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 month periods ended January 31, 2014 and 2013, and for the period from commencement of development stage, November 1, 2009, to January 31, 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 month periods ended January 31, 2014 the Company continued efforts to create business opportunities in markets for which is has secured exclusive distribution rights to represent equipment manufactured by one of China's top heating, ventilation, and air conditioning (“HVAC”) manufacturers, Mammoth China (Shanghai) Zheijiang Ltd. These countries include the Philippines, Dubai 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.
During the quarter ended January 31, 2014, the Company began 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. At present this construction management company is undergoing due diligence of the Mammoth product offering represented by the Company, while at the same time is conducting its own assessment of the overall market opportunity in the Philippines for the sales and installation of the HVAC equipment within the product line.
The Company believes these on-going negotiations could result in a formalized working relationship being announced in Q2 or Q3 of this fiscal year.
During Q1, the Company’s sole officer and director t received an invitation to speak at a large HVAC conference in country of India in February 2014, ACREX, 2014 held in New Delhi. As such,
i
n furtherance of continuing to make the greatest efforts possible to promote the overall expertise of the Company in particular in the specific industry field of Geothermal heating and cooling systems, the company CEO conducted a highly attended and well-received 3 hour presentation at the conference in late February 2014. The Company now has been presented a number of different project opportunities in India in which design consulting and equipment supply opportunities exist.
Throughout the remainder of the fiscal year, the Company intends to continue to develop relationships it has made and the ensuing associated project and business opportunities in both current and new target markets throughout the Asian and Middle-Eastern marketplaces.
Results of Operations
Comparison of the Three Months Ended January 31, 2014,
with the Three Months Ended January 31, 2013
We had no gross revenue for the three month periods ended January 31, 2014 and 2013.
Our general and administrative expenses from continuing operations for the three months ended January 31, 2014, were $44,187 as compared to $79,636 for the comparable period ended January 31, 2013. The decrease is primarily due a reduction in consulting services.
Overall, we have a net loss of $50,572 for the three months ended January 31, 2014, as compared to a net loss of $86,079 in the corresponding three months of the preceding year.
Liquidity and Capital Resources
As of January 31, 2014, our current assets were $4,217, as compared to $82,424 at October 31, 2013. As of January 31, 2014, our current liabilities were $978,606, as compared to $1,006,241 at October 31, 2013.
Operating activities used net cash of $64,400 for the three months ended January 31, 2014, as compared to use of $29,305 for the three months ended January 31, 2013.
Net cash of $13,807 was used by financing activities during the three months ended January 31, 2014, as compared to $29,365 net cash provided by financing activities during the comparable three months ended January 31, 2013.
Management intends to renegotiate the terms of the long-term debt with the holder prior to March 31, 2014.
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.