IA ENERGY CORP. - 10-Q - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTSOF OPERATIONS.
- Aug 13, 2019 9:59 pm GMT
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You should read the following discussion of the Company's financial condition and results of operations in conjunction with the financial statements and related notes included in the filing of the company's Form 10-K filed on April 15, 2019. This discussion may contain forward-looking statements, including, without limitation, statements regarding our expectations, beliefs, intentions, or future strategies that are signified by the words "expects," "anticipates," "intends," "believes," or similar language. Actual results could differ materially from those projected in the forward looking statements. We caution you that the Company's business and financial performance is subject to substantial risks and uncertainties.
IA Energy Corp., a Wyoming corporation, is a start-up global waste-to-energy company. We were incorporated on January 6, 2016 in the state of Wyoming. Our business office and mailing address is 24328 Vermont Avenue, Suite 300, Harbor City, CA 90710, and our telephone number is (310) 891-1959. Our website is www.iaenergy.com.
Our operations to date have been devoted primarily to start-up and development activities, which include: (i) formation of the Company; (ii) development of our business plan; (iii) development of our proprietary waste-to-energy technology; and (iv) marketing of our proprietary waste-to-energy technology. Though to date, significant research and development has been done, as described in more detail herein, we have not completed development of our proprietary waste-to-energy technology and there is no assurance that we will be successful in completing the development.
Our initial focus will be build and operate a pilot facility to process waste tires, which are in great supply in the Philippines due to a shortage of disposal capacity for these tires, and the lack of desire to create landfill capacity or alternative solutions. Supply of tires for processing is readily available, at low or no cost to us.
The tires will be converted by pyrolysis into bunker fuel and other recyclable bi-products that we will use to operate our own generators and sell electricity to local utilities or the national grid. The bunker fuel, which is a type of diesel, will be utilized to run generators which will produce electricity and will be sold to utility companies in local municipalities.
From our inception on January 6, 2016, until the present, we have had limited operating activities. During the period from inception on January 6, 2016 until the date of this Form 10-Q we have had no revenues. During the period from inception on January 6, 2016 to June 30, 2019 we had operating expenses of $5,822,739 which consisted mainly of consulting and business development expenses.
Emerging Growth Company
We are an emerging growth company under the JOBS Act. We will continue to be deemed an emerging growth company until the earliest of:
· The last day of the fiscal year of the issuer during which it had total annual
gross revenues of $1,070,000,000 (as such amount is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more;
· The last day of the fiscal year of the issuer following the fifth anniversary
of the date of the first sale of common equity securities of the issuer pursuant to an effective IPO registration statement;
· The date on which such issuer has, during the previous 3-year period, issued
more than $1,070,000,000 in non-convertible debt; or
· The date on which such issuer is deemed to be a 'large accelerated filer', as
defined in section 240.12b-2 of title 17, Code of Federal Regulations, or any
successor thereto. 11 Table of Contents
As an emerging growth company we are exempt from Section 404(b) of Sarbanes Oxley. Section 404(a) requires Issuers to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. This statement shall also assess the effectiveness of such internal controls and procedures. Section 404(b) requires that the registered accounting firm shall, in the same report, attest to and report on the assessment and the effectiveness of the internal control structure and procedures for financial reporting.
As an emerging growth company we are also exempt from Section 14A (a) and (b) of the Securities Exchange Act of 1934 which require the shareholder approval of executive compensation and golden parachutes. These exemptions are also available to us as a Smaller Reporting Company.
Results of Operations
Following is our discussion of the relevant items affecting results of operations for the three and six month periods ended June 30, 2019 and 2018.
Revenues. For the three and six months ended June 30, 2019 and 2018, net revenues were $-0-.
Consulting and business development. Consulting and business development fees for the three months ended June 30, 2019 and 2018 were $17,500 and $22,100, respectively. Consulting and business development fees for the six months ended June 30, 2019 and 2018 were $887,167 and $37,100, respectively. On August 1, 2018, the Company issued a total of 10,475,000 shares of its common stock for consulting services to be rendered to the Company. The shares were valued at $0.50 per share or $5,237,500 and were expensed over the terms of the respective Consulting Agreements ranging from 3 to 6 months.
Professional and accounting fees. Professional and accounting fees for the three months ended June 30, 2019 and 2018 were $11,590 and $1,675, respectively. Professional and accounting fees for the six months ended June 30, 2019 and 2018 were $16,741 and $2,971, respectively. Professional fees consist mainly of the fees for the audits and reviews of the Company's financial statements as well as the filings with the SEC. The Company anticipates that professional fees will increase commensurate with an increase in our operations.
Other selling, general and administrative expenses. Other selling, general and administrative expenses for the three months ended June 30, 2019 and 2018 were $1,785 and $5,314, respectively. Other selling, general and administrative expenses for the six months ended June 30, 2019 and 2018 were $3,628 and $7,038, respectively. We expect that selling, general and administrative expenses will increase as we add personnel to build our business.
Other Income (Expense).The Company had net other expenses of $-0- for the six months ended June 30, 2019 and 2018.
Off-Balance Sheet Arrangements
The Company has no off-balance sheet arrangements.
The Company has project-based contract personnel that we utilize to carry out our business. We utilize contract personnel on a continuous basis, primarily in connection with service contracts which require a high level of specialization for one or more of the service components offered.
Liquidity and Capital Resources
Since inception, the Company has financed its operations through a series of loans and sales of common stock. As of June 30, 2019, our primary source of liquidity consisted of $1,161 in cash and cash equivalents. We may seek to secure additional debt or equity capital to finance substantial business development initiatives.