(1) On February 21, 2010, the Company’s board of directors concluded that there were errors in the following financial statements of the Company (the “Subject Financial Statements”) and that the Subject Financial Statements should no longer be relied upon:
(i) for the three and nine months ended September 30, 2010 and 2009, each included in the Company’s Quarterly Report on Form 10-Q, filed on November 23, 2010;
(ii) for the three and six months ended June 30, 2010 and 2009, each included in the Company’s Quarterly Report on Form 10-Q, filed on August 23, 2010;
(2) The Company anticipates that, at a minimum, it will:
(i) In response to comments made by the U.S. Securities and Exchange Commission, the Company analyzed the recapitalization as of May 11, 2010, the date the Company entered into a share exchange agreement with a public shell company. The Company determined that a restatement was necessary to the Subject Financial Statements in order to properly recast share activity in accordance with FASB ASC paragraph 805-40-45-2(d).
(ii) As a result, the Company will restate outstanding share balances as of June 30, 2010, September 30, 2010, and include a share total as of December 31, 2009, to reflect the shares outstanding of the legal parent as of the date of the transaction. The Company also will restate earnings per share for the periods ended September 30, 2010 and 2009, and June 30, 2010 and 2009, respectively.
(iii) The Company identified conversion features embedded within convertible notes, adjustments to the conversion rates and exercise prices, and warrants. In accordance with ASC 815-40-15, the Company has determined that the features associated with the embedded conversion option and warrants should be accounted for at fair value as a derivative liability. At issuance, the Company will record the derivative liability to debt discount to the extent of the face amount of the notes and expense immediately the remaining value of the derivative as it exceeded the face amount of the note. At each reporting period, the Company will mark these derivative financial instruments to fair value.
(iv) In addition, the Company plans to restate the Statements of Stockholders’ Equity for each of the periods included in the June 30, 2010 and September 30, 2010 Quarterly Reports on Form 10-Q.
(3) The Company’s management, board of directors and independent registered public accounting firm have discussed the matters disclosed in this filing.
Deal Flow On July 27, 2010 and July 30, 2010, Centracan Incorporated, closed on a third and fourth tranche of financing, respectively, related to the May 11, 2010, private placement, as disclosed on the Company’s Current Report on Form 8-K, as filed with the SEC on May 18, 2010 (the “Private Offering”), with a total of ten (10) accredited investors for the issuance and sale of secured convertible promissory notes (the “Notes”) and Class A and Class B common stock purchase warrants.
Reverse Merger Activity On May 11, 2010 EcoReady Corporation became a public entity via a reverse mergers transaction.
Company Snapshot: (Located in Nevada, but manufacturing plant is located in China. Revenues will be generated outside China.)
Technology company that will focus on “green” products
Industry Snapshot
Post Merger Share Calculation:
- 392,457: Pre reverse merger outstanding shares
- 29,000,000: Newly issued shares of Common Stock
- 7,416,666: Shares from convertible notes associated with private placement
- 3,125,000: Shares from warrants associated with private placement
GeoTeam® best effort calculation of total post reverse merger shares assuming full conversions: 43,466,239
Financial Snapshot: No Revenue
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