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[February 12, 2014]
GREENWIND NRG INC - 10-K - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Edgar Glimpses Via Acquire Media NewsEdge) The following discussion should be read in conjunction with our consolidated financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K. Forward looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward-looking statements are based upon estimates, forecasts, and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward-looking statements made by us, or on our behalf. We disclaim any obligation to update forward-looking statements.
Overview We were incorporated under the name Greenwind NRG Inc. in the State of Nevada on February 25, 2010. We are a development-stage company and we have no revenues and minimal assets. As a result we have incurred losses since inception. Our operations to date have consisted of the formation of the Company, the raising of capital, and the formation of the Company's website On March 14, 2013, a registration statement on Form S-1 was declared effective for the registration of 10,000,000 shares of our common stock. As of October 31, 2013, we had sold 2,900,000 shares pursuant to this registration statement.
11 -------------------------------------------------------------------------------- Our auditors have issued a going concern opinion. This means that our auditors believe there is substantial doubt that we can continue as an on-going business for the next twelve months. This is because we have not generated any revenues and no revenues are anticipated until we develop our website, and implement our marketing plan.
We cannot complete the development of the technical aspects of our website without obtaining additional financing. Accordingly, we must raise cash from sources other than operations. Our only other source for cash at this time is investments by others in our company. We must raise cash to implement our business plan and begin operations.
PLAN OF OPERATION Completion of Additional Financing The Company expects to complete an additional $100,000 in equity financing through a private placement in the coming year to finance the continued operations of the Company. We intend to concentrate the majority of our efforts on raising capital during this period.
The table below sets forth the use of proceeds assuming that 100% of the securities offered for sale in the equity financing are sold. Management believes these costs will cover the necessary expenses for the Company to continue to develop our operations to the point that we may begin delivering services.
Gross Proceeds $ 100,000.00 Offering Expense* $ 20,000.00 Net Proceeds $ 100,000.00 Net Proceeds to be used Inventory $ 40,000.00 Website development $ 5,000.00 Marketing and Advertising $ 20,000.00 Audit, Accounting and filing Fees $ 10,000.00 Working Capital $ 17,217.00 Repayment of accounts payable and accrued liabilities $ 7,783.00 ---------- * Note the offering expense will be paid through the sale of equity or debt, and not with the proceeds, if any, raised from this offering.
Once we have completed the financings, our specific business plan for the next 8 months is as follows: Develop our Website We have worked to procure a web designer to complete a corporate website and credit card payment processing services. We have begun work on a website but we will require additional funds to have the website fully operational.
Initial Marketing Campaign Once our website is fully operational, we intend to market our products aggressively through web, print and other mediums.
Web marketing: Search Engine Optimization services will be used to assure that we are found using key words associated with "wind energy", "Ireland", "off the grid" and more. We intend to make our website a marketing piece in itself with maps showing wind speed locations in Ireland and the UK as well as other information on the benefits of wind energy products.
12 --------------------------------------------------------------------------------Print Media Advertising: We intend to market our products in magazines and other print media that target an environmentally conscious consumer base.
We intend to spend up to $20,000 on marketing efforts. The marketing budget is not a set cost but will be based on the amount raised in the financing.
Management expects revenues to increase as the marketing budget increases.
Operations and Products During the initial marketing campaign, our management expects clients to begin using the website to purchase our products.
We will be competing with other wind energy product providers. We intend to offer competitive prices, installation and aggressively market our products but there is no guarantee we will be able to achieve profitable operations. Some of our key competitors in the sector include Turbotricity, Wind Power and Ireland Wind Turbine.
Products Description Price ----------- ----- 5KW (complete kits for 5KW off grid wind generator system with free standing tower) US$10,812 2KW (complete kits for 5KW off grid wind generator system with free standing tower) US$3,405 500W (complete kits for 500W off grid wind generator system with guyed tower) US$805 We plan on offering additional products on our website in the future but at this time, we only intend to offer the above products. Margins on products will be a trial and error process as we test for price elasticity and competitor comparisons. We intend to mark products up by 35% for the initial year of operations. Other sources of revenue will come from installations which will differ on a sale by sale basis as some locations will require more set up time than others.
Salaries Jerwin Alfiler intends to handle business operations without hiring additional employees. Eventually, capacity may be needed in reception, installation and shipping. Total salary costs are expected to be $150,000 per year once we have raised sufficient capital and/or generated revenue.
Marketing Marketing efforts once we have sufficient capital and/or generated revenue are expected to run at approximately $25,000 annually.
General Overhead Accounting, Audit, Legal and Filing: Costs associated with keeping the Company in good standing and up to date with all legal, audit and filing obligations are expected to be approximately $100,000 per year once the Company has raised sufficient capital and/or generated revenue. At this time however, because of our startup nature, costs associated with the development stage accounting, audit, legal and filing fees are expected to be drastically reduced and be approximately $10,000.
We believe the main catalyst for sales is education and marketing efforts of the variable cost savings and environmental benefits of wind energy for home use.
Once the original capital expenditure of the turbine has been incurred, the only variable costs that remain are any costs associated with repair and maintenance.
We do not have projected figures for these costs at this time. Management will be focused on increasing sales through our marketing efforts.
13 -------------------------------------------------------------------------------- * "Variable cost savings" is defined as the savings associated with the price paid for energy consumption in addition to the capital required to purchase and set up the power generation equipment.
Anticipated Future Requirements We anticipate that we will incur the following expenses over the next twelve months: 1. $25,000 in connection with our development of our website and marketing efforts; and 2. $10,000 for operating expenses, including professional legal and accounting expenses associated with our company being a reporting issuer under the Securities Exchange Act of 1934.
We require a minimum of approximately $35,000 to proceed with our plan of operation over the next twelve months. As we had cash of $0 and a working capital deficit in the amount of $25,260 as of October 31, 2013, we do not have sufficient working capital to enable us to carry out our stated plan of operation for the next twelve months. We plan to complete private placement sales of our common stock in order to raise the funds necessary to pursue our plan of operation and to fund our working capital deficit in order to enable us to pay our accounts payable and accrued liabilities. We currently do not have any arrangements in place for the completion of any private placement financings and there is no assurance that we will be successful in completing any private placement financings.
RESULTS OF OPERATIONS For the period from February 25, 2010 (date of inception) to October 31, 2013, the Company earned $nil in revenues.
During the year ended October 31, 2013, the Company incurred $40,837 of operating expenses compared with $24,110 of operating expenses during the year ended October 31, 2012. The increase in operating expenses was attributed to higher general and administrative costs relating to day-to-day operations of the business.
The Company incurred a net loss of $40,837 or $nil per share, for the year ended October 31, 2013 compared with a net loss of $24,110, or $nil per share, for the year ended October 31, 2012.
LIQUIDITY AND CAPITAL RESOURCES As at October 31, 2013, the Company had cash and total assets of $nil compared with cash of $925 and total assets of $1,473 as at October 31, 2012. The decrease in cash was due to the fact that the Company incurred operating expenditures during the year and had limited financing available for operating activities. The decrease in total assets was due to the amortization of the long-lived assets in accordance with the Company's amortization policies.
As at October 31, 2013, the Company had total liabilities of $25,260 compared with total liabilities of $14,896 as at October 31, 2012. The increase in total liabilities was due to an increase in the amounts owing to a related party of the Company for financing received to support the Company's day-to-day activities.
The Company had a working capital deficit of $25,260 at October 31, 2013 compared with a working capital deficit of $13,971 at October 31, 2012. The increase in working capital deficit was due to the fact that the Company received financing from a related party to support the Company's operations.
On March 14, 2013, a Registration Statement on Form S-1 was declared effective by the SEC, registering a total of 10,000,000 shares of our common stock (the "Registered Shares") in an initial public offering (the "Offering"). As of October 31, 2013, the Company issued 2,900,000 Registered Shares for a total of $29,000 in proceeds and the Offering has been completed.
CASH FLOWS FROM OPERATING ACTIVITIES During the year ended October 31, 2013, the Company used $44,187 of cash for operating activities compared with $16,657 for the year ended October 31, 2012.
The increase in the cash used for operating activities was attributed to financing received from a related party which was used to repay outstanding operating obligations incurred by the Company.
CASH FLOWS FROM INVESTING ACTIVITIES 14 --------------------------------------------------------------------------------During the period from February 25, 2010 (date of inception) to October 31, 2013, the Company used $2,342 in cash for investing activities, to purchase property and equipment.
CASH FLOWS FROM FINANCING ACTIVITIES During the year ended October 31, 2013, the Company received $43,262 from financing activities, compared with $nil for the year ended October 31, 2012.
The increase was attributed to $29,000 received from the issuance of 2,900,000 common shares, and $14,459 received from related parties less $197 repaid to related parties. The amounts owing to related parties are unsecured, non-interest bearing, and due on demand.
OFF-BALANCE SHEET ARRANGEMENTS We have 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 our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders.
CRITICAL ACCOUNTING POLICIES Our financial statements are affected by the accounting policies used and the estimates and assumptions made by management during their preparation. A complete listing of these policies is included in Note 2 of the notes to our financial statements for the years ended October 31, 2013 and 2012. We have identified below the accounting policies that are of particular importance in the presentation of our financial position, results of operations and cash flows, and which require the application of significant judgment by management.
USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the balance sheet and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
LOSS PER COMMON SHARE Basic loss per share is calculated using the weighted-average number of common shares outstanding during each reporting period. Diluted loss per share includes potentially dilutive securities such as outstanding options and warrants, using various methods such as the treasury stock or modified treasury stock method in the determination of dilutive shares outstanding during each reporting period.
The Company does not have any potentially dilutive instruments.
STOCK-BASED COMPENSATION Stock-based compensation is accounted for at fair value in accordance with ASC 718. To date, the Company has not adopted a stock option plan and has not granted any stock options.
As of October 31, 2013, the Company has not issued any stock-based payments to its employees.
RECENT ACCOUNTING PRONOUNCEMENTS The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
Contractual Obligations The following table outlines payments due under our significant contractual obligations over the periods shown, exclusive of interest: Payments due by Period Contractual Obligations At October 31, 2013 Less than One to Three to More Than One Year Three Years Five Years Five Years Total Operating Lease Obligations $ 0 $ 0 $ 0 $ 0 $ 0 Long-Term Debt Obligations $ 0 $ 0 $ 0 $ 0 $ 0 Capital Expenditure Obligations $ 0 $ 0 $ 0 $ 0 $ 0 Purchase Obligations $ 0 $ 0 $ 0 $ 0 $ 0 Other Long-Term Liabilities $ 0 $ 0 $ 0 $ 0 $ 0 15 --------------------------------------------------------------------------------The above table outlines our obligations as of October 31, 2013 and does not reflect any changes in our obligations that have occurred after that date.
Critical Accounting Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company's estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
We have irrevocably opted out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the Jumpstart Our Business Startups Act.
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