financials out....
Form 10-Q for ESSENTIAL INNOVATIONS TECHNOLOGY CORP
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13-Sep-2013
Quarterly Report
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 and nine-month periods ended July 31, 2013 and 2012, and for the period from commencement of development stage, November 1, 2009, to July 31, 2013 and our annual report on Form 10-K for the year ended October 31, 2012, 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 and nine-month periods ended July 31, 2013 the Company has continued to make efforts towards engaging the research and development and future business channels and relationships to facilitate the on-going testing of its technology. During the quarter the Company entered into exclusive representation agreements forPhilippines,Dubai and the UAE for a complete line of HVAC equipment manufactured by Mammoth Zhejiang company of China. The Company has secured such exclusive rights for an initial term through the end of Calendar 2014 for each of these markets. The goal of this sales and marketing agreement is to give the Company the opportunity to attempt to generate sales revenue during periods in which it remains in research and development phase for its technologies. The Company possesses specific expertise and has long-standing relationships in the HVAC field in these and many other global markets.
Results of Operations
Comparison of the Three and Nine Months Ended July 31, 2013, with the Three and Nine Months Ended July 31, 2012
We had no gross revenue for the three and nine- month periods ended July 31, 2013 and 2012
Our general and administrative expenses from continuing operations for the three and nine months ended July 31, 2013, were $131,635 and $278,965 compared to $70,411 and $150,411 for the comparable periods ended July 31, 2012, an increase of 87% and 85.5%. The increase is primarily due to two consulting contracts, which totaled $91,800, entered into related to promoting our services and developing markets for our technology.
During the three and nine months ended July 31, 2013 we had marketing expenses of $nil and $nil, respectively, as compared to $nil and $1,041,000 for the respective three and nine-months ended July 31, 2012. The decrease is due to the expensing of marketing-related consulting contracts in the three and nine-months ended July 31, 2012
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Overall, we have a net loss of $138,020 and $297,993 for the respective three and nine-months ended July 31, 2013, as compared to a net loss of $76,794 and $1,155,422 in the corresponding three and nine-months of the preceding year.
We had 1 part-time employee as of July 31, 2013.
Liquidity and Capital Resources
As of July 31, 2013, our current assets were $22,545, as compared to $146 at October 31, 2012. As of July 31, 2013, our current liabilities were $1,075,956, as compared to $957,364 at October 31, 2012.
Operating activities used net cash of $68,041 for the nine months ended July 31, 2013, as compared to use of $47,911 for the nine months ended July 31, 2012.
Net cash of $90,440 was provided by financing activities during the nine months ended July 31, 2013, as compared to $56,250 net cash provided by financing activities during the comparable nine months ended July 31, 2012.
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.
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