The following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with its unaudited interim
condensed consolidated financial statements and related notes included in this
Quarterly Report on Form 10-Q and the audited financial statements and notes
thereto as of and for the fiscal year ended April 30, 2021.
FORWARD-LOOKING STATEMENTS
The discussion contained herein contains "forward-looking statements" that
involve risk and uncertainties. These statements may be identified by the use of
terminology such as "believes," "expects," "may," "should" or anticipates" or
expressing this terminology negatively or similar expressions or by discussions
of strategy. The cautionary statements made in this Form 10-Q should be read as
being applicable to all related forward-looking statements wherever they appear
in this Form 10-Q. The Company's actual results could differ materially from
those discussed in this report.
BUSINESS AND PLAN OF OPERATION
Lux Amber, Corp., based in Frisco, Texas, is an international specialty chemical
company with many products that are friendly to the environment. The common
description is "green chemicals." The Company has degreed chemists on staff with
years of successful experience in the specialty chemical industry. The term
"specialty chemicals" is best defined by those chemicals whose formulas allow
the chemical compounds to perform a specific function for a class of customers.
The Company's products have been used successfully in a diverse array of
applications, including:
· Chemicals to protect surfaces in asphalt handling equipment
· Chemicals to control the reproduction of pests
· Military Chemical, Biological, Radiological, Nuclear, and Explosives
(CBRNE) sites
· Commercial nuclear power plants and nuclear-powered ships
· Hazardous toxic industrial chemical and toxic industrial material clean-up
The Company's corporate telephone number is 972-214-9764. The Company's stock
symbol is LXAM.
LAC has three (3) wholly owned subsidiaries (collectively with LAC, the
"Company"): Worldwide Specialty Chemicals, Inc. ("WSC"), Industrial Chem
Solutions, Inc. ("ICS"), and Safeway Pest Elimination, LLC, ("SPE"), which was
formed July 16, 2018. LAC and its subsidiaries serve as both producers and
distributors of environmentally safe, specialty chemicals. The Company formerly
held a 49% interest in PCNM LLC, a Service-Disabled Veteran owned small business
that sold the Company's products to government agencies. PCNM was legally
dissolved on July 31, 2020.
The Company's products utilize all-natural and renewable resources, contain no
dangerous chemicals or additives, and offer "green" solutions to its customers.
ICS' product line includes asphalt release agents, industrial cleaners,
environmental remediation gels, odor control agents, and consumer friendly
cleaners for a wide range of uses, including construction, environmental
remediation, hazardous materials clean-up, nuclear decommissioning, industrial
cleaning, and odor control. SPE's products are designed for the elimination and
control of pests.
LIQUIDITY AND CAPITAL RESOURCES
During the six-month period ended October 31, 2021, the primary sources of
liquidity were cash flows from financing activities, and in particular, issuance
of stock and promissory notes.
As of October 31, 2021, the Company had total assets of $3,407,314 consisting of
current assets of $277,601, $178,556 in receivables, $85,528 in inventory,
$13,517 in prepaid expenses and other current assets, and long-term assets of
$2,309,953 in goodwill and other intangibles, $451,136 in fixed assets, $26,965
on other long-term assets, and $341,659 in right of use assets. As of April 30,
2021, the Company had total assets of $3,353,460, consisting of current assets
of $112,982 in receivables, $137,211 in inventory, $7,960 in prepaid expenses
and other current assets and long-term assets of $2,309,953 in goodwill and
other intangibles, and $512,697 in fixed assets and $272,657 in right of use
assets.
20
As of October 31, 2021, the Company had total liabilities totaling $2,820,283
including $2,088,675 in current payables and accrued expenses, $66,522 in
related party payables, $240,627 notes payable, $104,752 in Paycheck protection
program loans, and $319,707 in right of use liabilities. As of April 30, 2021,
the Company had total liabilities totaling $2,468,547 including $1,756,156 in
accounts payable and accrued expenses, $208,756 in related party payables,
$127,624 in notes payable, and $271,259 in lease liabilities, and $104,752 in
Paycheck protection program loans.
As October 31, 2021, the Company had an accumulated stockholders' equity of
$587,031 and $884,913 at April 30,2021. The increase is result of the items
discussed below.
RESULTS OF OPERATIONS
Comparison of the three and six-month periods ended October 31, 2021 and October
31, 2020.
Revenues
For the three-month period ended October 31, 2021, the Company had revenues of
$433,920, and $396,155 for the same period in 2020. The increase in sales is
primarily the result of 1) expanded business with legacy customers to service
additional Hot Mix Asphalt Plants under their ownership; 2) increase in sales
price per unit; 3) addition of new customers.
For the six-month period ended October 31, 2021, the Company had revenues of
$857,748, and $686,415 for the same period in 2020. The increase in sales is
primarily the result of 1) expanded business with legacy customers to service
additional Hot Mix Asphalt Plants under their ownership; 2) increase in sales
price per unit; 3) addition of new customers.
Cost of Goods Sold decreased as a percentage of revenues due to a change in the
mix of products sold during the period and increases in the gross selling prices
on all the products offered by the company.
Operating Expenses
For the six-month period ended October 31, 2021, the Company's operating
expenses totaled $1,082,454 which included $272,639 in product delivery
expenses, $719,302 in general and administrative expenses, $10,542 in selling
expenses and $79,971 in depreciation of assets. For the six-month period ended
October 31, 2020, the Company had operating expenses that totaled $1,439,745
which included $301,266 in product delivery expenses, $1,027,757 in general and
administrative expenses, $35,755 in selling expenses and $74,967 in
depreciation.
For the three-month period ended October 31, 2021, the Company's operating
expenses totaled $544,359 which included $119,424 in product delivery expenses,
$383,144 in general and administrative expenses, $3,440 in selling expenses and
$38,351 in depreciation of assets. For the three-month period ended October 31,
2020, the Company had operating expenses that totaled $771,460 which included
$159,285 in product delivery expenses, $555,979 in general and administrative
expenses, $18,513 in selling expenses and $37,683 in depreciation.
The decrease is primarily due to 1) Less travel cost due to more efficient use
of mobile assets; 2) Shifting the cost burden of delivery to the customer; 3)
Improved cost accounting processes; 4) Improved purchasing processes by sourcing
raw materials from multiple vendors and buying in larger quantities.
GOING CONCERN
The accompanying consolidated financial statements are presented on a going
concern basis. The Company's financial condition raises substantial doubt about
the Company's ability to continue as a going concern. The Company has limited
cash, its current liabilities exceed its current assets as of October 31, 2021
and has incurred reoccurring losses from operations during the six months ended
October 31, 2021. The Company is relying on capital from investors to meet the
majority of its operating expenses.
21
OFF-BALANCE SHEET ARRANGEMENTS
There are no off-balance sheet transactions, arrangements, obligations
(including contingent obligations), or other relationships with unconsolidated
entities or other persons that have, or may have, a material effect on financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources of the Company.
© Edgar Online, source Glimpses