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MarketScreener Homepage  >  Equities  >  OTC Bulletin Board - Other OTC  >  Incoming Inc    ICNN

INCOMING INC

(ICNN)
Delayed Quote. Delayed OTC Bulletin Board - Other OTC - 08/01 02:16:58 pm
0.007 USD   -30.00%
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INCOMING : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

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08/14/2019 | 03:35pm EDT

THE FOLLOWING DISCUSSION OF THE RESULTS OF OUR OPERATIONS AND FINANCIAL CONDITION SHOULD BE READ IN CONJUNCTION WITH OUR FINANCIAL STATEMENTS AND THE NOTES THERETO INCLUDED ELSEWHERE IN THIS REPORT.

This section of the report includes a number of forward-looking statements that reflect the Company's current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: "believe," "expect," "estimate," "anticipate," "intend," "project" and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this annual report. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.

The following discussion provides an analysis of the results of our operations, an overview of our liquidity and capital resources and other items related to our business. The following discussion and analysis should be read in conjunction with our unaudited consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q and our audited financial statements and notes included in our Annual Report on Form 10-K as of and for the year ended December 31, 2018.

Overview

Company references herein are referring to consolidated information pertaining to Incoming, Inc., the registrant.

The following discussion is an overview of the important factors that management focuses on in evaluating our businesses, financial condition and operating performance and should be read in conjunction with the financial statements included in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those anticipated in these forward looking statements as a result of any number of factors, including those set forth in this Quarterly Report and elsewhere in the Company's Annual Report on Form 10-K and other public filings.

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All written and oral forward-looking statements made in connection with this Quarterly Report on Form 10-Q that are attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. Given the uncertainties that surround such statements, you are cautioned not to place undue reliance on such forward-looking statements.

Company Overview

NABE has historically been a refiner and producer of commercial-grade biodiesel as specified by the American Society of Testing and Materials (ASTM D6751). Our refining and production facility is located in Lenoir, North Carolina with a nameplate annual capacity of five million gallons. The Lenoir plant is currently idle due to adverse market conditions. Our facility has the ability to produce biodiesel from virgin, agri-based feedstock using commercial specifications. The biodiesel we produce is sold throughout North Carolina, South Carolina and Virginia directly or through wholesale distributors. At times, we have strategically purchased biodiesel from other producers to meet commercial requirements. We also purify and sell glycerin, which is created as a byproduct of the biodiesel production process. Once the facility has accumulated sufficient glycerin to make full loads, it is typically sold to the market.

Our production process starts with purchasing the most cost effective and suitable agri-based feedstock (e.g., soy, canola, sunflower, cotton seed and chicken/pork fat). A sample of every feedstock is tested by our in-house laboratory in order to develop the proper recipe of catalysts for the transesterification process. The glycerin byproduct is then separated from the biodiesel and any excess methanol is recovered. Recovered methanol is either sold or reused in the production process. Glycerin is sold on the open market as either a crude product or as a further-processed tech grade product. While biodiesel is our main product, glycerin is a popular chemical used in pharmaceutical and hygiene applications and serves as an additional source of revenue.

Our facility is capable of producing biodiesel from a wide range of agri-based feedstocks: soy, canola, sunflower, cotton seed and chicken/pork fat. Biodiesel production costs are highly dependent on the cost of feedstock, and we believe the ability to utilize a variety of feedstocks efficiently and interchangeably is imperative to gaining a competitive advantage in the biodiesel production market.




Results of Operations



The following is a discussion and analysis of our results of operations for the three and six-month periods ended June 30, 2019 and 2018, and the factors that could affect our future financial condition. This discussion and analysis should be read in conjunction with our financial statements and the notes thereto included elsewhere in this report. Our financial statements are prepared in accordance with United States generally accepted accounting principles. All references to dollar amounts in this section are in United States dollars unless expressly stated otherwise.




Depreciation

Depreciation expense totaled $8,164 during the second quarter of 2018. There was no depreciation expense in 2019 as all depreciable fixed assets were fully impaired during the third quarter of 2018.

Depreciation expense totaled $16,238 during the first two quarters of 2018.

There was no depreciation expense in 2019 as all depreciable fixed assets were fully impaired during the third quarter of 2018.

Selling, General and Administrative (SG&A) Expenses

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SG&A expenses totaled $23,367 for the period April 1, 2019 through June 30, 2019. During the period under consideration, SG&A expenses primarily consisted of costs associated with payroll, office overhead and professional fees.

SG&A expenses totaled $28,212 for the period April 1, 2018 through June 30, 2018. During the period under consideration, SG&A expenses primarily consisted of costs associated with payroll, office overhead and professional fees.

Comparing the Company's activity for the period April 1, 2019 through June 30, 2019 to the activity for the period April 1, 2018 through June 30, 2018, SG&A expenses were consistent and comparable to the prior year.

SG&A expenses totaled $46,598 for the period January 1, 2019 through June 30, 2019. During the period under consideration, SG&A expenses primarily consisted of costs associated with payroll, office overhead and professional fees.

SG&A expenses totaled $56,234 for the period January 1, 2018 through June 30, 2018. During the period under consideration, SG&A expenses primarily consisted of costs associated with payroll, office overhead and professional fees.

Comparing the Company's activity for the period January 1, 2019 through June 30, 2019 to the activity for the period January 1, 2018 through June 30, 2018, SG&A expenses were consistent and comparable to the prior year.

Other Income (Expense)

The Company had no Other Income during the period April 1, 2019 through June 30, 2019 or during the same period in the prior year.

The Company had no Other Income during the period January 1, 2019 through June 30, 2019.

The Company had interest expense of $70 during the period January 1, 2018 through June 30, 2018.

Liquidity and Capital Resources




Working Capital

                              As of             As of
                          June 30, 2019   December 31, 2018
Current Assets          $           628 $               628
Current Liabilities     $       849,471 $           796.489
Working Capital Deficit $     (848,843) $         (795,861)
Accumulated Deficit     $   (7,358,283)$       (7,311,685)




Cash Flows

                                         Six Months      Six Months
                                            Ended           Ended
                                        June 30, 2019   June 30, 2018

Cash used in operating activities $ (50,700)$ (60,960) Cash provided by investing activities

               -               -

Cash provided by financing activities 50,700 57,760 Net (decrease) in cash

                $             - $       (3,200)


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As of June 30, 2019, our current assets totaling $628 consisted of accounts receivable and other current assets. Our accounts payable and accrued liabilities and current portion of amounts due to related parties and third parties were $849,471 as of June 30, 2019. As a result, we had a working capital deficit of $848,843.

Current assets for the Company totaled $628 as of December 31, 2018. Current liabilities for the Company totaled $796,489 as of December 31, 2018, which resulted in a working capital deficit of $795,861.

Comparing the working capital deficit at June 30, 2019 to the deficit at December 31, 2018, there was an increase of $52,982 as the deficit increased from $795,861 to $848,843. The biggest contributor to the overall increase was the Company's additional related party borrowings to fund operations.

On a short-term basis, it is anticipated that the Company's liquidity needs will be met through borrowing from related parties and through the sale of common stock. Considering the long-term view, the Company intends to provide liquidity through operation of its biodiesel plant in Lenoir, North Carolina. Since the December 31, 2018 balance sheet date, no amounts of receivables were written off.

Historically, cash flow requirements have been primarily met through sales of biodiesel related products, through collections of accounts receivable, through share issuances, and through gross proceeds from bank and related party loans. For the six months ended June 30, 2019, the Company generated a loss from operations of $46,598 on no sales over the same period. For six months ended June 30, 2018, the Company generated a loss from operations of $72,472, including depreciation expense of $16,238, on no sales over the same period.

A portion of the Company's operations have been funded through the issuance of common stock shares. As of June 30, 2019, the Company has issued 33,754,332 shares of common stock (31,774,332 shares of Class A stock and 1,980,000 shares of Class B stock).

Historically, our cash flow requirements have been primarily met by equity financings and from operating the Company's biodiesel production facility in Lenoir, NC. Management expects to keep operational costs to a minimum until cash is available through financing or operating activities. Management plans to continue to seek other sources of financing on favorable terms; however, there are no assurances that any such financing can be obtained on favorable terms, if at all.

Cash Used In Operating Activities

During the period January 1, 2019 through June 30, 2019, the Company's cash used in operating activities totaled $50,700. For the same period, the Company's cash used in operating activities was primarily attributable to making payments on trade payables.

During the period January 1, 2018 through June 30, 2018, the Company's cash used in operating activities totaled $60,960. For the same period, the Company's cash used in operating activities was primarily attributable to amortizing prepaid insurance and to making payments on trade payables. Insurance amortization totaled $3,821 while payables decreased $8,433 during the first six months of 2018. Depreciation expense was $16,238 for the first six months of 2018.

Cash Provided By Investing Activities

During the period January 1, 2019 through June 30, 2019, the Company had no cash flow related to investing activities.

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During the period January 1, 2018 through June 30, 2018, the Company had no cash flow related to investing activities.

Cash Provided By Financing Activities

During the period January 1, 2019 through June 30, 2019, the Company's cash provided by financing activities totaled $50,700. This amount represents proceeds provided from short-term financing from a related party, net of payments on short-term debt.

During the period January 1, 2018 through June 30, 2018, the Company's cash provided by financing activities totaled $57,760. This amount represents proceeds provided from short-term financing from a related party, net of payments on short-term debt.



Future Financings


We anticipate that additional funding will be required in the form of equity financing from the sale of our common stock in order to proceed with our acquisition and expansion plan. However, we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock to fund our marketing and acquisition plans. At this time, we do not have any arrangements in place for any future equity financing.

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 financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standard Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, "Leases (Topic 842)" ("ASU 2016-02") to increase the transparency and comparability about leases among entities. Additional ASUs have been issued subsequent to ASU 2016-02 to provide supplementary clarification and implementation guidance for leases related to, among other things, the application of certain practical expedients, the rate implicit in the lease, lessee reassessment of lease classification, lessor reassessment of lease term and purchase options, variable payments that depend on an index or rate and certain transition adjustments. ASU 2016-02 and these additional ASUs are now codified as Accounting Standards Codification Standard 842 - "Leases" ("ASC 842"). ASC 842 supersedes the lease accounting guidance in Accounting Standards Codification 840 "Leases" ("ASC 840"), and requires lessees to recognize a lease liability and a corresponding lease asset for virtually all lease contracts. It also requires additional disclosures about leasing arrangements. The Company elected to utilize the "package" of three expedients, as defined in ASC 842, which retain the lease classification and initial direct costs for any leases that existed prior to adoption of the standard. The Company also has elected to not evaluate land easements that existed as of, or expired before, adoption of the new standard. The Company's Consolidated Financial Statements for the periods prior to the adoption of ASC 842 are not adjusted and are reported in accordance with the Company's historical accounting policy. As of the date of implementation on January 1, 2019, the impact of the adoption of ASC 842 resulted in the recognition of a right of use asset and lease payable obligation on the Company's Consolidated Balance Sheets of $6,384. As the right of use asset and the lease payable obligation were the same upon adoption of ASC 842, there was no cumulative effect impact on the Company's retained earnings.

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On June 20, 2018, the FASB issued ASU 2018-07, Improvements to Nonemployee Share-Based Payment Accounting, as part of its ongoing Simplification Initiative. Currently, share-based payments to nonemployees are accounted for under Subtopic 505-50, which significantly differs from the guidance for share-based payments to employees under Topic 718. This ASU supersedes Subtopic 505-50 by expanding the scope of Topic 718 to include nonemployee awards and generally aligning the accounting for nonemployee awards with the accounting for employee awards (with limited exceptions). The amendments specify that Topic 718 applies to all share-based payment transactions where the grantor is acquiring goods or services being used or consumed in its own operations by issuing these awards. They do not apply to share-based payments that are used to effectively provide financing for the grantor/issuer or that are granted in conjunction with selling goods or services to customers as part of a contract which should be accounted for under Topic 606. The adoption did not have an impact on our consolidated financial statements.

© Edgar Online, source Glimpses

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