This report on Form 10-Q contains certain
forward-looking statements. All statements other than statements of historical fact are “forward-looking statements”
for purposes of these provisions, including any projections of earnings, revenues, or other financial items; any statements of
the plans, strategies, and objectives of management for future operation; any statements concerning proposed new products, services,
or developments; any statements regarding future economic conditions or performance; statements of belief; and any statement of
assumptions underlying any of the foregoing. Such forward-looking statements are subject to inherent risks and uncertainties, and
actual results could differ materially from those anticipated by the forward-looking statements.
These forward-looking statements involve
significant risks and uncertainties, including, but not limited to, the following: growth and anticipated operating results; developments
in our markets and strategic focus; product development and reseller relationships and future economic and business conditions.
Our actual results could differ materially from those anticipated in such forward-looking statements as a result of a number of
factors. These forward-looking statements are made as of the date of this filing, and we assume no obligation to update such forward-looking
statements. The following discusses our financial condition and results of operations based upon our consolidated financial statements
which have been prepared in conformity with accounting principles generally accepted in the United States. It should be read in
conjunction with our financial statements and the notes thereto included elsewhere herein.
Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations
As used in this Form 10-Q, references to “XR Energy,”
the “Company,” “we,” “our” or “us” refer to XR Energy Inc. unless the context otherwise
indicates.
Forward-Looking Statements
The
following discussion and analysis and results of operations should be read in conjunction with our unaudited financial statements
and accompanying notes and the other financial information which are included elsewhere in this Form 10-Q (the “Report”).
This Report contains forward-looking statements which relate to future events or our future financial performance. In some cases,
you can identify forward-looking statements by terminology such as “may,” “should,” “expects,”
“plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential”
or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions
and involve known and unknown risks, uncertainties, and other factors that may cause our or our industry’s actual results,
levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance
or achievements expressed or implied by these forward-looking statements.
For a description
of such risks and uncertainties, refer to our Registration Statement on Form S-1 which was declared effective by the Securities
and Exchange Commission on July 19, 2012 (registration statement no. 333-178156). While these forward-looking statements, and any
assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business,
actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other
future performance suggested herein.
We assume no obligation to update forward-looking statements, except as otherwise required
under the applicable federal securities laws.
Business Overview
We were formed to offer energy consulting
services to smaller sized middle market companies, which are companies generating less than $5,000,000 a year in revenues. The
Company will analyze customer’s energy consumption and recommend energy saving solutions.
Results of Operations
Comparison of Three Months Ended March 31,
2013 and 2012:
Revenues
For the three months ended March 31, 2013,
we had $1,777 in income as compared to $1,445 of income for the three months ended March 31, 2012. This income was collected from
East Coast Power, LLC.
Total operating expenses
For the three months ended March 31, 2013 total
operating expenses were $17,350 which consisted primarily of $6,750 for professional fees, $9,500 for transfer agent fees and $525
for rent and utilities, as compared to $2,750 of operating expenses for the three months ended March 31, 2012 which consisted primarily
of $2,000 for professional fees and $525 for rent and utilities. The increase in operating expenses was primarily as a result of
an increase in the professional fees and transfer agent fees.
Net loss
Net loss for the three months ended March 31,
2013 was $15,573, as compared to net loss of $1,305 for the three months ended March 31, 2012. The increase in net loss was primarily
the result of an increase in the amount of professional fees and transfer agent fees .
Liquidity and Capital Resources
As of March 31, 2013, the Company had a cash
balance of $4,493. From September 2010 through July 2011 the Company sold an aggregate of 118,800 shares of its common
stock in a private placement and raised gross proceeds of $29,700. The Company believes that such funds will be insufficient
to fund its expenses over the next twelve months. There can be no assurance that additional capital will be available to the Company.
On May 10, 2012, the Company executed a Promissory
Note payable to Anthony Muratore, our president and a director. The note provides that until May 10, 2013, upon two business days'
prior written notice to Mr. Muratore, we may borrow, from time to time, any amounts in increments of up to $5,000, provided that
the aggregate principal amount outstanding under this note does not exceed $25,000. The note bears interest at a rate of 5% (default
rate of 15%) and is due no later than May 10, 2013. As of March 31, 2013 the company has borrowed a total of $20,000 from
Mr. Muratore.
The Company currently has no other agreements,
arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources.
Since the Company has no significant arrangement or plan currently in effect, its inability to raise funds for the above purposes
will have a severe negative impact on its ability to remain a viable company.
We currently have no other commitments with
any person for any capital expenditures.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
Michael T. Studer CPA P.C. is our auditors.
There have not been any changes in or disagreements with accountants on accounting and financial disclosure or any other matter.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management,
including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the
design and operation of our disclosure controls and procedures, as defined in Rule 15d-15(e) under the Securities Exchange Act
of 1934, as amended, as of the end of the period covered by this report (the “Evaluation Date”). Based on this evaluation,
our principal executive officer and principal financial officer concluded as of the Evaluation Date that our disclosure controls
and procedures were effective such that the information relating to us required to be disclosed in our Securities and Exchange
Commission (“SEC”) reports (i) is recorded, processed, summarized and reported within the time periods specified in
SEC rules and forms and (ii) is accumulated and communicated to management, including our principal executive officer and principal
financial officer, as appropriate, to allow timely decisions regarding required disclosure. Based on our evaluation, management
concluded that our internal control over financial reporting was effective as of March 31, 2013.
Changes in Control Over Financial Reporting
During our most recent fiscal quarter, there has not occurred any
change in our internal control over financial reporting (as such term is defined in Rule 15d-15(f) under the Exchange Act) that
has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.