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    TEGY   US89342A1079

TRANSACT ENERGY CORP.

(TEGY)
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TRANSACT ENERGY : PLAN OF OPERATIONS (form 10-Q)

10/08/2021 | 01:58pm EST

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENT NOTICE

This Form 10-Q contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. For this purpose, any statements contained in this Form 10-Q that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as "may," "will," "expect," "believe," "anticipate," "estimate" or "continue" or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, and actual results may differ materially depending on a variety of factors, many of which are not within our control.

These factors include but are not limited to economic conditions generally and in the industries in which we may participate; competition within our chosen industry, including competition from much larger competitors; technological advances and failure to successfully develop business relationships.



OUR BUSINESS


Our business is using sustainable energy in emissions-free processing of municipal solid waste into at least eighteen(18) globally traded commodities.

We formed TransAct Energy Corp. as a Nevada corporation on March 15, 2006. Although our original business plan called for the securing and managing of any energy leasehold, the Company focused on securing producing and non-producing oil and gas leases in Alberta, Canada. On September 7, 2006, we acquired a one hundred percent (100%) interest in a Petroleum and Natural Gas Lease, from the province of Alberta, Canada for twelve thousand and fifty-one dollars ($12,051), the MedHat Project. We did not develop this resource. We looked to expand our holdings in Alberta through acquisitions and joint ventures for the following two years. We have since allowed this lease to lapse and moved away from this focus.

In 2008, the Company was introduced to Dr. Mory Ghomshei one of the world's leading geothermal experts and two of his geothermal power projects in British Columbia, Canada. We worked with companies Aqua Terra Power and Aqua Terra Geothermal through the balance of 2009 on the two geothermal power projects in British Columbia. Other than lending Aqua Terra funds no formal arrangement was entered pending them securing drill permits on the two projects.

These licenses lapsed under their original owners and were re-posted by the government for public tender; an Ontario corporation associated with Dr. Ghomshei acquired most of the original licenses and has received drilling permits. We entered discussions with this entity in the latter half of 2011 to form a Farm-in relationship. We have put these discussions on hold pending the completion of our first waste optimization plant although we are maintaining dialogue with Dr. Ghomshei as it relates to utilizing Geothermal in the plants themselves.

TransAct in mid-2009 started introducing the concept of geothermal power to markets in Western and South Asia with the plan to enter joint venture relationships to develop geothermal power projects in these areas. To enter these markets as a power producer the Company found it strategic to develop traditional carbon fueled power projects in addition. After discussions with Spectrum Energy Project Investments (a UAE power company), submitted applications to the Basra Investment Commission to develop/manage three natural gas power plants. These multi-billion-dollar projects came with long-term power purchase agreements (PPA) and sovereign guarantees and our application through Spectrum was shortlisted. We were unsuccessful in completing our acquisition of 50% of Spectrum and the initial offering lapsed.

On August 31, 2009, TransAct Energy completed and closed its initial public offering at twenty-five cents ($0.25) per share selling one million one hundred and two thousand shares (1,102,000) for a total capital raise of two-hundred and seventy-four thousand three hundred and ninety-eight dollars ($274,398 USD). The majority of these funds were placed with Aqua Terra Power as convertible notes to secure and develop the four (4) geothermal licenses in British Columbia, Canada; the balance was used to pay the costs of the offering and a small amount went to working capital. The Company was approved for listing on the OTCBB in December 2009 and received the trading symbol "TEGY."

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Throughout 2010 we laid the groundwork for large power projects in South Europe, Asia and Africa; smaller projects for solar, waste to energy and hydrogen fuel cells specifically in India. We worked to secure markets for geothermal, new solar photo-voltaic, waste to energy and hydrogen fuel cell generators.

Joint development agreement negotiations took place in December 2010 clearing the way for Transact to enter one major project in South East Asia in 2011. The 2011 year was frustrated with the company's inability to collect raised or earned funds into the company's bank account. Thus projects, joint ventures and previous efforts were postponed or lost permanently. While we did maintain the company's trading status the year was taken up with collection efforts and supporting business relationships while in limbo. We did initiate discussions on new waste to energy technologies to leverage the work we had done previously in this sector.

The Company's 2012 efforts were focused on building out a Waste Optimization division. We modified our Business Plan for this focus and entered a Joint Development Agreement with the owners of a small scale, proprietary, zero emissions waste optimization plant ("ZEWOPtm") that had been operating a 20 tonne per day plant for two years. We reconnected with clients in India and Brazil for future waste optimization opportunities. From the second quarter, through to the end of 2012 we worked to raise the necessary funds to build a municipal scale plant (500+ tonnes per day) in Scotland.

2013 continued as a building year for both the company and its Waste Optimization division. We completed the acquisition of the ZEWOPtm technology from the Scottish Inventor and brought him on as a long-term member of our team. We successfully negotiated a relationship with the international firm Fichtner Consulting Engineers to complete the certification of our plants going forward. We identified suppliers of waste for the proposed United Kingdom plants, initiated the relationships for the uptake of the Natural Gas and Electricity in the United Kingdom and tentatively sourced the capital required for the first plant in the United Kingdom. Globally we negotiated the intent to build a plant in Mexico that includes the required equity and waste. In Brazil, we initiated a relationship to create a green energy fund in order to grow both the market in Brazil and the other strategic areas of South America. Initial talks have taken place with potential development partners for a few of the major Brazil markets pending the success of the Mexico plant.

Throughout 2014 TransAct worked to finalize the engineering review and agreements necessary to develop the first ZEWOPtm in Puebla, Mexico. The plant under design is capable of processing 1320 metric tons per day of Municipal Solid Waste ("MSW") and is estimated to cost approximately three hundred million dollars. In late November Fichtner Consulting Engineers reported they believed the ZEWOPtm could process the MSW 100% into useable products without emissions. The Fichtner report provided TransAct the opportunity to submit the Waste Supply Agreement to the Municipality of Puebla, prepare off-take agreements for interested buyers of the ZEWOPtm products and formalize the share purchase agreement with the Puebla Waste Consortium ("PWC"). PWC intended on providing 30% of the capital required to build the ZEWOPtm, while TransAct negotiates third party lenders for the remaining 70% of the cost through debt instruments.

The Company delivered the results of the Fichtner Report to the Puebla City Staff in December of 2014. The cost of the plant was more than originally discussed because it included garbage pre-processing and their waste contained more water. This affected the required equity and although it was never stated appears to be cause of the PWC hesitation. We also found out subsequently there was legal wrangling and back room negotiations between the existing MSW concession holders and the municipal/state government, affecting their ability to sign with us. After 6 months with no movement forward for the MSW feedstock from the City of Puebla, Management set out in 2015 to secure an alternate source of MSW. The agreement we had with the Puebla Waste Consortium was terminated however the sales efforts were all to National/International companies whose interest in our products will not change with a change in location. The one hundred-million-dollar equity for the plant in Puebla disappeared with the termination of the consortium contract. An alternative source of the plant equity is being sought during 2015/16 with a variety of investors coming forward during this period. As soon as we finalize the feedstock and sales contracts we will seek to formalize the required equity.

Because of the specialized nature of many of the ZEWOPtm components, we initiated some of the equipment procurement; thus, we entered a design/supply agreement for our proprietary reactors with a specialized engineering firm.

2014 saw the Company form subsidiary corporations in Ireland and Mexico. In Ireland we established the wholly owned subsidiary "TransAct Energy Global Limited", this company will in turn wholly own each national subsidiary. The first national subsidiary of TransAct Global is "TransAct Energy Mexico S.DE R.L. DE C.V."

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which will own a majority shareholding of each holding company that owns a ZEWOPtm like the Mexican corporation "Puebla ZEWOP 1, S. DE R.L. DE C.V.".

At the beginning of 2015 we focused on finalizing the sale of the anticipated ZEWOPtm products. These efforts included getting signed letters of intent from qualified buyers and preparing formal legal agreements for the same. We now have letters of intent from multiple qualified buyers for all the expected product and agreements ready to be signed subject to us finalizing our feed-stock agreement (Waste Supply Agreement) for the first plant.

In summary 2015's efforts focused on completing the due-diligence for the Mexican candidate feed-stocks including matching equity partners and buyers of the resulting products. To that end we now have several feed-stock agreements to negotiate through to a final agreement or dismiss depending on the outcome of the negotiations. The potential equity partners have been identified subject to finalizing the feed-stock agreement and pre-sales of the future products. The clients that signed letters of intent for the products have also been briefed on the potential feed-stock cities to re-confirm their commitment. Every effort was made during the year to keep the candidate banks for debt financing informed of our progress and they appear to be continuing with their support.

2016 we focused on finalizing contracts for the required MSW feedstock. The results were a signed memorandum of understanding (MOU) with a private contractor in Mexico City and a municipality outside of Asuncion, Paraguay; a letter of invitation from the Republic of Panama; and a formal proposal to a municipality in the State of Jalisco, Mexico now awaiting the formal request for proposal coming in 2017. The Mexico City MOU was followed in December 2016 with a Waste Supply Agreement. Each opportunity was negotiated to satisfy our need for thirteen-hundred and twenty metric tons per day of MSW feedstock per ZEWOPtm.

2017 was Transacts breakthrough year as it finally secured the required feedstock under long-term contract for its first ZEWOPtm to be in Mexico's second largest city Guadalajara. We immediately secured a strategically located industrial site in El Salto and have proceeded to pre-sell the products from the future ZEWOPtm.

In 2018 we focused on completing the due diligence for the El Salto site, the pre-development capital required to pay for the building-site and the completion of all preliminary design work required to secure an EPC Contractor (Engineering, Procurement and Construction) through the tender process to build the ZEWOPtm. Due diligence was completed proving the site suitable for our proposed use and the landowners have so far continued to wait for us to close on the site.

The pre-development capital was committed to as a bridge-loan, but to date has not been received.



                                [[Image Removed]]

                Figure 1: Concept Rendering of El Salto ZEWOPtm

   Plant is estimated at 31,355 sq. meters. Using approximately 7.2 hectares.


2019 was dominated with closing the funds to build the El Salto ZEWOPtm and preparing the Company for operating status. This included continued meetings with members of the new Mexican government to forward our waste management approach in Mexico and renegotiating the purchase of the El Salto lands anticipating a closing. We started the process of acquiring a sustainable geothermal technology that will provide most of the energy required to operate the ZEWOPtm. Our incoming COO and CPO started working through the people requirements for Mexico.

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We acquired another Irish corporation to hold our physical assets in Ireland as we start the search for facilities to house our global accounting, human resources and research/development offices in Dublin. To that end Christina Kenny officially came on as our Chief People Officer starting the process of identifying our first hires for both the global administration and the El Salto ZEWOPtm.

2020 had two focuses: We continued raising the predevelopment capital for El Salto, Mexico and new business development initiatives that could result in cash flow. Raising the pre-development capital for El Salto during COVID-19 Pandemic led to the loss of several funders, however, as companies adjusted it created new opportunities. We reduced our initial capital requirements by $10 Million through negotiating a lease/purchase agreement on the El Salto lands. Then after many single-family office contacts we negotiated the balance of the funds required. We have contracted for a $14 Million loan which was expected in April 2021with an office that owns an EPC Contractor and we have agreed to their preferred vendor status, provided they are competitive through the tender process. This company has struggled to deliver on its commitments to date. In terms of business development, we contracted with our reactor engineers to develop a retail business using our core reactor technology. The retail opportunity is now in the business planning stage.

The first half of 2021 has been focused on planning and team building in anticipation of starting the predevelopment phase of the El Salto ZEWOPtm. In that process we clearly identified our purpose "To Help humanity restore its balance with nature" and our Mission "To utilize latent energies and human off casts to create resources that enhance the Economy, the Environment and Communities we operate in." All corporate activity undertaken will work towards our vision of "a world where all energy and resources used to sustain humanity, have no impact on the biosphere." To that end we spent time examining our future risk and resilience strategies, examining our supply-mesh and creating a detailed plan for the first ninety-days after launch. We continued to work on finalizing the required predevelopment funds both with the original commitment from the beginning of 2021that has not yet completed and with several others in progress for the third quarter.

Throughout the third quarter of 2021 we continued to manage four potential funding relationships, two of which have continued to mature through due diligence and negotiations. During this period, we also were able to raise some working capital and maintain relationships in Guadalajara, MX. We initiated feedstock (MSW) discussions in three states in the US northeast each is in its own process.




PLAN OF OPERATION



TransAct Energy Corp. has elected to focus entirely on the global development and dissemination of its ZEWOPtm. The ZEWOPtm makes ecological, economic, cultural, and social sense. Becoming an engine that supports the circular economy in any community it enters, sustainably; Municipalities can now be paid instead of paying to manage their MSW. In the process, TransAct is able to incorporate many of the energy technologies it has worked on including, geothermal and solar.

It is our intent during the eighteen-months that it should take to construct the first municipal scale ZEWOPtm; to debug any mechanical/operational issues of the design. After the first building is erected (approximately one-year in), we will secure the second site in Guadalajara and start its construction as soon as the first plant is certified operational. We will complete the assembly of the second ZEWOPtm to perfect the project management process, creating a cookie cutter approach to ZEWOPtm buildout.

The first two ZEWOPtm gives us the opportunity to recruit and train the project managers' expertise to effectively work with our EPC contractors in the development of each new ZEWOPtm; with a focusing on streamlining the supply mesh of required materials and equipment.

During the estimated twenty-four to thirty months, it will take to get the first two ZEWOPtm underway, we intend on imbedding a team in Europe to secure feedstock and development sites for the next twenty ZEWOPtm. This approach will be continued around the globe, selecting major markets that are politically and economically ready to adopt our approach to sustainable manufacturing using solid waste. Upon receipt (in the last quarter of 2021) of the loan funds required for the predevelopment of the El Salto, ZEWOPtm; our pre-described timeline will start.

With a firm start date and location of the first ZEWOPtm TransAct Energy Mexico can proceed to finalize long-term offtake agreements. We will reengage Fichtner Consulting Engineers to prepare working drawings, that while being approved under permits and permissions will go to tender for a guaranteed procurement and construction contract

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(EPC). We had selected a preferred vendor for this role, however, they still have to compete in the EPC tender process. When these steps are completed, we intend on finalizing the tentative financing commitments we have in place with two international investment banks and now potentially a single-family office.

TransAct intends on establishing the manufacturing of our proprietary reactors in Mexico within 6months of receiving the funds. We have already initiated discussions for a joint venture agreement with an ISO 9001 and ASME capable manufacturer. Our facility would supply the demand for both Mexico, South America, Central America, Canada and the USA.

ZEWOPtm can demonstrate to Mexico and the World a municipal scale solution to manufacturing using solid waste without emissions. Although we have been approached to build in other North American cities, we feel the market is best approached when the first ZEWOPtm is fully operational to garner government agency support. Once we break ground, we will make sure major municipalities throughout the US and Canada are aware of our process, so we get on their technology review lists. This will ensure a smoother entry into other North American markets,

Until the first revenues from operations come in, our corporate operations will continue to be funded by raising money through private placements or public offerings. We anticipate bringing on an expanded management team to oversee our operational growth throughout the upcoming year and plan to raise additional capital as required.



SUBSEQUENT EVENTS



None



RESULTS OF OPERATIONS



Results of Operations for Three Months Ending September 30, 2021, Compared to Three Months Ending September 30, 2020

We did not generate any material revenue from July 1, 2021, to September 30, 2021, as was the same for the three-month period in 2020. For the three months ended September 30, 2021, our general and administrative expenses were $79,405 compared to $78,825 for the same period in 2020. Expenses consisted primarily of compensation of $75,819. Compensation was $74,772 for the same period ending September 30, 2020.

Interest Expense for the three months ending September 30, 2021, was $395,461 compared to $395,830 for the same period in 2020. As a result, we have reported a net loss before taxes of ($474,866) for the Three Months ended September 30, 2021, compared to a loss of ($474,655) for the same period last year.

Results of Operations for the Nine Months Ended September 30, 2021, Compared to The Nine Months Ended September 30, 2020

We did not generate any revenue from January 1, 2021, to September 30, 2021, as was the same for the nine-month period in 2020. For the nine months ended September 30, 2021, our general and administrative expenses were $241,078 compared to $470,969 for the same period in 2020. The main expense was compensation, which was $229,890 for the period ending September 30, 2021 and $468,862 for the period ending September 30, 2020. Interest expense for the nine-month period ending September 30, 2021, was ($1,174,870) compared to ($1,175,135) for the same period ending September 30, 2020. As a result, we have reported a net loss of ($1,415,948) for the period ended September 30, 2021. Our total net loss from January 1, 2020, through September 30, 2020, was ($1,646,104).

Stock-Based Compensation Costs - There was $0 stock-based compensation recorded during the period ended September 30, 2021.

LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2021, our current assets are $410,405 made up of prepaid expenses of $294,763, receivables of $108,495 and $7,147 cash on hand. Our current liabilities consist of accounts payable in the amount of $344,473, accrued interest of $ 7,329,918 compensation payable of $ 3,327,895 and Notes payable, net of any discount of $381,110.

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NEED FOR ADDITIONAL FINANCING

We estimate our upcoming operating expenses to increase substantially as we transcend from development stage to operating stage and maybe as much as $24,000,000.00 over the coming year. We do not have any commitments for capital expenditures however we do anticipate entering into commitments to secure acquisitions. We believe we will need additional funds to cover our expenses and acquisitions for the next twelve months. Our need for capital may change dramatically as we pursue our business plan during that period. At present, we have no material understandings, commitments or agreements with respect to the acquisition of any business venture or capital commitments. Further, we cannot assure that we will be successful in consummating business opportunities on favourable terms, or we will be able to profitably manage any business opportunities. Should we require additional capital, we may seek additional advances from officers, sell common stock or find other forms of debt financing.

There is no guarantee the Company will not need to raise further significant capital over the next year, some of which may need to be done by way of selling equity in the Company or its subsidiaries. Depending on the market price and the terms that can be negotiated this will result in the dilution of current shareholders of the Company's stock or earnings from proposed plants.

© Edgar Online, source Glimpses

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