The following Management's Discussion and Analysis and Results of Operations
contains forward-looking statements. Forward-looking statements reflect
management's current expectations and are inherently uncertain. Our actual
results may differ significantly from management's expectations.
The Company has yet to generate revenue from its operations during the fiscal
year ended April 30, 2022 and it has not had material or consistent revenue in
each of the last two fiscal years. In order for the Company to maintain and
expand its operations through the next 12 months, it must: 1. Continue to raise
through capital infusions, either by means of equity or debt offerings, a
minimum of $1 million and up to $5 million; or 2. Continue to secure license and
development agreements that provide up-front fees or guaranteed, royalties, in a
minimum amount of $1 million and up to $5 million. The Company has prepared
filings with the Securities and Exchange Commission to become a fully reporting
registrant under the Securities and Exchange Act of 1934, as amended. Management
believes that this action will allow the Company to move its common stock to a
more stable market exchange, and provide greater transparency to the Company's
operations, both necessary steps towards attracting institutional investors.
During the fiscal year ended April 30, 2020, the Company also received purchase
orders for multiple solar projects. The Company has secured two new Community
Solar Project agreements (the "Agreement") with Cube Smart Self Storage of
Hackensack, NJ ("Cube Smart"). The new locations are anticipated to produce an
additional $6.6 million in revenues, that's in addition to the previously
announced $3.9 million totaling $9.9 million for the entire project over a
period of 25 years. The Company incurred net losses for the years ended April
30, 2021 and 2022 of ($8,956,197) and ($3,805,472), respectively. Cumulative
losses since inception are ($14,258,484). The Company has a working capital
deficit at April 30, 2022 of $3,861. Despite the current private stock offerings
and new contracts, there is no guarantee whether the Company will be able to
support its operations on a long term basis. This raises doubt about the
Company's ability to continue as a going concern. If additional funds cannot be
raised or otherwise generated, the Company may be forced to reduce staff,
minimize its research and development activities, or in a worst case scenario,
shut-down operations. However, management is cautiously optimistic that they can
continue to improve operations and raise the appropriate funds to grow their
underlying business. As explained above, the Company is currently raising
working capital to fund its operations via private placements of common stock,
and has ongoing and pending contracts that are expected to generate operating
cash to support operations well into 2023. Despite its limited cash resources,
the Company is able to retain engineering, consulting, legal and accounting
personnel partially through the raising of interim working capital. The Company
has substantial Commitments for Capital Expenditures. In 2021 the Company
acquired $265,021 of property and equipment. It does not immediately anticipate
a further purchase of facilities or significant equipment.
Results of Operations Year Ended April 30, 2021 Compared to Year Ended April 30,
2022
For the year ending April 30, 2022, the Company's gross margin was 0% as a
percentage of net sales as it was in 2021. Management does not place great
weight on these gross profit results at this time, as sales revenue and cost of
goods sold figures are in an early stage of developing and refinement.
Operating Expenses
Operating Expenses incurred for the year ending April 30, 2021 were $8,369,327
compared to $3,121,994 for the year ending April 30, 2022, a decrease of
$5,150,725. The majority of the decrease was due to additional general and
administrative expenses in the previous year reflective of the additional legal
and accounting to move the Company toward being fully reporting. In 2021, the
Company recognized a loss of $159,050 pursuant to converting debt into common
stock. Income and Earnings per Share. Net loss per weighted average share was
($0.06) for 2021 and ($0.007) for 2022.
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Liquidity and Capital Resources
In the year ended April 30, 2022, the Net Cash Flow used in Operations was
$1,924,016 compared to $3,779,159 for the year ended April 30,201. In the year
ended April 30, 2022, the Net Cash Flow used in Investing was $781,865 compared
to $365,021 for the year ended April 30, 2021. In the year ended April 30, 2022,
the Net Cash Flow provided by financing activities was $2,705,881 compared to
$4,029,478 for the year ended April 30, 2021. The Company needs to obtain
capital; however, no assurance can be given that it will be able to obtain this
capital on acceptable terms, if at all. In such an event, this may have a
materially adverse effect on the Company's business, operating results and
financial condition. If the need arises, the Company may attempt to obtain
funding or pay expenses through the continued sale or issuance of restricted
stock. The Company may also use various types of short term funding, related
party advances and expenses payment deferrals and external loans. The Company's
auditors have issued a going concern opinion. Management is cautiously
optimistic, however, that it will be able to generate the funding required to
continue and expand its operations over the long term, and believes that it
currently has cash reserves and cash commitments available to fund operations
through the end of the year or longer.
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements at this time.
Plan of Operations
The Company plans to continue to marketing its renewable energy generation
systems, focusing on solar resources, as a replacement of fossil fuel energy
generation equipment. The Company intends to do this by serving as the
administrator of solar system installations to be provided by the Company's
vendors, and a coordinating agent for leasing arrangements relating to those
systems. In the next twelve months we intend to focus on projects in the $50,000
to $5,000,000 range. GSFI will provide financing for those projects through
investment of its own funds, management of project-specific investor funds, and
leasing of solar energy equipment and components. As of the date of this annual
statement, we are currently engaged if four (4) Solar Roof Leases in the New
York and New Jersey metropolitan area, each for a term of twenty-five (25) years
at $2,000 per month with annual increases of 2%. As of the date of this annual
statement, the Company was actively seeking to develop solar systems at all the
locations subject to our leases. The leases will not commence until the Company
has arranged for the commencement of construction of a solar system at the site.
The construction of each solar system will cost the Company approximately
$60,000 to $2,000,000 to build depending on the specifications of the system and
any applicable tax credits.
Pursuant to the terms of the Solar Leases, the Company agreed to lease space
from each of the property owners for the siting, installation, inspection,
operation, maintenance, and repair of solar systems on each of the sites. Each
lease is for a term of twenty-five (25) years for a monthly rental amount of
$2,000 payable upon commencement of net metering of commercial revenue
generation. None of the Solar Leases provide a deadline for completion of, or a
penalty for failure to build an operational solar system at the locations
subject to the Solar Leases. Once a solar system has become operational at a
Solar Lease location, the Company will receive payment from the sale of the
electricity it generates to the local electric utility, and any corresponding
tax credits and other incentives. The Company may then also enter a PPA with the
lessor of the location in order to sell electricity generated by the system to
the lessor, or make electricity from the system available to the many potential
customers of a community solar project. The Company is responsible for
developing, installing and designing each solar facility and is the owner of the
solar equipment and the property owner shall have the right to purchase the
equipment after twenty (20) years. The Company has the right to terminate the
Lease at any time without notice to the property owner. Following the expiration
or termination of the lease, the Company will be required to decommission,
dismantle and remove the solar system and all other installations and to return
the property to its condition before the commencement of the lease.
Timetable for Solar System Installations
Anticipated
Project Completion Date Anticipated Cost Anticipated Developer
8012 Tonneli Ave, N. Bergen, NJ November, 2022 Pending** Amergy
11 Station Road, Bellport, NY December, 2022 Pending** Amergy
607 Station Road, Bellport, NY January, 2023 Pending** Amergy
747 Main Street, New Rochelle NY January 2023 Pending** Amergy
* Reflects estimates based on future conditions. Actual dates, costs and related
may vary.
** Pending: the Company has not yet fully/sufficiently evaluated the project to
make an estimate.
32
If the Company is able to raise sufficient funds, it hopes to enter into larger
leases for larger projects to increase its revenue streams. To effectively fund
our business plan, we will need to raise additional capital. However, there can
be no assurance that the Company will be able to raise sufficient capital on
terms acceptable to the Company to complete any or all of these projects.
During the first calendar quarter of 2022, we will require approximately $7
million of which approximately $2 million will be used to repay the Company's
currently outstanding convertible notes and approximately $5 million will be
used for the design, construction and installment of the Company's first four or
five solar facility projects.
During the second calendar quarter of 2022, providing the Company can complete
one or more solar systems at locations under the Solar Leases, the Company
expects to commence revenue generating operations. If four or more such solar
systems are operational, it is anticipated that revenues from the resale of
electricity to the applicable utilities will generate approximately $50,000 to
$60,000 per quarter based on the projections we received from Amergy as to the
amount of power these systems will generate, and the current amounts the
applicable electric utilities will pay for electricity generated using solar
power. However, there can be no assurance that these facilities will ever
generate revenues or in the amounts we are anticipating.
Thereafter, in the third quarter of 2022, providing the Company has generated
revenue generating operations, the Company anticipates it will be profitable
within the quarter. The Company will continue to seek additional candidates for
leases of the solar systems it markets and intends to sell and anticipates it
will be required to raise additional capital through the sale of its securities
or debt. However, there can be no assurance that the Company will be able to
raise these funds or that it will be able to do so on terms that are favorable
to the Company.
Anticipated Milestones
The Company anticipates completing projects it has already started, and
potentially expand with new leases and projects, possibly in new states, as
described in the table below.
Anticipated Completion Categories of
Milestone Commencement Date Date Expenditures
8012 Tonneli Ave, N. November 2022 March 2022 Contractors, equipment,
Bergen NJ transportation, developer
11 Station Road December 2022 April 2022 Contractors, equipment,
Bellport NY transportation, developer
607 Station Road January 2023 May 2022 Contractors, equipment,
Bellport NY transportation, developer
747 Main Street, New January 2023 May 2022 Contractors, equipment,
Rochelle NY transportation, developer
Expansion New State Efforts Expected to Third Marketing, Travel,
Start 3rd Quarter 2022 Quarter 2022 Consultants
Expansion 2nd New Efforts Expected to Fourth Marketing, Travel,
State Start 4th Quarter 2022 Quarter 2022 Consultants
The amounts that we actually spend for any specific purpose may vary
significantly, and will depend on a number of factors including, but not limited
to, the pace of the completion of each solar system, conditions in the markets
for the services required to complete solar systems, changes in or revisions to
our marketing strategies, as well as any applicable legal or regulatory changes
which may occur.
If we are unable to raise the net proceeds from our Offering or other financing
activities that we believe are needed to fund or business plan, we may be
required to scale back our development plans by reducing expenditures for
employees, consultants, business development and marketing efforts, and other
envisioned expenditures. This could reduce our ability to complete existing
solar system projects or initiate new ones, or require us to seek further
funding earlier, or on less favorable terms, than if we had raised the full
amount of the offering.
If management is unable to implement its proposed business plan or employ
alternative financing strategies, it does not presently have any alternative
proposals.
33
We cannot assure you that our solar systems will be completed in a timely manner
or at all, that we will ever earn revenues sufficient to support our operations
or that we will ever be profitable. Furthermore, since we have no committed
source of financing, we cannot assure you that we will be able to raise money as
and when we need it to continue our operations. If we cannot raise funds as and
when we need them, we may be required to severely curtail, or even to cease our
operations.
Critical Accounting Policies and Estimates
This discussion and analysis of our financial condition and results of
operations are based on our financial statements that have been prepared under
accounting principle generally accepted in the United States of America. The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the 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. Actual results could differ from those estimates.
A summary of significant accounting policies is included in Note 2 to the
consolidated financial statements included in this Registration Statement. Of
these policies, we believe that the following items are the most critical in
preparing our financial statements.
Use of Estimates
Preparing financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenue, and expenses. Actual results and outcomes may differ from
management's estimates and assumptions.
Stock-Based Compensation
The Company accounts for its stock-based compensation in accordance with ASC
718, Compensation - Stock Compensation, which requires the measurement and
recognition of compensation expense for all share-based payment awards made to
employees and directors to be recognized in the financial statements, based on
their fair value. The Company measures share-based compensation to consultants
in accordance with ASC 505-50, Equity-Based Payments to Non-Employees, and
recognizes the fair value of the award over the period the services are rendered
or goods are provided.
Most Recent accounting pronouncements
Refer to Note 1 in the accompanying consolidated financial statements.
Impact of Most Recent Accounting Pronouncements
There were no recent accounting pronouncements that have had a material effect
on the Company's financial position or results of operations.
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