The following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with its unaudited interim
condensed consolidated financial statements and related notes included in this
Quarterly Report on Form 10-Q and the audited financial statements and notes
thereto as of and for the fiscal year ended April 30, 2021.
The discussion contained herein contains "forward-looking statements" that
involve risk and uncertainties. These statements may be identified by the use of
terminology such as "believes," "expects," "may," "should" or anticipates" or
expressing this terminology negatively or similar expressions or by discussions
of strategy. The cautionary statements made in this Form 10-Q should be read as
being applicable to all related forward-looking statements wherever they appear
in this Form 10-Q. The Company's actual results could differ materially from
those discussed in this report.
BUSINESS AND PLAN OF OPERATION
Lux Amber, Corp., based in Frisco, Texas, is an international specialty chemical
company with many products that are friendly to the environment. The common
description is "green chemicals." The Company has degreed chemists on staff with
years of successful experience in the specialty chemical industry. The term
"specialty chemicals" is best defined by those chemicals whose formulas allow
the chemical compounds to perform a specific function for a class of customers.
The Company's products have been used successfully in a diverse array of
· Chemicals to protect surfaces in asphalt handling equipment
· Chemicals to control the reproduction of pests
· Military Chemical, Biological, Radiological, Nuclear, and Explosives
· Commercial nuclear power plants and nuclear-powered ships
· Hazardous toxic industrial chemical and toxic industrial material clean-up
The Company's corporate telephone number is 972-214-9764. The Company's stock
symbol is LXAM.
LAC has three (3) wholly owned subsidiaries (collectively with LAC, the
"Company"): Worldwide Specialty Chemicals, Inc. ("WSC"), Industrial Chem
Solutions, Inc. ("ICS"), and Safeway Pest Elimination, LLC, ("SPE"), which was
formed July 16, 2018. LAC and its subsidiaries serve as both producers and
distributors of environmentally safe, specialty chemicals. The Company formerly
held a 49% interest in PCNM LLC, a Service-Disabled Veteran owned small business
that sold the Company's products to government agencies. PCNM was legally
dissolved on July 31, 2020.
The Company's products utilize all-natural and renewable resources, contain no
dangerous chemicals or additives, and offer "green" solutions to its customers.
ICS' product line includes asphalt release agents, industrial cleaners,
environmental remediation gels, odor control agents, and consumer friendly
cleaners for a wide range of uses, including construction, environmental
remediation, hazardous materials clean-up, nuclear decommissioning, industrial
cleaning, and odor control. SPE's products are designed for the elimination and
control of pests.
LIQUIDITY AND CAPITAL RESOURCES
During the three-month period ended July 31, 2021, the primary sources of
liquidity were cash flows from financing activities, and in particular, issuance
of stock and promissory notes.
As of July 31, 2021, the Company had total assets of $3,457,896 consisting of
current assets of $347,847, $189,768 in receivables, $151,529 in inventory,
$6,550 in other current assets, and long-term assets of $2,309,953 in goodwill
and other intangibles, $478,117 in fixed assets, $76,965 on other long-term
assets, and $295,014 in right of use assets. As of April 30, 2021, the Company
had total assets of $3,353,460, consisting of current assets of $112,982 in
receivables, $137,211 in inventory, $7,960 in prepaid expenses and other current
assets and long-term assets. These gains in current assets are due to the
company's sales increase of 45.87% over the same quarter of the previous
comparable period, which in turn lead to an increase in account receivables. The
increase in inventory is a result of the company preparing for a comparable
increase in sales of the succeeding quarter. The sales increase and the increase
in the gross profit allowed the company to obtain a higher percentage return on
its current and long-term assets.
The company has made additional acquisitions of products and assets. Since that
acquisition has judicially added assets, which combined, provide the basic
application equipment and rolling stock to support revenues significantly larger
than the revenues produced in May, June, and July of the previous year. In the
current quarter, those combined assets produced revenues which are forty-six
 percent higher than the previous quarter. In June of 2021 the company's
ability to increase its revenue has been enhanced by the addition of a Corporate
President who has a broad network within the industries that the company serves;
therefore, it is the opinion of management that the rate of growth in revenues
and margins from the asset base will be sustained.
The increase in total assets was primarily due to the increase in its account
receivable and inventory as a result of slower customer pay times due to cash
flow issues industry wide as a result of COVID-19 and a buildup of inventory to
accommodate the increase in sales.
As of July 31, 2021, the Company had total liabilities totaling $2,621,038
including $1,832,863 in current payables and accrued expenses, $169,110 in
related party payables, $240,627 notes payable, $104,752 in Paycheck protection
program loans, and $273,685 in right of use liabilities. As of April 30, 2021,
the Company had total liabilities totaling $2,468,547 including $1,756,156 in
accounts payable and accrued expenses, $208,756 in related party payables,
$127,624 in notes payable, and $271,259 in lease liabilities, and $104,752 in
Paycheck protection program loans.
As July 31, 2021, the Company had an accumulated stockholders' equity of
$836,858 and $884,913 at April 30,2021. The increase is result of the items
RESULTS OF OPERATIONS
Comparison of the three-month period ended July 31, 2021 and July 31, 2020.
For the three-month period ended July 31, 2021, the Company had revenues of
$423,828, and $290,260 for the same period in 2020. The increase in sales of
$133,568 is primarily the result of 1) expanded business with legacy customers
to service additional Hot Mix Asphalt Plants under their ownership; 2) increase
in sales price per unit; 3) addition of new customers.
Cost of Goods Sold decreased as a percentage of revenues due to a change in the
mix of products sold during the period and increases in the gross selling prices
on all the products offered by the company. The increase in selling prices
ranged from thirty-five  percent to one hundred  percent.
For the three-month period ended July 31, 2021, the Company's operating expenses
totaled $538,095 which included $153,215 in product delivery expenses, $336,158
in general and administrative expenses, $7,102 in selling expenses and $41,620
in depreciation of assets. For the three-month period ended July 31, 2020, the
Company had operating expenses that totaled $691,085 which included $141,981 in
product delivery expenses, $492,329 in general and administrative expenses, $19,
491 in selling expenses and $37, 284 in depreciation.
The decrease is primarily due to 1) Less travel cost due to more efficient use
of mobile assets; 2) Shifting the cost burden of delivery to the customer; 3)
Improved cost accounting processes; 4) Improved purchasing processes by sourcing
raw materials from multiple vendors and buying in larger quantities.
The accompanying consolidated financial statements are presented on a going
concern basis. The Company's financial condition raises substantial doubt about
the Company's ability to continue as a going concern. The Company has limited
cash, its current liabilities exceed its current assets as of July 31, 2021 and
has incurred reoccurring losses from operations during the three months ended
July 31, 2021. The Company is relying on capital from investors to meet the
majority of its operating expenses.
OFF-BALANCE SHEET ARRANGEMENTS
There are no off-balance sheet transactions, arrangements, obligations
(including contingent obligations), or other relationships with unconsolidated
entities or other persons that have, or may have, a material effect on financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources of the Company.
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