INTRODUCTION
This section provides management's discussion of the financial condition,
changes in financial condition and results of operations of Quantum 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.
Results of Operations
Year Ended February 28, 2021 Compared to Year Ended February 29, 2020.
Operating expenses for the year ended February 28, 2021 were $622,696 compared
to $234,359 for the year ended February 28, 2020. The increase in operating
expenses was due to the fact that the Company had no cash to operate in the year
ended February 29, 2020. Therefore, professional fees and general and
administrative expenses increased by $302,641. Management and consulting fees
increased by $86,584 for the year ended February 28, 2021. Other expenses for
the year ended February 28, 2021 were $6,814,746 compared to $817,189 for the
year ended February 29, 2020. During the year ended February 28, 2021 the
Company had $-0- in bad debts, $6,808,276 in unrealized loss common stock
payable, $21,787 gain on derivative for a convertible note payable, incurred
$28,257 in interest expense and had $-0- in interest expense - warrants,
compared to the year ended February 29, 2020 when the Company had $30,000 in bad
debts, $138,185 loss on derivative for a convertible note payable, incurred
$45,743 in interest expense, $453,261 in interest expense - warrants and
$150,000 in joint venture write off.
Net Loss
Net loss for the years ended February 28, 2021 and February 29, 2020 was
$7,437,442 and $1,051,548, respectively. The increase in loss of $6,385,894 was
due to the increase in operating expenses of $388,337 and the increase to other
expenses as mentioned above in the amount of $5,997,557.
Liquidity and Capital Resources:
As of February 28, 2021, our assets totaled $3,169,508 which consisted of cash
of $1,969,508 and $1,200,000 of deposits - related party. The Company's total
liabilities were $11,519,633, which consisted of accounts payable and accrued
expenses, accounts payable and accrued expenses - related parties, common stock
payable, convertible note payable, derivative liability, promissory notes
payable and promissory notes payable - related parties. As of February 28, 2021,
the Company had an accumulated deficit of $19,848,297 and working capital
deficit of $9,550,125.
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Cash (Used in) Operating Activities
Net cash used in operating activities for the year ended February 28, 2021 and
February 29, 2020 was $210,367 and $206,571, respectively. The increase amount
was attributed to common stock subscribed for rent of $240,000, unrealized loss
common stock agreements of $6,808,276, gain on derivative of $21,787, increases
to accounts payable of $72,253 and accounts payable -related parties of
$128,333.
Cash from Investing Activities
Net cash used in investing activities was $1,200,000 which were deposits -
related party compared to the year ended February 28, 2021 which was an
investment in joint venture of $150,000.
Cash from Financing Activities
Net cash provided by financing activities was $3,379,828 for the year ended
February 28, 2021 which was proceeds from stock subscription compared to
$355,040 for year ended February 29, 2020 which was all due to cash received
from notes payable.
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