ECO SCIENCE SOLUTIONS, INC. - Quarter Report: 2011 October (Form 10-Q)

Item 1.  Financial Statements  

Our unaudited consolidated financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.

(A Development Stage Company)

Consolidated Financial Statements

October 31, 2011

                                                                                                                                                                                                     Index

Consolidated Balance Sheets................................................................................................................................................... F–1

Consolidated Statements of Operations.................................................................................................................................   F–2

Consolidated Statements of Cash Flows................................................................................................................................   F–3

Notes to the Consolidated Financial Statements..................................................................................................................     F–4

(A Development Stage Company)

Consolidated Balance Sheets

(Unaudited)

(A Development Stage Company)

Consolidated Statements of Operations

(Unaudited)

(A Development Stage Company)

(A Development Stage Company)

Notes to the Consolidated Financial Statements

(Unaudited)

1.        Nature of Business and Continuance of Operations

Pristine Solutions Inc., (the “Company”) was incorporated in the State of Nevada on December 8, 2009.  The Company’s principal business is the sale and distribution of electric instant water heaters in Jamaica. 

These consolidated financial statements have been prepared on a going concern basis, which assumes the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary financing and the attainment of profitable operations.  As of October 31, 2011, the Company has incurred losses totaling $74,755 since inception, and has not yet generated any revenue from operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

2.        Summary of Significant Accounting Policies

The interim unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States and the rules of the Securities and Exchange Commission for interim financial information. They do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Therefore, these financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes thereto contained in the Company's latest Annual Report filed with the SEC on Form 10-K for the year ended January 31, 2011. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the unaudited interim consolidated financial statements that would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal year as reported in the Form 10-K have been omitted.

a)       Basis of Presentation

These consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States and are expressed in US dollars. The Company’s fiscal year end is January 31.

b)      Principal of Consolidation

The consolidated financial statements include the accounts of Pristine Solutions Inc. and its 100% owned subsidiary. All significant intercompany balances and transactions have been eliminated in consolidation.

c)       Use of Estimates

The preparation of consolidated financial statements in conformity with United States generally accepted accounting principles 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to long-lived assets and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

d)      Revenue Recognition

Sales are recorded when products are shipped to customers. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. No provision for discounts or rebates to customers, estimated returns and allowances or other adjustments were recognized during the periods ended October 31, 2011 and 2010. In instances where products are configured to customer requirements, revenue is recorded upon the successful completion of the Company’s final test procedures and the customer’s acceptance. No revenues were deferred due to products being configured to customer requirements during the periods ended October 31, 2011 and 2010.

(A Development Stage Company)

Notes to the Consolidated Financial Statements

(Unaudited)

2.       Summary of Significant Accounting Policies (continued)

e)       Product Warranty

The Company provides a one year warranty on all products sold. The Company’s policy is to accrue a warranty liability equal to 2% of sales based on the manufacturer’s past experience. Spare parts equal to 1% of each order are provided to the Company free of charge from the manufacturer. During the nine months ended October 31, 2011, the Company recognized $11 (2010 - $nil) of warranty expenses in accrued liabilities and cost of goods sold. The Company did not have any warranty claims during the periods ended October 31, 2011 and 2010. The Company will continue to evaluate its warranty policy based on actual products returned and costs incurred.

The Company’s warranty accrual is based on the Company’s best estimates of product failure rates and unit costs to repair. However, the Company plans to release new products. As a result, it is at least reasonably possible that products could be released with certain unknown quality and/or design problems. Such an occurrence could result in materially higher than expected warranty and related costs, which could have a materially adverse effect on the Company’s results of operations and financial condition.

f)       Earnings (Loss) Per Share (“EPS”)

Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. At October 31, 2011, the Company had no potentially dilutive securities outstanding.

g)       Recent Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect and that may impact its consolidated financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on their financial position or results of operations.

3.        Related Party Transactions

Office services and office space are provided without charge by the sole officer and director of the Company. Such costs are immaterial to the consolidated financial statements and accordingly, have not been reflected therein.

As of October 31, 2011, the Company owes the sole director of the Company $2,315 (January 31, 2011 - $2,055) for expenditures paid on behalf of the Company.  The amount owed is unsecured, non-interest bearing, and has no specified repayment terms.

4.        Loans payable

As of October 31, 2011, the Company owes an unrelated third party $10,033 (January 31, 2011 - $9,985) for a note payable dated December 21, 2010. The note payable is unsecured, non-interest bearing, and has no specified repayment terms.

As of October 31, 2011, the Company is indebted to an unrelated third party for $18,051.  This loan is unsecured, non-interest bearing, and is due on demand.

5.        Commitments 

On December 30, 2009, the Company entered into a license agreement to sell and distribute electric instant water heaters in Jamaica. According to the terms of the agreement, the Company was required to purchase no less than 50 products within six months of the agreement date. The agreement was effective for an initial period of one year and could be extended for a further period by either party if written notice was given 30 days prior to the expiration date. On March 18, 2011, the Company extended the term of the license agreement for an additional six months.  According to the terms of the agreement, the Company is required to purchase no less than 150 products within six months. As of October 31, 2011, 172 units of water heaters had been ordered, of which 52 have been received by the Company and full payment had been made on all the units.

F-5

FORWARD-LOOKING STATEMENTS  

This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these terms, or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our unaudited consolidated financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our unaudited consolidated financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report.

Unless otherwise specified in this quarterly report, all dollar amounts are expressed in United States dollars and all references to “common stock” refer to shares of our common stock.

As used in this quarterly report, the terms “we”, “us”, “our” and “our company” mean Pristine Solutions Inc., and our subsidiary Pristine Solutions Limited, a Jamaica corporation, unless otherwise indicated.

Corporate Overview  

We were incorporated on December 8, 2009 under the laws of the State of Nevada. We have a wholly-owned subsidiary, Pristine Solutions Limited, incorporated under the laws of Jamaica. Our principal executive offices are located at Stettin Albert Town, Trelawny, Jamaica. Our telephone number is (876) 572-4681. Our fiscal year end is January 31.

We are a startup, development stage company. We have only recently begun operations and we have relied upon the sale of our securities and proceeds from debt to fund those operations as we have only generated limited revenues from the sale of our products. We intend on developing a network of sales points for the sale and service of tankless water heaters in Jamaica. We aim to be the first tankless water heater company specializing in tankless-only products to enter the Jamaican market and the only company in the Jamaican market offering solar powered tankless water heater products.

On December 30, 2009, we entered into a distribution agreement with the manufacturer of the tankless hot water heaters which we hope to sell in Jamaica: Zhongshan Guangsheng Industry Co., Ltd., of China (“Zhongshan”). Zhongshan currently manufactures the tankless hot water heaters under the brand Gleamous Electric Appliances. Zhongshan is part of an international enterprise that also owns a research and development group, factory, and sales group and is looking to expand into other markets. Our management hopes that we can expand the Gleamous brand into the Jamaican market and the rest of the Caribbean. Pursuant to the terms of this agreement, we acquired 52 units of Zhongshan’s various Gleamous tankless water heaters of which we were required to purchase 50 within the first 6 months of the agreement. As consideration, we were granted the exclusive license to distribute the products within Jamaica. The term of the agreement was 1 year and may be terminated by either party with 30 days written notice.

Employees  

As of October 31, 2011, we have 3 employees as we have hired two full-time commissioned sales staff to market, sell and install our tankless hot water tanks and the third employee is our sole director and officer, who contributes approximately 50% of her time to our company.

We currently engage independent contractors in the areas of accounting and legal services. We plan to engage independent contractors in the areas of marketing, bookkeeping, investment banking and other services including at least 3 part time consultants who will each focus on sales and marketing, business development and investor relations.

Purchase of Significant Equipment  

We anticipate spending approximately $60,000 on the purchase of tankless water heaters under our distribution agreement with Zhongshan during the next 12 months. Pursuant to the terms of the agreement, after confirmation of the order, our company shall pay a 30% deposit prior to production in favor of Zhongshan within the time stipulated in the relevant sales confirmation with 70% balance paid against delivery notice before the delivery of the order. As of October 31, 2011, an additional 120 units have been ordered but have yet to be delivered. 

Personnel Plan  

Other than as stated above, we do not anticipate any significant changes in the number of employees during the next 12 months. However, if we are successful with obtaining any purchase orders from our targeted wholesalers and distributors, then we will hire part time employees to act as after sales and service representatives of our company, and we will also hire additional full-time commission oriented sales representatives to obtain additional purchase orders for our company. The numbers of employees to be hired are uncertain and will depend on the success and size of the initial purchase order.

Plan of Operation  

You should read the following discussion of our financial condition and results of operations together with our unaudited consolidated financial statements and the notes thereto included elsewhere in this filing. Our unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States. This discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those anticipated in these forward-looking statements.

Anticipated Cash Requirements  

We estimate that our expenses over the next 12 months will be approximately $470,000 as described in the table below. These estimates may change significantly depending on the nature of our future business activities and our ability to raise capital from shareholders or other sources.