QUANTUM ENERGY, INC. INTRODUCTION
This section provides management's discussion of the financial condition, changes in financial condition and results of operations ofQuantum Energy Inc. with specific information on results of operations and liquidity and capital resources. It includes management's interpretation of our financial results, the factors affecting these results, the major factors expected to affect future operating results and future investment and financing plans. This discussion should be read in conjunction with our consolidated financial statements and notes thereto. Several factors exist that could influence our future financial performance, some of which are described in Item 1A above, "Risk Factors". They should be considered in connection with evaluating forward-looking statements contained in this report or otherwise made by or on behalf of us since these factors could cause actual results and conditions to differ materially from those set out in such forward-looking statements.
Cautionary Statement for the Purposes of the Safe Harbor under the Private Securities Litigation Reform Act of 1995
The statements contained in this Annual Report on Form 10-K may contain
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All
statements other than statements of historical fact included in this Report are
forward-looking statements made in good faith by us and are intended to qualify
for the safe harbor from liability established by the Private Securities
Litigation Reform Act of 1995. When used in this Report, or any other of our
documents or oral presentations, the words "anticipate", "believe", "estimate",
"expect", "forecast", "goal", "intend", "objective", "plan", "projection",
"seek", "strategy" or similar words are intended to identify forward-looking
statements. Such forward-looking statements are subject to risks and
uncertainties that could cause actual results to differ materially from those
expressed or implied in the statements relating to our strategy, operations,
markets, services, and other factors all of which are difficult to predict and
many of which are beyond our control. Accordingly, while we believe these
forward-looking statements to be reasonable, there can be no assurance that they
will approximate actual experience or that the expectations derived from them
will be realized. Further, we undertake no obligation to update or revise any of
our forward-looking statements whether as a result of new information, future
events or otherwise.
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RESULTS OF OPERATIONS
As of the date of his report, we have no business operations. We have been and
we currently are exploring and we intend to continue to explore various business
opportunities in the energy and alternative energy industries and business
opportunities in other industries and we intend to obtain capital that may be
required for such opportunities. Our ability to pursue any future plan of
operation is dependent upon our ability to obtain financing. To date, our
primary sources of financing have been sales of our debt and equity securities.
For the year ended February
28,
2019 2018 $ Change % Change
Advertising and marketing $ 296 $ 9,551 $ (9,255 ) (96.9 %)
Management fees and compensation 30,000 95,079 (65,079 ) (68.4 %)
General and administrative 37,705 114,551 (76,846 ) (67.1 %)
Amortization of land purchase options - 120,033 (120,033 ) (100.0 %)
Professional fees 273,790 110,399 163,392 148.0 %
NET LOSS $ 341,791 $ 449,613 $ (107,821 ) (24.0 %)
The Company has earned no operating revenue in 2019 or 2018 and does not anticipate earning any revenues in the near future.
The Company will continue to focus its capital and resources toward permitting and development activities at its Stoughton Property.
Total net loss for the year ended
General and administrative expense
For the year ended February 28,
2019 2018 $ Change % Change
General administrative and insurance $ 5,776 17,078 $ (11,302 ) (66.2 %)
Stock option expense - 83,461 (83,461 ) (100.0 %)
Travel 20,937 6,194 14,743 238.0 %
Transfer agent fees 10,992 7,818 3,174 40.6 %
Total general and administrative expense
$ (76,846 ) (67.1 %)
Total general and administrative expense decreased
Travel expense increased$14,743 to$20,937 for the year endedFebruary 28, 2019 compared to$6,194 for the year endedFebruary 28, 2018 as management spent a significant amount of time meeting with various capital providers and potential merger candidates (Note 6 to the Consolidated Financial Statements). Professional fees For the year ended February 28, 2019 2018 $ Change % Change Audit fees$ 32,293 $ 7,500 $ 24,793 N/A Accounting 26,458 27,500 (1,043 ) (3.8 %) Consultants 11,480 - 11,480 N/A Legal 203,560 75,399 128,161 N/A Total professional fees$ 273,790 $ 110,399 $ 163,391 148.0 % 16
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Audit fees increased
Consultant fees increased
For the year endedFebruary 28, 2019 , legal fees increased$128,161 to$203,560 compared to$75,399 for the year endedFebruary 28, 2018 . The Company incurred costs associated with a registration with theSEC and various legal and corporate governance matters. There are no pending legal issues or contingencies as ofFebruary 28, 2019 .
LIQUIDITY AND FINANCIAL CONDITION
BALANCE SHEET INFORMATION February 28, 2019 February 28, 2018
Working capital (deficit) $ (322,219 ) $ 2,301
Total assets 9,400 65,186
Accumulated deficit (11,359,308 ) (11,017,516 )
Stockholders' deficit (314,397 ) (142,075 )
WORKING CAPITAL February 28, 2019 February 28, 2018
Current assets $ 1,578 $ 57,364
Current liabilities 323,797 55,063
Working capital (deficit) $ (322,219 ) $ 2,301
For the year ended December 31,
CASH FLOWS 2019 2018
Cash flow used by operating activities
65,000 175,000
Net decrease in cash during period$ (18,285 ) $ (614 ) As ofNovember 30, 2018 , the Company had cash on hand of$7,021 . Since inception, the primary sources of financing have been sales of the Company's debt and equity securities.Quantum Energy, Inc. has not attained profitable operations and its ability to pursue any future plan of operation is dependent upon our ability to obtain financing.Quantum Energy, Inc. anticipates continuing to rely on sales of its debt and/or equity securities in order to continue to fund ongoing operations. Issuances of additional shares of common stock may result in dilution to the Company's existing stockholders. There is no assurance that the Company will be able to complete any additional sales of equity securities or that it will be able arrange for other financing to fund its planned business activities. The Company's continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations on a timely basis, to obtain additional financing as may be required, or ultimately to attain profitability. Potential sources of cash, or relief of demand for cash, include additional external debt, the sale of shares of the Company's stock or alternative methods such as mergers or sale of the Company's assets. No assurances can be given, however, that the Company will be able to obtain any of these potential sources of cash. The Company currently requires additional cash funding from outside sources to sustain existing operations and to meet current obligations and ongoing capital requirements. The Company plans for the long-term continuation as a going concern include financing future operations through sales of our equity and/or debt securities and the anticipated profitable operations. These plans may also, at some future point, include the formation of joint ventures the joint venture partner would provide the necessary financing in return for equity in the property.
OFF-BALANCE SHEET ARRANGEMENTS
The Company has no significant off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that are material to its
stockholders.
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CRITICAL ACCOUNTING POLICIES
The Company has identified certain accounting policies, described below, that are most important to the portrayal of its current financial condition and results of operations. The Company's significant accounting policies are disclosed in the notes to the audited financial statements included in this Annual Report.
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