ISSUER INFORMATION AND DISCLOSURE STATEMENT
PURSUANT TO RULE 15C2-11(a)(5)
PART A. GENERAL COMPANY INFORMATION
Item I. The exact name of the issuer and its predecessor (if any).
EC Development, Inc., a Delaware corporation (hereinafter, the “Company”).
The Company is the survivor of a merger with its predecessor, Nucleus, Inc., a
Nevada corporation which was originally incorporated as eNucleus, Inc., in 1984;
then merged with American General Ventures, Inc. in January 28, 1999 and then
changed its name to Nucleus, Inc. in June 12, 2000.
Item II. The address of the issuer’s principal executive offices.
EC Development, Inc.
23 E. 9th Street, Suite 229,
Shawnee, Oklahoma, 74801
Office: (405) 273-3330
Fax: 972-307-5417
Website: www.ecdevonline.com
Item III. The jurisdiction(s) and date of the issuer’s incorporation or organization.
The Company was incorporated on May 30, 2000, in the State of Delaware. The
Company was created as a wholly-owned subsidiary of Nucleus, Inc., for purposes
of merger to redomicile that entity (which was originally incorporated as
eNucleus, Inc., in Nevada in 1984. It then merged with American General
Ventures, Inc. on January 28, 1999 and thereafter changed its name to Nucleus,
Inc. in June 12, 2000.
PART B. SHARE STRUCTURE
Item IV. The exact title and class of securities outstanding.
Common Stock
Item V. Par or stated value and description of the security.
Common Stock- $0.001 par value
100,000,000 shares authorized
Security Symbol: ECDI
CUSIP Number: 26826X 104
Item VI. The number of shares or total amount of the securities outstanding for
each class of securities authorized.
As of the end of the most recent fiscal quarter as well as the end of the issuer’s
last two fiscal years, the number of shares authorized was 100,000,000 shares.
The number of shares outstanding as of February 10, 2011 was 25,825,680
shares. Of these, 652,220 shares were in the public float. There are presently
209 shareholders of record as of February 10, 2011. The number of shares
outstanding and in the public float as of December 31, 2010 is the same as for
February 10, 2011; no new shares have been issued since December 31, 2010.
There were 266,000 shares outstanding for the end of the fiscal year ending
December 31, 2009 of which 99,820 shares were in the public float (calculated on
a post-split basis, based on the 200:1 split effective June 28, 2010).
The Articles of Incorporation of the Company permit issuance of 20,000,000
shares of Preferred Stock (with par value equal to $0.001) but no certificate of
designation setting forth relative terms of any class of preferred stock has been
filed. There is no CUSIP number for any preferred shares or other class of stock.
The Company’s stock was originally quoted for sale on the OTC (Over the
Counter) market under the symbol ENCS which was the successor symbol from
the exchange of stock in Nucleus, Inc., the Nevada entity, into which it merged,
which previously traded under the symbol NCLS. Following emergence from
bankruptcy and a 6:1 reverse split, the Company’s new stock began trading under
the symbol ENCU in April 2002 (symbol change effective July 2002). The
symbol was changed in 2004 to ENUI following the 10:1 reverse split and
acquisition of Primewire as discussed below (symbol change effective March
2004). The present symbol ECDI was assigned in August 2010 following the
name change.
There are no special rights to dividends, voting, preemption or other rights.
There are no special provisions of the Company’s articles of incorporation or bylaws designed to delay, defer or prevent a change in control of the issuer.
Statement Regarding Shell-Company Status. The Company was formed in 2000
to acquire the assets of and to be the successor-in-interest to another company
domiciled in Nevada. From that point forward, the Company was subject to
bankruptcy proceedings on two occasions, during both of which times, a
significant portion of the business was disposed of in order to resolve debts but,
while the Company had the volume of its business reduced in connection with the
bankruptcy proceedings, the Company, as an “issuer” for purposes of
determining “Shell Company” status, was not “without assets or operations” at
any time in its history as such are interpreted in determining “shell company”
status. The Company has, from inception, been engaged in different aspects of
software development and sales and related businesses including hosting and
ASP-model services and, while it has transitioned from areas of concentration, it
has not reached a point where it could be deemed to have “ceased doing business”
in the computer industry. “Shell company” status relates generally to whether a
company is without a business model or exists with nominal assets or only cash
equivalents in anticipation of an acquisition; not whether or not a company is
successful in its attempts to conduct business within a market sector. The
requirements that are considered for “shell company” status are intended to
include companies which, whether from total cessation of business operations or
intentional formation, are at a point where no business is conducted or intended
to be conducted while the entity is held pending some unknown future
transaction. To the contrary, the Company was originally formed for the
purposes of acquiring and operating software-industry assets for development
and marketing and it has remained such an entity, even while shifting the focus
of types of software and software-services being offered in its quest for viability.
Statement regarding submission or publishing of quotations directly or indirectly
on behalf of the issuer, or any director, officer or any person, directly or indirectly
the beneficial owner of more than 10 percent of the outstanding units or shares of
any equity security of the issuer, or at the request of any promoter for the issuer,
and, if so, the name of such person, and the basis for any exemption under the
federal securities laws for any sales of such securities on behalf of such person.
To the best of Company’s knowledge, information and belief, quotations with
respect to the Company’s common stock are not being submitted or published,
directly or indirectly, on its behalf or on behalf of a director, officer or beneficial
owners of more than ten 10% percent of the common stock that is issued and
outstanding.
PART C. BUSINESS INFORMATION
Item VII. The name and address of the transfer agent.
Transfer Online, Inc.
512 SE Salmon Street
Portland, Oregon, 97214
Fax: 503 227-6874
Transfer Online, Inc., is an SEC-approved transfer-agent.
Item VIII. The nature of the issuer’s business.
A. Business Development.
Effective May 5, 2010, the business known as EC Development, LLC was acquired
by the Company resulting in the acquisition of a software development business.
The Company was the successor in interest to Nucleus, Inc., (which was originally
incorporated as eNucleus, Inc., in Nevada in 1984; then merged with American
General Ventures, Inc. in January 28, 1999; and then changed its name to
Nucleus, Inc. in June 12, 2000. As described in the history below, the Company
has owned, developed and marketed software products and other products and
services throughout its history.
With the acquisition of EC Development, LLC, the Company’s focus shifted to the
Gaming Industry. The Company now designs, developments and markets
software and data acquisition tools which integrate with its software to monitor,
audit, analyze and report usage, financial transactions and customer tendencies
in the gaming industry. The historical focus of the Company remains in the
software solutions provider industry.
Organizational Aspects. The Company was incorporated May 30, 2000 as a
corporation under the Delaware General Corporation Laws. The Company was
formed as a subsidiary of Nucleus, Inc., a Nevada corporation, which was the
predecessor company. Nucleus Inc., the Nevada corporation was formed in 1984
and changed its name from eNucleus, Inc., to Nucleus, Inc., by amendment to its
articles on June 12 2000. Prior to the re-domocile which represented a merger
with the Company as a new corporation, the predecessor also merged with
American General Ventures, Inc. in January 28, 1999.
There have been four amendments to the articles of incorporation of the
Company:
(i)
to effectuate a 6 to 1 reverse split in connection with its issuance of shares
to creditors and its emergence from Bankruptcy filed and effective October
2001;
(ii)
to effectuate a 10 to 1 reverse split in connection with its acquisition of
PrimeWire, Inc., filed and effective February 2004,
(iii) to enact the name change to EC Development, Inc., and, at the same time,
effectuate a 200 to 1 reverse split of its shares, effective June 28, 2010;
(iv) to acquire EC Development LLC., by a certificate of merger filed and
effective July 22, 2010
Statement regarding fiscal year end.
December 31.
The Company’s fiscal year ends on
Statement regarding bankruptcy, receivership or any similar proceeding. The
Company, when it was known as eNucleus, Inc., filed a voluntary petition for
reorganization under Chapter 11 of the United States Bankruptcy Code in the U.S.
Bankruptcy Court for the Northern District of Illinois, Eastern Division on May
10, 2001. The Company defaulted on its lease obligations and on short-term
notes and the filing of the petition was deemed necessary when the Company was
unable to restructure its debt. A plan was confirmed and the Company emerged
from bankruptcy on November 6, 2003. In connection with the discovery of
undisclosed encumbrances from the Primewire transaction, the Company sold its
“Pro Books” line of software and entered into outsourcing contracts for the
ongoing projects of eNucleus India Solutions Pte. to maintain operations but,
after its inability to pay its costs of operations, the Company filed a second
petition for reorganization under Chapter 11 of the United States Bankruptcy
Code in the U.S. Bankruptcy Court for the Western District of Washington, on
July 25, 2009.
Statement regarding material reclassification, merger, consolidation, or purchase
or sale of a significant amount of assets not in the ordinary course of business. As
also described elsewhere in this Information Statement, the Company has had
three reclassifications of its common stock, all by reverse split. The Company has
also engaged in the following material acquisitions or sales
(i)
(ii)
the Company acquired Strategic Business Group, Inc., in December 2002;
the Company acquired PrimeWire, Inc., in February 2004 but the
acquisition price was subsequently renegotiated and reduced in a
settlement agreement;
(iii) the Company acquired TAK Acquisition Co., in June 2004;
(iv) the Company acquired Frontier Technologies in August 2004;
(v)
the Company acquired certain contract rights from Applitech Solutions,
Inc., in October 2004;
(vi) the Company acquired the assets of Applitech Solutions, Ltd through a
wholly owned subsidiary eNucleus India Solutions Pte. in May 2005;
(vii) the Company acquired software and related assets from Acrux, LLC,
through a wholly owned subsidiary, Education ASPX, Inc., in September
2005; and
(viii) the Company acquired EC Development, LLC in May 2010.
Prior to that date, the predecessor company, first known as eNucleus, Inc.,
merged with and acquired Nucleus Holding Corporation, a privately-held Illinois
corporation in April 1999. During 1999, the predecessor company acquired four
computer systems and services companies (Comp-Pro Computers, Inc.; Young
Data Systems, Inc.; Innovative Technology Solutions, Inc.; and Telos
Distributing, Inc.). The predecessor company subsequently acquired, in 2000,
Webnet.com, Inc.
Statement regarding de-listing by any securities exchange or the OTC Bulletin
Board. The shares were previously subject to a voluntary de-registration of the
class of securities pursuant to a filing of Form 15-12g with the Securities and
Exchange Commission.
Statement regarding current, past, pending or threatened legal proceedings or
administrative actions either by or against the issuer that could have a material
effect on the issuer’s business, financial condition, or operations. All past legal or
administrative actions have been resolved in connection with the filing of the
Fourth Amended Plan allowing the Company to emerge from Bankruptcy.
Statement regarding default of any terms of any note, loan, lease, or other
indebtedness or financing arrangement requiring the issuer to make payments.
Numerous defaults as to financing and lease obligations resulted in filing
petitions in bankruptcy as described above.
Statement regarding a change of control. Majority control changed in connection
with the acquisition of EC Development, LLC effective as of August 24, 2010.
Statement regarding any increase of 10% or more of the same class of
outstanding equity securities. In connection with each of the acquisitions
described above, the Company issued more than 10% of its common stock to
shareholders of the selling entities. Additionally, the predecessor company also
issued more than 10% of its then outstanding stock to acquire the entities
described above.
Statement regarding past, pending or anticipated stock split, stock dividend,
recapitalization, merger, acquisition, spin-off, or reorganization. The Company
has had three recapitalizations:
(i)
a 6 to 1 reverse split effective October 2001;
(ii)
a 10 to 1 reverse split effective February 2004; and
(iii) a 200 to 1 reverse split effective June 28, 2010.
Statement regarding current, past or pending trading suspensions by a securities
regulator. None.
B. Business of Issuer.
The Company’s primary and secondary SIC Codes are 5045 and 7371
The NAICS code is 511210.
Statement regarding “development stage” status. While the Company is
presently conducting operations in its industry, it may be considered a
development stage company when its audit is complete based on its focus on the
development of a newer line of software solutions.
Statement regarding “shell company” status. As detailed above, the Company
would not be considered a shell company as it has maintained operations or,
where operations were suspended in bankrupty, had the intent to resume
operations at all times during its history.
Statement regarding the names of any parent, subsidiary, or affiliate of the issuer.
The acquired entity, EC Development, LLC, was merged out of existence. Its
operations - software development and production - are consolidated in the
Company’s financial statements and its business is described as the business of
the Company. EC Development, LLC is not a subsidiary, having been merged out
of existence. The Company has no other affiliated entities.
Statement regarding the effect of existing or probable governmental regulations
on the business. The Gaming Industry is highly regulated and, as the Company’s
products are used in gaming operations to provide monitoring, auditing and
other functions required for the Company’s customers to comply with those
regulations. Changes in these regulations could have a material effect on the
Company’s ability to continue its operations. The Company’s products are
marketed and sold as compliant with applicable regulations and, in many
jurisdictions, certified as permitting customers of the Company to be in
compliance. The Company has no knowledge of pending regulations or changes
that would affect its operations.
Statement regarding an estimate of the amount spent during each of the last two
fiscal years on research and development activities. The Company, EC
Development, Inc., has not spent any funds on research or development activities
in the market but EC Development, LLC (merged owner of the recently acquired
business) has spent approximately $1,500,000 in the development of its products
and services for the gaming industry. The Company expects it will spend monies
on the further development of its products to meet market demand for additional
features or compliance-reporting functions requested by its clients.
Statement regarding costs and effects of compliance with environmental laws
(federal, state and local). The Company is not presently subject to any abatement
or similar laws nor will the products and services likely become subject to
environmental laws but the Company acknowledges that operations of all
businesses, especially users of electricity in the software development areas, may
be subject to regulations regarding more efficient use of electricity or the
requirement of implementing “green technology” as a result of current energyuse policies and such regulations, if imposed, tend to increase the costs over
those related to non-compliant methodologies on a short-term basis.
Statement regarding the number of total employees and number of full time
employees. The Company currently has ten (10) full-time employees and no
part-time employees (10 total).
Item IX. The nature of products or services offered.
The Company is presently engaged in the development; marketing and sale of
software related to the gaming industry and intends to remain focused in the
gaming-industry sector of the software industry. It has been involved in the
development, marketing and sales of other software in the past. The business of
the Company is the development of software and ancillary data-acquisition tools
for gaming and Casino Management Software systems that are standardscompliant and integrate management and reporting for all Class II and Class III
games and related gaming systems.
The development and marketing of casino gaming software systems
includes the complete “Tahoe Casino Management System” as well as
“Tahoe TITO” (ticket-in/ticket-out) system, “Tahoe Table Tracking”
system (both of which are software packages available on a standalone
basis) and other related software all under the brand name, “the Tahoe
Suite of Software,” to companies in the gaming industry. The Company
claims trademarks for its use of the various names and logos associated
with “Tahoe Suite of Software.” These systems are proprietary and
developed by the Company using both open-sourced and commercial
hardware and software solutions. The software is sold with appropriate
licenses for use of software belonging to others. The hardware includes
data-acquisition tools that interface with the software systems which are
produced to the Company’s specifications by a third-party vendor.
The Company’s business is the development, sales and support of casino
software products for the management of and monitoring of all aspects of
the operation of a casino. The Company’s software is in daily use in small
and medium-sized casinos in the United States and Mexico. The Company
believes that the software has proven to be reliable and technologically
superior to that of its established rivals. The Company markets the Tahoe
products by distinguishing the software’s ability to support a wider range
of game classes than do competing products and also by promoting its
software as built to modern software engineering standards, which
increases flexibility and reduces system management cost and complexity.
The Company’s products are sold directly to its customers through a
variety of distribution channels.
The Company’s software systems are standards-compliant and integrate
management and reporting for both Class II and Class III games and
related gaming systems. The first generation of the Tahoe Suite of
Software was released in 2005. Over the past five years, the company has
continued to expand and grow its state of the art gaming technology to
provide what, the Company believes, is one of the most comprehensive
and cutting-edge casino management systems (sometimes referred to
herein generically, as “CMS”) in the market. The system is deployed on
thousands of gaming devices in casinos in the US and Mexico and the
Company believes that the Tahoe Suite of Software has proven to be both
reliable and technologically superior to that of its established rivals. The
company’s technology is subject to protections through multiple
applications for patents (patents pending) with the United States Patent
and Trademark Office.
Statement regarding distribution methods. The Company markets its products
and services to the gaming industry both by direct sales and sales in conjunction
with VAR’s and consultants who act as the distribution channel.
Statement regarding the status of any publicly announced new product or service.
The Company has previously announced newer versions of certain of its product
line including an updated casino management suite and these products are
presently released for sale with at least one current installation.
Statement regarding competitive business conditions, the issuer’s competitive
position in the industry, and methods of competition. There are two categories of
competitors for EC Development, Inc. in the casino management software or
CMS market; the casino game manufacturers which have traditionally provided
CMS software in connection with the sales and installation of their own gaming
machines and smaller technology companies and programmers which offer
custom programming services. The Company is not aware of a similar suite of
products currently marketed by small software companies and programmers and
therefore is not aware of realistic competition from this market segment. The
Company recognizes the strengths of the major game manufacturers which come
from size, resources and current market penetration as well as their weaknesses
which come primarily from the nature of software designed to work with their
own specific gaming equipment. The Company markets software solutions that
are considered equipment-agnostic inasmuch as the software may be easily
installed with many different types of casino games including equipment for the
smaller Class II games and facilities. The Company’s products and solutions are
marketed through direct sales and distributors alongside the sellers of gaming
equipment and other products and services for the Gaming Industry.
The Company plans to complete by deploying their technology in areas that are
not highly sought after by the large casino game manufacturers and where
smaller technology companies do not have the financial or local presence to
compete.
Central and South American Market – This market represents many
opportunities for the company. The Company has currently deployed its Tahoe
CMS in a number of gaming facilities in Mexico and has demonstrated its ability
to localize the Tahoe CMS program in both currency and language within Spanish
speaking countries.
Tribal Gaming – The Company has undertaken a focus in this market. The
founders of EC Development LLC are Native Americans and have actively worked
with a number of tribes. The Company currently has demonstrated its ability to
deploy the Tahoe CMS solution in several tribes meeting the challenges of both
Class II and Class III gaming environments.
Boutique Gaming – The boutique gaming market consists of three primary
segments, which are the Cruise Ship industry; Award with Prize (AWP); and
CLASS 2 international facilities. The Tahoe CMS solution is built with state-ofthe-art technologies to meet the unique requirements of this gaming sector.
Statement regarding sources and availability of raw materials and the names of
principal suppliers. The Company uses many different manufacturers to produce
the data acquisition hardware and interfaces that work with its software
solutions. These products are produced to the Company’s specifications by OEM
manufacturers. The Company is not aware of any issues with raw materials.
Statement regarding dependence on one or a few major customers. There are
many customers in the various markets served by the Company. Material
contracts with distributors are discussed elsewhere in this section.
Statement regarding patents, trademarks, licenses, franchises, concessions,
royalty agreements or labor contracts, including their duration. The Company
has filed three patent applications which are presently pending under US Patent
Application Nos. 20090054151; 20080058105; and 20090299833, all relating to
software and hardware solutions for the gaming industry. The Company holds
numerous trademarks relating to the brand and identity of its product line but no
trademarks or servicemarks are presently registered with the United States
Patent and Trademark Office. The Company is not subject to any franchise
arrangements, royalty agreements of labor contracts.
Statement regarding need for any government approval of principal products or
services. The product line of the Company includes software solutions which may
be relied upon by governmental agencies in determining taxes due from gaming
facilities and other official uses. As a result, most governmental agencies require
verification of the reliability and verifiability of the data-collection components of
such software to insure proper collection of taxes. the Company has obtained
certification of certain of its products from recognized independent research and
testing facilities in order to be able to sell these products to governmentallyregulated casinos. Certification is ongoing for new products, revisions to the
product line and the requirements of new jurisdictions where the products may
be sold.
Statement regarding material contracts. The Company presently markets to all
sectors of the gaming industry and no single customer of the Company represents
a material percentage of the customer base. The Company acquires components
including data-acquisition modules from a number of vendors who manufacture
these on an OEM basis. The Company has two significant distribution contracts
in place but only the agency arrangement with its distributor in Mexico has
proven to be of a material size and scope. The Company believes the
arrangement is satisfactory to all parties but there can be no assurance of the
continuation of the present agency relationship and, based on the size and scope
of the relationship, loss of the relationship would have a material negative impact
on the Company’s sales. The Company has been developing distribution
arrangements for other geographic locations and market sectors.
Item X. The nature and extent of the issuer’s facilities.
The Company owns a small office building which was formerly its corporate
headquarters but which is now leased. The Company maintains an office
presence in another office building pursuant to a lease arrangement. The
Company owns no other real estate in part or in whole. The office facility
contains office equipment appropriate for software development but no
specialized manufacturing equipment.
PART D. MANAGEMENT STRUCTURE AND FINANCIAL INFORMATION
Item XI. The name of the chief executive officer, members of the board of
directors, as well as control persons.
A. Officers and Directors.
The following list sets forth the name, address and position of each executive
officer and director of the Issuer as of the date hereof:
Name
Eugene A. Estep
23 E. 9th Street, Suite 229
Shawnee, OK 74801
Position
President/CEO/Director
Randy A. Edgerton
4800 NW 135th Street
Vancouver, WA
Treasurer/ CFO/Director
Frederick C. Combs
23 E. 9th Street, Suite 229
Shawnee, OK 74801
Secretary
The Board of Directors is comprised of Randy Edgerton and Eugene Estep, both
officers; there are presently no independent directors. The principal occupation
and business experience during the last five years for each of the present
directors and executive officers of the Issuer are as follows:
Eugene A. Estep has served as Chairman of the Board and Chief
Executive Officer of EC Development, Inc., since August 2010, pursuant to the
reorganization of the Company. Mr. Estep served as president of EC
Development, LLC from August 2005 until July 31, 2010. From 2002 until 2005
Mr. Estep formed a private consulting firm providing information technology
security services, which included audits for banks, conversion from mainframe
systems to window based systems and security audits for the financial industry as
well as the gaming industry. Mr. Estep formed several private consulting firms
including Techrescue, LLC, one of his early stage companies, which has over 800
customers today and continues to thrive.
Randy A. Edgerton has served as Chief Financial Officer and Director
since August 2010, pursuant to the reorganization of the company. Mr. Edgerton
served as Chief Executive Officer and Director of eNucleus, Inc., from 2006 to
2010 and as Executive Vice President of Sales from 2004 – 2006. From 1997 to
2004 Mr. Edgerton was the founder and President of TAK Acquisition Company,
a privately held internet-enabled petroleum supply chain technology company for
major oil companies, their suppliers and distributors. Mr. Edgerton has over 20
years of experience serving in various executive positions in information
technology. His executive experience spans large complex computer and network
solutions, software development and support for IT systems in the US, Asia,
India and South America.
Fredrick C. Combs, Secretary, jointly founded EC Development, LLC,
and has been developing cutting edge gaming technology solutions since 2003.
He is the original designer and architect of the Tahoe CMS system and holds
several patents. Prior to forming EC Development, LLC, he provided consulting
and technical development services to the Financial Industry specific to banking
and for medical accounting applications. He is an innovator in technology
applications with high security requirements including one of the first web based
medical accountings systems that had over 300 concurrent users, which he
designed and implemented in 2002.
The following table sets forth the ownership for each class of equity securities of
the Issuer owned beneficially and of record by all directors and officers of the
Issuer.
Name and Position
Eugene A. Estep
President
2,000,000
7,788,000 (controlled)*
Percentage
Owned
6.94%
27.02%
Randy A. Edgerton
Treasurer
263
1,350,263 (controlled)**
0.00%
4.68%
4,578,000
7,578,000 (controlled)***
15.88%
26.29%
13,716,263
47.58%
Frederick C. Combs
Secretary
Officers and Directors as
a Group.
Common Stock Owned
*Eugene A. Estep also holds shares in his wife’s name and as 50%
owner of Techrescue, LLC
**Randy Edgerton also holds shares in his wife’s name.
*** Frederick C. Combs also holds shares as 50% owner of Techrescue,
LLC
Statement regarding general partners. The Company has no general partners as
it is a corporation.
Statement regarding promoters. The Company has not engaged the services of
any firm which would constitute promotional services or a promoter.
Statement regarding control persons. Eugene A. Estep; Randy A. Edgerton; and
Frederick C. Combs are deemed control persons based on their positions with the
company and number of shares owned. The following is a list of shareholders as
of November 1, 2010 for EC Development, Inc., that discloses all shareholders
that currently hold more than 5% of the common stock of the company’s issued
and outstanding shares and may also therefore be considered control persons.
Shareholder
Eugene Estep –
Robin Estep (Wife of CEO)
Frederick Coombs III
Techrescue LLC
SueMac Inc
Kandice Edgerton (Wife of CFO)
Number of Shares
2,000,000
2,788,000
4,578,000
3,000,000
2,250,000
1,325,000
B. Legal/Disciplinary History.
As to each of the parties identified as a control person, the following disclosures
are made: the identity as to whether any of the foregoing persons have, in the last
five years, been the subject of:
1. A conviction in a criminal proceeding or named as a defendant in a pending
criminal proceeding (excluding traffic violations and other minor offenses);
N/A
2. The entry of an order, judgment, or decree, not subsequently reversed,
suspended or vacated, by a court of competent jurisdiction that permanently or
temporarily enjoined, barred, suspended or otherwise limited such person’s
involvement in any type of business, securities, commodities, or banking
activities;
N/A
3. A finding or judgment by a court of competent jurisdiction (in a civil action),
the SEC, the CFTC, or a state securities regulator of a violation of federal or state
securities or commodities law, which finding or judgment has not been reversed,
suspended, or vacated; or
N/A
4. The entry of an order by a self-regulatory organization that permanently or
temporarily barred suspended or otherwise limited such person’s involvement in
any type of business or securities activities.
N/A
Statement regarding affiliations or relationships between the former Officers and
Directors of the Company and the current Officers and Directors of the Company.
No current officer or director has any affiliation with any prior officer or director.
C. Disclosure of Family Relationships.
The ownership of stock by beneficial owners who are related to the Company’s
Directors and officers is disclosed on the chart above. Kandice Edgerton is the
wife of the current CFO and Robin Estep is the wife of the current CEO.
D. Disclosure of Related Party Transactions.
No transactions have occurred nor are any proposed between the Company and
any “related person” with a value in excess of the lesser of 1% of the Company’s
assets or $120,000. The prior ownership of EC Development, LLC (which
became affiliated with the Company as a result of the transaction) had no prior
affiliation with the Company and therefore the transaction was not a “relatedparty” transaction.
E. Disclosure of Conflicts of Interest.
The Company is not aware of any conflicts of interest involving the Company and
any of its officers or directors.
Item XII. Financial information for the issuer’s most recent fiscal period.
See Attached Financial Information (not audited) for the preceding two fiscal
years (and therefore includes the period ending December 31, 2010) which has
been prepared and is presented in accordance with U.S. generally accepted
accounting principles and filed with OTC Disclosure and News Service and are
incorporated herein by reference. The following statements are incorporated by
reference:
1) Year-end balance sheet for periods ending December 31, 2010 and December
31, 2009;
2) Annual statement of income for periods ending December 31, 2010 and
December 31, 2009;
3) Annual statement of cash flows for periods ending December 31, 2010 and
December 31, 2009;
4) Annual statement of changes in stockholders’ equity for periods ending
December 31, 2010 and December 31, 2009;
5) Financial notes for the above statements.
No audit opinion is attached as the above financial statements are not audited.
EC Development, Inc., intends to post all financial reports on the website owned
and managed by OTC Markets, Inc., (formerly Pinksheets) for dissemination of
this type of information every quarter and will disclose the financial condition of
the Company and any changes that have occurred since this statement. It is the
intent of the Company to commence filing reports under the Securities Exchange
Act of 1934 once audited financial statements are available, which are currently
being prepared.
Item XIII. Similar financial information for such part of the two preceding fiscal years
as the issuer or its predecessor has been in existence.
See Attached Financial Information (not audited) for the preceding two fiscal
years presented in comparison format which has been prepared and is presented
in accordance with U.S. generally accepted accounting principles and filed with
OTC Disclosure and News Service and are incorporated herein by reference. The
list of financial statements referenced in Item XII are also incorporated herein by
this reference.
Item XIV. Beneficial Owners.
The following is a list of shareholders as of November 1, 2010 for EC
Development, Inc., that discloses all shareholders that currently hold more than
5% of the common stock of the company’s issued and outstanding shares and
may also therefore be considered control persons.
Shareholder
Eugene Estep –
Robin Estep (Wife of CEO)
Frederick Coombs III
Techrescue LLC
SueMac Inc
Kandice Edgerton (Wife of CFO)
Number of Shares
2,000,000
2,788,000
4,578,000
3,000,000
2,250,000
1,325,000
SueMac, Inc. is controlled by Richard and Sue McCarthy.
Techrescue LLC is controlled by Eugene Estep and Frederick Coombs who are
both officers of the Company.
Item XV. The name, address, telephone number, and email address of each of the
following outside providers that advise the issuer on matters relating to operations,
business development and disclosure.
1. Investment Banker
None
2. Promoters
None
3. Counsel:
Steven D. Talbot, P.S.
2101 NE 129th Street, Suite 213
Vancouver, WA 98686
360-816-8518 (phone)
360-816-8503 (facsimile)
4. Certified Public Accountant.
De Joya Griffith & Company, LLC
2580 Anthem Village Drive
Henderson, Nevada 89052
Tel. 702.563.1600 ext. 1117
Fax. 702.920.8049
De Joya Griffith & Company, LLC is a member of the PCOAB.
Financial information was prepared by Randy Edgerton with the
assistance of Steve Gralak.
5. Public Relations Consultant.
None
6. Investor Relations Consultant
The Issuer has not retained any investor relations providers
7. Any other advisor (s) that assisted, advised, prepared or provided information
with respect to this disclosure documentation:
Not applicable.
Item XVI. Management’s Discussion and Analysis or Plan of Operation.
Management Discussion and Analysis. From time to time, the Company
may publish forward-looking statements relative to such matters as anticipated
financial results, business prospects, technological developments and similar
matters. The Private Securities Litigation Reform Act of 1995 provides a safe
harbor for forward-looking statements. The following summary should be read in
conjunction with the Financial Statements incorporated herein by reference. All
statements other than statements of historical fact included in this information
statement are, or may be deemed to be, forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Exchange Act of 1934, as amended. Important factors that could cause
actual results to differ materially from those discussed in such forward-looking
statements include, but are not limited to, changes in current liquidity needs;
changes in the economy; inability to raise additional capital; potential litigation;
volatility of the Company’s stock price; the variability and timing of business
opportunities; changes in accounting policies and practices; the effect of internal
organizational changes; adverse state and federal regulation and legislation; and
the occurrence of extraordinary or catastrophic events and terrorist acts. These
factors and others involve certain risks and uncertainties that could cause actual
results or events to differ materially from management’s views and expectations.
Inclusion of any information or statement in this information statement does not
necessarily imply that such information or statement is material. The Company
cannot undertake any obligation to release publicly revised or updated forwardlooking information, and such information included in this information
statement is based on information currently available and may not be reliable
after this date.
Liquidity. As of December 31, 2010, the Company had negative working capital
of $184,793. Current assets consisted of cash of $215 and cash equivalents
(accounts receivables) of $816,785 for a total of $817,000. Current liabilities
consist of accounts payable of $124,870, notes payable to tax authorities and
others$304,260, accrued costs of goods sold of 247,500, accrued costs of payroll
and associated expenses of $131,474, accrued interest and loans payable of
$36,197 and deferred revenue of $157,492 for a total of $1,001,793. While the
Company has pending contracts for increased sales which would meet short-term
liquidity needs, there can be no assurance that the Company will be able to fulfill
all of the contracts so there can be no assurance that liquidity needs will be met
through pending sales. The Company is also presently investigating financing
arrangements to meet short-term liquidity needs and insure availability of
working capital for continue development, marketing and sales of its software
products but there is no assurance that it will be able to obtain such financing or
that such financing will be available on favorable terms.
Capital Resources and Needs. The Company expects to need additional
development services such as programming, and additional office space,
computer systems, furniture and equipment as it expands operations. This
amount is not expected to exceed $250,000 in the next twelve months and is
expected to be funded either through additional sales of equity or lease financing.
Results of Operations. The Company recognized income of $99,420 in the
prior year of operations, January 1, 2010 through December 31, 2010 which
compares to a net loss of $157,067 for the same period in 2009. Gross revenues
for the year of January 1, 2010 through December 31, 2010 were $2,150,056 from
which costs of goods sold of $701,194 are deducted leaving gross profit of
$1,448,862, which compares to gross revenue of $1,704,073, costs of goods sold
of $377,492 and gross profit of $1,326,581 for 2009. Costs affecting income
include payroll expenses of $822,311 for the year ending December 31, 2010
which compares to payroll expenses of $984,424 for the prior period, the largest
expense. Other significant expenses include costs of facilities and equipment
which consists primarily of office expenses and office equipment and outside
services which consists primarily of outside programming and testing. While the
Company anticipates growth in revenues, costs associated with marketing,
increased staffing and larger facilities may limit growth in net income. The
Company anticipates that it will continue to realize a modest profit as it continues
to increase market share but there can be no assurance of continued profitability
or an increase of profitability necessary to sustain operations.
Known Trends Management is not aware of foreseeable trends such as known
future increases in costs of labor or materials, changes in income, revenue or
sales or changes to liquidity which would have a material effect on the financial
statements: all forecasts are therefore subject to uncertainty and lack of
predictability. The Company continues to pursue its business model and sales
under that model, the success of which will have a direct effect on its financial
statements for future periods. The Company does not believe that sales or supply
conditions are subject to seasonal factors beyond the normal trends to
consummate transactions towards the ends of periods. The Company is not
aware of any significant elements of income or loss that will not, in the future,
arise from the continuing operations.
Statement regarding off-balance sheet arrangements. The Company does not
presently have, nor does it reasonably anticipate the existence or use of any offbalance sheet arrangements.
Part E Issuance History.
Item XVII List of securities offerings and shares issued for services in the past two years.
The Company sold and issued shares of its common stock in the following
transactions during the past two years.

During the period from approximately June 1, 2010 to September 30, 2010,
the Company issued 10,509,688 shares to resolve claims and debts pursuant



to the plan of reorganization allowing the Company to emerge from
Bankruptcy. The shares were offered to creditors and claimants of the
Company and not pursuant to a public offering. Shares were issued pursuant
to an exemption from registration under Section 3(a)(7) of the Securities Act
of 1933. Pricing was based on waiver of claims, many of which had not been
liquidated.
During the period from August 1, 2010 to August 25, 2010, the Company
issued to the owners of EC Development, LLC 15,000,000 shares to acquire
the assets and business of this entity. The offering was only made to the then
shareholders of EC Development, LLC, not through a public offering but
strictly through a private offer and sale which was pursuant to the exemption
contemplated in Section 4(2) of the Securities Act of 1933. Shares were not
subject to a registration statement and bear a legend to that effect and
regarding restrictions on their resale.
The Company has not issued any additional shares or options to acquire
securities since the end of its most-recent fiscal year, December 31, 2010.
The Company has not issued any shares for services during the previous two
years.
Part F Exhibits.
Item XVIII. Material Contracts.
The Company does not presently have written employment contracts with its
officers. The Company does not presently have any deferred compensation plan.
Therefore, no material contracts are attached as Exhibits.
Item XIX. Articles of Incorporation and Bylaws.
The Company has filed with OTC Disclosure and News Service, which items are
incorporated herein by reference, copies of its articles of incorporation and its
bylaws.
Item XX. Purchases of Equity Securities by the Issuer and Affiliated Purchasers.
Neither the Company nor any “affiliated purchaser” has purchased or
repurchased any shares of any of the Company’s securities.
Statement regarding investment policies. The Company has no present
policy or intentions to make investments in real estate, real estate
mortgages or securities of persons engaged in real estate activities except
as it relates to acquisitions of office space to meet expansion needs. The
Company has not been engaged in the purchase of securities of any other
entity for investment or any other purpose. The Company is not aware of
any purchases of securities by any affiliate of the Company which are
material to the operations or capitalization of the Company.
Item XXI. Issuer’s Certifications.
CERTIFICATION
I, Randy Edgerton, certify that:
1.
I have reviewed this Initial Disclosure and based on my knowledge, this
disclosure statement does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this disclosure
statement; and,
2.
I have reviewed the financial statements filed separately and incorporated
by reference above and based on my knowledge, the financial statements,
and other financial information included or incorporated by reference in
this disclosure statement, fairly present in all material respects the
financial condition of the issuer as of, and for, the periods referenced
therein and in this disclosure statement; and
3.
I have full authority to sign on behalf of the Company.
Dated this 28th day of February 2011:
Certified by: /s/ Randy Edgerton
Randy Edgerton, CFO