UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q
(Mark One)

[X]
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2013

OR

[   ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ______________.

Commission File Number 000-54507

ECO-TEK GROUP, INC.
(Exact name of registrant as specified in its charter)

Nevada
68-0679096
(State or Other Jurisdiction
of Incorporation)
(IRS Employer Identification No.)

15-65 Woodstream Blvd,
Woodbridge, Ontario, Canada
L4L 7X6
 (Address of principal executive offices)(Zip Code)

Telephone: (877) 275-2545
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes [X] No [  ]
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes [X ]   No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “ large accelerated filer, ” “ accelerated filer ” and “ smaller reporting company ” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  [  ]
Accelerated filer  [  ]
Non-accelerated filer  [  ]
Smaller reporting company [X]

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

As of May 14, 2013, we had 250,819,800 shares of $0.001 par value per share common stock outstanding   , which number does not include 333,333 shares of common stock which the Issuer has agreed to issue to Ira Morris in exchange for the forgiveness of debt as described below under “ Item 2. Unregistered Sales of Equity Securities and Use of Proceeds ”, which shares have not been physically issued to date.

 


 
 
 

 
ECO-TEK GROUP, INC.

FORM 10-Q

INDEX

   
Page No.
PART I   FINANCIAL INFORMATION
 
     
ITEM 1.   Consolidated Financial Statements (Unaudited)
 
     
 
Consolidated Balance Sheets as of  March 31, 2013 and December 31, 2012
F-1
 
Consolidated Statements of Operations and Comprehensive Loss for The Three Months ended March 31, 2013 and 2012
F-2
 
Consolidated Statements of Cash Flows for The Three Months ended March 31, 2013 and 2012
F-3
 
Notes to Consolidated Financial Statements
F-4
     
ITEM 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
  3
     
ITEM 3.
Quantitative and Qualitative Disclosures About Market Risk
  11
  
   
ITEM 4.
Controls and Procedures
  11
     
PART II
OTHER INFORMATION
  13
     
ITEM 1.
Legal Proceedings
  13
     
ITEM 1A.
Risk Factors
  13
     
ITEM 2.
Unregistered Sales Of Equity Securities And Use Of Proceeds
  13
     
ITEM 6.
Exhibits
  13


 
2
 


 
PART 1 – FINANCIAL INFORMATION

ITEM 1 – CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

ECO-TEK GROUP, INC.
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2013 AND DECEMBER 31, 2012
(Expressed in United States Dollars)
 
   
March 31, 2013
   
December 31,
2012
 
 
ASSETS
           
             
Current Assets
           
Cash
 
$
8,956
   
$
12,836
 
Accounts receivable, net of allowance of $15,468 as of March 31, 2013 and December 31, 2012
   
38,699
     
37,889
 
Inventory
   
23,392
     
14,278
 
Investment tax credit recoverable
   
-
     
9,955
 
Deposit and sundry assets
   
591
     
3,847
 
Total Current Assets
   
71,638
     
78,805
 
 
Long Term Assets
               
Equipment, net of depreciation
   
7,021
     
7,338
 
Total Assets
 
$
78,659
   
$
86,143
 
 
LIABILITIES AND STOCKHOLDERS' DEFICIT
               
                 
Current Liabilities
               
Accounts payable and accrued liabilities
 
$
125,130
   
$
136,850
 
Notes payable (Note 5)
   
301,893
     
134,935
 
Convertible promissory notes payable (Note 6)
   
263,775
     
260,278
 
Advances from stockholders (Note 7)
   
470,718
     
474,250
 
Total Current Liabilities
   
1,161,516
     
1,006,313
 
 
Commitment (Note 8)
               
                 
Stockholders' Deficit
               
Preferred stock, $0.001 par value ; 50,000,000 shares authorized and 1,000 shares outstanding as of March 31, 2013 and December 31, 2012 (Note 9)
   
1
     
1
 
Common stock, $0.001 par value; 7,000,000,000 shares authorized and 250,819,800 shares issued and outstanding as of March 31, 2013 and December 31, 2012 (Note 9)
   
250,820
     
250,820
 
Additional paid-in capital
   
880,597
     
863,242
 
Accumulated other comprehensive loss
   
(25,068
)
   
(34,643
)
Accumulated deficit
   
(2,189,207
)
   
(1,999,590
)
Total Stockholders' Deficit
   
(1,082,857
)
   
(920,170
)
Total Liabilities and Stockholders' Deficit
 
$
78,659
   
$
86,143
 

The accompanying notes are an integral part of these unaudited consolidated financial statements
   
 

 
F-1
 


 
ECO-TEK GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
FOR THE THREE MONTHS ENDED MARCH 31, 2013 and 2012
(Expressed in United States Dollars)
 
   
Three Months Ended March 31, 2013
   
Three Months Ended March 31,
2012
 
 
SALES
 
$
53,441
   
$
88,520
 
 
COST OF PRODUCTS SOLD
   
38,427
     
47,319
 
 
GROSS PROFIT
   
15,014
     
41,201
 
 
OPERATING EXPENSES
               
General and administrative
   
       158,009
     
        21,430
 
Salaries and wages
   
         26,815
     
         17,565
 
Selling and delivery
   
           6,369
     
              158
 
Financial
   
         13,121
     
              385
 
Depreciation
   
              317
     
              645
 
 
TOTAL OPERATING EXPENSES
   
204,631
     
40,183
 
 
NET (LOSS) INCOME
 
$
(189,617
)
 
$
1,018
 
 
FOREIGN CURRENCY TRANSLATION ADJUSTMENT
   
9,576
     
(9,748)
 
 
COMPREHENSIVE LOSS
 
$
(180,041
)
 
$
(8,730
)
 
LOSS PER WEIGHTED NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED
 
$
(0.00
)
 
$
(0.00
)
 
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED
   
250,819,800
     
123,960,417
 
 


The accompanying notes are an integral part of these unaudited consolidated financial statements

 
 
F-2
 


 
 

ECO-TEK GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2013 and 2012
 (Expressed in United States Dollars)

 
   
Three Months Ended March 31, 2013
   
Three Months Ended March 31,
2012
 
CASH FLOWS FROM OPERATING ACTIVITIES
           
Net (loss) income
 
$
(189,617
)
 
$
1,018
 
Adjustments to reconcile net loss to net cash used in operating activities:
               
Depreciation
   
317
     
645
 
Amortization of discount
   
3,497
     
-
 
Contributed services
   
17,355
     
17,483
 
Changes in operating assets and liabilities:
               
Accounts receivable
   
(1,614
)
   
(23,669)
 
Inventory
   
(9,497)
     
(3,054
)
Investment tax credit recoverable
   
9,823
     
5,214
 
Deposit and sundry assets
   
3,193
     
-
 
Accounts payable and accrued liabilities
   
(10,420
)
   
(3,322
)
CASH USED IN OPERATING ACTIVITIES
   
(176,963
)
   
(5,685
)
                 
 
CASH FLOWS FROM FINANCING ACTIVITIES
               
Proceeds from notes payable
   
166,958
     
-
 
Advances from stockholders
   
6,184
     
4,562
 
CASH PROVIDED BY FINANCING ACTIVITIES
   
173,142
     
4,562
 
EFFECT OF EXCHANGE RATE CHANGES ON CASH
   
(59)
     
79
 
NET DECREASE IN CASH
   
(3,880)
     
(1,044
)
CASH, BEGINNING OF PERIOD
   
12,836
     
6,878
 
CASH, END OF PERIOD
 
$
8,956
   
$
5,834
 

 
SUPPLEMENTAL CASH FLOW INFORMATION

During the three months ended March 31, 2013 and 2012 interest of $nil and income taxes of $nil were paid.


The accompanying notes are an integral part of these unaudited consolidated financial statements
 
 
 

 
F-3
 


 
ECO-TEK GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2013
(Expressed in United States Dollars)
(Unaudited)
 
1.
NATURE OF OPERATIONS

Eco-Tek Group, Inc. (“ Eco-Tek " or the " Company ") was incorporated on May 4, 2005 under the laws of the province of Ontario, Canada.  Eco-Tek is dedicated to the development and marketing of innovative and cost effective " Green " products to the automotive and industrial sectors.

Sandalwood Ventures, Ltd. (“ Sandalwood ”) was incorporated on April 10, 2007 in the State of Nevada for the purpose of acquiring, exploring and developing mining properties.  In connection with the Share Exchange Agreement as explained below, pursuant to which Sandalwood acquired Eco-Tek, on November 16, 2012, Sandalwood filed a Certificate of Amendment to its Articles of Incorporation with the Secretary of State of Nevada and changed its name to “ Eco-Tek Group, Inc. ”
 
On June 25, 2012, Sandalwood entered into a share exchange agreement (the “ Share Exchange Agreement ”) with the shareholders of and corporate entity of Eco-Tek, which closed on June 29, 2012, wherein it acquired the latter in exchange for 125,000,000 shares of common stock in a transaction accounted for as a reverse merger.  On June 25, 2012, certain of Eco-Tek’s shareholders also entered into a stock purchase agreement wherein they acquired the 1,000 Series A Preferred Stock shares which provided them 51% voting rights to Sandalwood.  As a result of these transactions, Eco-Tek’s shareholders became Sandalwood’s majority shareholders and Eco-Tek became a wholly-owned subsidiary of Sandalwood.  Following the share exchange, Sandalwood undertakes continued manufacturing and distribution of Eco-Tek’s products and ongoing research, development and commercialization of associated products.  In connection with this change in business focus, Sandalwood ceased undertaking any mineral exploration activities and the rights to its Sandalwood 1 Lode Claim expired in September 2012. Sandalwood has also changed its year-end to December 31 and its name to Eco-Tek Group, Inc., as described above.

Consequently, the assets and liabilities and the historical operations reflected in the consolidated financial statements for the periods prior to June 29, 2012 are those of Eco-Tek and are recorded at the historical cost basis. After June 29, 2012 (the closing date), the Company’s consolidated financial statements include the assets and liabilities of both Eco-Tek and Sandalwood and the historical operations of both after that date as one entity.

2 .
BASIS OF PRESENTATION
 
The accompanying unaudited interim condensed consolidated financial statements have been prepared by the Company without audit.  In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial positions, results of operations, and cash flows at March 31, 2013 and 2012, have been made.
 
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted.  It is suggested that these interim condensed consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company's December 31, 2012 and 2011 audited consolidated financial statements.  The results of operations for the periods ended March 31, 2013 and 2012 are not necessarily indicative of the operating results for the full year.

 
 
 
 
 
F-4
 
 
 
ECO-TEK GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2013
(Expressed in United States Dollars)
(Unaudited)

3.
GOING CONCERN
 
The Company's consolidated financial statements are presented on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.  The Company has experienced losses from operations since inception that raise substantial doubt as to its ability to continue as a going concern.
 
The Company's existence is dependent upon management's ability to develop profitable operations and resolve its liquidity problems. Management anticipates the Company will attain profitable status and improve its liquidity through continued business development and additional equity investment in the Company.  Management is pursuing various sources of financing and intends to raise equity financing through a private placement with a private group of investors in the near future.  In the event the Company is not able to raise the necessary equity financing from private investors, the Company intends to seek stockholder loans or debt financing, as needed, until profitable operations are attained.
 
The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.
  
4.
SIGNIFICANT ACCOUNTING POLICIES
 
Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the 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. Actual results could differ from those estimates. These estimates are reviewed periodically, and, as adjustments become necessary, they are reported in earnings in the period in which they become known.

Fair value of financial instruments

The carrying value of the Company's cash, accounts receivable, accounts payable and accrued liabilities, advances from stockholders, notes payable and convertible notes approximate fair value because of the short-term maturity of these instruments.

Recently issued accounting pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that recently issued accounting pronouncements adopted do not have a material impact on its financial position or results of operations.


 

 
F-5
 
 
 
ECO-TEK GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2013
(Expressed in United States Dollars)
(Unaudited)

5. 
NOTES PAYABLE

The Company received seven loans on August 22, 2012, September 7, 2012, December 12, 2012, February 7, 2013, February 25, 2013, March 7, 2013 and March 22, 2013, totaling $301,893 which bear interest at 8% per annum and have a term of one year.   In the event of default, the debt holders have the option to convert the loans into common shares at a conversion price equal to 70% of the volume weighted average closing prices of the Company’s common shares during the ten (10) trading days prior to the conversion date.

 
6.        CONVERTIBLE PROMISSORY NOTES PAYABLE
 
All of the Convertible Promissory Notes described below (the “ Convertible Notes ”) bear interest at the rate of 8% per annum, and are due and payable twelve months from their respective effective dates, unless otherwise described below.  Additionally, the principal and interest due under such Convertible Notes is convertible into shares of the Company’s common stock at a conversion price of $0.000357 per share at the option of the respective holders thereof, as provided in such Convertible Notes.

During the fiscal year ended December 31, 2012, the Company entered into amendments to certain outstanding Convertible Notes.  The amendments added a provision to the Convertible Notes which prohibited the holder thereof from converting such note into shares of the Company’s common stock if such conversion would result in the holder holding more than 4.99% of the Company’s common stock, subject to each holder’s ability to waive such limitation with not less than 61 days prior written notice to the Company (the “ Maximum Percentage ”). Approximately $182,500 of the Convertible Notes are subject to the Maximum Percentage.

The Company accounts for the Convertible Notes in accordance with ASC Topic 470, Debt , as it pertains to accounting for convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement).  Under the accounting guidance, convertible debt instruments that may be settled entirely or partially in cash upon conversion are required to be separated into liability and equity components, with the liability component amount determined in a manner that reflects the issuer’s non-convertible debt borrowing rate. The value assigned to the liability component is determined by measuring the fair value of a similar liability that does not have an equity conversion feature. The value assigned to the equity component is determined by deducting the fair value of the liability component from the initial proceeds. The excess of the principal amount of the liability component over its carrying amount (the non-cash discount) is amortized to interest cost using the effective interest method over the term of the debt agreement.  In addition, transaction costs incurred that directly relate to the issuance of convertible debt instruments must be allocated to the liability and equity components in proportion to the allocation of proceeds and accounted for as debt issuance costs and equity issuance costs, respectively.

The Company estimated its non-convertible borrowing rate at the date of issuance of the Convertible Notes to be 18%. The 18% non-convertible borrowing rate represented the borrowing rate of similar companies with the same credit quality as the Company. Using the income method and discounting the principal and interest payments of the Convertible Notes using the 18% non-convertible borrowing rate, the Company estimated the fair value of the $165,000 Convertible Notes issued in fiscal 2012 to be $149,985 with the discount being $15,015. The discount is being amortized as non-cash interest expense over the life of the notes using the effective interest method.


 
F-6
 
 
 
ECO-TEK GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2013
(Expressed in United States Dollars)
(Unaudited)

The Company also evaluated the Convertible Notes for potential embedded derivatives, noting that the conversion feature and make-whole provisions did not meet the embedded derivative criteria as set forth in ASC Topic 815, Derivatives and Hedging . Therefore, no additional amounts have been recorded for those items.

The Convertible Notes payable consist of the following:

Beginning balance as of January 1, 2013
 
$
260,278
 
Add: amortization of discount
   
3,497
 
Less: conversions to common stock
   
-
 
Ending balance as of March 31, 2013
 
$
263,775
 
 
7.
ADVANCES FROM STOCKHOLDERS
 
The advances from stockholders are unsecured, non-interest bearing and due on demand.

8.
COMMITMENT
 
The Company leases premises under an operating lease with a two year term in Woodbridge, Ontario.  Minimum lease commitments under the lease, excluding taxes, at March 31, 2013 were:

2013 - 2014   $ 22,500
       

9.     
CAPITAL STOCK

The Company is authorized to issue 50,000,000 shares of $0.001 par value preferred stock, which may be issued from time to time in one or more series as shall be determined by the Board of Directors. Such stock shall have such voting powers, full or limited, or no voting powers, and such preferences and relative, participating, optional or other special rights and such qualification, limitations or restriction thereof, as shall be stated in resolutions providing for the issuance of such class or series of preferred stock.

On April 13, 2012, the Company filed a Certificate of Designation of a series of 1,000 shares of Series A Preferred Stock of the Company. The holders of the Series A Preferred Stock, voting separately as a class are entitled to vote in aggregate, on all shareholders matters, 51% of the total vote on such shareholder matters, no matter how many shares of common stock or other voting stock of the Company are issued or outstanding in the future.  Additionally, the Company is prohibited from adopting any amendments to the Company’s Bylaws, Articles of Incorporation, as amended, making any changes to the Certificate of Designation establishing the Series A Preferred Stock, or effecting any reclassification of the Series A Preferred Stock, without the affirmative vote of at least 66-2/3% of the outstanding shares of Series A Preferred Stock. However, the Company may, by any means authorized by law and without any vote of the holders of shares of Series A Preferred Stock, make technical, corrective, administrative or similar changes to such Certificate of Designation that do not, individually or in the aggregate, adversely affect the rights or preferences of the holders of shares of Series A Preferred Stock.

 

 
 
F-7
 
 
 
ECO-TEK GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2013
(Expressed in United States Dollars)
(Unaudited)

On January 23, 2012, the Company affected a 28:1 forward stock split of its common stock without adjusting the par value of $0.001. All share amounts referred to in these consolidated financial statements have been retroactively restated to reflect the stock split.

The Company is authorized to issue 7,000,000,000 shares of common stock with a par value of $0.001 per share.

During the three months ended March 31, 2013, certain shareholders contributed services to the Company valued at $17,355 (2012:  $17,483) which were included in salaries and wages with a corresponding credit to additional paid-in-capital.

In June 2012, the Company issued 125,000,000 shares to acquire Sandalwood.  The transaction was accounted for as a reverse merger.  Shares outstanding immediately prior to the transaction of 125,819,800 and the net book value of Sandalwood $(128,236) were presented as an acquisition of the net liabilities of Sandalwood in the Statement of Stockholders' Deficit.

10.       SUBSEQUENT EVENTS
 
Effective May 7, 2013, Armitage SA, loaned the Company $67,000, which the Company plans to memorialize in the form of a Promissory Note shortly after the date of this filing, which will bear interest at the rate of 8% per annum and will mature on May 7, 2014. In the event of default, the holder has the option to convert the loan into common shares at a conversion price equal to 70% of the volume weighted average closing prices of the Company’s common shares during the ten (10) trading days prior to the conversion date.





 

 
 
F-8
 

 
 
 
ITEM 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Quarterly Report on Form 10-Q contains “ forward-looking statements ”. Forward-looking statements discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements may include words such as “ anticipate, ” “ believe, ” “ estimate, ” “ intend, ” “ could, ” “ should, ” “ would, ” “ may, ” “ seek, ” “ plan, ” “ might, ” “ expect, ” “ anticipate, ” “ predict, ” “ project, ” “ forecast, ” “ potential, ” “ continue ” and negatives thereof or similar expressions. Forward-looking statements speak only as of the date they are made, are based on various underlying assumptions and current expectations about the future and are not guarantees. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, level of activity, performance or achievement to be materially different from the results of operations or plans expressed or implied by such forward-looking statements.

We cannot predict all of the risks and uncertainties associated with such forward-looking statements. Accordingly, such information should not be regarded as representations that the results or conditions described in such statements or that our objectives and plans will be achieved and we do not assume any responsibility for the accuracy or completeness of any of these forward-looking statements. These forward-looking statements are found at various places throughout this Quarterly Report on Form 10-Q and include information concerning possible or assumed future results of our operations, including statements about business strategies; future cash flows; financing plans; plans and objectives of management; future cash needs; future operations; business plans and future financial results, and any other statements that are not historical facts.

These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. All subsequent written and oral forward-looking statements concerning other matters addressed in this Quarterly Report on Form 10-Q and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Quarterly Report on Form 10-Q. Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.

References in this Quarterly Report on Form 10-Q, unless another date is stated, are to March 31, 2013. As used herein, the " Company, " “ Eco-Tek, ” " we, " " us, " " our " and words of similar meaning refer to Eco-Tek Group, Inc., a Nevada corporation and its wholly-owned subsidiary, Eco-Tek Group, Inc., an Ontario corporation, unless otherwise stated or the context requires otherwise.

Corporate History

We were initially incorporated as Sandalwood Ventures, Ltd. in Nevada in April 2007.  On November 16, 2012, we filed a Certificate of Amendment with the Secretary of State of Nevada and changed our name to “ Eco-Tek Group, Inc. ”

On January 6, 2012, Edwin Slater, the Company’s then sole Director approved the filing of a Certificate of Change Pursuant to NRS 78.209 (the “ Certificate of Change ”).  The Certificate of Change affected a 28:1 forward stock split of the Company’s (i) authorized and unissued; and (ii) issued and outstanding, shares of common stock, effective with the Secretary of State of Nevada on January 23, 2012 (the “ Forward Split ”), pursuant to Nevada Revised Statutes Section 78.209.  The Certificate of Change was effective with FINRA at the open of business on January 26, 2012 (the “ FINRA Effectiveness Date ”).

 
 
 
 
3
 
 
 
Following the filing and effectiveness of the Certificate of Change and Forward Split, the Company has 7,000,000,000 shares of common stock, $0.001 par value per share authorized (compared to 250,000,000 shares of common stock, $0.001 par value per share authorized prior to the Forward Split)(“ Common Stock ”).  Unless otherwise stated, the effects of the Forward Split have been retroactively reflected throughout this report.

Change in Business Focus

On June 25, 2012, the Company entered into a Share Exchange Agreement with Eco-Tek Group Inc., an Ontario corporation (“ Eco-Tek Ontario ”) and its shareholders (the “ Eco-Tek Ontario Shareholders ”).  The Eco-Tek Ontario Shareholders included Luciana D’Alessandris, Jim Vogiatzis, Michael Zitser and Sergey Kartsev (the “ Purchasers ”) who in April 2012 entered into a Stock Purchase Agreement with Edwin Slater, our then majority shareholder and acquired 93.7% (23.4% each) of our outstanding Common Stock (notwithstanding the issuance of Series A Preferred Stock and subsequent purchase of such Series A Preferred Stock by the Purchasers, which Series A Preferred Stock provides the holders thereof, voting as a group, the right to 51% of the total vote on all shareholder matters, no matter how many shares of Common Stock or other voting stock of the Company are issued or outstanding (the “ Super Majority Voting Rights ”)).

Pursuant to the Share Exchange Agreement, which closed on June 29, 2012, the Company acquired 100% of the outstanding shares of common stock of Eco-Tek Ontario in consideration for an aggregate of 125,000,000 shares of the Company’s common stock. The Company was a “ shell company ” with only nominal operations prior to the closing of the Share Exchange Agreement.

From the date of our incorporation until June 29, 2012, when the Share Exchange Agreement closed, we were an exploration stage company engaged in the acquisition and exploration of mineral properties. We acquired a 100% undivided interest in one mineral claim known as the " Sandalwood 1 Lode Claim, ” totaling 20 acres located in the Goodsprings (Yellow Pine) Mining District situated within the southwestern corner of the State of Nevada, U.S.A. Our plan of operations was to conduct mineral exploration activities on the Sandalwood 1 Lode Claim in order to assess whether it possessed mineral deposits of lead, zinc, copper or silver in commercial quantities capable of commercial extraction. The Company did not undertake any mineral exploration activities from incorporation to June 29, 2012.

Following the closing of the Share Exchange Agreement, the Company changed its business focus to that of Eco-Tek Ontario (the blending and sale of oil lubrication products, as described further below) and ceased undertaking any mineral exploration activities.  In connection with this change in business focus, the Company let the rights to its Sandalwood 1 Lode Claim expire in September 2012.

Name Change

On October 12, 2012 our Board of Directors and majority shareholders (including the Purchasers) approved the filing of a Certificate of Amendment to the Company’s Articles of Incorporation to affect a name change of the Company to “ Eco-Tek Group, Inc. ”, which was filed with the Secretary of State of Nevada on November 16, 2012.  

Description of Business Operations

Eco-Tek Ontario, acquired in June 2012, as described above, was initially formed as an Ontario, Canada corporation on May 4, 2005, under the name of ClikTech Corp. The name of the corporation was changed to Eco-Tek Group Inc., on June 28, 2012.  Eco-Tek Ontario is dedicated to the development and marketing of innovative and cost effective “ green ” products to the automotive and industrial sectors.




 
4
 

 
Currently we, through Eco-Tek Ontario (in the discussion below, references to “ we ”, “ us ” or the “ Company ” include Eco-Tek Ontario), are a distributor of lubrication products for the automobile market. We manufacture (through the blending of various ingredients) and distribute Eco-Tek synthetic lubricants, filtration systems and other products, described below. We maintain websites at www.eco-tekgroup.net and www.ecotekworldwide.com . The information on, or that may be accessed through our websites is not incorporated by reference into this report and should not be considered a part of this report.
 
Products
 
Currently we sell the following products, which are currently commercially available (except as otherwise stated), which we either manufacture (through the blending of various ingredients) or distribute on behalf of third parties under our own “ Eco-Tek ” brand, which products are described in greater detail in our Annual Report on Form 10-K for the year ended December 31, 2012, filed with the Securities and Exchange Commission on April 16, 2013:

 
·
“Eco-Tek 3000 Super Synthetic 100% API Approved HP Motor Oil”
 
·
“ECO-TEK 4 In 1 Fuel Treatments”
 
·
“Eco-Tek Engine Flush”
 
·
“Eco-Tek Heavy Duty Synthetic Oil Stabilizer”
 
·
“Eco-Tek Bypass And Magnetic Oil Filtration For Trucks”
 
·
“Eco-Tek Premium Orange Hand Cleaner”
 
·
“Eco-Tek Non-Toxic Super Lubricant”

Future Planned Products and Expansion

Funding permitting we plan to expand our product line with the following additional products:

-  
“ Eco-Tek Fuel Saving Package ” which will combine the Eco-Tek Non Toxic Super Lubricant and the Eco-Tek 4 in 1 Fuel Treatment, and is planned to also be marketed on the internet. This product has been developed, but needs to be packaged. The Company believes that this product could be ready for commercial sale in the next six months.

-  
“ Eco-Tek Non Toxic Windshield Washer Fluid ”, for which a prototype currently exists, and which is in the final testing phase of development.  The Company estimates this product is approximately sixty percent (60%) complete. The Company believes that this product could be ready for commercial sale in approximately six months.

-  
“ Eco-Tek Non Toxic Multi-Purpose Lubricant ” which will come with a non-pressurized spray applicator, which we believe will have several uses similar to WD 40, but will be “ green ” and nontoxic. A prototype currently exists for this product, which the Company estimates is approximately ninety-nine percent (99%) complete and needs to be packaged and labeled to be ready for commercial sale which is anticipated to happen in approximately the next four months.


We also hope, funding permitting, to open environment conscious quick lube centers in southern Ontario, Canada, through Eco-Tek Lube Centres, the wholly-owned subsidiary of Eco-Tek Ontario, with the goal of expanding throughout North America and eventually worldwide. These centers are planned to offer oil changes using Eco-Tek synthetic oils and performance enhancing, eco-friendly lubricants.  We anticipate that the cost of opening a new facility will be approximately $150,000 and the cost of converting an existing facility to an Eco-Tek Lube Centre will be approximately $50,000.
 
Moving forward, we plan to add on-line product ordering and fulfillment in conjunction with TV advertising and infomercials for our products.  We plan to begin television advertising as soon as possible and anticipate the cost of producing an infomercial at approximately $1,000 per minute.
 
 
 
 
 
5
 
 
 
Product Development

The Company, through Eco-Tek Ontario, entered into a Technology co-operation Agreement (the “ Technology Agreement ”) with Dr. Sabatino Nacson, PHD Chemistry on August 23, 2012, which was amended and restated on September 14, 2012 and further amended on November 12, 2012 (the discussion of the Technology Agreement below affects and reflects such amendments and restatements). The Technology Agreement provides for Dr. Nacson to collaborate with the Company on the development of various products used in the automotive industry, including fuel injector formulation, fuel treatment, diesel fuel enhancement, lubricating oils, and penetrating lubricant formulation.  Pursuant to the Technology Agreement, Dr. Nacson agreed to provide consulting services to the Company and assist the Company in patent writing to protect new products and technology developed for the Company in the automotive market.  We agreed to compensate Dr. Nacson (i) CDN$100 per hour for the development of products up to a maximum of CDN$5,000 per product upon release and acceptance of formula to us; (ii) through the issuance of 1,039,583 shares of the Company’s common stock, which have previously been issued to date; (iii) by the payment of 1% of total sales of new products sold which were exclusively developed by Dr. Nacson or in collaboration with the Company; and (iv) to repay Dr. Nacson for all expenses associated with the U.S. and Canadian patents on the lubricant oil formation, which total $30,000, and all expenses moving forward, which will be paid quarterly.  As of March 31, 2013, the Company has not made any of the agreed upon payments within this agreement and all patents remain with Dr. Nacson and have not been assigned to the Company.
 
Dr. Nacson agreed not to develop end user products in the automotive industry, which compete with the Company.  We also received the exclusive rights to market and sell products developed by Dr. Nacson in the automotive market.  All products and formulae will be provided to us and remain our sole property.   We will manufacture, package and market products developed by Dr. Nacson at our sole discretion.  Dr. Nacson agreed to  assign all patent rights associated with the oil lubricant technology to us.  The Company agreed to indemnify and hold Dr. Nacson harmless against any claims or actions arising out of the use of any product developed by Dr. Nacson. The Technology Agreement has a term of seven years, extendable for up to another seven years thereafter, provided that the Technology Agreement can be terminated by either party after the expiration of the first seven year period with 90 days written notice from either party. Although the provisional patent application relating to the formula used in our products is registered in Dr. Nacson’s name, we have the exclusive rights to use such formula and any other products and intellectual property associated therewith created by Dr. Nacson for use in the automotive industry and during the term of the Technology Agreement.



 
6
 


 
Plan of Operations For the Next 12 Months

Planned Actions
 
 
Total Estimated Cost to Complete
 
Implement an internet sales strategy for Eco-Tek Multi-Purpose Lubricant and Fuel Savings Package.
 
 
$
5,000
 
Maintain active research and development program for new or improved engine treatment performance products.
 
 
$
25,000
 
Introduce the eco-friendly windshield washer fluid to the market.
 
 
$
50,000
 
Introduce a household lubricant to the market.
 
 
$
50,000
 
Recruit, train and establish two additional corporate sales agents in Ontario.
 
 
$
40,000
 
Create infomercial for television advertising
 
 
$
50,000
 
Increase retail outlets in Ontario and throughout Canada.
 
 
$
50,000
 
Increase international distributors.
 
 
$
2,400
 
Convert a pre-existing service center into an Eco-Tek Lube Center in Ontario, Canada.
 
 
$
50,000
 
Establish up to two more Eco-Tek Lube Centers in Ontario, Canada.
 
 
$
120,000
 
TOTAL
 
$
442,400
 
 
COMPARISON OF OPERATING RESULTS

Comparison of Three Months Ended March 31, 2013 to Three Months Ended March 31, 2012

Revenue. Revenue decreased by $35,079 to $53,441 for the three months ended March 31, 2013 from $88,520 for the three months ended March 31, 2012. The main reason for the decrease in revenue was due to a large non-reoccurring customer order of $28,800 fulfilled during the first quarter ended March 31, 2012.
 
Cost of Goods Sold .  Cost of goods sold was $38,427 for the three months ended March 31, 2013, compared to $47,319 for the three months ended March 31, 2012, a decrease of $8,892 from the prior period.  The decrease in cost of goods sold of $8,892 was not in proportion to the decrease in revenue of $35,079, mainly due to the fact that the Company earned an exceptionally high gross margin on that particular one-time customer order explained above.

Operating Expenses. Operating expenses increased to $204,631 for the three months ended March 31, 2013 from $40,183 for the three months ended March 31, 2012. The $164,448 increase in operating expenses was mainly due to an increase of $136,579 in general and administrative expenses, to $158,009 for the three months ended March 31, 2013, compared to $21,430 for the three months ended March 31, 2012, increase in salaries and wages of $9,250, to $26,815 for the three months ended March 31, 2013, compared to $17,565 for the three months ended March 31, 2012, and increase in financial charges of $12,736, to $13,121 for the three months ended March 31, 2013, compared to $385 for the three months ended March 31, 2012.  The overall increase in operating expenses is due to the fact that operating expenses for the three months ended March 31, 2012 include expenses of only Eco-Tek Ontario, whereas operating expenses for the three months ended March 31, 2013 include expenses of Eco-Tek Ontario as well as public company expenses, due to the closing of the Share Exchange Agreement on June 29, 2012.

 
 
 
 
 
7
 
 
 
Net loss. During the three months ended March 31, 2013, we incurred a net loss of $189,617 as compared to net income of $1,018 during the three months ended March 31, 2012.  The major reason for the increase in net loss in the current period as compared to the previous period is primarily due to the increase in total operating expenses of $164,448 and more specifically the increase in general and administrative expenses of $158,009, which was mainly due to the closing of the Share Exchange Agreement on June 29, 2012.
 
Liquidity and Capital Resources

As of March 31, 2013, the Company had total assets of $78,659, which included total current assets of $71,638, consisting of cash of $8,956, accounts receivable of $38,699, inventory of $23,392, deposits and sundry assets of $591, and long-term assets of $7,021 representing equipment, net of depreciation.

The Company had total liabilities of $1,161,516 as of March 31, 2013, which consisted solely of current liabilities, consisting of accounts payable and accrued liabilities of $125,130, notes payable of $301,893 (described in greater detail below under “ Promissory Notes ”), convertible notes payable of $263,775 (described in greater detail below under “ Convertible Promissory Notes ”), and advances from stockholders of $470,718.
 
The Company had a working capital deficit of $1,089,878 and an accumulated deficit of $2,189,207 as of March 31, 2013.
 
Net cash used in operating activities . During the three months ended March 31, 2013, the Company used $176,963 of net cash in operating activities compared with using $5,685 of net cash in operating activities for the three months ended March 31, 2012. The increase of $171,278 in net cash used in operating activities is mainly due to net loss of $189,617 incurred during the three months ended March 31, 2013 as compared to net income of $1,018 generated during the three months ended March 31, 2012.

Net cash provided by financing activities . During the three months ended March 31, 2013, net cash provided by financing activities of $173,142 consisted of proceeds from issuance of notes of $166,958 and advances from shareholders of $6,184, compared with $4,562 of net cash provided by financing activities for the three months ended March 31, 2012, due solely to advances from shareholders.

Convertible Promissory Notes Payable

Our expenses have historically been funded through third-party plans evidenced by Convertible Promissory Notes, as described in greater detail below:

On October 26, 2010 and November 4, 2010, we entered into Convertible Promissory Notes with Cornerstone Global Investments (“ Cornerstone ”) and Gordon Douglas King and Jay Louise King (the “ Kings ”), respectively, each in the amount of $5,000.  The Convertible Promissory Notes matured on October 26 and November 4, 2011, respectively, and have not been repaid or extended to date.  If converted into shares of our common stock, the convertible notes would each convert into 14,000,000 shares of our common stock (subject in the case of Cornerstone to the Conversion Limitation, described below).

On January 31, 2011, February 2, 2011 and February 3, 2011, we entered into Convertible Promissory Notes with Cornerstone, the Kings, and Translink Communications, respectively, each in the amount of $5,000.  The Convertible Promissory Notes matured on January 31, February 2 and February 3, 2012, respectively, and have not been repaid or extended to date. If converted into shares of our common stock, the convertible notes would each convert into 14,000,000 shares of our common stock (provided that the Translink note has a Conversion Limitation, as described below).
 
 
 
 
 

 
 
8
 
 
 
Additionally, in February 2011, the Company entered into Amended and Restated Convertible Promissory Notes with Morgarlan Limited (“ Morgarlan ”), in the amount of $12,500, and Little Bay Consulting SA (“ Little Bay ” and together with Morgarlan, the “ Note Holders ”), in the amount of $12,500, which amended and replaced the prior Convertible Promissory Notes entered into with such entities in February 2010, and which extended the due date of such Convertible Promissory Notes to February 10, 2012, which notes have matured to date and have not been repaid or extended to date.  I f converted into shares of our common stock, the convertible notes would each convert into 35,000,000 shares of our common stock (subject in the case of Little Bay to the Conversion Limitation, described below).
  
In April and June 2011, the Company entered into two Convertible Promissory Notes with Cornerstone in the aggregate amount of $20,000.  I f converted into shares of our common stock, the convertible notes would convert into 56,000,000 shares of our common stock (subject to the Conversion Limitation, described below). In May 2011, the Company entered into a Convertible Promissory Note with MIH Holdings Ltd. in the amount of $10,000.  I f converted into shares of our common stock, the convertible note would convert into 28,000,000 shares of our common stock (subject to the Conversion Limitation, described below).  The April 2011 note with Cornerstone and the May 2011 note with MIH Holdings Ltd.  have matured and have not been repaid or extended to date.

Effective October 27, 2011 and December 22, 2011, the Company entered into two Convertible Promissory Notes with MIH Holdings Ltd., in the amounts of $5,000 and $10,000, respectively.   I f converted into shares of our common stock, the convertible notes would convert into 14,000,000 and 28,000,000 shares of our common stock, respectively (subject to the Conversion Limitation, described below).  The October 2011 note has matured and has not been repaid or extended to date.
 
Effective November 4, 2011, the Company entered into a Convertible Promissory Note with Little Bay in the amount of $5,000.   I f converted into shares of our common stock, the convertible note would convert into 14,000,000 shares of our common stock (subject to the Conversion Limitation, described below).   The November 2011 note has matured and has not been repaid or extended to date.
 
In February and March 2012,  we  issued three Convertible Promissory Notes. A note dated February 3, 2012 in the principal amount of $5,000 was issued to Little Bay in connection with a loan of $5,000 made to the Company by Little Bay, which note matured in February 2013, and bears interest at the rate of 8% per annum. A note dated February 17, 2012 in the principal amount of $5,000 was issued to MIH Holdings Ltd. (“ MIH ”) in connection with a loan of $5,000 made to the Company by MIH, which note matured in February 2013, and bears interest at the rate of 8% per annum.  The third note dated March 6, 2012, in the principal amount of $10,000 was issued to MIH in connection with a loan of $10,000 made to the Company by MIH, which note matures in March 2013, and bears interest at the rate of 8% per annum.  The notes have matured and have not been paid to date.   I f converted into shares of our common stock, the convertible notes would convert into 14,000,000, 14,000,000, and 28,000,000 shares of the Company’s common stock, respectively (not including the conversion of any accrued and unpaid interest and notwithstanding the Conversion Limitation as such relates to Little Bay and MIH as described below).

Effective April 20, 2012, Talon International Corp. (“ Talon ”) loaned the Company $115,000 (the “ Talon Loan ”), which was evidenced by a Convertible Promissory Note (as amended and restated, which amendment and restatement are reflected in the discussion below). The note bears interest at the rate of 8% per annum and matures on April 20, 2013. I f converted into shares of our common stock, the convertible note would convert into 322,128,851 shares of the Company’s common stock (not including the conversion of any accrued and unpaid interest) provided that the promissory note included a Conversion Limitation (as defined below).  The Talon Loan is subject to the Conversion Limitation, described below.
 
The Convertible Promissory Notes described above (the “ Convertible Notes ”) bear interest at the rate of 8% per annum, and are due and payable twelve months from their respective effective dates, unless otherwise described.  Additionally, the principal and interest due under such Convertible Notes is convertible into shares of the Company’s common stock at a conversion price of $0.0003571 per share at the option of the respective holders thereof, as provided in such Convertible Notes.

In May 2012 and effective as of June 2, 2011, February 2, 2011 and December 21, 2011, the Company entered into amendments to the outstanding Convertible Promissory Notes with Cornerstone, Little Bay and MIH, respectively.  The amendments added a provision to the convertible notes which prohibited the holder thereof from converting such note into shares of the Company’s common stock if such conversion would result in the holder holding more than 4.99% of the Company’s common stock, subject to each holder’s ability to waive such limitation with not less than 61 days prior written notice to the Company (the “ Conversion Limitation ”).  Additionally, in October 2012, but effective in February 2011, the Company entered into an amendment to the outstanding Convertible Promissory Note with Translink to add a Conversion Limitation.
 
 
 
 
 
 
 
9
 

 
Effective June 26, 2012, Little Bay loaned the Company $30,000, which was evidenced by a convertible promissory note which bears interest at the rate of 8% per annum and matures on June 26, 2013.  I f converted into shares of our common stock, the convertible note would convert into 84,033,613 shares of the Company’s common stock (not including the conversion of any accrued and unpaid interest) provided that the promissory note included a Conversion Limitation (as defined above).
 
Promissory Notes

Effective August 22, 2012, Fayt Investments Ltd. (“ Fayt Investments ”), loaned the Company $50,000, which was evidenced by a Promissory Note, which bears interest at the rate of 8% per annum and matures on August 22, 2013.  

Effective September 7, 2012, Little Bay, loaned the Company $25,000, which was evidenced by a Promissory Note, which bears interest at the rate of 8% per annum and matures on September 7, 2013.  

Effective December 12, 2012, Little Bay, loaned the Company $59,935, which was evidenced by a Promissory Note, which bears interest at the rate of 8% per annum and matures on December 12, 2013.  

Effective February 7, 2013, Little Bay loaned the Company $29,957, which was evidenced by a Promissory Note, which bears interest at the rate of 8% per annum and matures on February 7, 2014.  

Effective February 25, 2013, Translink Communication, loaned the Company $50,000, which the Company plans to memorialize in the form of a Promissory Note shortly after the date of this filing, which will bear interest at the rate of 8% per annum and will mature on February 25, 2014.  

Effective March 7, 2013 and March 22, 2013, Island View Garden, loaned the Company $52,000 and $35,000, which the Company plans to memorialize in the form of Promissory Notes shortly after the date of this filing, which will bear interest at the rate of 8% per annum and will mature on March 7, 2014 and March 22, 2014, respectively.
 
 
Effective May 7, 2013, Armitage SA, loaned the Company $67,000, which the Company plans to memorialize in the form of a Promissory Note shortly after the date of this filing, which will bear interest at the rate of 8% per annum and will mature on May 7, 2014.

Upon an event of default (as described in the notes) of any of the promissory notes described above, the holder thereof has the option of converting the unpaid principal and interest owed under the applicable promissory note into shares of the Company’s common stock at a conversion price equal to 70% of the volume weighted average of the closing prices of the Company’s common stock on the Over-The-Counter Bulletin Board or Pink Sheets trading market or on the principal securities exchange or other securities market on which the Company’s common stock is then being traded, for the ten prior trading days.

Need For Additional Capital

The Company has experienced losses from operations since inception that raise substantial doubt as to its ability to continue as a going concern.  The Company will need to raise additional funding to complete the Plan of Operations set forth above and repay the notes described above.  The Company has budgeted the need for approximately $442,400 of additional funding during the next 12 months to affect the Plan of Operations set forth above and $75,000 to pay its costs and expenses associated with the filing requirements with the Securities and Exchange Commission, which funding may not be available on favorable terms, if at all.   The Company’s operations do not currently produce sufficient operating cash to support the Company’s operations without additional funding.   If the Company is unable to raise adequate working capital it will be restricted in the implementation of its business plan and may be forced to cease filing reports with the SEC.
 
 
 
 
 
 
10
 
 
 
The Company’s consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. As shown in the accompanying consolidated financial statements, the Company has experienced losses from operations and has negative working capital as of March 31, 2013.  These factors raise substantial doubt regarding the Company's ability to continue as a going concern. 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 equity financing to continue operations, and the attainment of profitable operations. The consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue as a going concern.

Moving forward, we plan to seek out additional debt and/or equity financing (similar to the Convertible Notes and/or Promissory Notes) to pay costs and expenses associated with our filing requirements with the Securities and Exchange Commission and to affect our plan of operations (as described above); however, we do not currently have any specific plans to raise such additional financing at this time.  The sale of additional equity securities, if undertaken by the Company and if accomplished, may result in dilution to our shareholders. We cannot assure you, however, that future financing will be available in amounts or on terms acceptable to us, or at all.

There can be no assurance that the Company will be able to continue to raise funds, in which case we may be unable to meet our obligations and we may cease operations.

ITEM 3.   Quantitative and Qualitative Disclosures About Market Risk

Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), we are not required to provide the information required by this Item as we are a “ smaller reporting company, ” as defined by Rule 229.10(f)(1).

ITEM 4.   Controls and Procedures

(a)            Evaluation of disclosure controls and procedures . Our Principal Executive Officer and Principal Financial Officer, after evaluating the effectiveness of our " disclosure controls and procedures " (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q (the " Evaluation Date "), has concluded that as of the Evaluation Date, our disclosure controls and procedures were not effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.  This conclusion was based on the existence of the material weaknesses in our  internal control over financial reporting previously disclosed and discussed below.
   
A material weakness is a deficiency, or a combination of deficiencies, in  internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. We identified and continue to have the following material weaknesses in our internal controls over financial reporting: we currently do not have an internal audit group, and we will need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge. Additionally, due to the fact that we have only three officers and directors who have no experience as officers or directors of a reporting company, such lack of experienced personnel may impair our ability to maintain effective internal controls over financial reporting and disclosure controls and procedures, which may result in material misstatements to our consolidated financial statements and an inability to provide accurate and timely financial information to our stockholders.  
 
 
 
 
 
 
11
 

 
To address the need for more effective internal controls, management has plans to improve the existing controls and implement new controls as our financial position and capital availability improves.  
 
(b)            Changes in internal control over financial reporting . There were no changes in our internal control over financial reporting during our most recent fiscal quarter that materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.
 
Limitations on the Effectiveness of Internal Controls

Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the internal control. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.
   

 
12
 


 
PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we may become party to litigation or other legal proceedings that we consider to be a part of the ordinary course of our business. We are not currently involved in legal proceedings that could reasonably be expected to have a material adverse effect on our business, prospects, financial condition or results of operations. We may become involved in material legal proceedings in the future.

ITEM 1A. RISK FACTORS

There have been no material changes from the risk factors previously disclosed in the Company’s Annual Report on Form 10-K filed with the Commission on April 16, 2013 and investors are encouraged to read and review the risk factors included in the Annual Report on Form 10-K prior to making an investment in the Company.
 
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Effective January 29, 2013, the Company entered into a Debt Conversion Agreement with Ira Morris, pursuant to which Mr. Morris agreed to convert an aggregate of $10,000 which he was owed, which included $5,000 loaned to Eco-Tek Ontario in March 2011 and $5,000 loaned to Eco-Tek Ontario in April 2012, into 333,333 shares of the Company’s common stock ($0.03 per share), which shares have not been issued to date and have not been reflected in the number of issued and outstanding shares disclosed throughout this report, unless otherwise stated.

Effective February 7, 2013, Little Bay loaned the Company $29,957, which was evidenced by a Promissory Note, which bears interest at the rate of 8% per annum and matures on February 7, 2014.  

Effective February 25, 2013, Translink Communication, loaned the Company $50,000, which the Company plans to memorialize in the form of a Promissory Note shortly after the date of this filing, which will bear interest at the rate of 8% per annum and will mature on February 25, 2014.  

Effective March 7, 2013 and March 22, 2013, Island View Garden, loaned the Company $52,000 and $35,000, which the Company plans to memorialize in the form of Promissory Notes shortly after the date of this filing, which will bear interest at the rate of 8% per annum and will mature on March 7, 2014 and March 22, 2014, respectively.

Effective May 7, 2013, Armitage SA, loaned the Company $67,000, which the Company plans to memorialize in the form of a Promissory Note shortly after the date of this filing, which will bear interest at the rate of 8% per annum and will mature on May 7, 2014.

Upon an event of default (as described in the notes) of any of the promissory notes described above, the holder thereof has the option of converting the unpaid principal and interest owed under the applicable promissory note into shares of the Company’s common stock at a conversion price equal to 70% of the volume weighted average of the closing prices of the Company’s common stock on the Over-The-Counter Bulletin Board or Pink Sheets trading market or on the principal securities exchange or other securities market on which the Company’s common stock is then being traded, for the ten prior trading days.

We claim an exemption from registration afforded by Section 4(2) and/or Regulation S of the Securities Act of 1933, as amended (" Regulation S ") for the sale of the above securities, since the sale of the securities were made to non-U.S. persons (as defined under Rule 902 section (k)(2)(i) of Regulation S), pursuant to offshore transactions, and no directed selling efforts were made in the United States by the issuer, a distributor, any of their respective affiliates, or any person acting on behalf of any of the foregoing.

ITEM 6. EXHIBITS

See the Exhibit Index following the signature page to this Quarterly Report on Form 10-Q for a list of exhibits filed or furnished with this report, which Exhibit Index is incorporated herein by reference.
 

 
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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 
ECO-TEK GROUP, INC.
   
DATED: May 14, 2013
By: /s/ Ronald Kopman
 
Ronald Kopman
 
President (Principal Executive Officer)
 
and Chief Financial Officer (Principal Financial Officer/Principal Accounting Officer)
 
 
 

 
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  EXHIBIT INDEX
 
Exhibit Number
Description of Exhibit
   
3.1(1)
Articles of Incorporation
   
3.2(5)
Certificate of Change Pursuant to NRS 78.209
   
3.3(7)
Series A Preferred Stock Designation
   
3.4(13)
Certificate of Amendment to Articles of Incorporation (November 16, 2012) – Changing Name to “Eco-Tek Group, Inc.”
   
3.5(1)
Bylaws
   
10.1(2)
Convertible Promissory Note with Morgarlan Limited
   
10.2(2)
Convertible Promissory Note with Little Bay Consulting SA
   
10.3(3)
Amended and Restated Convertible Promissory Note with Morgarlan Limited
   
10.4(3)
Amended and Restated Convertible Promissory Note with Little Bay Consulting SA

10.5(3)
Convertible Promissory Note with Cornerstone Global Investments (Effective October 26, 2010)
   
10.6(3)
Convertible Promissory Note with Gordon Douglas King and Jay Louise King (Effective November 4, 2010)
   
10.7(3)
Convertible Promissory Note with Cornerstone Global Investments (Effective January 31, 2011)
   
10.8(3)
Convertible Promissory Note with Gordon Douglas King and Jay Louise King (Effective February 2, 2011)
   
10.9(3)
Convertible Promissory Note with Translink Communications (Effective February 3, 2011)
   
10.10(4)
Convertible Promissory Note with Cornerstone Global Investments (Effective April 19, 2011)
   
10.11(4)
Convertible Promissory Note with MIH Holdings Ltd. (Effective May 25, 2011)
   
10.12(4)
Convertible Promissory Note with Cornerstone Global Investments (Effective June 3, 2011)
   
10.13(6)
Convertible Promissory Note With MIH Holdings Ltd. (Effective October 27, 2011)
   
10.14(6)
Convertible Promissory Note With Little Bay Consulting SA (Effective November 4, 2011)
   
10.15(6)
Convertible Promissory Note With MIH Holdings Ltd. (Effective December 22, 2011)
   
10.16(7)
Stock Purchase Agreement (April 2012)
   
10.17(8)
$5,000 Convertible Promissory Note with Little Bay Consulting SA (effective February 3, 2012)
   
10.18(8)
$5,000 Convertible Promissory Note with MIH Holdings Ltd. (effective February 17, 2012)
   
10.19(8)
$10,000 Convertible Promissory Note with MIH Holdings Ltd. (effective March 6, 2012)
 
 
 
 
 
 
15
 
 
 
   
10.20(8)
$115,000 Amended and Restated Convertible Promissory Note with Talon International Corp. (effective April 20, 2012)
   
10.21(8)
Amendment to Convertible Promissory Note with Cornerstone Global Investments
 
10.22(8)
Amendment to Convertible Promissory Note with Little Bay Consulting SA
   
10.23(8)
Amendment to Convertible Promissory Note with MIH Holdings Ltd.
   
10.24(9)
Amended and Restated Stock Purchase Agreement (June 2012)
   
10.25(9)
Cancellation of Shares Agreement
   
10.26(9)
Share Exchange Agreement – Eco-Tek Group Inc., the Company and the Eco-Tek Shareholders
   
10.27(9)
Form of Distribution Agreement
   
10.28(9)
$30,000 Convertible Promissory Note with Little Bay Consulting SA (effective June 26, 2012)
   
10.29(9)
Exclusive Distribution Letter Agreement Regarding Oil Cleaner and Filter
   
10.30(10)
Commercial Lease Agreement for 15-65 Woodstream Blvd, Woodbridge, Ontario, Canada L4L 7X6
   
10.31(10)
Technology co-operation Agreement
   
10.32(11)
Amended and Restated Technology co-operation Agreement
   
10.33(11)
Non-Disclosure Agreement with Kleen Flow Tumbler
   
10.34(12)
Promissory Note With Fayt Investments Ltd. (August 2012)($50,000)
   
10.35(12)
Promissory Note With Little Bay Consulting SA (September 2012)($25,000)
   
10.36(12)
First Amendment to Technology co-operation Agreement
   
10.37(12)
Amendment to Convertible Promissory Note With Translink Communications
   
10.38(13)
First Amendment to Technology Co-Operation Agreement (November 12, 2012)
   
10.39(13)
Debt Conversion Agreement with Ira Morris
   
10.40(13)
Promissory Note with Little Bay Consulting SA  (December 2012) ($59,934.61)
   
10.41(13)
Promissory Note with Little Bay Consulting SA  (February 2013) ($29,957.00)
   
31*
Certificate of the Principal Executive Officer and Principal Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
   
32*** 
Certificate of the Principal Executive Officer and Principal Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 
 
 
16
 
 
 
   
101.INS**
XBRL Instance Document
   
101.SCH**
XBRL Taxonomy Extension Schema Document
   
101.CAL**
XBRL Taxonomy Extension Calculation Linkbase Document
   
101.DEF**
XBRL Taxonomy Extension Definition Linkbase Document
   
101.LAB**
XBRL Taxonomy Extension Label Linkbase Document
   
101.PRE**
XBRL Taxonomy Extension Presentation Linkbase Document

*   Filed herewith.

*** Furnished herewith.
 
(1) Filed as an exhibit to the Company’s Form S-1 Registration Statement, filed with the Commission on October 19, 2009, and incorporated by reference herein.

(2) Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q, filed with the Commission on February 22, 2010, and incorporated by reference herein.

(3) Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q, filed with the Commission on February 23, 2011, and incorporated by reference herein.

(4) Filed as an exhibit to the Company’s Annual Report on Form 10-K, filed with the Commission on October 11, 2011, and incorporated by reference herein.
  
(5) Filed as an exhibit to the Company’s Current Report on Form 8-K, filed with the Commission on January 26, 2012, and incorporated reference herein.

(6) Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q, filed with the Commission on February 14, 2012, and incorporated herein by reference.

(7) Filed as exhibits to the Company’s Form 8-K current report, filed with the Commission on April 20, 2012, and incorporated herein by reference.

(8) Filed as exhibits to the Company’s Form 8-K current report, filed with the Commission on May 10, 2012, and incorporated herein by reference.

(9) Filed as exhibits to the Company’s Form 8-K current report, filed with the Commission on July 6, 2012, and incorporated herein by reference.

(10) Filed as exhibits to the Company’s Form 8-K/A Amendment No. 1, filed with the Commission on August 27, 2012, and incorporated herein by reference.

(11) Filed as exhibits to the Company’s Form 8-K/A Amendment No. 2, filed with the Commission on September 21, 2012, and incorporated herein by reference.

(12) Filed as exhibits to the Company’s Form 10-Q Quarterly Report, filed with the Commission on November 16, 2012, and incorporated herein by reference.

(13  Filed as exhibits to the Company’s Form 10-K Annual Report, filed with the Commission on April 16, 2013, and incorporated herein by reference.

** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

 
17
 
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