ECO SCIENCE SOLUTIONS, INC. - Quarter Report: 2014 October (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended October 31, 2014

o  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES 

 EXCHANGE ACT OF 1934

For the transition period from [ ] to [ ]

Commission file number 000-54803

ECO SCIENCE SOLUTIONS, INC.

(Exact name of registrant as specified in its charter)

N/A

 (Former name, former address and former fiscal year, if changed since last report)

Indicate the number of shares outstanding of each of the registrant’s

classes of common stock as of the latest practicable date.

30,293,001 Common Shares issued and outstanding as of December 15, 2014

DOCUMENTS INCORPORATED BY REFERENCE: None

PART I-FINANCIAL INORMATION

The Company’s unaudited interim consolidated financial statements for the nine month period ended October 31, 2014 form a part of this quarterly report. They are stated in United States Dollars (US$) and are prepared in accordance with United States generally accepted accounting principles.

These financial statements should be read in conjunction with the audited financial statements and notes included thereto for the year ended January 31, 2014 on Form 10-K, as filed with the Securities and Exchange Commission on May 14, 2014.

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The accompanying notes are an integral part of these financial statements

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The accompanying notes are an integral part of these financial statements

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The accompanying notes are an integral part of these financial statements

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ECO SCIENCE SOLUTIONS, INC.

NOTES TO THE FINANCIAL STATEMENTS

OCTOBER 31, 2014

NOTE 1: NATURE OF BUSINESS AND CONTINUANCE OF OPERATIONS

The Company was incorporated in the state of Nevada on December 8, 2009 under the name Pristine Solutions, Inc. The Company’s wholly owned subsidiary, Pristine Solutions Limited, was incorporated under the laws of Jamaica. The Company’s original business plan focused on developing a network of sales points for the sale and service of tankless water heaters in Jamaica, through Pristine Solutions Limited. 

On August 22, 2012, Christine Buchanan-McKenzie resigned from all positions with the Company, including, but not limited to that of President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer, and a member of the Board of Directors.  The resignation did not involve any disagreement with the Company on any matter relating to the Company’s operations, policies or practices. On the same day, Mr. Michael Borkowski was appointed as President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer, and a member of the Board of Directors of the Company.

On August 23, 2012, the Company and its controlling stockholders entered into a Share Exchange Agreement (the “Share Exchange”) with Eaton Scientific Systems, Ltd., a Nevada corporation (“ESSL”) and the shareholders of ESSL (the “ESSL Shareholders”), whereby the Company acquired 25,000,000 shares of common stock (100%) of ESSL (the “ESSL Stock”) from the ESSL Shareholders.  In exchange for the ESSL Stock, the Company issued 25,000,000 shares of its common stock to the ESSL Shareholders (the “Share Exchange”). 

The Company’s Chief Executive Officer, Mr. Michael J. Borkowski, on behalf of the Company, entered into a Common Stock Purchase Agreement with the Company’s controlling shareholder, and former President, Ms. Christine Buchanan-McKenzie, whereby the Company would purchase one hundred percent (100%), or 240,000,000 shares, of the Company’s common shares owned by Mrs. Buchanan-McKenzie, at par value $.0001, and representing approximately 54.1% of the Company’s total issued and outstanding shares.  The Common Stock Purchase Agreement, and subsequent transaction closing, was completed on October 22, 2012.  On October 23, 2012, the Common Stock Purchase Agreement was finalized, and a change in control of the Company took place. 

In conjunction with the Share Exchange and Common Stock Purchase Agreement, the total shares held by the ESSL Shareholders are 265,000,000, or approximately 59.8% of the issued and outstanding common stock of the Company as of October 30, 2012.  In addition, certain ESSL shareholders owning a total of 135,779,375 shares of the Company’s common stock, representing approximately 30.64% of the issued and outstanding common stock of the Company, entered into three (3) separate twenty-four (24) month Lock-Up Agreements.

As a result of the Share Exchange and Common Stock Purchase Agreement, (i) there was a change in control of the Company; (ii) ESSL became the Company’s wholly owned subsidiary; and (iii) the ESSL operations continued as its primary business.  In addition, on November 27, 2012, the Company changed its name to Eaton Scientific Systems, Inc.

In October, 2013, the Company’s Management was introduced to Domenic Marciano (“Marciano”).  Marciano represented that he intended to acquire an exclusive license to a unique automotive product, the EcoFlora Spark Plug, with a proprietary technology, and that EcoFlora has the potential to be uniquely positioned in the automotive parts business in the United States and International automotive parts marketplace.

The Majority Shareholders acknowledge that the Company has not been able to attract investment capital sufficient to execute its business plan because of its Share price.  Further, Management believes that the potential success of the EcoFlora technology could potentially provide value to the Company and its shareholders. As a result, on November 26, 2013, the Company and its Majority Shareholders (the “Majority Stockholders”) entered into an Agreement for the Purchase of Common Stock (the “Stock Purchase Agreement”) with Marciano whereby Marciano acquired 227,370,000 shares of the Company’s common stock from the Majority Stockholders at par value $.0001, representing approximately 51.3% of the Company’s total issued and outstanding shares, in exchange for cash in the amount of $22,737 (the “Cash Proceeds”).  The Stock Purchase Agreement, and subsequent transaction closing, was completed on November 26, 2013, and a change in control of the Company took place.

The Majority Shareholders and the Company’s Management also believe it is in the best interest of the Company’s Shareholders to operate Eaton Scientific Systems, Ltd. (“Eaton Sub”) a Nevada corporation and wholly owned subsidiary of the Company, as a privately held Company, until such time where it is sufficiently capitalized to increase the probability for its Clinical Trials of Homatropine (“Tropine 3”) in oral suspension for the treatment of hot flash symptoms in pre-menopausal, menopausal and post menopausal women, to be in a position to yield results that may provide the opportunity for a potential FDA approval for marketing to consumers in the US.

In connection with the terms and conditions of the Stock Purchase Agreement and sale of 227,370,000 shares held by the Majority Stockholders:

1.

Marciano appointed two new directors to the Company’s board of directors; and

2.

The “Lock-Up-Leak-Out” Agreements executed in October 2012 were cancelled by mutual agreement between the Board and the Company’s Shareholders who were party to the Agreements.

3.

The Majority Shareholders of the Company have voted to “Spin-out” to its Shareholders, one hundred percent (100%) of the issued and outstanding shares of Eaton Scientific Systems Ltd., its operating subsidiary, as of the record date of November 25, 2013, on a one-for-one basis within sixty-days (60) of the Change of Control of the Company, or by January 25, 2014.  

On January 9, 2014, the Spin-out was complete, and Eaton Scientific Systems, Ltd. was no longer a subsidiary of the Company.

On February 14, 2014, the Company changed its name to Eco Science Solutions, Inc. (OTCQB.ESSI).

NOTE: The following notes and any further reference made to “the Company”, "we", "us", "our" and "ESSI" shall mean Eco Science Solutions, Inc. (formerly Eaton Scientific Systems, Inc.), unless otherwise indicated.

Headquartered in Miami, Florida, Eco Science Solutions, Inc., a Nevada corporation, is charged with the origination, development and commercialization of innovative aftermarket automotive parts.

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On December 4, 2013, the Company (the “Company”) executed an Agreement of the License of Intellectual Property (the “License Agreement”) dated November 4, 2013 with Eco Science Solutions International, Inc., a Canadian corporation (“ESS International”), for the exclusive license to a revolutionary Spark Plug technology, the EcoFlora Spark Plug, that has filed for Patent protection in Canada and the United States based on its "Internal Pre-Combustion Chamber High Efficiency Spark Plug" technology. In connection with the License Agreement, the Company issued ESS International 2,500,000 shares of the Company’s Series “A” Convertible Preferred Stock (“Preferred Stock”), in exchange for the exclusive license of the Patent Applications, in perpetuity.  The Preferred Stock is convertible into common stock at a conversion rate of 10 common shares for each preferred share.

On February 14, 2014, the Company effected a 1000-to-1 reverse stock split.  As a result, the total shares of common stock issued and outstanding was adjusted to 443,001 shares with a par value of $0.10.

On April 4, 2014, the Company received notice from Eco Science Solutions International, Inc. to convert 100% of the Series “A” preferred shares into restricted common shares on a 10 for 1 basis.  As a result, on April 9, 2014, 25,000,000 shares of the Company’s restricted common stock was issued, of which 19,866,668 shares were issued to the Company’s chairman, Domenic Marciano, and 5,133,332 shares were issued to non-related parties.  Subsequent to the conversion, Eco Science Solutions International, Inc. no longer holds any shares of the Company’s capital stock, and Mr. Marciano holds 20,094,038 shares of the Company’s common stock, which represents 62.13% of the total issued and outstanding shares of the Company’s common stock on a fully diluted basis.

The Company is currently in the testing stages, and intends to validate its technology and then and manufacture and sell the technology.

Going Concern

These financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has not generated significant revenues to date and has never paid any dividends and is unlikely to pay dividends or generate significant earnings in the immediate or foreseeable future.  As at October 31, 2014, the Company had a working capital deficit from continuing operations of $340,853, and an accumulated deficit of $8,596,562. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability to raise equity or debt financing, and the attainment of profitable operations from the Company's future business. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern.

The financial statements reflect all adjustments consisting of normal recurring adjustments, which, in the opinion of management, are necessary for a fair presentation of the results for the periods shown. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of significant accounting policies is presented to assist in understanding the Company’s financial statements.  These accounting policies conform to accounting principles, generally accepted in the United States of America, and have been consistently applied in the preparation of the financial statements.

Basis of Presentation

These consolidated financial statements and related notes are 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.

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.

Cash and Cash Equivalents

The Company considers all highly liquid instruments with maturity of three months or less at the time of purchase to be cash equivalents. As of October 31, 2014 and January 31, 2014, the Company had no cash equivalents.

Intangible Assets

Intangible assets consist of licensing and other direct costs incurred in connection with the license rights of pending patents, and are capitalized and amortized over the shorter of the economic or legal life of the patent.  During the nine months ended October 31, 2014 and the year ended January 31, 2014, respectively, $0 and $5,265,000 were capitalized to patent costs.

Impairment of Long-Lived Assets

The Company’s long-lived assets, including intangibles, are reviewed for impairment whenever events or changes in circumstances indicate that the historical-cost carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the asset by comparing the undiscounted future net cash flows expected to result from the asset to its carrying value. If the carrying value exceeds the undiscounted future net cash flows of the asset, an impairment loss is measured and recognized. An impairment loss is measured as the difference between the net book value and the fair value of the long-lived asset.

Due to the Company’s recurring losses, the costs related to its patents were evaluated for impairment and it was determined that there were no sufficient estimated future cash flows for the recoverability of the asset.  As a result, an impairment loss of $5,265,000 was recorded for the year ended January 31, 2014.

Fair Value Measurements

Pursuant to ASC 820, Fair Value Measurements and Disclosures and ASC 825, Financial Instruments, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 and 825 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 and 825 prioritizes the inputs into three levels that may be used to measure fair value:

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The Company’s financial instruments consist principally of cash, accounts payable, and accrued liabilities. Pursuant to ASC 820 and 825, the fair value of cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.

Revenue Recognition

The Company recognizes revenue in accordance with ASC 605, Revenue Recognition. Revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service has been provided, and collectability is reasonably assured.  As of October 31, 2014, no revenue has been recognized, as the Company has not commenced operations.

Stock-Based Compensation

The Company records stock-based compensation in accordance with ASC 718, Share-Based Payments, using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued.

Basic and Diluted Net Income (Loss) Per Share

The Company computes net income (loss) per share in accordance with ASC 260, Earning per Share.  ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. 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.

Discontinued Operations

In accordance with ASC 205-20 and ASU 2014-08, Presentation of Financial Statements - Discontinued Operations, the Company reported the results of its former subsidiary, Eaton Scientific Solutions, Ltd. (“Eaton Sub”), as a discontinued operation in the Company’s annual financial statements for the year ended January 31, 2014. The application of ASC 205-20 and the adoption of ASU 2014-08 are discussed therein.

Comprehensive Loss

ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at October 31, 2014, the Company has no items that represent comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements.

Recently Adopted Accounting Standards: 

The Company evaluates the pronouncements of various authoritative accounting organizations, primarily the Financial Accounting Standards Board (“FASB”), the US Securities and Exchange Commission (“SEC”), and the Emerging Issues Task Force (“EITF”), to determine the impact of new pronouncements on US GAAP and the impact on the Company. The Company has recently adopted the following new accounting standards:

Adopted:

In February 2013, the FASB issued ASU No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive (ASU 2013-02). This guidance is the culmination of the FASB’s deliberation on reporting reclassification adjustments from accumulated other comprehensive income (AOCI). The amendments in ASU 2013-02 do not change the current requirements for reporting net income or other comprehensive income. However, the amendments require disclosure of amounts reclassified out of AOCI in its entirety, by component, on the face of the statement of operations or in the notes thereto. Amounts that are not required to be reclassified in their entirety to net income must be cross-referenced to other disclosures that provide additional detail. This standard is effective prospectively for annual and interim reporting periods beginning after December 15, 2012. The adoption of this update did not have a material impact on its consolidated financial statements.

In April 2013, the FASB issued ASU No. 2013-07, Presentation of Financial Statements (Top 205): Liquidation Basis of Accounting. The objective of ASU No. 2013-07 is to clarify when an entity should apply the liquidation basis of accounting and to provide principles for the measurement of assets and liabilities under the liquidation basis of accounting, as well as any required disclosures. The amendments in this standard is effective prospectively for entities that determine liquidation is imminent during annual reporting periods beginning after December 15, 2013, and interim reporting periods therein. The adoption of this update did not have a material impact on its consolidated financial statements.

In July 2013, the FASB issued ASU No 2013-11, Presentation of an Unrecognized Tax Benefit When Net Operating Loss Carryforward Exists.  The objective of ASU 2013-11 is to reduce diversity in practice by providing guidance on the presentation of unrecognized tax benefits, and will better reflect the manner in which an entity would settle at the reporting date any additional income taxes that would result from the disallowance of a tax position when net operating loss carryforwards, similar tax losses, or tax credit carryforwards exist. The amendments in this Update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013, and interim reporting periods therein. Early adoption is permitted. The adoption of this update did not have a material impact on its consolidated financial statements.

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In June 2014, the FASB issued ASU No, 2014-10, Elimination of Certain Financial Reporting Requirements for Development Stage Entities.  The objective of ASU 2014-10 is to reduce the cost and complexity associated with the incremental reporting requirements for development stage entities.  This Update removes all incremental financial reporting requirements, and eliminates an exception provided to development stage entities in Topic 810.  The amendments in this standard are effective retrospectively for annual reporting periods beginning after December 15, 2014, and interim periods therein. Early adoption is permitted.

Not Yet Adopted:

In April 2014, the FASB issued ASU No. 2014-08 Presentation of Financial Statements (Top 205): Reporting Discontinued Operations and Disclosure of Disposals of Components of an Entity.  The objective of ASU No. 2014-08 is to clarify the criteria for determining which disposals can be presented as discontinued operations and also modifies related disclosure requirements. The standard is required to be adopted by public business entities in annual periods beginning on or after December 15, 2014, and interim periods within those annual periods.  Early adoption is permitted for new disposals beginning in the first quarter of 2014, provided financial statements have not been issued before the release of this standard. The Company is evaluating the effect, if any, adoption of ASU No. 2014-08 will have on its consolidated financial statements.

Recently Issued Accounting Standards Updates: 

There were various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries. None of the updates are expected to a have a material impact on the Company's consolidated financial position, results of operations or cash flows.

NOTE 3: NOTES AND LOANS PAYABLE-CONVERTIBLE

On January 7, 2013, the Company issued a Convertible Promissory Note in the amount of $250,000 to a non-related party (the “Convertible Note”).  The Convertible Note and accrued interest was subsequently purchased and assigned to another non-related party as part of a Convertible Note Assignment and Purchase Agreement (the “Assignment”) dated August 18, 2013.  The Convertible Note is payable within two years, or by January 31, 2015, accrues interest at a rate of 6% per annum, and is convertible into the Company’s common stock at a rate of $0.003 per share. In accordance with certain Assignment of Debt agreements dated between April 16, 2014 and September 11, 2014, total principal in the amount of $13,650 was assigned to five non-related parties (the “Assignees”), transferring all the rights of the original Convertible Note. As a result, the principal balance of the Convertible Note was reduced to $236,350.  Interest in the amount of $26,947 and $15,986 has been accrued as of October 31, 2014 and January 31, 2014, respectively, and is included as an accrued expense on the accompanying balance sheets.

On September 11, 2014, the Company received notice from an Assignee to convert 100% of the Assignee’s $1,200 note into the Company’s common stock at the conversion rate of $0.003 per share.  As a result, 400,000 unrestricted shares of the Company’s common stock were issued to the Assignee.

On October 6, 2014, the Company received notice from an Assignee to convert 100% of the Assignee’s $3,000 note into the Company’s common stock at the conversion rate of $0.003 per share.  As a result, 1,000,000 unrestricted shares of the Company’s common stock were issued to the Assignee.

As of October 31, 2014 and January 31, 2014, respectively, the Company has accrued $26,947 and $15,986 in interest on notes and loans payable.

NOTE 4: RELATED PARTY TRANSACTIONS

As of October 31, 2014, related parties are due a total of $175,131, which is comprised of $116,881 in cash loans to the Company, and $58,250 in accrued compensation.

Related party transactions consist of the following:

On September 1, 2012, the Company entered into an employment agreement with Mr. Michael J. Borkowski (the “2012 Employment Agreement”) to serve as the Company’s President, CEO, and Director. The Employment Agreement was for a term of three (3) years, and included compensation in the amount of $72,000 per year, bonus compensation in the amount of $100,000 contingent upon the Company meeting certain goals, 5,000,000 stock options, and certain other benefits in the event they are offered by the Company in the future. As a result of the change in control of the Company in November 2013, the 5,000,000 stock options granted under the 2012 Employment Agreement became fully vested (see Note 9). As of October 31, 2014 and January 31, 2014, $59,000 has been recorded as a related party payable for unpaid compensation under the 2012 Employment Agreement.

On November 15, 2013, the Company entered into a new employment agreement with Mr. Michael J. Borkowski (the “2013 Employment Agreement”) to serve under new management as the Company’s President, CEO, and Director. The Employment Agreement, which replaces the 2012 Employment Agreement, is for a term of one (1) year, and includes compensation in the amount of $18,000 per year, compensation for certain travel expenses, and grants to purchase 400,000 shares of the Company’s common stock at par, which vest periodically beginning February 15, 2014, at 100,000 shares per vesting period through November 15, 2014 (the “Stock Award”). In connection with the Stock Award, $640,000 has been recorded as deferred compensation, of which $480,000 has been expensed in the current year.  There remains $160,000 in deferred compensation to be amortized over the next month. As of October 31, 2014 and January 31, 2014, $750 has been recorded as prepaid related party compensation under the 2013 Employment Agreement.

On November 4, 2013, the Company issued a Promissory Note (the “Note”) in the amount of $22,000 to Eco Science Solutions International, Inc., a company controlled by Domenic Marciano, the Company’s chairman, for cash loans made to the Company.  The Note bears interest at a rate of 5% per annum and is due within ninety (90) days of written demand. As of October 31, 2014, the Note remains unpaid, and no demand has been made.  Interest in the amount of $1,088 and $265 has been accrued as of October 31, 2014 and January 31, 2014, respectively, and is included as an accrued expense on the accompanying balance sheets.

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On January 31, 2014, the Company issued a Convertible Promissory Note (the “Convertible Note”) in the amount of $16,991 to Eco Science Solutions International, Inc., a company controlled by Domenic Marciano, the Company’s chairman, for cash loans made to the Company.  Modifications to the Convertible Note have been made through October 31, 2014to increase the principal by $77,891, representing additional cash loans made to the Company for overhead advances. The Convertible Note bears interest at a rate of 5% per annum, is due within two (2) years, or January 31, 2016, and is convertible into the Company’s common stock at a rate equal to the fair market value on the date of conversion. As of October 31, 2014, the Note remains unpaid, and no demand has been made. Interest in the amount of $1,745 and $0 has been accrued as of October 31, 2014 and January 31, 2014, respectively, and is included as an accrued expense on the accompanying balance sheets.

On April 9, 2014, in connection with the conversion of certain preferred stock, Domenic Marciano, the Company’s chairman, was issued 19,866,668 of the Company’s common stock (see Note 6).

As of October 31, 2014 and January 31, 2014, respectively, the Company has accrued $2,833 and $265 in interest on related party loans.

NOTE 5: COMMITMENTS AND CONTINGENCIES

On December 4, 2013, the Company (the “Company,” the “Licensee”) executed an Agreement of the License of Intellectual Property (“License Agreement”) dated November 4, 2013 with Eco Science Solutions International, Inc., a Canadian corporation (“Licensor”), for the license of certain US and Canadian Patent Pending Applications in perpetuity.  In connection with the terms and conditions of the License Agreement, the Company will pay Licensor a royalty equal to three percent (3%) of Gross Revenues (the “Gross Revenues”) earned in connection with the Patent License, payable on a quarterly basis.  As of October 31, 2014, no Gross Revenues have been earned.

NOTE 6: PREFERRED STOCK

The total number of authorized shares of preferred stock that may be issued by the Company is 50,000,000 shares with a par value of $0.001.

On December 4, 2013, in connection with the Agreement of the License of Intellectual Property dated November, 4, 3013, the Company issued 2,500,000 shares of Series “A” Convertible Preferred Stock to Eco Science Solutions International, Inc., a company controlled by Domenic Marciano, the Company’s chairman, valued at $5,265,000. As a result, $5,262,500 was recorded as preferred additional paid in capital.  The Preferred Stock is convertible into the Company’s common stock at a rate of 10 shares of common stock for each share of Preferred Stock.

On April 4, 2014, the Company received notice from Eco Science Solutions International, Inc. to convert 100% of the Series “A” preferred shares into restricted common shares on a 10 for 1 basis.  As a result, on April 9, 2014, 25,000,000 shares of the Company’s restricted common stock were issued, and preferred additional paid in capital was reduced by $5,262,500.

As of October 31, 2014, no shares of the Company’s preferred stock were issued and outstanding.

NOTE 7: COMMON STOCK

The following reflects the common stock transactions as adjusted for the change in par value, and the effects of the 1000-to-1 reverse stock-split that occurred on February 14, 2014.

The total number of authorized shares of common stock that may be issued by the Company is 650,000,000 shares with a par value of $0.10.

On September 11, 2014, the Company received notice from the holder of a $1,200 Convertible Note Payable to convert 100% of principal into the Company’s common stock at the conversion rate of $0.003 per share.  As a result, 400,000 unrestricted shares of the Company’s common stock, with a par value of $40,000, were issued to the note holder, and additional paid in capital was reduced by $38,800.

On October 6, 2014, the Company received notice from the holder of a $3,000 Convertible Note Payable to convert 100% of principal into the Company’s common stock at the conversion rate of $0.003 per share.  As a result, 1,000,000 unrestricted shares of the Company’s common stock, with a par value of $100,000, were issued to the note holder, and additional paid in capital was reduced by $97,000.

As of October 31, 2014 and January 31, 2014, respectively, 30,293,001 and 443,001 shares of the Company’s common stock were issued and outstanding.

NOTE 8: WARRANTS AND OPTIONS

On September 1, 2012, the Company, under its 2012 Plan, granted qualified stock options to purchase 6,500,000 shares of its common stock.  Of the total options granted, 5,000,000 were granted to the President of the Company (the “Executive Options”) at $0.10 per share, and 1,500,000 were granted to a consultant at $0.25 per share (collectively, the “Options”).  The Options are exercisable for a period of five (5) years, vest quarterly over a period of three (3) years, and were valued using the Black-Scholes valuation method at $0.41 per share, or $2,665,000, to be amortized over a 36-month period.

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As of October 31, 2014 and January 31, 2014, the Company has granted a total of 6,500,000 options to purchase common stock shares. In connection with the options granted, a total of $2,665,000 has been recorded as deferred compensation, of which $153,750 and $2,084,617 has been expensed during the nine months ended October 31, 2014 and the year ended January 31, 2014, respectively. There remains $205,000 and $358,750 of deferred compensation as of October 31, 2014 and January 31, 2014, respectively.

NOTE 9: RESTRICTED STOCK AWARDS

On February 15, 2014, in connection with a certain Employment Agreement dated November 15, 2013, its President was awarded the right to purchase 400,000 shares of the Company’s restricted common stock (the “Restricted Stock Units”, “RSUs”) at a per share price of $0.001 (the “Stock Award”).  The Stock Award, valued at $640,000, vests periodically over the period beginning February 15, 2014 through November 15, 2014, at 100,000 RSUs per vesting period.  During the nine month period ended October 31, 2014, the Company recorded deferred compensation in the amount of $640,000, of which $480,000 has been expensed in the current year for the 300,000 RSUs vested through October 31, 2014.  There remains $160,000 in deferred compensation to be amortized over the next  month.

As of October 31, 2014, the Company has awarded a total of 400,000 Restricted Stock Units. In connection with the Stock Award, a total of $640,000 has been recorded as deferred compensation, of which $480,000 has been expensed as of October 31, 2014. There remains $160,000 of deferred compensation as of October 31, 2014.

NOTE 10: INCOME TAXES

The components of the net change in deferred tax asset at October 31, 2014 and January 31, 2014, the statutory tax rate, the effective tax rate and the amount of the valuation allowance are indicated below:

The significant components of the cumulative deferred income tax assets and liabilities at October 31, 2014 and January 31, 2014, are as follows:

NOTE 11: SUBSEQUENT EVENTS

On November 15, 2014, in accordance with his Employment Agreement, the Company issued 100,000 shares of restricted common stock, valued at $160,000, to its President for cash in the amount of $100. As a result, additional paid in capital was reduced by $9,900.

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Forward Looking Statements

This quarterly report contains forward-looking statements. These statements relate to future events or the Company’s future financial performance. In some cases, forward-looking statements can be identified by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or 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 the Company’s or its 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 the Company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.

The Company’s unaudited 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 the Company’s financial statements and the related notes that appear elsewhere in this quarterly report.

The following discussion contains forward-looking statements that reflect the Company’s plans, estimates and beliefs. The Company’s 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. All adjustments necessary for a fair statement of the results for the interim periods have been made, and all adjustments are of a normal recurring nature.

In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States Dollars and all references to “common shares” refer to the common shares in the Company’s capital stock.

As used in this annual report, the terms "we", "us", "our" and "ESSI" mean Eco Science Solutions, Inc. (formerly Eaton Scientific Systems, Inc.), unless otherwise indicated.

Overview

The Company was incorporated in the state of Nevada on December 8, 2009, under the name Pristine Solutions, Inc. The Company’s wholly owned subsidiary, Pristine Solutions Limited, was incorporated under the laws of Jamaica. The Company’s original business plan focused on developing a network of sales points for the sale and service of tankless water heaters in Jamaica, through Pristine Solutions Limited. 

On August 22, 2012, Christine Buchanan-McKenzie resigned from all positions with the Company, including, but not limited to that of President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer, and a member of the Board of Directors.  The resignation did not involve any disagreement with the Company on any matter relating to the Company’s operations, policies or practices. On the same day, Mr. Michael Borkowski was appointed as President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer, and the sole member of the Board of Directors of the Company.

On August 23, 2012, the Company and its controlling stockholders entered into a Share Exchange Agreement (the “Share Exchange”) with Eaton Scientific Systems, Ltd., a Nevada corporation (“ESSL”) and the shareholders of ESSL (the “ESSL Shareholders”), whereby the Company acquired 25,000,000 shares of common stock (100%) of ESSL (the “ESSL Stock”) from the ESSL Shareholders.   In exchange for the ESSL Stock, the Company issued 25,000,000 shares of its common stock to the ESSL Shareholders.  In addition, the Company’s Chief Executive Officer, Mr. Michael J. Borkowski, on behalf of the Company, entered into a Common Stock Purchase Agreement with the Company’s controlling shareholder, and former President, Ms. Christine Buchanan-McKenzie, whereby the Company would purchase one hundred percent (100%), or 240,000,000 shares, of the Company’s common shares owned by Mrs. Buchanan-McKenzie, at par value $.0001, and representing approximately 54.1% of the Company’s total issued and outstanding shares.  The Common Stock Purchase Agreement, and subsequent transaction closing, was completed on October 22, 2012.  On October 23, 2012, the Common Stock Purchase Agreement was finalized, and a change in control of the Company took place. 

In conjunction with the Share Exchange and Common Stock Purchase Agreement, the total shares held by the ESSL Shareholders are 265,000,000, or approximately 59.8% of the issued and outstanding common stock of the Company as of October 30, 2012.  Certain ESSL shareholders owning a total of 135,779,375 shares of the Company’s common stock, representing approximately 30.64% of the issued and outstanding common stock of the Company, entered into three (3) separate twenty-four (24) month Lock-Up Agreements.

As a result of the Share Exchange and Common Stock Purchase Agreement, (i) there was a change in control of the Registrant; (ii) ESSL became the Company’s wholly owned subsidiary; and (iii) the ESSL operations will continue as the Company’s primary business. In addition, on November 27, 2012, the Company changed its name to Eaton Scientific Systems, Inc.

In October, 2013, the Company’s Management was introduced to Domenic Marciano (“Marciano”).  Marciano represented that he intended to acquire an exclusive license to a unique automotive product, the EcoFlora Spark Plug, with a proprietary technology, and that EcoFlora has the potential to be uniquely positioned in the automotive parts business in the United States and International automotive parts marketplace.

The Majority Shareholders acknowledge that the Company has not been able to attract investment capital sufficient to execute its business plan because of its Share price.  Further, Management believes that the potential success of the EcoFlora technology could potentially provide value to the Company and its shareholders. As a result, on November 26, 2013, the Company and its Majority Shareholders (the “Majority Stockholders”) entered into an Agreement for the Purchase of Common Stock (the “Stock Purchase Agreement”) with Marciano whereby Marciano acquired 227,370,000 shares of the Company’s common stock from the Majority Stockholders at par value $.0001, representing approximately 51.3% of the Company’s total issued and outstanding shares, in exchange for cash in the amount of $22,737 (the “Cash Proceeds”).  The Stock Purchase Agreement, and subsequent transaction closing, was completed on November 26, 2013, and a change in control of the Company took place.

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The Majority Shareholders and the Company’s Management also believe it is in the best interest of the Company’s Shareholders to operate Eaton Scientific Systems, Ltd. (“Eaton Sub”) a Nevada corporation and wholly owned subsidiary of the Company, as a privately held Company, until such time where it is sufficiently capitalized to increase the probability for its Clinical Trials of Homatropine (“Tropine 3”) in oral suspension for the treatment of hot flash symptoms in pre-menopausal, menopausal and post menopausal women, to be in a position to yield results that may provide the opportunity for a potential FDA approval for marketing to consumers in the US.

In connection with the terms and conditions of the Stock Purchase Agreement and sale of 227,370,000 shares held by the Majority Stockholders:

1.

Marciano appointed two new directors to the Company’s board of directors; and

2.

The “Lock-Up-Leak-Out” Agreements executed in October 2012 were cancelled by mutual agreement between the Board and the Company’s Shareholders who were party to the Agreements.

3.

The Majority Shareholders of the Company have voted to “Spin-out” to its Shareholders, one hundred percent (100%) of the issued and outstanding shares of Eaton Scientific Systems Ltd., its operating subsidiary, as of the record date of November 25, 2013, on a one-for-one basis within sixty-days (60) of the Change of Control of the Company, or by January 25, 2014.  

On January 9, 2014, the Spin-out was complete, and Eaton Scientific Systems, Ltd. was no longer a subsidiary of the Company.

On February 14, 2014, the Company changed its name to Eco Science Solutions, Inc. (OTCQB.ESSI).

NOTE: The following notes and any further reference made to “the Company”, "we", "us", "our" and "ESSI" shall mean Eco Science Solutions, Inc. (formerly Eaton Scientific Systems, Inc.), unless otherwise indicated.

Description of Business 

Headquartered in Miami, Florida, Eco Science Solutions, Inc., a Nevada corporation, is charged with the origination, development and commercialization of innovative aftermarket automotive parts.

On December 4, 2013, the Company (the “Company”) executed an Agreement of the License of Intellectual Property (the “License Agreement”) dated November 4, 2013 with Eco Science Solutions International, Inc., a Canadian corporation (“ESS International”), for the exclusive license to a revolutionary Spark Plug technology, the EcoFlora Spark Plug, that has filed for Patent protection in Canada and the United States based on its "Internal Pre-Combustion Chamber High Efficiency Spark Plug" technology. In connection with the License Agreement, the Company issued ESS International 2,500,000 shares of the Company’s Series “A” Convertible Preferred Stock (“Preferred Stock”), in exchange for the exclusive license of the Patent Applications, in perpetuity.  The Preferred Stock is convertible into common stock at a conversion rate of 10 common shares for each preferred share.

On February 14, 2014, the Company effected a 1000-to-1 reverse stock split.  As a result, the total shares of common stock issued and outstanding was adjusted to 443,001 shares with a par value of $0.10.

On April 4, 2014, the Company received notice from Eco Science Solutions International, Inc. to convert 100% of the Series “A” preferred shares into restricted common shares on a 10 for 1 basis.  As a result, on April 9, 2014, 25,000,000 shares of the Company’s restricted common stock was issued, of which 19,866,668 shares were issued to the Company’s chairman, Domenic Marciano, and 5,133,332 shares were issued to non-related parties.  Subsequent to the conversion, Eco Science Solutions International, Inc. no longer holds any shares of the Company’s capital stock, and Mr. Marciano holds 20,094,038 shares of the Company’s common stock, which represents 62.13% of the total issued and outstanding shares of the Company’s common stock on a fully diluted basis.

The Company is currently in the testing stages, and intends to validate its technology and then and manufacture and sell the technology.  At January 31, 2014, the Company has not yet commenced its principal operations.

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Results of Operations

The following summary of the Company’s results of operations should be read in conjunction with the Company’s audited consolidated financial statements for the years ended January 31, 2014 and 2013, which are included herein. The financial information provided includes the continuing operations of the Company and the discontinued operations of its former wholly owned subsidiaries, Pristine Solutions, Ltd. and Eaton Scientific Systems, Ltd.

.

Revenue

The Company has not yet launched its major business activity, which is automotive spark plug manufacturing and distribution.

Cost of sales

The Company has not yet launched its major business activity, which is automotive spark plug manufacturing and distribution.

General and Administrative Expenses

General and administrative expenses from continuing operations in the amount of $16,135 for the three months ended October 31, 2014, were comprised of $3,500 of legal and accounting fees, $6,400 of management and consulting fees,  and $6,235 of office, overhead and other general and administrative expenses.

General and administrative expenses from continuing operations in the amount of $20,000 for the three months ended October 31, 2013, were comprised of $2,000 of legal and accounting fees, and $18,000 in management and consulting fees.

General and administrative expenses from continuing operations for the three months ended October 31, 2014, were $16,135 as compared to $20,000 for the three months ended October 31, 2013, which resulted in an decrease in general and administrative expenses for the current period of $3,865.

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General and administrative expenses from continuing operations in the amount of $56,741 for the nine months ended October 31, 2014, were comprised of $20,292 of legal and accounting fees, $15,400 of management and consulting fees, $3,470 in transfer agent and filing fees, $4,000 in research and development, and $13,579 of office, overhead and other general and administrative expenses.

General and administrative expenses from continuing operations in the amount of $56,000 for the nine months ended October 31, 2013, were comprised of $2,000 of legal and accounting fees, and $54,000 in management and consulting fees.

General and administrative expenses from continuing operations for the nine months ended October 31, 2014, were $56,741 as compared to $56,000 for the nine months ended October 31, 2013, which resulted in an increase in general and administrative expenses for the current period of $741.

Significant changes in general and administrative expenses from continuing operations for the three months ended October 31, 2014, compared to the three months ended October 31, 2013, resulting in a decrease of $3,865, were attributable to the following items:

·

an increase in legal, accounting and audit fees of $1,500, due to an increase in accounting fees of $1,500 for quarterly accounting and tax preparation fees not incurred in the prior year;

·

a decrease in management fees of $11,600 due to a reduction in Executive compensation;  

·

an increase in office supplies and other general expenses of $6,235, resulting from $1,281 in rent expense, $3,001 in travel expenses, $1,055 in publicity & promotion, and $898 in other general office expenses incurred during the current period, compared to none for the same period in the prior year.

Significant changes in general and administrative expenses from continuing operations for the nine months ended October 31, 2014, compared to the nine months ended October 31, 2013, resulting in an increase of $56,741, were attributable to the following items:

·

an increase in legal, accounting and audit fees of $18,292, due to legal fees of $9,448 in connection with the change in control and other recent equity transactions, accounting fees of $4,844 for quarterly accounting and tax preparation fees, and auditor fees of $6,000 for quarterly review services, compared to $2,000  in auditor fees for the same period in the prior year;

·

a decrease in management fees of $38,600 due to a reduction in Executive compensation;  

·

an increase in transfer agent and filing fees of $3,470, due to $3,470 incurred in connection with recent equity transactions during the current period, compared to none in for the same period in the prior year;

·

an increase in research and development of $4,000 due to product development costs incurred during the current period, compared to none for the same period in the prior year; and

·

an increase in office supplies and other general expenses of $13,579, resulting from $3,843 in rent expense, $5,690 in travel expenses, $1,795 in publicity & promotion, and $2,251 in other general office expenses incurred during the current period, compared to none for the same period in the prior year.

General and administrative expenses from continuing operations for the three months and nine months ended October 31, 2014, were incurred primarily for the purpose of advancing the Company closer to its goal of the manufacturing and distribution of its high-efficiency spark plug product.

Net Loss

During the nine months ended October 31, 2014, the Company incurred a net loss from continuing operations of $704,020 compared with a net loss of $733,468 for the nine months ended October 31, 2013. The decrease in net loss of $29,448 is attributable to an increase in general and administrative expenses of $741; an increase in interest expense of $2,310, resulting from an increase in notes payable; and a decrease in amortization of deferred stock option compensation of $32,499.

Liquidity and Capital Resources

As at October 31, 2014, the Company had cash from continuing operations in the amount of $9,028, compared to $5,684 as of January 31, 2014.   

The Company had a working capital deficit of $340,853 as of October 31, 2014, compared to a working capital deficit of $90,422 as of January 31, 2014. The increase in working capital deficit of $250,431 is primarily attributable to an increase in cash of $3,344; a decrease in accounts payable and accrued expenses of $4,575; related party loans reclassified from long-term liabilities of $22,000; and convertible notes payable reclassified from long-term liabilities of $236,350.

Cash flows from operating activities-continuing operations

During the nine months ended October 31, 2014, the Company used $74,847 of cash flow for operating activities, compared with $6,435 for the nine months ended October 31, 2013. The increase in cash used in operating activities of $68,412 is primarily attributable to an increase in the net loss from operations of $29,448, a decrease in deferred stock compensation amortization of $32,499, a decrease in accounts payable and accrued expenses of $17,929, and a decrease in related party payables of $47,432.

Cash flows from investing activities-continuing operations

During the nine months ended October 31, 2014 and 2013, the Company used no funds for investing activities.

Cash flows from financing activities-continuing operations

During the nine months ended October 31, 2014, the Company was provided with $78,191 of cash flow from financing activities compared with none during the nine months ended October 31, 2013. The increase in cash flows provided from financing activities of $78,191 is attributable to an increase in related party loans of $77,891, and subscriptions received of $300.

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Future Financings

The Company will require additional financing in order to proceed with its plan of operations, including approximately $1,000,000 over the next 12 months to pay for its ongoing expenses. These cash requirements include working capital, general and administrative expenses, the development of the Company’s product line, and the pursuit of acquisitions. These cash requirements are in excess of the Company’s current cash and working capital resources. Accordingly, the Company will require additional financing in order to continue operations and to repay its liabilities. There is no assurance that any party will advance additional funds to the Company in order to enable the Company to sustain its plan of operations or to repay its liabilities. There can be no assurance that raising the desired amount of financing will enable the Company successfully to complete its plan of operations.

The Company anticipates continuing to rely on equity sales of its common stock in order to continue to fund its business operations. Issuances of additional shares will result in dilution to the Company’s existing stockholders. There is no assurance that the Company will achieve any additional sales of its equity securities or arrange for debt or other financing to fund its planned business activities.

Contractual Obligations

As a “smaller reporting company”, the Company is not required to provide tabular disclosure obligations.

Going Concern

These financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities as a going concern in the normal course of business. The Company has not generated significant revenues to date and has never paid any dividends and is unlikely to pay dividends or generate significant earnings in the immediate or foreseeable future.  As at October 31, 2014, the Company had a working capital deficit from continuing operations of $340,853, and an accumulated deficit of $8,596,562. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability to raise equity or debt financing, and the attainment of profitable operations from the Company's future business. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern.

Off-Balance Sheet Arrangements

The Company has no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

Critical Accounting Policies

The discussion and analysis of the Company’s financial condition and results of operations are based upon the Company’s consolidated audited financial statements, which have been prepared in accordance with the accounting principles generally accepted in the United States of America. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management’s application of accounting policies. The Company believes that understanding the basis and nature of the estimates and assumptions involved with the following aspects of the Company’s financial statements is critical to an understanding of its consolidated financial statements.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States and 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 period. The Company regularly evaluates estimates and assumptions, 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.

Revenue Recognition

The Company recognizes revenue in accordance with ASC 605, Revenue Recognition. Revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service has been provided, and collectability is reasonably assured.  As of October 31, 2014, no revenue has been recognized, as the Company has not commenced operations.

Stock-Based Compensation

The Company records stock-based compensation in accordance with ASC 718, Share-Based Payments, using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued.

Impairment of Long-Lived Assets

The Company’s long-lived assets, including intangibles, are reviewed for impairment whenever events or changes in circumstances indicate that the historical-cost carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the asset by comparing the undiscounted future net cash flows expected to result from the asset to its carrying value. If the carrying value exceeds the undiscounted future net cash flows of the asset, an impairment loss is measured and recognized. An impairment loss is measured as the difference between the net book value and the fair value of the long-lived asset.

Due to the Company’s recurring losses, the costs related to its patents were evaluated for impairment and it was determined that there were no sufficient estimated future cash flows for the recoverability of the asset.  As a result, an impairment loss of $5,265,000 was recorded for the year ended January 31, 2014.

Recently Adopted Accounting Standards: 

The Company evaluates the pronouncements of various authoritative accounting organizations, primarily the Financial Accounting Standards Board (“FASB”), the US Securities and Exchange Commission (“SEC”), and the Emerging Issues Task Force (“EITF”), to determine the impact of new pronouncements on US GAAP and the impact on the Company. The Company has recently adopted the following new accounting standards:

Adopted:

In February 2013, the FASB issued ASU No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive (ASU 2013-02). This guidance is the culmination of the FASB’s deliberation on reporting reclassification adjustments from accumulated other comprehensive income (AOCI). The amendments in ASU 2013-02 do not change the current requirements for reporting net income or other comprehensive income. However, the amendments require disclosure of amounts reclassified out of AOCI in its entirety, by component, on the face of the statement of operations or in the notes thereto. Amounts that are not required to be reclassified in their entirety to net income must be cross-referenced to other disclosures that provide additional detail. This standard is effective prospectively for annual and interim reporting periods beginning after December 15, 2012. The adoption of this update did not have a material impact on its consolidated financial statements.

In April 2013, the FASB issued ASU No. 2013-07, Presentation of Financial Statements (Top 205): Liquidation Basis of Accounting. The objective of ASU No. 2013-07 is to clarify when an entity should apply the liquidation basis of accounting and to provide principles for the measurement of assets and liabilities under the liquidation basis of accounting, as well as any required disclosures. The amendments in this standard is effective prospectively for entities that determine liquidation is imminent during annual reporting periods beginning after December 15, 2013, and interim reporting periods therein. The adoption of this update did not have a material impact on its consolidated financial statements.

In July 2013, the FASB issued ASU No 2013-11, Presentation of an Unrecognized Tax Benefit When Net Operating Loss Carryforward Exists.  The objective of ASU 2013-11 is to reduce diversity in practice by providing guidance on the presentation of unrecognized tax benefits, and will better reflect the manner in which an entity would settle at the reporting date any additional income taxes that would result from the disallowance of a tax position when net operating loss carryforwards, similar tax losses, or tax credit carryforwards exist. The amendments in this Update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013, and interim reporting periods therein. Early adoption is permitted. The adoption of this update did not have a material impact on its consolidated financial statements.

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In June 2014, the FASB issued ASU No, 2014-10, Elimination of Certain Financial Reporting Requirements for Development Stage Entities.  The objective of ASU 2014-10 is to reduce the cost and complexity associated with the incremental reporting requirements for development stage entities.  This Update removes all incremental financial reporting requirements, and eliminates an exception provided to development stage entities in Topic 810.  The amendments in this standard are effective retrospectively for annual reporting periods beginning after December 15, 2014, and interim periods therein. Early adoption is permitted.

Not Yet Adopted:

In April 2014, the FASB issued ASU No. 2014-08 Presentation of Financial Statements (Top 205): Reporting Discontinued Operations and Disclosure of Disposals of Components of an Entity.  The objective of ASU No. 2014-08 is to clarify the criteria for determining which disposals can be presented as discontinued operations and also modifies related disclosure requirements. The standard is required to be adopted by public business entities in annual periods beginning on or after December 15, 2014, and interim periods within those annual periods.  Early adoption is permitted for new disposals beginning in the first quarter of 2014, provided financial statements have not been issued before the release of this standard. The Company is evaluating the effect, if any, adoption of ASU No. 2014-08 will have on its consolidated financial statements.

Recently Issued Accounting Standards Updates: 

There were various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries. None of the updates are expected to a have a material impact on the Company's consolidated financial position, results of operations or cash flows.

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

Management’s Report on Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s president, chief executive officer and chief financial officer to allow for timely decisions regarding required disclosure. In designing and evaluating the Company’s disclosure controls and procedures, the Company’s management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and the Company’s management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. 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.

As of October 31, 2014, the end of the Company’s quarterly period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s president, chief executive officer and chief financial officer of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on the foregoing, the Company’s president, chief executive officer and chief financial officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.

Changes in Internal Control over Financial Reporting

There have been no changes in the Company’s internal controls over financial reporting that occurred during the nine months ended October 31, 2014, that have materially or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

PART II

The Company knows of no material, existing or pending legal proceedings against it, nor is the Company involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which its director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to its interest.

The Company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and is not required to provide the information under this item.

Recent Sales of Unregistered Securities

None.

None.

Not applicable.

None.

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Exhibits required by Item 601 of Regulation S-B

*

Filed herewith.

**

Pursuant to Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

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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.

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