note 8 Derivative Liabilities).

The effect of the correction in the affected period is to increase the net operating loss carry forwards and the income taxes valuation allowance as of December 31, 2016 by $264,979 (Note 10 Income Taxes).

In December 2013, the Company issued 750,000 preferred shares to related parties' stockholders that was not disclosed in the 10-K filing. The Company believes that the Series A Preferred Shares had zero value on December 31, 2013. The preferred shares issuance is disclosed in the restated financial statements (Note 9 Capital Stock and Note 12 Related Party Transactions).

The following table sets forth all the accounts in the original amounts and restated amounts, respectively. The error did not impact cash flows used in operating, investing and financing activities.

CONSOLIDATED BALANCE SHEETS

December 31, 2016

CONSOLIDATED STATEMENTS OF OPERATIONS

For the year ended December 31, 2016

NOTE 5 – ACCRUED EXPENSES AND SUNDRY CURRENT LIABILITIES

Accrued expenses and sundry current liabilities consisted of the following at December 31:

NOTE 6 – CONVERTIBLE NOTES PAYABLE

During the years ended December 31, 2016 and 2015, the Company is in default of its convertible notes due to non-repayment which triggered an increase of the outstanding balances. Loans are convertible at amounts of 40% to 60% of the market price of the common shares of the Company at the time of conversion and bear interest rates ranging between 8% and 22% per annum. The increases during the years ended December 31, 2016 and 2015 of $14,653 and $18,500 in non-cash borrowings are related to the default penalty on Tonaquint loans, respectively.

The convertible feature of these loans, due to their potential settlement in an indeterminable number of shares of the Company's common stock has been identified as a derivative. The derivative component is fair valued at the date of issuance of the obligation and this amount is marked to market at each reporting period. All of the convertible notes are in default as of December 31, 2016.

There were no conversions of convertible debts in 2016. During the year ended December 31, 2015 note payable of $1,973 plus accrued interests of $0 were converted into 393,000 shares.

A summary of the amounts outstanding as of December 31, 2016 and 2015 is as follows:

NOTE 7 – NOTES PAYABLE – RELATED PARTIES

During the year ended December 31, 2016 notes payable to related parties increased by $457,000, of which $450,000 resulted from conversion of accrued salaries, net of payments made during the year to notes payable and $7,000 from cash proceeds. The amount owed to stockholders at December 31, 2016 is $1,853,679. These loans are non interest bearing but interest is being imputed at 5.00% per annum and are payable on demand. Amounts of $71,201 and 66,280 has been imputed in 2016 and 2015 respectively. During the years ended December 31, 2016 and 2015, total loan conversions of $0 and $274,500 were made into 0 and 2,745,000,000 shares respectively.

The amount owed to Hanscom K. Inc. at December 31, 2016 is $453,780. During 2016, the Company received loans of $142,293 from Hanscom K. Inc. These loans are non-interest bearing and are payable on demand. Hanscom K Inc. is acting as a consultant for the Company.

During 2016, the Company did not receive any loans from RCO Group Inc. The amount owed to RCO Group Inc. at December 31, 2016 is $28,500. These loans are non-interest bearing and are payable on demand. These loans bear interest at 8.00% per annum and are payable on demand. RCO Group Inc. is acting as a financial consultant for the Company.

A summary of the amounts outstanding as of December 31, 2016 and 2015 is as follows:

NOTE 8 – DERIVATIVE LIABILITIES

During the years ended December 31, 2016 and 2015, the Company recorded various derivative liabilities associated with the convertible debts discussed in Notes 6 and warrants discussed in Note 4. The Company has determined that the features associated with the embedded conversion option on the notes should be accounted for at fair value, as a derivative liability, as the Company cannot determine if a sufficient number of shares would be available to settle all potential future conversion transactions. This also tainted the Company's existing warrants thus requiring derivative accounting treatment for these instruments.

The Company computes the value of the derivative liability at the issuance of the related obligation and at each reporting period using the Black Scholes Method which includes the following assumptions:  a risk free rate of 0.14%, volatility rates ranging between 401.00% and 1,319.00% and a forfeiture rate of 0.00%.  The derivative liability at December 31, 2016 and 2015 is as follows:

For the warrants discussed above, the Company computes the value of the derivative liability at the issuance of the related obligation and at each reporting period using the Black Scholes Method which includes the following assumptions:  a risk free rate of 0.14%, volatility rates of 495.00% and a forfeiture rate of 0.00%.  The derivative liability at December 31, 2016 and 2015 is as follows:

The following table summarizes the derivative liabilities at the end of the years ended December 31, 2016 and 2015;

Financial assets and liabilities recorded at fair value in our consolidated balance sheets are categorized based upon a fair value hierarchy established by GAAP, which prioritizes the inputs used to measure fair value into the following levels:

Level 1— Quoted market prices in active markets for identical assets or liabilities at the measurement date.

Level 2— Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable and can be corroborated by observable market data.

Level 3— Inputs reflecting management's best estimates and assumptions of what market participants would use in pricing assets or liabilities at the measurement date. The inputs are unobservable in the market and significant to the valuation of the instruments.

A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

Financial assets and liabilities measured at fair value on a recurring basis are summarized below for the year ended December 31, 2016.

Financial assets and liabilities measured at fair value on a recurring basis are summarized below for the year ended December 31, 2015.

The following table summarizes the change in the fair value of the derivative liability during the year ended December 31, 2016.

NOTE 9 – CAPITAL STOCK EQUITY

The Company is authorized to issue 10,000,000,000 shares of common stock (par value $0.00001) of which 3,249,327,026 were issued and outstanding as of December 31, 2016 and 2015.

In October 2017, the Company amended its Articles of Incorporation to increase its authorized capital to 25,000,000,000 shares of common stock (par value $0.00001).

The Company is authorized to issue 100,000,000 shares of preferred stock (par value $0.0001) of which 750,000 were issued and outstanding as of December 31, 2016. Each share of Series A Preferred Stock has voting rights at 100,000 votes per share.

In December 2013, the Company issued 750,000 preferred shares to certain officers and stockholders of the Company. The fair value of the preferred shares issued was determined to be zero.

 

There were no share issuances during the year ended December 31, 2016.

 

		Loans converted				Interests converted				Common shares of the Company
Tonaquint (Note 6)		$	1,973			$	-				393,000
Accrued compensation			50,000				-				500,000,000
Stockholders (Note 7)			274,500				-				2,745,000,000
Total		$	326,473			$	-				3,245,393,000

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		Warrants
Balance December 31, 2015			-
Warrants granted – Lakeshore Recycling Systems, LLC			519,567,390
Balance December 31, 2016			519,567,390

 

NOTE 10 – INCOME TAXES

The Company recognizes deferred income tax liabilities and assets for the expected future tax consequences of events that have been recognized in the financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the differences between the financial statement carrying amounts and the tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial statement and income tax purposes under enacted tax laws and rates.

The tax effects of temporary differences that give rise to deferred tax assets are presented below:

Components of the Company's deferred tax liabilities and assets are as follows:

The income tax provision (benefit) consists of the following:

 

The Company's federal and state income tax returns for the tax years 2013 and forward remain subject to examination.

NOTE 11 – COMMITMENTS AND CONTINGENCIES

The Company was party to a lease for its Barrington office, at a minimum annual rent of approximately $24,000 per year. The Barrington lease expired in May 2013 and the Company remains in these premises on a month to month basis. The rent expense charged to operations for the year ended December 31, 2016 and 2015 was $26,012 and $24,012, respectively.

NOTE 12 – RELATED PARTY TRANSACTIONS

During the year ended December 31, 2016 notes payable to stockholders increased by $457,000, of which $450,000 resulted from conversion of accrued salaries, net of payments made during the year to notes payable and $7,000 from cash proceeds. The amount owed to stockholders at December 31, 2016 is $1,853,679. These loans are non interest bearing but interest is being imputed at 5.00% per annum and are payable on demand.

For the years ended December 31, 2016 and 2015, interest accrued to related parties totaled $125,059 and $111,498.

During 2016, the Company received loans of $142,293 from Hanscom K. Inc. These loans are non-interest bearing and are payable on demand. The amount owed to Hanscom K. Inc. at December 31, 2016 is $453,780. Hanscom K Inc. is acting as a consultant for the Company.

During the year ended December 31, 2015, the Company settled loans with stockholders and accrued compensation totaling $324,500 through issuance of 3,245,000,000 shares. The Company recognized settlement expense for the loss incurred of $19,145,500.

On December 19, 2016, the Company entered into a Limited Liability Company Agreement (the "Agreement") with Lakeshore Recycling Systems LLC located in Morton Grove, Illinois ("Lakeshore"), creating ECOS BIO-ART LLC, a Delaware Limited Liability Company ("LLC"). ECOS BIO-ART LLC will sell biofermentation systems. The biofermentation systems turn organic waste into a byproduct which can be processed into a high quality organic fertilizer.

On the same date, the Company entered into a Supply Agreement (the "Supply Agreement") with LLC wherein we agreed to manufacture and supply equipment and products to LLC for resale or lease to Lakeshore and LLC's customers.

NOTE 13 – SUBSEQUENT EVENTS

The following convertible debt owners converted loans plus accrued interests into common shares of the Company:

 

During May 2017, an aggregate of $108,220 in loans from stockholders were converted into 541,100,000 shares of the common stock.

In August 2017, the Company issued 250,000 preferred shares to an officer. The fair value of the preferred shares issued was determined to be zero.

In October 2017, the Company increased its authorized capital to 25,000,000,000 shares of common stock (par value $0.00001).

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ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

There have been no disagreements on accounting and financial disclosures from the inception of our company through the date of this Form 10-K. Our consolidated financial statements for years ended December 31, 2016 and 2015, included in this report have been audited by Malone Bailey LLP, as set forth in this annual report.

From November 2, 2005 through February 9, 2017, Paritz & Company, P.A. ("Paritz") was the independent registered public accounting firm of Ecolocap Solutions Inc. (the "Company"). On February 9, 2017, we notified Paritz we were terminating it as our independent certifying accountant.

None of our previous audit reports, in particular the audit reports for the fiscal years ended December 31, 2013 and December 31, 2012, contained any adverse opinion or disclaimer of opinion, nor were qualified or modified as to uncertainty, audit scope, or accounting principles, except for a going concern qualification on the Company's financial statements for the fiscal years ended December 31, 2013 and December 31, 2012.

During the Company's two most recent fiscal years, the subsequent interim periods thereto, and through February 13, 2017, there were no disagreements (as defined in Item 304 of Regulation S-K) with the Paritz on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Paritz would have caused it to make reference in connection with its opinion to the subject matter of the disagreement. Further, during the Company's two most recent fiscal years, the subsequent interim periods thereto, and through February 13, 2017, there were no reportable events (as defined in Item 304(a)(1)(v) of Regulation S-K).

On February 9, 2017, we engaged MaloneBailey LLP, 9801 Westheimer Road, Houston, Texas 77042, telephone 713-343-4200, an independent registered public accounting firm, as our principal independent accountant with the approval of our board of directors. MaloneBailey LLP formerly Malone & Bailey, PC, was previously our independent certifying accountant from May 20, 2004 to November 2, 2005.

During the two most recent fiscal years and through the date of engagement, we have not consulted with MaloneBailey LLP regarding either:

1.

The application of accounting principles to any specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our financial statements, and neither a written report was provided to us nor oral advice was provided that MaloneBailey LLP concluded was an important factor considered by us in reaching a decision as to the accounting, auditing or financial reporting issue; or

2.

Any matter that was either subject of disagreement or event, as defined in Item 304(a)(1)(iv)(A) of Regulation S-K and the related instruction to Item 304 of Regulation S-K, or a reportable event, as that term is explained in Item 304(a)(1)(iv)(A) of Regulation S-K.

Management's Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the company's principal executive and principal financial officers and effected by the company's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any

evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk. As of December 31, 2016, management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") and SEC guidance on conducting such assessments. Based on that evaluation, they concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of US GAAP rules as more fully described below. This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that were considered to be material weaknesses. These matters involving internal controls and procedures that our management considered to be a material weakness under the standards of the Public Company Accounting Oversight Board was the lack of a functioning audit committee, lack of multiple levels of review over the financial reporting process and segregation of duties, and lack of controls over the accounting for warrants and record keeping procedures resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures. The aforementioned material weaknesses were identified by our management in connection with the review of our financial statements for the year ended December 31, 2016.

Management believes that the material weaknesses set forth above did not have an effect on our financial results. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only the management's report in this annual report.

CEO and CFO Certifications

Appearing immediately following the Signatures section of this report there are Certifications of the CEO and the CFO. The Certifications are required in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 (the Section 302 Certifications). This Item of this report, which you are currently reading is the information concerning the Evaluation referred to in the Section 302 Certifications and this information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended December 31, 2016 that have affected, or are reasonably likely to affect, our internal control over financial reporting.

None.

PART III

The following table presents information with respect to our officers, directors and significant employees as of the date of this Report:

Each director serves until our next annual meeting of the stockholders or unless they resign earlier. The Board of Directors elects officers and their terms of office are at the discretion of the Board of Directors.

Each of our directors serves until his or her successor is elected and qualified. Each of our officers is elected by the board of directors to a term of one (1) year and serves until his or her successor is duly elected and qualified, or until he or she is removed from office. At the present time, members of the board of directors are not compensated for their services to the board.

Biographical Information Regarding Officers and Directors

Michael Siegel, Chief Technology Officer. Studied Electrical Engineering at the University of Illinois in Champaign, Illinois, and following college joined the Marine Corps. He has over 30 years of experience in the technology, real estate and international business operations. On September 10, 2009, Michael Siegel was appointed president and principal executive officer. Mr. Siegel is currently a member of the board of directors. Since May 2008, Mr. Siegel has been president of Micro Bubble Technologies Inc., a Nevada corporation located in Barrington, Illinois. Micro Bubble Technologies Inc. is engaged in the business of manufacturing, marketing, distributing, setting up sub-distributors, and selling products based on nano technologies. He served as President and CEO of International Lottery and Gaming Inc. and Vietnam Telephone Co (Vietelco). From June 1975 to May 2008, Mr. Siegel was president of Siegel Research and Development, Inc., which created gaming, video and other technologies. He was also a general partner in 5 Hotels in the Chicago area. Between 2006 and 2008 Mr. Siegel was president of C Line, Inc.

Jeung Kwak, Chairman and Director. Since June 16, 2009, Mr. Kwak has been Chairman of Ecolocap Solutions Inc., Jeung Yeal Kwak has for over 25 years specialized in international trade in Korea, Asia, Russia, India, China and the US. Since 1992, he is President of Hanscom K Inc, specialized in international trade in steel products, including steel castings and fabrications and also concrete forms. In May 2008, he co-founded Micro Bubble Technologies Inc., a Nevada corporation located in Barrington, Illinois. Micro Bubble Technologies Inc. is engaged in the business of manufacturing, marketing, distributing, setting up sub-distributors, and selling products based on nano technologies. He attended Korea University and graduated in 1973 with a degree in Biology. Upon graduation, he immigrated to the United States and began his career in Chicago, Illinois.

Michel St-Pierre, Acting Chief Financial Officer. Mr. St-Pierre has served as an officer of the Company since July 2006. Mr. St-Pierre is a registered chartered accountant in Quebec, Canada. Before working for the Company, Mr. St-Pierre has served as Chief Financial Officer of a public shell company, Tiger Renewable Energy Limited (formerly known as Tiger Ethanol International Inc. and Arch Management) since January 2007 and held positions as the Finance Director (comparable to Corporate Treasurer) at SPB Canada Inc. from 2004-2006, Symbior Technologies Inc. from 2003-2004, and Boulangeries Comas Inc. from 2000-2003.

Compliance with Section 16(a) Of the Securities Exchange Act of 1934

Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers and directors, and persons who beneficially own more than 10% of our equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, directors and greater than 10% shareholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file. Based on our review of the copies of such forms we received, we believe that during the fiscal year ended December 31, 2016 all such filing requirements applicable to our officers and directors were complied with, except for reports by the following persons:

Audit Committee

We have a separately-designated audit committee of the board. Our audit committee is responsible for: (1) selection and oversight of our independent accountant; (2) establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal controls and auditing matters; (3) establishing procedures for the confidential, anonymous submission by our employees of concerns regarding accounting and auditing matters; (4) engaging outside advisors; and, (5) funding for the outside auditory and any outside advisors engagement by the audit committee. A copy of our audit committee charter is filed as an exhibit to this report. Up to February 25, 2009, our Audit Committee consisted of Lim Ping Wai who was an independent director; the full board has carried out the functions and responsibilities since her resignation.

Compensation Committee

The full board carries out the functions and responsibilities of this committee. This committee acts on behalf of our board of directors to approve compensation arrangements for our management and review the compensation paid to our board of directors. A copy of our Compensation Committee Charter was filed with our last 10KSB on March 31, 2008.

Nominating and Corporate Governance Committee

The full board carries out the functions and responsibilities of the Nominating and Corporate Governance Committee. This committee acts on behalf of our board of directors and generally to identify and recommend nominees for our board and our committees, identify and recommend candidates for senior management, review and recommend to the board, or independently take, action on various company corporate governance issues, receive and respond to certain complaints raised by our employees regarding alleged illegal acts or behavior-related conduct by board members in violation of our Code of Business Conduct and Ethics, supervise our chief financial officer in the context of the Ethics Code and carry-out other assignments as designated by our board. A copy of the Nominating and Corporate Governance Committee was filed with our last 10KSB on March 31, 2008.

Code of Ethics

We adopted a code of ethics on March 26, 2008. We adopted eight Corporate Values (Focus, Respect, Excellence, Accountability, Teamwork, Integrity, Very Open Communications and Enjoying Our Work) to provide a framework for all employees in conducting themselves in their jobs. These policies are not intended to substitute for those Values, but will serve as guidelines in helping employee to conduct our business in accordance with its Values. Compliance requires meeting the spirit, as well as the literal meaning, of the law, the policies and the Values. It is expected that employee will use common sense, good judgment, high ethical standards and integrity in all their business dealings.

As of May 31, 2017, we had four directors. We have adopted those standards for independence contained in the Nasdaq Marketplaces Rules, Rule 4350(d) and Rule 4200(a)(15). Messrs. Kwak, Siegel, Kwak and St-Pierre are not independent.

Compensation of Officers

Option award compensation is the fair value for stock options vested during the period, a notional amount estimated at the date of the grant using the Black-Scholes option-pricing model. The actual value received by the executives may differ materially and adversely from that estimated. A summary of cash and other compensation paid in accordance with management consulting contracts for our Principal Executive Officer and other executives for the most recent two years is as follows:

Executive Officer Compensation Table

Employment Contracts

None

Other Executive Officers

During 2016, other than those disclosed above, no other employment contracts have been executed by our company for any other executive officer.

Retirement, Resignation or Termination Plans

We sponsor no plan, whether written or verbal, that would provide compensation or benefits of any type to an executive upon retirement, or any plan that would provide payment for retirement, resignation, or termination as a result of a change in control of our company or as a result of a change in the responsibilities of an executive following a change in control of our company.

Directors Compensation

The following table sets forth the compensation paid by us to our directors during our fiscal year ended December 31, 2016. This information includes the dollar value of base salaries, bonus awards and number of stock options granted, and certain other compensation, if any. The compensation discussed addresses all compensation awarded to, earned by, or paid to our named directors.

Director's Compensation Table

There are no other stock option plans, retirement, pension, or profit sharing plans for the benefit of our sole director other than as described herein.

Indemnification

Pursuant to the articles of incorporation and bylaws of the corporation, we may indemnify an officer or director who is made a party to any proceeding, including a law suit, because of his position, if he acted in good faith and in a manner he reasonably believed to be in its best interest. In certain cases, we may advance expenses incurred in defending any such proceeding. To the extent that the officer or director is successful on the merits in any such proceeding as to which such person is to be indemnified, we must indemnify him against all expenses incurred, including attorneys fees. With respect to a derivative action, indemnity may be made only for expenses actually and reasonably incurred in defending the proceeding, and if the officer or director is judged liable, only by a court order. The indemnification is intended to be to the fullest extent permitted by the laws of the State of Nevada.

Regarding indemnification for liabilities arising under the Securities Act of 1933 which may be permitted for directors or officers pursuant to the foregoing provisions, we are informed that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy, as expressed in the Act and is therefore unenforceable.

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The following table sets forth certain information regarding the beneficial ownership of our common stock as of the date of this Report by (i) each of our directors, (ii) each of our officers named in the Summary Compensation Table, (iii) each person who is known by us to be the beneficial owner of more than five percent of our outstanding common stock, and (iv) all directors and executive officers as a group. Except as otherwise indicated below, each person named has sole voting and investment power with respect to the shares indicated. The percentage of ownership set forth below reflects each holder's ownership interest in the 9,804,563,278 shares of our common stock outstanding as of October 18, 2017.

 

Name and Address of Beneficial Owner (1)	Preferred Shares (6)	Percent of Preferred Stock	Common Shares	Common Warrants	Combined Common & Warrants	Percent of Common Stock & Warrants
Michael Siegel (2)	250,000	25.00%	687,512,262	0	687,512,262	7.01%
Jeung Kwak (3)	250,000	25.00%	678,515,027	0	678,515,027	6.92%
Michel St-Pierre (4)	250,000	25.00%	500,003,752	0	500,003,752	2.04%
James Kwak			200,000,000	0	200,000,000	5.10%
All executive officers and directors as a group (4 persons)	750,000	75.00%	2,066,031,041	0	2,066,031,041	21.07%

(1)	The mailing address for each of the listed individuals is c/o Ecolocap Solutions International Inc., 1250 South Grove Avenue, Suite 308, Barrington, Illinois 60010.
(2)	Owner of 5% or more of our common stock. Mr.Siegel, is the Chief Technology Officer.
(3)	Owner of 5% or more of our common stock. Mr. Kwak, is Chairman of the Board of Directors.
(4)	Owner of 5% or more of our common stock. Chief Financial Officer.
(5)	Owner of 5% or more of our common stock. Chief Financial Officer.
(6)	Each share of Series A preferred stock had 100,000 votes.  The total voting power of the Series A preferred stock is 75,000,000,000 votes.  Accordingly, the combined voting power of all of the Series A preferred stock and all the common stock was 77,066,031,041 votes. The holders of the Series A preferred stock and the common stock vote as a single class on all matters submitted to stockholders.

2016	$	22,000	Malone Bailey, LLP
2015	$	20,000	Malone Bailey, LLP.

2016	$	0
2015	$	0

2016	$	0
2015	$	0

PART IV

ITEM 15.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

The following is a complete list of exhibits filed as part of this annual report:

 

 

 

 

 

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