ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the accompanying unaudited financial statements for the three and six month periods ended April 30, 2014 and 2013, and for the period from commencement of development stage, November 1, 2009, to April 30, 2014 and our annual report on Form 10-K for the year ended October 31, 2013, including the financial statements and notes thereto.
Forward-Looking Information May Prove Inaccurate
This report contains statements about the future, sometimes referred to as “forward-looking” statements. Forward-looking statements are typically identified by the use of the words “believe,” “may,” “could,” “should,” “expect,” “anticipate,” “estimate,” “project,” “propose,” “plan,” “intend,” and similar words and expressions. Statements that describe our future strategic plans, goals, or objectives are also forward-looking statements.
Readers of this report are cautioned that any forward-looking statements, including those regarding our management’s current beliefs, expectations, anticipations, estimations, projections, proposals, plans, or intentions, are not guarantees of future performance or results of events and involve risks and uncertainties. The forward-looking information is based on present circumstances and on our predictions respecting events that have not occurred, that may not occur, or that may occur with different consequences from those now assumed or anticipated. Actual events or results may differ materially from those discussed in the forward-looking statements as a result of various factors. The forward-looking statements included in this report are made only as of the date of this report. We are not obligated to update such forward-looking statements to reflect subsequent events or circumstances.
Introduction
During the three and six month periods ended April 30, 2014 the Company continued efforts to create business opportunities in markets for which it has secured exclusive distribution rights to represent equipment manufactured by one of China's top heating, ventilation, and air conditioning (“HVAC”) manufacturers, Mammoth Technologies. These countries include the Philippines and the UAE.
In making such active efforts, the Company continues to seek to provide potential clients, primarily in the commercial and residential construction industry, with design consulting services that can employ highly innovative energy system implementation practices. Company expertise includes an internalized process of planning, designing, engineering, equipment specifying and financial system operational modeling that will ultimately provide long-term economic advantages and overall environmental sustainability. The Company continues to undertake direct dialogue with land developers and government organizations that have knowledge of our high-level of expertise and successful track record in the sector and that are seeking specifically to apply and deploy renewables and green technologies in their projects.
Further during this period the Company CEO participated in the ACREX 2014 Conference in New Delhi, India. In such regards, our CEO was an invited global expert in the field of Geothermal Heating and Cooling systems and personally conducted a 3 hour seminar to a large audience of contractors, developers, and government officials interested in the application of geothermal technology in the Indian marketplace. The Company is now working conjunctively with a local Indian engineering firm in New Delhi to present and propose system designs and budgets for a number of different projects in New Delhi and other regions of India as well. The Company does not have exclusive rights to the Indian market, however, it does have the rights to sell and market said Mammoth products in any markets in which Mammoth is as yet unrepresented, India being one such Country.
During the quarter ended April 30, 2014, the Company continued negotiations with a construction management company in the Philippines interested in working in conjunction with the Company to sell, market and install the Mammoth technologies in the Philippine marketplace. This company also has business activities in the Middle East, in particular, in Dubai, such that discussions and negotiations with this organization have included the potential for future working activities in such markets as well. Additionally the Company began discussions with one of the largest Power (utility) companies in the Philippines as to the same style of relationship for the Country, whereby they would provide their infrastructure and resources to the sales, application, deployment and service for the Mammoth product line, with the Company providing them the equipment and design consultation. The power provider is placing particular emphasis on the geothermal technology (most specifically targeting cooling and water heating).
The Company believes these on-going negotiations could result in a formalized working relationship being announced in Q3 or Q4 of this fiscal year.
Results of Operations
Comparison of the Three and Six Months Ended April 30, 2014,
with the Three and Six Months Ended April 30, 2013
We had no gross revenue for the three and six month periods ended April 30, 2014 and 2013.
Our general and administrative expenses from continuing operations for the three and six months ended April 30, 2014, were $73,857 and $118,044, respectively, as compared to $67,694 and $147,330 for the comparable three and six month periods ended April 30, 2013. The cumulative decrease for the six months is primarily due to a reduction in consulting services.
Overall, we have a net loss of $80,034 and $130,606 for the three and six months ended April 30, 2014, as compared to a net loss of $73,894 and $159,973 in the corresponding three and six month periods of the preceding year.
Liquidity and Capital Resources
As of April 30, 2014, our current assets were $nil, as compared to $82,424 at October 31, 2013. As of April 30, 2014, our current liabilities were $1,054,423, as compared to $1,006,241 at October 31, 2013.
Operating activities used net cash of $80,440 for the six months ended April 30, 2014, as compared to use of $59,915 for the six months ended April 30, 2013.
Net cash of $2,032 was used by financing activities during the six months ended April 30, 2014, as compared to $60,252 net cash provided by financing activities during the comparable six months ended April 30, 2013.
Our current balances of cash will not meet our working capital and capital expenditure needs for the whole of the current year. Because we are not currently generating sufficient cash to fund our operations, we will need to rely on external financing to meet future capital and operating requirements. Any projections of future cash needs and cash flows are subject to substantial uncertainty. Our capital requirements depend upon several factors, including the rate of market acceptance, our ability to get to production and generate revenues, our level of expenditures for production, marketing, and sales, purchases of equipment, and other factors. We can make no assurance that financing will be available in amounts or on terms acceptable to us, if at all. Further, if we issue equity securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences, or privileges senior to those of existing holders of common stock, and debt financing, if available, may involve restrictive covenants that could restrict our operations or finances. If we cannot raise funds, when needed, on acceptable terms, we may not be able to continue our operations, grow market share, take advantage of future opportunities, or respond to competitive pressures or unanticipated requirements, all of which could negatively impact our business, operating results, and financial condition.