Attached files
As filed with the Securities and Exchange Commission on December 9, 2010
Registration No. 333-169485
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
Amendment No 3 to
FORM S-1
Registration Statement
Under the Securities Act of 1934
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JA ENERGY
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(Name of small business issuer in its charter)
NEVADA 2869 27-3349143
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(State or other Jurisdiction of (Primary Standard (I.R.S. Employer
Incorporation or Organization) Industrial Identification No.)
Classification
Number)
4800 W. Dewey Drive, Las Vegas, NV 89118
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(Address of Principal Executive Offices) (Zip Code)
James Lusk
4800 W. Dewey Drive
Las Vegas, NV 89118
Telephone: (702) 358-8775
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(Name, address and telephone number of agent for service)
Copies to:
Thomas C. Cook, Esq.
Law Offices of Thomas C. Cook
500 N. Rainbow, Suite 300
Las Vegas, NV 89107
Phone: (702) 221-1925
Fax: (702) 221-1963
Approximate date of proposed commencement of sale to the public: As soon as
practicable after the Registration Statement becomes effective.
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box: [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
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If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
Indicate by checkmark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.
See the definitions of "large accelerated filer," "accelerated filer," and
"smaller reporting company" in Rule 12b-2 of the Exchange Act.
[ ] Large accelerated filer [ ] Accelerated filer
[ ] Non-accelerated filer [X] Smaller reporting company
(Do not check if a
smaller reporting Company)
Calculation of Registration Fee
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TITLE OF EACH PROPOSED PROPOSED
CLASS OF MAXIMUM MAXIMUM
SECURITIES AMOUNT OFFERING AGGREGATE AMOUNT OF
TO BE TO BE PRICE PER OFFERING REGISTRATION
REGISTERED RESISTERED SHARE(1) PRICE(1) FEE
Common stock
$0.001 par value 65,846,667 (1) $0.01(2) $658,466.67 $ 46.95
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TOTAL 65,846,667 N/A $658,466.67 $ 46.95
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(1) The shares included herein are being distributed to the stockholders of
Reshoot Production Company. Reshoot Production Company shareholders will not
be charged or assessed for JA Energy Common Stock, and Reshoot Production Co.
shareholders will receive no consideration for the distribution of the
foregoing shares in the spin-off.
(2) There currently exists no market for JA Energy's Common Stock. Although
the registrant's common stock has a par value of $0.001, the registrant
believes that the calculations offered pursuant to Rule 457(f)(2)
are not applicable and, as such, the registrant has valued the common stock,
in good faith and for purposes of the registration fee, based on $0.01 per
share. In the event of a stock split, stock dividend or similar transaction
involving our common stock, the number of shares registered shall
automatically be increased to cover the additional shares of common stock
issuable pursuant to Rule 416 under the Securities Act of 1933, as amended.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
ii
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THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING
AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION DATED ________, 2010
JA Energy
65,846,667 shares of common stock
This prospectus relates to the distribution by dividend to all of the
original stockholders of Reshoot Production Co., 65,846,667 shares of Reshoot
Production's common stock (the "Distribution"). JA Energy is not selling
any shares of common stock in this distribution and therefore will not
receive any proceeds from this distribution. All costs associated with this
registration will be borne by JA Energy.
JA Energy is currently a wholly-owned subsidiary of Reshoot Production
Company and after the distribution JA Energy and Reshoot Production
Company will be independent public companies, under common control immediately
following the distribution of shares in the spin-off transaction.
Subject to the Notice of Effectiveness of this Registration Statement, the
holders of Reshoot Production Company common stock will receive one-point-
four (1:1.4) shares of JA Energy Class A Common Stock for every one (1) share
of Reshoot Production Company common stock that they hold on [date], the
record date. Following the Distribution, Reshoot Production Company will not
own any shares of JA Energy.
You may be required to pay income tax on all or a portion of the value of
the shares of JA Energy Class A Common Stock received by you in connection
with this Distribution.
Currently, no public market exists for JA Energy common stock and a public
market may not develop, or, if any market does develop, it may not be
sustained. Our common stock is not quoted on any exchange or in the
over-the-counter market. After this Registration Statement becomes
effective, we expect to have an application filed with the Financial Industry
Regulatory Authority (FINRA) for our common stock to be eligible for
quotation on the OTC-Bulletin Board. There are no assurance that our
application for quotation will be accepted by FINRA. Until our common stock
is quoted on the OTC-BB, the offering will be made at $0.01 per share and
thereafter at prevailing market prices or privately negotiated prices.
We are considered a shell company, the purchase of the securities offered
through this prospectus involves a high degree of risk.
SEE SECTION TITLED "RISK FACTORS" ON PAGE 10
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No underwriter or person has been engaged to facilitate the
Distribution in this offering.
The U. S. Securities and Exchange Commission and state securities regulators
have not approved or disapproved of these securities, or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is ___________, 2010.
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TABLE OF CONTENTS
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PAGE
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Part I
PROSPECTUS SUMMARY...................................................... 3
SUMMARY OF DISTRIBUTION................................................. 3
QUESTIONS AND ANSWERS ABOUT THE SPIN-OFF................................ 5
FORWARD-LOOKING STATEMENTS.............................................. 6
THE SPIN-OFF AND PLAN OF DISTRIBUTION.................................. 6
SUMMARY FINANCIAL INFORMATION...........................................10
RISK FACTORS............................................................10
RISK FACTORS RELATING TO OUR COMPANY....................................11
RISK FACTORS RELATING TO OUR COMMON SHARES..............................16
CAPITALIZATION .........................................................20
CERTAIN MARKET INFORMATION..............................................21
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION...............21
DESCRIPTION OF BUSINESS.................................................25
LEGAL PROCEEDINGS.......................................................38
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS............39
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES..........................44
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..........................44
SECURITY OWNERSHIP OF CERTAIN BENEFICAL OWNERS AND MANAGEMENT...........45
THE DISTRIBUTION........................................................47
MANNER OF EFFECTING THE DISTRIBUTION....................................48
FEDERAL INCOME TAX CONSIDERATIONS.......................................54
FEDERAL SECURITIES LAWS CONSEQUENCES....................................57
DESCRIPTION OF SECURITIES...............................................57
SHARES ELIGIBLE FOR FUTURE SALE.........................................59
DIVIDEND POLICY.........................................................62
TRANSFER AGENT..........................................................62
LEGAL MATTERS...........................................................62
EXPERTS.................................................................62
WHERE YOU CAN FIND MORE INFORMATION.....................................63
FINANCIAL STATEMENTS....................................................64
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PROSPECTUS SUMMARY
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The following summary highlights selected information contained in this
prospectus. Before making an investment decision, you should read the entire
prospectus carefully, including the "Risk Factors" section, the financial
statements and the notes to the financial statements.
Corporate Background
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Reshoot Production Company works with experienced growers throughout the
world that have a history of growing first quality fresh produce. The
Company's business focuses on the production and distribution of organic
cucumbers, tomatoes, and peppers.
Additionally, Reshoot Production plans to utilize greenhouse technology that
manages weather related risks. Management believes that organic grown products
are: 1) better for a person's health; 2) the products have improved taste and
quality; and 3) are socially responsible.
JA Energy will manufacture and sell the Modular Distillation Units ("MDU"),
and Hydroponics Greenhouse packages to individuals, non profit organizations
or companies. The company will organize and manage farm cooperatives for the
growing of Jerusalem Artichoke, which will be used in the MDU to produce
ethanol. The juice from the Jerusalem will be condensed into a syrup. The
syrup by-product of the harvest will be shipped to a modular distillation
unit for processing into ethanol. The growing of vegetables versus the
production of ethanol, requires the spin-off of JA Energy, so that management
can focus its efforts on different business objectives.
The Reshoot Production Company's directors and five largest shareholders, who
own approximately 94% of the issued and outstanding shares decided it was in
the best interest of Reshoot Production Co. and JA Energy shareholders to
spin-off JA Energy, in order to allow both companies to focus on their
different business plans.
SUMMARY OF DISTRIBUTION
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JA Energy is a wholly-owned subsidiary of Reshoot Production Co. incorporated
on August 26, 2010. The board of directors of Reshoot Production Co.
approved, subject to the effectiveness of a registration with the U. S.
Securities and Exchange Commission, a spin-off to Company shareholders on
one-point-four to one (1:1.4) basis for every share of Reshoot Production Co.
common stock, par value $0.001 owned. The Reshoot Production Company stock
dividend will be based on 47,033,334 shares of Reshoot Production Company
common stock issued and outstanding as of the record date.
The shares of JA Energy are owned by Reshoot Production Co., who will
distribute the JA Energy shares once the Form S-1 is effective with the U. S.
Securities and Exchange Commission. The shares will be distributed by Empire
Stock Transfer Co., Henderson, Nevada, which acts as our transfer agent.
Reshoot Production Co. will retain no ownership in JA Energy following the
spin-off. Further, JA Energy will no longer be a subsidiary of Reshoot
Production Company.
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The board of directors and management of Reshoot Production Company believe
that the Distribution is in the best interests of Reshoot Production and its
stockholders. Reshoot Production Co. believes that the Distribution will
enhance value for Reshoot Production Company stockholders and that the spin-
off of its Jerusalem Artichoke business into JA Energy may provide greater
access to capital by allowing the financial community to focus solely on each
business entity as a stand alone company and be better able to obtain
financing from third parties. Reshoot Production Company will continue to
focus on its business on the production and distribution of organic
cucumbers, tomatoes, and peppers, whereby JA Energy will focus its business
on producing ethanol from Jerusalem Artichokes.
Why JA Energy Sent This Document To You
JA Energy sent you this document because you were an owner of Reshoot
Production Co. common stock on [date] __, 2010. You will be entitled to
receive a Distribution of one-point-four (1.4) shares of Common Stock of JA
Energy, a wholly-owned subsidiary of Reshoot Production Company, for every
one (1) share of Reshoot Production Co. you own. No action is required on
your part to participate in the Distribution and you do not have to pay cash
or other consideration to receive your Reshoot Production Co. shares.
This document describes JA Energy's business, the relationship between
Reshoot Production Co. and JA Energy, and how this transaction benefits
Reshoot Production Co. and its stockholders, and provides other information
to assist you in evaluating the benefits and risks of holding or disposing of
the shares of JA Energy stock you will receive as part of this Distribution.
You should be aware of certain risks relating to the Distribution and JA
Energy's business, which are described in this document beginning on page 10.
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Questions And Answers About The Spin-Off
Q. How Many JA Energy Shares Will I Receive?
A. JA Energy will distribute to you one-point-four (1.4) share of our common
stock for every one (1) shares of Reshoot Production Co. you owned on [date]
____, 2010, the record date.
Q. What Are Shares Of JA Energy Worth?
A. The value of our shares will be determined by their trading price after
the spin-off. We do not know what the trading price will be and we can
provide no assurances as to value. After the spin-off, our shares will not
be listed on any stock exchange. We have not started the process of working
with a broker dealer to submit our application to be listed on the OTC-
Bulletin Board.
Q. What Is The History Of The Parent Company?
A. Reshoot Production Co. was incorporated on October 31, 2007. Reshoot
Reshoot Production Company works with experienced growers throughout the
world that have a history of growing first quality fresh produce. The
Company's business focuses on the production and distribution of organic
cucumbers, tomatoes, and peppers.
Additionally, Reshoot Productions plans to utilize greenhouse technology that
manages weather related risks. Management believes that organic grown
products are: 1) better for a person's health; 2) the products have improved
taste and quality; and 3) are socially responsible.
Q. What Do I Have To Do To Receive My JA Energy's Shares?
A. No action is required by you. You do not need to pay any money or
surrender your Reshoot Production Company common shares to receive our common
shares. Our transfer agent will mail your JA Energy common shares to
your record address as of the record date.
Q. When Can I Expect To Receive My Spin-off Shares in JA Energy?
A. Subject to the Notice of Effectiveness of this Registration Statement, by
the U. S. Securities & Exchange Commission, our transfer agent will mail you
a share certificate representing your shares. If you are not a record holder
of Reshoot Production Company stock because your shares are held on your
behalf by your stockbroker or other nominee, your shares of Reshoot
Production Company Common Stock should be credited to your account with your
stockbroker or nominee following the effectiveness of JA Energy's
registration statement.
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Forward-looking Statements
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This prospectus contains statements that plan for or anticipate the future.
Forward-looking statements include statements about our future business plans
and strategies, and most other statements that are not historical in nature.
In this prospectus, forward-looking statements are generally identified by
the words "anticipate," "plan," "believe," "expect," "estimate," and the
like. Although we believe that any forward-looking statements we make in this
prospectus are reasonable, because forward-looking statements involve future
risks and uncertainties, there are factors that could cause actual results to
differ materially from those expressed or implied.
About Us
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JA Energy was incorporated in Nevada on August 26, 2010 as a wholly-owned
subsidiary of Reshoot Production Co.
JA Energy plans to manufacture and sell Modular Distillation Units ("MDU")
for the decentralized production of ethanol, to be operated in conjunction
with a Hydroponics Greenhouse. The MDU/Greenhouse package will be marketed
to individuals, non profit organizations and companies. Additionally the
Company will organize and manage Jerusalem Artichoke growers cooperatives to
provide the operators of the MDU/Greenhouse units with Jerusalem Artichoke
syrup for the distillation of ethanol. See "JA Energy Business Plan" under
Description of Business.
Our principal offices are currently located at 4800 W. Dewey Drive,
Las Vegas, NV 89118. Our telephone number is (702) 358-8775.
THE SPIN-OFF AND PLAN OF DISTRIBUTION
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Distributing Company Reshoot Production Company., a Nevada
corporation. As used in this prospectus,
the term Reshoot Production includes Reshoot
Production Company unless the context
otherwise requires.
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Distributed Company JA Energy, a Nevada corporation
As used in this prospectus, the terms
JA Energy, the Company, we, our, us
and similar terms mean JA Energy.
JA Energy Shares Reshoot Production Company will distribute
to be Distributed to its stockholders an aggregate of
65,846,667 shares of Common Stock, $0.001
par value per share, of JA Energy. The
shares of JA Energy Common Stock distributed
will constitute 100% of the JA Energy Common
Stock outstanding after the Distribution.
Immediately following the Distribution,
Reshoot Production Co. will not own any
shares of JA Energy Common Stock, and
JA Energy will be an independent public
Company, under common control immediately
following the distribution of shares in the
spin-off transaction.
Record Date If you own Reshoot Production Co. shares at
the close of business on [date], 2010 (the
"Record Date"), then you will receive JA
Energy Common Stock in the Distribution.
Distribution Date You will receive your JA Energy, stock
certificate from our transfer agent.
The stock certificate will be mailed to you
after our Registration Statement becomes
effective. If you are not a record holder
of Reshoot Production Co. stock because such
shares are held on your behalf by your
stockbroker or other nominee, your JA Energy
Common Stock should be credited to your
account with your stockbroker or other
nominee after the Distribution date.
Following the Distribution, you may request
physical stock certificates if you wish, and
instructions for making that request will be
furnished with your account statement.
Distribution On the Distribution Date, the Distribution
agent identified below will begin
distributing certificates representing our
Common Stock to Reshoot Production Company
stockholders. You will not be required to
make any payment or take any other action
to receive your shares of our Common Stock.
7
Distribution Ratio Reshoot Production Co. will distribute to
its stockholders an aggregate of
65,846,667 shares of Common Stock of
JA Energy, based on 47,033,334
shares & Reshoot Production Company
outstanding on the record date. Therefore,
for every one (1) share of Reshoot Production
Company common stock that you own of record
on [date], 2010 you will receive
one-point-four (1.4) shares of JA Energy
Company Common Stock.
Distribution Agent Empire Stock Transfer Co. Their address is:
1859 Whitney Mesa Dr., Henderson, NV 89014.
Their telephone number is: (702) 818-5898.
Transfer Agent and Empire Stock Transfer Co. Their address is:
Registrar for Reshoot 1859 Whitney Mesa Dr., Henderson, NV 89014.
Production Shares Their telephone number is: (702) 818-5898.
Trading Market We are not trading on any exchange.
Dividend Policy Reshoot Production Co. has not paid cash
dividends in the past, and we anticipate that
following the Distribution neither Reshoot
Production nor JA Energy will pay cash
dividends. However, no formal action has
been taken with respect to future dividends,
and the declaration and payment of dividends
by Reshoot Production and JA Energy will be
at the sole discretion of their respective
boards of directors.
Risk Factors The Distribution and ownership of our Common
Stock involve various risks. You should read
carefully the factors discussed under "Risk
Factors" beginning on page 10. Several of
the most significant risks of the
Distribution include
o The Distribution may cause the price of
Reshoot Production Co. Common Stock to
decline.
o There has not been a prior trading market
for JA Energy Common Stock and a
trading market for our Common Stock may
not develop.
o The Distribution of Reshoot Production Common
Stock may result in tax liability to you.
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o Reshoot Production Co. and/or JA Energy
may in the future, sell or issue
unregistered convertible securities
which are convertible into common
shares of their common stock without
limitations on the number of common
shares the securities are convertible into,
which could dilute the value of your
holdings and could have other negative
impacts on your investment.
Federal Income Tax Reshoot Production and JA Energy do not
Consequences intend for the Distribution to be tax-free
for U.S. federal income tax purposes. You
may be required to pay income tax on the
value of your shares of JA Energy Common
Stock. You are advised to consult your own
tax advisor as to the specific tax
consequences of the Distribution.
Our Relationship with After the Distribution, Reshoot Production
Reshoot Production Co. after and JA Energy will have different management
the Distribution and directors and Reshoot Production Co. will
have no ownership in JA Energy
Board of Directors of After the Distribution, JA Energy,
JA Energy is expected to have an initial board of three
directors. The initial directors will serve
a one-year term.
Management of JA Energy The management of JA Energy will be different
than the management of Reshoot Productions as
both businesses have different end objectives
to achieve.
Stockholder Inquiries Any persons having inquiries relating to the
Distribution should contact the Shareholder
Services department of the distribution agent
at (702) 818-5898 or JA Energy, in writing at
JA Energy, 4800 W. Dewey Drive, Las Vegas,
NV 89118, or by telephone at (702) 358-8775.
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SUMMARY FINANCIAL INFORMATION
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For The Period
From Inception
(August 26, 2010)
to
August 31, 2010
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Statement of Operations Data:
Revenues $ -
Net Loss $ (2,825)
Net Loss Per Common Share - Basic $ (0.00)
Balance sheet data:
August 31, 2010
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Working Capital $ 0
Total Assets $ 0
Accrued expenses (audit fees) $ 2,500
Additional paid-in capital $ 325
Deficit accumulated during development stage $ (2,825)
Total stockholders' equity $ (2,500)
Total liabilities and stockholders' equity $ 0
RISK FACTORS
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All parties and individuals reviewing this prospectus and considering us as
an investment should be aware of the financial risk involved. When deciding
whether to invest or not, careful review of the risk factors set forth herein
and consideration of forward-looking statements contained in this
registration statement should be adhered to. Prospective investors should be
aware of the difficulties encountered as we face all the risks including
competition, and the need for additional working capital. If any of the
following risks actually occur, our business, financial condition, results of
operations and prospects for growth would likely suffer. As a result, you
could lose all or part of your investment.
You should read the following risk factors carefully before purchasing our
common stock.
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RISK FACTORS RELATING TO OUR COMPANY
------------------------------------
1. SINCE WE ARE A DEVELOPMENT STAGE COMPANY, AND WE HAVE NOT GENERATED ANY
REVENUES, THERE ARE NO ASSURANCES THAT OUR BUSINESS PLAN WILL EVER BE
SUCCESSFUL.
Our company was incorporated on August 26, 2010, we are a spin-off of Reshoot
Production Company. At this time we are considered a shell company. We have
realized no revenues. We have no solid operating history upon which an
evaluation of our future prospects can be made. Based upon current plans, we
expect to incur operating losses in future periods as we incur significant
expenses associated with the initial startup of our business. Further, there
are no assurances that we will be successful in realizing revenues or in
achieving or sustaining positive cash flow at any time in the future. Any
such failure could result in the possible closure of our business or force us
to seek additional capital through loans or additional sales of our equity
securities to continue business operations, which would dilute the value of
any shares you purchase in this Distribution.
2. IF OUR BUSINESS PLAN IS NOT SUCCESSFUL, WE MAY NOT BE ABLE TO CONTINUE
OPERATIONS AS A GOING CONCERN AND OUR STOCKHOLDERS MAY LOSE THEIR ENTIRE
INVESTMENT IN US.
As discussed in the Notes to Financial Statements included in this
Registration Statement, at August 31, 2010 we had no working capital, no
assets, and no stockholders' equity. In addition, we had a net loss of
approximately $(2,825) for the period inception (August 26, 2010) to
August 31, 2010.
These factors raise substantial doubt that we will be able to continue
operations as a going concern, and our independent auditors included an
explanatory paragraph regarding this uncertainty in their report on our
financial statements for the period inception (August 26, 2010) to August 31,
2010. Our ability to continue as a going concern is dependent upon our
generating cash flow sufficient to fund operations and reducing operating
expenses. Our business plans may not be successful in addressing these
issues. If we cannot continue as a going concern, our stockholders may lose
their entire investment in us.
3. WE EXPECT LOSSES IN THE FUTURE BECAUSE WE HAVE GENERATED NO REVENUE.
We have generated no revenues to date, we expect losses over the next
eighteen to twenty-four months based on the expenses associated in executing
our business plan. We cannot guarantee that we will ever be successful in
generating significant revenues in the future. We recognize that if we are
unable to generate significant revenues, we will not be able to earn profits
or continue operations as a going concern. There is no history upon which to
base any assumption as to the likelihood that we will prove successful, and
we can provide investors with no assurance that we will generate any
operating revenues or ever achieve profitable operations.
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4. WE HAVE NO OPERATING HISTORY AS AN INDEPENDENT PUBLIC COMPANY AND WE
MAY BE UNABLE TO OPERATE PROFITABLY AS A STAND-ALONE COMPANY.
JA Energy does not have an operating history as an independent public
company. Following the Distribution, JA Energy will maintain its own credit
and banking relationships and perform its own financial and investor
relations functions. JA Energy may not be able to successfully put in place
the financial, administrative and managerial structure necessary to operate
as fully reporting independent public company, and the development of such
structure will require a significant amount of management's time and other
resources.
5. OUR OFFICERS AND DIRECTORS HAVE NO PRIOR EXPERIENCE IN RUNNING A FULLY
REPORTING COMPANY.
Our executive officers have no experience in operating a fully reporting
company, and no experience converting artichokes to ethanol. Due to their
lack of experience, our executive officers may make wrong decisions
and choices regarding the conversion of artichokes to ethanol on behalf of
the Company. Consequently, our Company may suffer irreparable harm due to
management's lack of experience in this industry. As a result we may have to
suspend or cease operations which will result in the loss of your investment.
6. OUR BUSINESS MAY REQUIRE ADDITIONAL CAPITAL AND IF WE DO OBTAIN
ADDITIONAL FINANCING OUR THEN EXISTING SHAREHOLDERS MAY SUFFER SUBSTANTIAL
DILUTION.
We may require additional capital to finance our growth, purchase
technologies and build our infrastructure. Our capital requirements may be
influenced by many factors, including:
o the demand for our products and services;
o the timing and extent of our investment in new technology;
o the level and timing of revenue;
o the expenses of sales and marketing and new product development;
o the cost of facilities to accommodate a growing workforce;
o the extent to which competitors are successful in developing new
products and increasing their market shares; and
o the costs involved in maintaining and enforcing intellectual property
rights.
To the extent that our resources are insufficient to fund our future
activities, we may need to raise additional funds through public or private
financing. However, additional funding, if needed, may not be available on
terms attractive to us, or at all. Our inability to raise capital when
needed could have a material adverse effect on our business, operating
results and financial condition. If additional funds are raised through the
issuance of equity securities, the percentage ownership of our company by our
current shareholders would be diluted.
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7. WE MAY NOT BE ABLE TO RAISE SUFFICIENT CAPITAL OR GENERATE ADEQUATE
REVENUE TO MEET OUR OBLIGATIONS AND FUND OUR OPERATING EXPENSES.
Failure to raise adequate capital and generate adequate sales revenues to
meet our obligations and develop and sustain our operations could result in
reducing or ceasing our operations. Additionally, even if we do raise
sufficient capital and generate revenues to support our operating expenses,
there can be no assurances that the revenue will be sufficient to enable us
to develop business to a level where it will generate profits and cash flows
from operations. These matters raise substantial doubt about our ability to
continue as a going concern. Our independent auditors currently included an
explanatory paragraph in their report on our financial statements regarding
concerns about our ability to continue as a going concern.
8. JERUSALEM ARTICHOKES ARE NOT CONSIDERED A COMMERCIAL PLANT; THEREFORE,
WE SHALL BE UNABLE TO INSURE OUR CROP AND FACE RISK OF LOSS.
Since Jerusalem Artichokes are not considered a commercial plant, we will
most likely be unable to purchase insurance to protect us from risk of loss.
For example, adverse weather conditions would most likely adversely affect
our crop yields and subsequently hurt our ethanol production. Therefore,
since we are unable to carry insurance we face risks related to poor crop
yields that have the potential to hurt all aspects of our business
operations.
9. IF WE ARE UNABLE TO ATTRACT KEY EMPLOYEES, WE MAY BE UNABLE TO SUPPORT
THE GROWTH OF OUR BUSINESS.
Our success depends in part on our ability to attract and retain competent
personnel. We must hire qualified managers, engineers, accounting, human
resources, operations and other personnel. Competition for employees in the
ethanol industry is intense. We cannot assure you that we will be able to
attract and maintain qualified personnel. If we are unable to hire and
maintain productive and competent personnel, the amount of ethanol we produce
may decrease and we may not be able to efficiently operate our ethanol
business. Competition for talent among companies in the our industry is
intense and we cannot assure you that we will be able to continue to attract
or retain the talent necessary to support the growth of our business.
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10. OUR FIVE LARGEST SHAREHOLDERS OWN APPROXIMATELY 94% OF THE CONTROLLING
INTEREST IN OUR VOTING STOCK AND INVESTORS WILL NOT HAVE ANY VOICE IN OUR
MANAGEMENT, WHICH COULD RESULT IN DECISIONS ADVERSE TO OUR GENERAL
SHAREHOLDERS.
Our five largest shareholders, beneficially have the right to vote
approximately 94% of our outstanding common stock. As a result, these
shareholders will have the ability to control substantially all matters
submitted to our stockholders for approval including:
a) election of our board of directors;
b) removal of any of our directors;
c) amendment of our Articles of Incorporation or bylaws; and
d) adoption of measures that could delay or prevent a change in control or
impede a merger, takeover or other business combination involving us.
As a result of their ownership and positions, these five individuals have the
ability to influence all matters requiring shareholder approval, including
the election of directors and approval of significant corporate transactions.
In addition, the future prospect of sales of significant amounts of shares
held by our director and executive officer could affect the market price of
our common stock if the marketplace does not orderly adjust to the increase
in shares in the market and the value of your investment in the company may
decrease. Management's stock ownership may discourage a potential acquirer
from making a tender offer or otherwise attempting to obtain control of us,
which in turn could reduce our stock price or prevent our stockholders from
realizing a premium over our stock price.
11. THE USE AND DEMAND FOR ETHANOL IS DEPENDENT ON VARIOUS ENVIRONMENTAL
REGULATIONS AND GOVERNMENTAL PROGRAMS THAT COULD CHANGE AND CAUSE THE DEMAND
FOR ETHANOL TO DECLINE.
There are various federal and state laws, regulations and programs that have
led to increased use of ethanol in fuel. These laws, regulations and
programs are constantly changing. Federal and state legislators and
environmental regulators could adopt or modify laws, regulations or programs
that could adversely affect the use of ethanol. Certain states oppose the
use of ethanol because they must ship ethanol in from other corn producing
states, which could significantly increase gasoline prices in the state.
Material changes in environmental regulations regarding the use of methyl
tertiary butyl ethers or the required oxygen content of automobile emissions
or the enforcement of such regulations could decrease the need to use
ethanol. For example, the recently enacted Energy Policy Act of 2005
eliminated the reformulated oxygenate standards under the Clean Air Act.
Future changes in the law may further postpone or waive requirements to use
ethanol.
14
Other laws, regulations and programs provide economic incentives to ethanol
producers and users. The passage of pending federal or state energy
legislation or any other revocation or amendment of any one or more of these
laws, regulations or programs could have a significant adverse effect on the
ethanol industry and our business. We cannot assure you that any of these
laws, regulations or programs will continue in the future. Some of these
laws, regulations and programs will expire under their terms unless extended,
such as the federal partial excise tax exemption for gasoline blenders who
use ethanol in their gasoline, which is scheduled to expire in December 2010.
Government support of the ethanol industry could change and Congress and
state legislatures could remove economic incentives that enable ethanol to
compete with other fuel additives. The elimination or reduction of
government subsidies and tax incentives could cause the cost of ethanol-
blended fuel to increase. The increased price could cause consumers to avoid
ethanol-blended fuel and cause the demand for ethanol to decline.
12. IN THE FUTURE, WE WILL INCUR INCREMENTAL COSTS AS A RESULT OF OPERATING
AS A PUBLIC COMPANY, AND OUR MANAGEMENT WILL BE REQUIRED TO DEVOTE
SUBSTANTIAL TIME TO COMPLIANCE INITIATIVES.
Upon the effectiveness of our registration, we will incur legal, accounting and
other expenses as a fully-reporting public company. Moreover, the Sarbanes-
Oxley Act of 2002 (the "Sarbanes-Oxley Act"), as well as new rules subsequently
implemented by the SEC, have imposed various new requirements on public
companies, including requiring changes in corporate governance practices. Our
management will need to devote a substantial amount of time to these new
compliance initiatives. Moreover, these rules and regulations will increase
our legal and financial compliance costs and will make some activities more
time-consuming and costly. We expect to incur approximately $10,000 of
incremental operating expenses in 2010, our first year of being a public
company. We project that the total incremental operating expenses of being a
public company will be approximately $12,000 for 2011. The incremental costs
are estimates, and actual incremental expenses could be materially different
from these estimates.
The Sarbanes-Oxley Act also requires, among other things, that we maintain
effective internal controls for financial reporting and disclosure controls
and procedures. We must perform system and process evaluation and testing of
our internal controls over financial reporting to allow management and our
independent registered public accounting firm to report on the effectiveness
of our internal controls over financial reporting, as required by the
Sarbanes-Oxley Act. Our testing, or the subsequent testing by our
independent registered public accounting firm, may reveal deficiencies in our
internal controls over financial reporting that are deemed to be material
weaknesses. Our compliance with Sarbanes-Oxley will require that we incur
substantial accounting expense and expend significant management efforts.
Moreover, if we are not able to comply with the requirements of Sarbanes-
Oxley in a timely manner, or if we or our independent registered public
accounting firm identifies deficiencies in our internal controls over
financial reporting that are deemed to be material weaknesses, the market
price of our stock could decline, and we could be subject to sanctions or
investigations by the SEC or other regulatory authorities, which would
require additional financial and management resources.
15
RISKS RELATING TO OUR COMMON SHARES
-----------------------------------
13. WE MAY, IN THE FUTURE, ISSUE ADDITIONAL COMMON SHARES, WHICH WOULD
REDUCE INVESTORS' PERCENT OF OWNERSHIP AND MAY DILUTE OUR SHARE VALUE.
Our Articles of Incorporation authorize the issuance of 70,000,000 shares of
common stock and 5,000,000 preferred shares. The future issuance of common
stock may result in substantial dilution in the percentage of our common
stock held by our then existing shareholders. We may value any common stock
issued in the future on an arbitrary basis. The issuance of common stock for
future services or acquisitions or other corporate actions may have the
effect of diluting the value of the shares held by our investors, and might
have an adverse effect on any trading market for our common stock.
14. IF OUR SHARES OF COMMON STOCK ARE QUOTED ON A PUBLIC MARKET, THEY WILL
IN ALL LIKELIHOOD BE PENNY STOCKS.
The Securities Enforcement and Penny Stock Reform Act of 1990 requires
additional disclosures relating to the market for penny stocks in connection
with trades in any stock defined as a penny stock. SEC regulations generally
define a penny stock to be an equity security that has a market or exercise
price of less than $5.00 per share, subject to certain exceptions. Such
exceptions include any equity security listed on NASDAQ and any equity
security issued by an issuer that has net tangible assets of at least
$100,000, if that issuer has been in continuous operation for three years.
Unless an exception is available, the regulations require delivery, prior to
any transaction involving a penny stock, of a disclosure schedule explaining
the penny stock market and the associated risks. The penny stock rules
require a broker-dealer, prior to a transaction in a penny stock not
otherwise exempt from the rules, to deliver a standardized risk disclosure
document that provides information about penny stocks and the nature and
level of risks in the penny stock market. The broker-dealer must also provide
the customer with current bid and offer quotations for the penny stock,
details of the compensation of the broker-dealer and its salesperson in the
transaction, and monthly account statements showing the market value of each
penny stock held in the customer's account. The bid and offer quotations and
broker-dealer and salesperson compensation information must be given to the
customer orally or in writing prior to effecting the transaction and must be
given in writing before or with the customer's confirmation. In addition, the
penny stock rules require that prior to a transaction in a penny stock not
otherwise exempt from such rules, the broker-dealer must make a special
written determination that the penny stock is a suitable investment for the
purchaser and receive the purchaser's written agreement to the transaction.
These disclosure requirements may have the effect of reducing the level of
trading activity in the secondary market for securities that become subject
to the penny stock rules. Since our securities are highly likely to be
subject to the penny stock rules, should a public market ever develop, any
market for our shares of common stock may not be liquid.
16
15. AS THERE IS NO PUBLIC MARKET FOR OUR COMMON SHARES, THEY ARE AN ILLIQUID
INVESTMENT AND INVESTORS MAY NOT BE ABLE TO SELL THEIR SHARES.
No market currently exists for our securities and we cannot assure you that
such a market will ever develop, or if developed, will be sustained. Our
common stock is not currently eligible for quotation on any stock exchange
and there can be no assurance that our common stock will be listed on any
stock exchange in the future. We intend to apply for admission to quotation
of our securities on the OTC-Bulletin Board after this prospectus is declared
effective by the SEC. If for any reason our common stock is not quoted on
the OTC-Bulletin Board or a public trading market does not otherwise develop,
purchasers of the shares may have difficulty selling their common stock
should they desire to do so. As of the date of this filing, there have been
no discussions or understandings between JA Energy or anyone acting on our
behalf with any market maker regarding participation in a future trading
market for our securities. If no market is ever developed for our common
stock, it will be difficult for you to sell any shares you purchase in this
Distribution. In such a case, you may find that you are unable to achieve
any benefit from your investment or liquidate your shares without
considerable delay, if at all. In addition, if we fail to have our common
stock quoted on a public trading market, your common stock will not have a
quantifiable value and it may be difficult, if not impossible, to ever resell
your shares, resulting in an inability to realize any value from your
investment. If no market for our shares materializes, you may not be able to
sell your shares or may have to sell your shares at a significantly lower
price.
The Company's common stock could be subject to wide fluctuations in response
to variations in quarterly results of operations, announcements of
technological innovations or new solutions by the Company or its competitors,
general conditions in e-commerce and supply chain solutions industry, and
other events or factors, many of which are beyond the Company's control. In
addition, the stock market has experienced price and volume fluctuations,
which have affected the market price for many companies in industries similar
or related to that of the Company, which have been unrelated to the operating
performance of these companies. These market fluctuations may have a
material adverse effect on the market price of the Company's common stock if
it ever becomes tradable.
16. BECAUSE WE DO NOT INTEND TO PAY ANY CASH DIVIDENDS ON OUR COMMON STOCK,
OUR STOCKHOLDERS WILL NOT BE ABLE TO RECEIVE A RETURN ON THEIR SHARES UNLESS
THEY SELL THEM.
We intend to retain any future earnings to finance the development and
expansion of our business. We do not anticipate paying any cash dividends on
our common stock in the foreseeable future. Unless we pay dividends, our
stockholders will not be able to receive a return on their shares unless they
sell them. There is no assurance that stockholders will be able to sell
shares when desired.
17
17. RULE 144 SAFE HARBOR IS UNAVAILABLE FOR THE RESALE OF SHARES ISSUED BY
US UNLESS AND UNTIL WE CEASED TO BE A SHELL COMPANY AND HAVE SATISFIED THE
REQUIREMENTS OF RULE 144(I)(1)(2).
JA Energy is a "shell company" as defined by Rule 12b-2 promulgated under the
Exchange Act. Accordingly, the securities in this offering can only be
resold through registration under the Securities Act, Section 4(1) of the
Securities Act, if available, for non-affiliates, or by meeting the
conditions of Rule 144(i) promulgated under the Securities Act. A "shell
company" means a registrant, other than an asset-backed issuer, that has:
o No or nominal operations; and
Either,
o no or nominal assets;
o assets consisting solely of cash and cash equivalents; or
o assets consisting of any amount of cash and cash equivalents and
nominal other assets.
The provisions of Rule 144(i) providing for the six month holding period are
not available for the resale of securities initially issued by a "shell
company."
Rule 144 safe harbor is unavailable for the resale of shares issued by us
unless and until we have ceased to be a shell company and have satisfied the
requirements of Rule 144(i)(1)(2). Notwithstanding paragraph (i)(1) of
Rule 144, if the issuer of the securities previously had been shell company
described in paragraph (i)(1)(i) but has ceased to be shell company
described in paragraph (i)(1)(i); is subject to the reporting requirements
of Section 13 or 15(d) of the Exchange Act; has filed all reports and other
materials required to be filed by Section 13 or 15(d) of the Exchange Act,
as applicable, during the preceding 12 months (or for such shorter period
that the issuer was required to file such reports and materials), other than
Form 8-K reports, and has filed current "Form 10 information" with the SEC
reflecting its status as an entity that is no longer shell company described
in paragraph (i)(1)(i), then those securities may be sold subject to the
requirements of Rule 144 after one year has elapsed from the date that the
issuer filed "Form 10 information" with the SEC.
The term "Form 10 information" means the information that is required by SEC
Form 10, to register under the Exchange Act each class of securities being
sold under Rule 144. The Form 10 information is deemed filed when the
initial filing is made with the SEC.
In order for Rule 144 to be available, we must have certain information
publicly available. We plan to publish information necessary to permit
transfer of shares of our common stock in accordance with Rule 144 of the
Securities Act, inasmuch as we have filed the registration statement with
respect to this prospectus.
18
18. WE MAY ISSUE SHARES OF PREFERRED STOCK IN THE FUTURE THAT MAY ADVERSELY
IMPACT YOUR RIGHTS AS HOLDERS OF OUR COMMON STOCK.
Our articles of incorporation authorize us to issue up to 5,000,000 shares of
preferred stock. Accordingly, our board of directors will have the authority
to fix and determine the relative rights and preferences of preferred shares,
as well as the authority to issue such shares, without further stockholder
approval. As a result, our board of directors could authorize the issuance
of a series of preferred stock that would grant to holders preferred rights
to our assets upon liquidation, the right to receive dividends before
dividends are declared to holders of our common stock, and the right to the
redemption of such preferred shares, together with a premium, prior to the
redemption of the common stock. To the extent that we do issue such
additional shares of preferred stock, your rights as holders of common stock
could be impaired thereby, including, without limitation, dilution of your
ownership interests in us. In addition, shares of preferred stock could be
issued with terms calculated to delay or prevent a change in control or make
removal of management more difficult, which may not be in your interest as
holders of common stock.
19. WE WILL INCUR ONGOING COSTS AND EXPENSES FOR SEC REPORTING AND
COMPLIANCE, WITHOUT REVENUE WE MAY NOT BE ABLE TO REMAIN IN COMPLIANCE,
MAKING IT DIFFICULT FOR INVESTORS TO SELL THEIR SHARES, IF AT ALL.
We plan to contact a market maker immediately following the effectiveness of
our Registration Statement and have them file an application on our behalf to
have the shares quoted on the OTC Electronic Bulletin Board. To be eligible
for quotation on the OTCBB, issuers must remain current in their filings with
the SEC. Market Makers are not permitted to begin quotation of a security
whose issuer does not meet this filing requirement. Securities already
quoted on the OTCBB that become delinquent in their required filings will be
removed following a 30 or 60 day grace period if they do not make their
required filing during that time. In order for us to remain in compliance
we will require future revenues to cover the cost of these filings, which
could comprise a substantial portion of our available cash resources. If we
are unable to generate sufficient revenues to remain in compliance it may be
difficult for you to resell any shares you may purchase, if at all.
19
CAPITALIZATION
--------------
The following table sets forth, as of August 31, 2010, the capitalization
of the Company on an actual basis. This table should be read in conjunction
with the more detailed financial statements and notes thereto included
elsewhere herein.
August 31, 2010
------------------
Current liabilities:
Accrued expense $ 2,500
-------------
Total current liabilities 2,500
Stockholders' deficit:
Preferred stock, $0.001 par value, 5,000,000
shares authorized, none issued -
Common stock, $0.001 par value, 70,000,000
shares authorized, none issued and outstanding
as of 8/31/10 -
Additional paid-in capital 325
Deficit accumulated during development
stage (2,825)
-------------
Total stockholders' deficit (2,500)
-------------
Total liabilities and stockholders' deficit $ -
=============
20
CERTAIN MARKET INFORMATION
--------------------------
There currently exists no public trading market for our common stock. We do
not intend to develop a public trading market until the spin-off registration
has been completed. There can be no assurance that a public trading market
will develop at that time or be sustained in the future. Without an active
public trading market, you may not be able to liquidate your shares without
considerable delay, if at all. If a market does develop, the price for our
securities may be highly volatile and may bear no relationship to our actual
financial condition or results of operations. Factors we discuss in this
prospectus, including the many risks associated with an investment in our
company, may have a significant impact on the market price of our common
stock. Also, because of the relatively low price of our common stock, many
brokerage firms may not effect transactions in the common stock.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
---------------------------------------------------------
Certain statements contained in this prospectus, including statements
regarding the anticipated development and expansion of our business, our
intent, belief or current expectations, primarily with respect to the future
operating performance of JA Energy and the services we expect to offer and
other statements contained herein regarding matters that are not historical
facts, are "forward-looking" statements. Future filings with the U. S.
Securities and Exchange Commission, future press releases and future oral or
written statements made by us or with our approval, which are not statements
of historical fact, may contain forward-looking statements, because such
statements include risks and uncertainties, actual results may differ
materially from those expressed or implied by such forward-looking
statements.
All forward-looking statements speak only as of the date on which they are
made. We undertake no obligation to update such statements to reflect events
that occur or circumstances that exist after the date on which they are made.
This section must be read in conjunction with the Audited Financial
Statements included in this prospectus.
21
Overview
--------
JA Energy plans to manufacture and sell Modular Distillation Units ("MDU")
for the decentralized production of ethanol, to be operated in conjunction
with a Hydroponics Greenhouse. The MDU/Greenhouse package will be marketed
to individuals, non profit organizations and companies. Additionally the
Company will organize and manage Jerusalem Artichoke growers cooperatives
to provide the operators of the MDU/Greenhouse units with Jerusalem
Artichoke syrup for the distillation of ethanol.
There are no waste products associated with Jersuleum Artichoke, in that the
one hundred percent of the crop is utilized as either ethanol, the pulp of
the stalks are used for cattle feed and the root tubers are used as seed for
planting next seasons crop.
Results of Operations for Period Ending August 31, 2010
-------------------------------------------------------
We earned no revenues since our inception on August 26, 2010 through
August 31, 2010. Management does not expect JA Energy to be profitable
for at least eighteen to twenty-four months.
For the period of inception through August 31, 2010 we generated no income.
Since our inception on August 26, 2010, we experienced a net loss of
$(2,825). Our loss was attributed to organizational expenses, specifically
incorporation fees in the State of Nevada. We anticipate our operating
expenses will increase as we build our operations. Some of our increased
expenses will be attributed to professional fees to be incurred in connection
with the filing of a registration statement with the U. S. Securities
Exchange Commission under the Securities Act of 1933. We anticipate our
ongoing operating expenses will also increase once we become a reporting
company under the Securities Exchange Act of 1934.
Revenues
--------
We generated no revenues for the period from inception (August 26, 2010)
through August 31, 2010. We anticipate, but there are no assurances, that we
will be generating revenues in the in the next eighteen to twenty-four
months.
22
Liquidity and Capital Resources
-------------------------------
Our balance sheet as of August 31, 2010 reflects no assets and $2,500 in
current liabilities.
Notwithstanding, we anticipate generating losses and therefore we may be
unable to continue operations in the future. We anticipate we will require
additional capital up to approximately $1,500,000 and we would have to issue
debt or equity or enter into a strategic arrangement with a third party. We
intend to try and raise capital through a private offering after this
registration statement is declared effective and our shares are quoted on the
Over the Counter Bulletin Board. There can be no assurance that additional
capital will be available to us. We currently have no agreements,
arrangements or understandings with any person to obtain funds through bank
loans, lines of credit or any other sources.
Future Financings
-----------------
We anticipate continuing to rely on equity sales of our common shares in
order to continue to fund our business operations. Issuances of additional
shares will result in dilution to our existing shareholders. There is no
assurance that we will achieve any additional sales of our equity
securities or arrange for debt or other financing to fund our exploration and
development activities.
Management anticipates JA Energy needs to raise $1,500,000 in future
offerings of our common stock. The funds would be used to acquire
businesses, marketing, and client development. In the event we are unable to
raise $1,500,000, we may be unable to conduct our business operations and may
consequently go out of business. There are no formal or informal agreements
to attain such financing and we can not assure you that any financing can be
obtained. If we are unable to raise these funds, we will not be able to
implement any of our proposed business activities and may be forced to cease
operations. The table below illustrates our business plan that constitute
top priorities. Each material event or milestone listed in the table below
will be required until revenues are generated. Each step needs to be
completed before we can move on to the next step with these milestones.
Therefore, we are unable to provide a timeline, in that, if one step is not
achieved, the remaining steps cannot be completed.
23
Anticipated
Manner time needed to
Milestone of achievement complete milestone
----------------------------------------------------------------------------
1. Business plan Prepared by officer of the Already completed
developed Company
2. Separate company Spin-off of Subsidiary In process
formed with own
management
3. Company becomes Files Registration In process
non-deficient with SEC and completes
fully reporting comments
4. Broker-dealer Company seeks a Following
applies for market maker Effectiveness
OTC-BB listing of Registration
5. Business plan Pipe transaction to Six months after
fully funded raise $1,500,000 (stock OTC-BB listing
must be trading)
6. The Company Business fully 18-24 months
operates at a operational after funding
profit
Going Concern Consideration
---------------------------
Our independent auditors included an explanatory paragraph in their report on
the accompanying financial statements regarding concerns about our ability to
continue as a going concern. Our financial statements contain additional
note disclosures describing the circumstances that lead to this disclosure by
our independent auditors.
Off-Balance Sheet Arrangements
------------------------------
We have no off-balance sheet arrangements.
24
DESCRIPTION OF BUSINESS
-----------------------
Corporate History
-----------------
The Company was organized August 26, 2010 (Date of Inception) under the laws
of the State of Nevada, as JA Energy. The Company was incorporated as a
subsidiary of Reshoot Production Company, a Nevada corporation. At this
time, we consider ourselves to be a shell company. We do not consider
ourselves to be a blank check company as we do not have any intention to
engage in a reverse merger with any entity in an unrelated industry.
JA Energy Business Plan
-----------------------
JA Energy will manufacture and sell the Modular Distillation Units ("MDU"),
and Hydroponics Greenhouse packages to individuals, non profit organizations
or companies. The company will organize and manage farm cooperatives for the
growing of Jerusalem Artichoke, which will be used in the MDU to produce
ethanol. JA Energy plans to use a patented varietal Jerusalem Artichoke to
control the expansion of the crop. Additionally, JA Energy will manage the
processing the crop in the field, separating the pulp from the juice (the
equipment is unique to this application). The "juice" will be harvest by a
harvester which separates the juice for the plant pulp. The juice is
transferred via the harvester to an accompanying tank truck. When each tank
truck is filled it then drives to the centrally located processing plant.
The juice will be transported to a centrally located processing plant to
condense the juice to a syrup (JA Energy plans to apply for patent on this
process). The "syrup" once processed will be packaged in containers commonly
called totes (used primarily for the shipping of molasses). These totes will
be shipped to the various MDU locations via trucking companies contracted by
the cooperative for processing into ethanol.
The varietal Jerusalem Artichoke is a nonflowering plant. The Jerusalem
Artichoke is a relative of the Sunflower and is not related to the the Globe
Artichoke. It sets itself apart from all other varietals of the plant. The
unique characteristic will make unauthorized use of the plant easier to
detect. Jerusalem Artichoke normally produces a flower that has infertile
seeds, requiring the crop to be expanded by using the root systems (tubers)
similarly to the way potatoes are grown. Only authorized growers will be
allowed to plant the crop. Limiting the number of growers and the acreage
they are authorized to plant will control the expansion of the crop.
25
The Jerusalem Artichoke does not produce an oil. The inulin is converted in
to ethanol, at a rate of 1,200 gallons of ethanol per acre per USDA
statistics. The crop is used one hundred percent and there are no waste by-
products. The stalks are juiced and processed into a syrup or directly into
ethanol via distillation. The pulp of the stalks is used for cattle feed
comparable to distillers grains. The root tubers are used a seed for
planting next seasons' crop. Once the rate of cultivation slows the root
tubers will be used for chicken or hog feed, and can be processed into a
gluden free flour. JA Energy Inc. does not intend to be involved in these
other areas.
The greenhouse gases from the distillation process are redirected into a
hydroponics greenhouse that is attached to the modular distillation unit as
is the liquid residue. The entire process is free of waste products, even
the plant material for the greenhouses will be collected and mulched.
The condensed syrup will be packaged similarly to molasses and shipped by
common carrier to modular distillation units that have contracted for the
syrup. Each modular distillation unit will be purchased from JA Energy
to be operated by the purchaser.
We plan to establish small portable conversion plants in inner-cities. We
plan to begin this program in Nevada. The conversion plants can only convert
a limited amount of artichoke extract to ethanol. We plan to have one of
these portable conversion plants in operation during 2011. We shall be
targeting local charities to assist in the payment and operations of this
facility. We expect each facility will require six employees to operate the
distilling equipment. The first unit was constructed and has been tested by
Green Global Systems LLC. Mr. Lusk is currently a member of Green Global
Systems and controls 50% of this limited liability company. Green Global
Systems LLC had built a MDU using the specifications of a patent owned by
our CEO. The cost of construction for the first unit was $35,000. Although
Green Global Systems LLC spent $94,000 in research and development costs to
build the first MDU. Now that the first prototype has been built, we have
costed out the process to construct a small distillation unit and we believe
we can produce units for $25,000. The MDU is currently under the control of
Green Global Systems, LLC which has agreed to a buyout of their interest for
the amount of funds expended. We have identified a company that construct
the unit for us at this cost. The Company plans to setup a Modular
Distillation Unit which was manufactured and tested by Green Global Systems,
LLC, in Central Nevada. The unit will be permanently housed in Central
Nevada as part of the company's demonstration and training facility. The
unit will be operated by the Company. The Company will apply for the
applicable permits for operation and use the ethanol produced as fuel to
deliver the fruit and vegetables grown in the hydroponics greenhouses to
customers in Las Vegas. The Company plans to lease 50 acres for a
demonstration crop to supply the Jerusalem Artichoke juice. The company
plans to establish a demonstration facility as well as a training facility
to train the purchasers of the MDUs.
26
Management has identified land in Caliente, Lincoln County, Nevada it can
lease land to begin its first planting. This land is arid and suitable for
growing artichokes. The company plans to form farmer cooperatives where the
farmers will own 90% of crop grown and the company will own 10% of the
crop. The farmers will be responsible for all the funding or financing to
establish the processing plant and acquire the necessary equipment. The
company plans to sign management agreements with the cooperatives whereby
the Company will have control of processing production. The agreements will
be for ten years with an option to renew for an additional ten years. The
management of the cooperatives will require the farmers to create a board of
directors for each cooperative. The purpose of the board is to give guidance
to management.
The farmers will be compensated by the amount of dry matter and juice their
acreage produces. Dry matter will be valued by the ton while the juice will
be by volume. The farmers are responsible for the cultivation of their
farms. The cooperative will be responsible for the selling of the syrup,
cattle feed (pulp), and tubers.
Since Jerusalem Artichokes grow like weeds, their stalks will provide three
harvests during one calendar year. At the end of the calendar year, the
remaining stalks (tuber) in the field can be used as seeds to multiply the
harvest in the following year by twenty percent. When the harvest stalks
are harvested, the harvesting machinery will divide the harvest into two
parts: 1) animal feeds; and 2) juice that can be condense into syrup.
The artichoke juice has a short shelf-life, as compared to the syrup that
can be stored for a longer length of time. The Company has developed a
small [size of a tractor trailer] distiller that can convert the artichoke
syrup into 1,000 gallons of ethanol per week. The MDU was tested using
molasses as the distillation feedstock. The test was for the efficiency of
the MDU, which is designed to distill a variety of feedstocks. The unit
will distill at a rate of 144 gallons per day which is the 1,000 gallons per
week rate. The Company plans to control the harvesting of the crop via
the management agreements with the cooperatives. At this time, the
Company does not plan own or operate its own harvesting machinery.
We developed a model based on 50 acres of the Jerusalem artichoke crop.
Based on three harvests, we believe this would produce a total 50,000
gallons of ethanol per year on 50 acres of land. We estimate our total
operating costs, including equipment depreciation, seeds, costs to harvest
and, overhead costs will equate to $1.24 per gallon. We estimate the
residual animal feed for the 50 acres after costs will equal $23,120.
Therefore, based on the current market price of ethanol of $1.80 per gallon,
we estimate our 50 acres will yield 50,000 gallons per year with a profit of
$0.56 per gallon or $28,000 plus $23,120 in residual animal feed.
This estimated operating costs to produce one gallon of ethanol includes
the necessary energy and water inputs. The energy cost savings associated
with the MDU is derived from a design methodology to introduce distillate
into the still area. This method of heating and the redirection of the
waste heat into heat exchangers reduces the energy costs, which increase
the effectiveness of the distillation process.
27
The Reshoot Production Co. directors decided it was in the best interest of
Reshoot Production Company and JA Energy Company's shareholders to spin-off
JA Energy to minimize any potential conflict of interest, in utilizing the
same resources and in accessing funding. Further, although somewhat related,
both companies have different business objectives. Reshoot Production is
focused on the production and distribution of organic cucumbers, tomatoes,
and peppers. JA Energy, is focused on producing ethanol from Jerusalem
Artichokes. Management believes that it would be in the best interest of
each company to pursue its own objectives since they will require different
skills sets. Reshoot Production Company management that works with farms to
grow organic vegetables believes it can identify customers for the pulp by-
product that is not used in the production of ethanol.
Jerusalem artichoke
-------------------
The Jerusalem Artichoke is a relative of the Sunflower, it is considered a
perennial native sunflower species, and is not related to the Globe
Artichoke. This plant begins it growth from its underground roots. The
plant produces a product called inulin, which is a white, starchlike
polysaccharide that yields very sweet sugar called fructose. The plant
stores the inulin in its stem until it flowers. When the plant begins to
flower, the inulin is then translocated to the tuber, which are the roots of
the plant.
Jerusalem Artichoke stalk must be cut above the underground stems immediately
before the plant flowers to retain all of the sugar in the stalk; the stalk
is then ground in a hammermill to release the sugars from the center of the
stalk; the sugar juices from the hammermill are collected; the remaining mass
of the center of the stalk, and bark is squeezed to remove the remaining
sugar juices; the entire collected sugar juice is then processed by heating
and adding yeast, then fermenting. The remaining product is then distilled
to produce ethanol. The method produces the maximum quantity of high grade
ethanol per acre of plant of any known plant source.
Management has identified a varietal Jerusalem Artichoke, which regulates
flowering and the translocation of sugars in the plant. This varietal
Jerusalem Artichoke contains genes that prolong the growing season, increase
sugar production, and delay the translocation of sugars.
Management is considering the purchase varietal Jerusalem Artichoke seeds
from a supplier in New Zealand, who holds the patent on this varietal
Jerusalem Artichoke. At this time, we have not entered into any formal
agreement with this supplier. As a back-up, we are trying to identify
other varieties of the Jerusalem Artichoke seeds currently available in the
U.S. The primary reason for the use of this varietal, is that, it is the
only nonflowering variety. This unique characteristic provides the company
greater control on the expansion of the crop.
28
Farm Cooperative Business Strategy
----------------------------------
The Company plans to organize and manage Jerusalem Artichoke farm
cooperatives under a management agreement with the cooperatives. The
Company will hold a ten percent organizers share of the ownership of the
cooperatives, in addition to being compensated as the manager. Each
cooperative will have am advisory board to work with the contracted
management team to advance the interest of the cooperative. Management is
not aware of any Jerusalem Artichoke Growers cooperatives in the U.S. There
is a farm association of Jerusalem Artichoke Growers on the East Coast. The
uses of Jerusalem Artichokes include: animal feed usually grown by the user,
health food produce, a flour used for a diabetic sensitive pasta and a by-
product used in health foods.
Management is currently exploring opportunities for the establishment of
growing districts. The control of establishing growing districts is
important to the Company's business plan. An over-supply of the crop would
depress prices and have an adverse effect on the future of Jerusalem
Artichoke as a source of ethanol. Management expects to have the first
growing districts in place by the 2012 growing season. The 2011 growing
season will be dedicated to fifty acres, in Central Nevada for the sole
purpose of producing crops to demonstrate the process.
The cooperatives will be organized similarly to the Citrus Growers
cooperatives. For example, the Citrus Growers cooperatives are responsible
for the farming or cultivation of the crop, and the cooperative is
responsible for the harvesting and marketing the crop. Using this model,
the cooperative members will be able to finance and share the costs for the
equipment necessary for the harvesting and processing of the crop on a larger
scale, while being freed of the marketing of the crop to the end user.
MDU unit purchaser needs to have a reliable supply of syrup for the
production of ethanol. In order to help create reliable supplies of the
syrup, the Company plans to place these contracts with the cooperatives,
thereby matching customer with producer.
Each cooperative will be organized in a hub and spoke structure. The
processing plant will be located as close as possible to the center of a
growing district. The size of the growing district is expected not to exceed
a twenty-five mile radius. This will reduce the transportation costs from
the field to the condensing facilities. The facilities will be designed in
such a manner that they can be expanded to accommodate addition cooperative
growers.
The marketing will be done at a centralized marketing location to gain
economies of scales. Each cooperative may elect to process their crop.
The by-products of the tuber (root system) and the pulp portion of the crop
are currently being researched to identify other commercial uses. Once a
commercial size crop is grown, the by-products from the crop itself can
offer the cooperatives another source of revenue.
29
The Ethanol Market
------------------
Ethanol is produced from starch or sugar-based feed products such as corn,
potatoes, wheat, and sorghum, artichokes as well as from agricultural waste
products including sugar, rice straw, cheese whey, beverage wastes and
forestry and paper wastes. Historically, corn has been the primary source
because of its relatively low cost, wide availability and ability to produce
large quantities of carbohydrates that convert into glucose more easily than
other products. Management believes that Jerusalem Artichokes, in which its
stalks can be harvested three times per year, and can be grown in an arid
climate offer a high percent of end product that can be converted into
ethanol.
Ethanol has been utilized as a fuel additive since the late 1970's when its
value as a product extender for gasoline was discovered during the OPEC oil
embargo crisis. In the 1980's, ethanol began to see widespread use as an
octane enhancer, replacing other environmentally harmful components in
gasoline such as lead and benzene. Ethanol's use as an oxygenate continued to
increase with the passage of the Clean Air Act Amendments of 1990, which
required the addition of oxygenates to gasoline in the nation's most polluted
areas. Ethanol contains approximately 35% oxygen and when combined with
gasoline, it acts as an oxygenate that increases the percentage of oxygen in
gasoline. As a result, the gasoline burns cleaner and releases less carbon
monoxide and other exhaust emissions into the atmosphere. Although not all
scientists agree about the existence or extent of environmental benefits
associated with its use, the use of ethanol is commonly viewed as a way to
improve the quality of automobile emissions.
The most common oxygenate competing with ethanol is methyl tertiary butyl
ether or "MTBE," which is cheaper than ethanol. Since the introduction and
widespread use of MTBE as an oxygenate, it has been discovered in ground
water, lakes and streams. Unlike ethanol, which is biodegradable, MTBE is
petroleum-based. While MTBE has not been classified as a carcinogen, it has
been shown to cause cancer in animals and its continued use has raised
serious environmental concerns. As a result, by the end of 2005, according
to the U.S. Department of Energy, 25 states, including California, Illinois
and New York, had barred, or passed laws banning, any more than trace levels
of MTBE in their gasoline supplies, and legislation to ban MTBE was pending
in four others. Due in part to federal and state policies promoting cleaner
air, the environmental concerns associated with MTBE, and federal and state
tax and production incentives, the ethanol industry has grown substantially
in recent years. The Renewable Fuels Association estimates that in 2004,
approximately 1.95 billion gallons of ethanol were utilized as an oxygenate
in the Federal Reformulated Gasoline Program, 290 million gallons in the
federal winter Oxygenated Gasoline Program, 280 million gallons in Minnesota
to satisfy the state's oxygenated fuels program, and 1.05 billion gallons in
conventional gasoline markets as an octane enhancer and gasoline extender.
30
Government Incentives
---------------------
In addition to the recently-enacted federal renewable fuel standard, the
federal government and various state governments have created incentive
programs to encourage ethanol production and to enable ethanol-blended fuel
to better compete in domestic fuel markets with gasoline blended with MTBE.
The federal incentive programs include excise tax credits to gasoline
distributors, direct payments to eligible producers for increased ethanol
production and federal income tax credits which eligible producers may earn.
State incentive programs include production payments and income tax credits.
However, these programs are not without controversy, due in part to their
cost, and we cannot assure you that they will continue to be available in the
future.
Federal Excise Tax Exemption
----------------------------
Although the regulatory program is complicated and there are other federal
tax incentives for ethanol production, the most important incentive for the
ethanol industry and its customers is the partial exemption from the federal
motor fuels excise tax, or the "excise tax exemption." The excise tax
exemption is provided to gasoline distributors as an incentive to blend their
gasoline with ethanol. For each gallon of gasoline blended with 10% of
ethanol, the distributors receive a 5.1c per gallon reduction from the
federal excise tax, which equates to a 51c reduction for each gallon of
ethanol that they use. This exemption was recently extended through December
21, 2010 under the Volumetric Ethanol Excise Tax Credit signed into law by
President Bush in October 2004.
Federal Small Producer Credit
-----------------------------
The federal Small Ethanol Producer Credit provides an eligible ethanol
producer a 10c per gallon tax credit for the first 15 million gallons of
ethanol produced annually. Under the program, ethanol producers that qualify
or their owners (for pass-through tax entities) can reduce their federal
income tax liability by the amount of the annual credit, subject to
limitations. However, benefit of the credit is reduced somewhat because the
amount of the credit must be added to regular taxable income (but not to
alternative minimum taxable income). Until recently, an eligible small
ethanol producer was defined as a producer whose annual production capacity
was 30 million gallons or less, which effectively precluded most newer plants
from qualifying. The Energy Tax Incentives Act of 2005 increased the annual
production capacity limitation from 30 million to 60 million gallons, of any
type of alcohol, including alcohol not eligible for the credit.
As for our Company, we only plan to produce ethanol at the demonstration
site in Central Nevada. The licensing as a small producer will be done by
those groups, individuals or companies purchasing MDU.
31
Ethanol Pricing
---------------
The price of ethanol tends to be volatile. Historically, ethanol prices have
tended to correlate with wholesale gasoline prices, due largely to the
primary use of ethanol as an additive to gasoline. Over the last couple of
years, however, as ethanol production has expanded rapidly, ethanol prices
have been particularly volatile and ethanol and gasoline prices have at times
diverged significantly.
JA Energy Funding Requirements
------------------------------
JA Energy needs funding to fully execute its business plan. JA Energy will
require at least $1,500,000 to acquire other business opportunities, market
its services and build a client base.
Future funding could result in potentially dilutive issuances of equity
securities, the incurrence of debt, contingent liabilities and/or
amortization expenses related to goodwill and other intangible assets, which
could materially adversely affect the Company's business, results of
operations and financial condition. Any future acquisitions of other
businesses, technologies, services or product(s) might require the Company to
obtain additional equity or debt financing, which might not be available on
terms favorable to the Company, or at all, and such financing, if available,
might be dilutive.
If we are successful in obtaining funding, we expect that JA Energy and
Reshoot Production may cease to be under common control and thus may cease
to be affiliates.
Sales and Marketing
-------------------
We plan to establish small portable conversion plants in inner-cities. We
plan to begin this program in Nevada. Working with City redevelopment
agencies and nonprofits organization to establish MDU's in their
jurisdiction the community will create jobs and increase nutrition.
The USDA has identified the inner cities of the US as lacking in the
availability of fresh produce. This is the basis of the Inner City Foods
Program which will provide grants of up to $300,000 for the production of
produce in the inner city by non-profit organizations. Additionally these
areas have a supply of unemployed non-skilled workers and they are usually
located near the industrial areas of communities. This provides an
opportunity to utilize the resources of redevelopment agencies, USDA, and
State unemployment programs to produce clean energy and jobs for the inner
city inhabitants.
32
Once these units are established management hopes other communities will see
the value of participating. If there is increased demand for the MDUs, the
amount of crop acreage will be expanded creating jobs in the rural
communities. The ethanol produced can be sold to local fuel blenders or to
the municipalities for use in their fleets.
The conversion plants can only convert a limited amount of artichoke extract
to ethanol. We plan to have one of these portable conversion plants in
operation during 2011. We shall be soliciting local charities to purchase a
small portable conversion plant. In this sense, we expect each conversion
plant will require six employees to operate the distilling equipment. This
will provide new jobs in the inner-cities, and the charities will have an
opportunity to make money for their organizations by owning a small ethanol
distilling plant.
The marketing will be expanded to areas outside the inner cities, such as
Indian Reservation where there is also a need for fresh produce and jobs.
Beyond those areas the company intends to market to individuals or business
that what to operate one of the MDU sites.
Competition
-----------
We expect to be in direct competition with producers of ethanol and other
alternative fuel additives. Many of these producers have significantly
greater resources than we do. We also expect the number of competitors to
increase. The development of other ethanol plants, particularly those in
close proximity to our ethanol plant, will increase the supply of ethanol and
may result in lower local ethanol prices. Ethanol plants in close proximity
will also compete with us for, among other things, resources and personnel.
Because of their close proximity, these competitors may also be more likely
to sell to the same markets that we intend to target for our ethanol product.
We will be in direct competition with numerous other ethanol plants. We plan
to compete with other ethanol producers on the basis of price and delivery
service. We believe that we will be able, if necessary, to sell some of our
products at lower prices because of the amount of sugar available in the
Jerusalem Artichoke. This is primarily due to the fact that the Jerusalem
Artichoke can be harvested three times in the same year, and the average yield
of alcohol per acre for the Jerusalem Artichoke is 1,200 gallons, as compared
to Sugarcane (Hawaii) that yields 889 gallons per acre; sugar cane
(Louisiana) that yields 555 gallons per acre; sugar beet that yields 412
gallons per acre; and corn that yield 400 gallons per acre, according the
USDA.
33
As of March 2007, according to the Renewable Fuels Association, 114 U.S.
ethanol plants have the capacity to produce approximately 5.6 billion gallons
of ethanol annually, with another 87 plants under construction or expansion
expected to add approximately 6.4 billion more gallons of annual productive
capacity. A majority of the ethanol production capacity is located in the
Midwest, in the corn-producing states of Illinois, Iowa, Minnesota, Nebraska
and South Dakota. The largest ethanol producers include Abengoa Bioenergy
Corp., Archer Daniels Midland Company, Aventine Renewable Energy, LLC.,
Cargill, Inc., Hawkeye Renewables, LLC, New Energy Corp., US BioEnergy Corp.
and VeraSun Energy Corporation.
We may also compete with ethanol that is produced or processed in certain
countries in Central America and the Caribbean region, Brazil and other
countries. Ethanol produced in the Caribbean basin and Central America may be
imported into the United States at low tariff rates or free of tariffs under
the Caribbean Basin Initiative and the Dominican Republic-Central America-
United States Free Trade Agreement. According to the Renewable Fuels
Association, Brazil produced approximately 4.5 billion gallons of ethanol in
2006. Although tariffs presently impede large imports of Brazilian ethanol
into the United States, low production costs, other market factors or tariff
reductions could make ethanol imports from various countries a major
competitive factor in the U.S.
Alternative Fuel Additives
--------------------------
Alternative fuels, gasoline oxygenates and ethanol production methods are
continually under development by various ethanol and oil companies that have
far greater resources than we do. New products or methods of ethanol
production developed by larger and better-financed competitors could provide
them competitive advantages over us and harm our business.
PATENTS, TRADEMARKS, FRANCHISES, CONCESSIONS, ROYALTY AGREEMENTS, OR LABOR
CONTRACTS
Mr. James Lusk, our CEO has filed for a patent for the modular distillation
unit and accompanying hydroponics greenhouse. Upon the completion of the
spin-off these pending patent rights will be assigned to the Company. Mr.
James Lusk will not seek any consideration for this assignment, and plans to
donate the patent to the Company.
34
Our ability to compete depends, in part, upon successful protection of our
intellectual property. We do not have the financial resources to protect our
rights to the same extent as major ethanol producers. We will attempt to
protect proprietary and intellectual property rights to manufacturing
processes by applying for a process patent. Despite these precautions,
existing patent laws afford only limited practical protection in certain
countries. We also plan to conduct business in other countries in which
there is little patent protection. As a result, it may be possible for
unauthorized third parties to copy and distribute our processes and artichoke
seeds, which could have a material adverse effect on our business, results
of operations and financial condition. We do not own the process for
enhancing yields of sugar production from the Jerusalem Artichoke seed we
plan to utilize. The referenced varietal is covered by a patent filing in
New Zealand and the patent holder is currently pursuing a patent in the
United States.
Despite measures we have taken to protect our proprietary rights,
unauthorized parties may attempt to reverse engineer or copy aspects of our
products or obtain and use information that we regard as proprietary.
Policing unauthorized use of our products is difficult and expensive. In
addition, litigation may be necessary in the future to enforce our
intellectual property rights, to protect our trade secrets, to determine the
validity and scope of the proprietary rights of others, or to defend against
claims of infringement or invalidity. Any such litigation could result in
substantial costs and the diversion of resources and could have a material
adverse effect on our business, results of operations and financial
condition. We cannot assure you that infringement or invalidity claims will
not materially adversely affect our business, results of operations and
financial condition. Regardless of the validity or the success of the
assertion of these claims, we could incur significant costs and diversion of
resources in enforcing our intellectual property rights or in defending
against such claims, which could have a material adverse effect on our
business, results of operations and financial condition.
35
BANKRUPTCY OR SIMILAR PROCEEDINGS
There has been no bankruptcy, receivership or similar proceeding.
NEED FOR GOVERNMENTAL APPROVAL OF PRINCIPAL PRODUCTS OR SERVICES
----------------------------------------------------------------
The establishment of an ethanol plant, we will need to obtain and comply with
various permitting requirements. There are three levels of permitting
requirements; 10,000 gallons or less per year for own use requires a simple
application and compliance with local codes, more that 10,000 gallons but
less than 500,000 requires an application with a bond, and over 500,000
requires an application with a bond. The bonding process for JA Energy is
expected to take six months with a bond of no more than $50,000. This is for
the demonstration unit in Central Nevada. The company does not plan to
operate any other units. The permitting requirement for the 10,000 gallons
is a thirty day process. The MDU must comply with all local building codes
which are subject to the individual municipalities. The demonstration unit
has already been conditionally approved by the municipality subject to an
approved set of engineered drawings. The drawings have been completed by
Green Global System LLC and need to be submitted to the municipality.
As a condition to granting necessary permits, regulators could make demands
that increase our costs of construction and operations, in which case we
could be forced to obtain additional debt or equity capital. Environmental
issues, such as contamination and compliance with applicable environmental
standards could arise at any time during the construction and operation of
the ethanol plant.
The ethanol plant will be subject to environmental regulation by the state in
which the plant is located and by the United States Environmental Protection
Agency ("EPA"). For example, our future ethanol facilities will be subject
to environmental regulations of Nevada and the EPA. These regulations could
result in significant compliance costs and may change in the future. For
example, although carbon dioxide emissions are not currently regulated, some
authorities support restrictions on carbon dioxide emissions that, if
adopted, could have a significant impact on our operating costs because we
may have to emit a significant amount of carbon dioxide into the air. Also,
the state environmental agencies or the EPA may seek to implement additional
regulations or implement stricter interpretations of existing regulations.
Recently, the EPA cautioned ethanol producers that it is prepared to sue
companies whose plants do not comply with applicable laws and regulations.
In a recent test of certain ethanol plants, the EPA expressed concerns over
the discovery of certain "volatile organic compounds," some of which may be
carcinogenic. Changes in environmental regulations or stricter
interpretation of existing regulations may require additional capital
expenditures or increase our operating costs.
36
In addition, the ethanol plant could be subject to environmental nuisance or
related claims by employees, property owners or residents near the ethanol
plant arising from air or water discharges. These individuals and entities
may object to the air emissions from our ethanol plant. Ethanol production
has been known to produce an unpleasant odor to which surrounding residents
and property owners could object. Environmental and public nuisance claims,
or tort claims based on emissions, or increased environmental compliance
costs could significantly increase our operating costs.
EFFECT OF EXISTING OR PROBABLE GOVERNMENTAL REGULATIONS ON THE BUSINESS
There are various federal and state laws, regulations and programs that have
led to increased use of ethanol in fuel. These laws, regulations and
programs are constantly changing. Federal and state legislators and
environmental regulators could adopt or modify laws, regulations or programs
that could adversely affect the use of ethanol. Certain states oppose the use
of ethanol because they must ship ethanol in from other corn producing
states, which could significantly increase gasoline prices in the state.
Material changes in environmental regulations regarding the use of MTBE or
the required oxygen content of automobile emissions or the enforcement of
such regulations could decrease the need to use ethanol. For example, the
recently enacted Energy Policy Act of 2005 eliminated the reformulated
oxygenate standards under the Clean Air Act. Future changes in the law may
further postpone or waive requirements to use ethanol.
Employees
---------
We no employees, all functions, including development, strategy, negotiations
is being provided by our officers/directors on a voluntary basis, without
compensation. Once the Company starts generating sufficient cash flows, our
sole officer would be entitled to compensation for his services and past
services rendered to the Company.
Description of Property
-----------------------
Our offices are currently located at 4800 W. Dewey Drive, Las Vegas, NV
89118 Our telephone number is (702) 358-8775. The office space is a small
area in the office of a Veterinary Hospital owned by Steve Scott, who is a
director of the Company. The space is provided at no cost to the company, and
no reimbursement will accrue. Management believes that its current
facilities are adequate for its needs through the next twelve months, and
that, should it be needed, suitable additional space will be available to
accommodate expansion of the Company's operations on commercially reasonable
terms, although there can be no assurance in this regard.
37
LEGAL PROCEEDINGS
-----------------
From time to time and in the ordinary course of its business, we may be named
as a defendant in legal proceedings related to various issued, including
worker's compensation claims, tort claims and contractual disputes. We are
currently involved in no such legal proceedings. We are aware of one
potential situation that could lead to the commencement of legal
proceedings. This would result from a payment owed to a Green Global
Systems, LLC where Jim Lusk, the Company's President, is one of four
members of this LLC, with a 50% ownership in this LLC. Green Global Systems,
LLC is currently an non-operating company but has not been dissolved. Green
Global Systems, LLC was suppose to raise funds to advance the conversion of
artichokes into ethanol. There is no claim against JA Energy or Reshoot
Production Company. The amount of the dispute is the total dollars expended
by Green Global Systems, LLC during operations. The cost includes legal
fees, rent, wages, building of a Modular Distillation Unit according to the
patent filed by James Lusk, consultant engineers, travel and entertainment,
consultants local governmental issues and general office expenses.
Management of the Company has negotiated to dissolve Green Global Systems,
LLC from these third parties, who are not shareholders of JA Energy for
$94,000. Upon payment to this LLC of $94,000 that Company would receive full
ownership of Modular Distillation Unit developed by Green Global Systems, LLC.
This is not any claim against the President of JA Energy. The $94,000 is a
reimbursement of funds expended by Green Global Systems, LLC. The costs cover
the research and development of the MDU based on Mr. Lusk's patent as well as
$35,000 for the manufacturing of a unit. Consultants paid by Green Global
Systems, LLC all signed non-compete non-circumvention agreements. To
re-create another base of consultants to provide what has been previously
provided will require time and resources.
If this matter is not settled with the LLC, the Company would need to expend
its own funds to research and develop its own Modular Distillation Unit. It
is possible this may cost more than $94,000. The Company believes that the
purchase of this information is the most economical use of resources.
38
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
------------------------------------------------------------
Directors and Executive Officers
--------------------------------
Our executive officers and directors and their respective ages as of
August 31, 2010 are as follows:
Set forth below are the names, ages and present principal occupations or
employment, and material occupations, positions, offices or employments for
the past five years of our current directors and executive officers.
Name Age Positions and Offices Held
--------------- --- ----------------------------------
James Lusk 59 President, Chief Executive Officer,
and Director
Steve Scott 61 Vice President, COO, Director
Marc Schechtman 58 Director
============================================================================
The business address for our officers/directors is: c/o JA Energy,
4800 W. Dewey Drive, Las Vegas, NV 89118. Set forth below is a brief
description of the background and business experience of our officers and
directors.
James Lusk, President/CEO/Director
----------------------------------
Mr. Lusk has spent the past twelve months, prior to the incorporation of
JA Energy, researching the business plan for JA Energy. This includes
identifying the varietal Jerusalem artichoke, where to grow the artichoke,
how to harvest the artichoke, and process the final product into ethanol. He
brings to the company the know-how to make the business plan operational.
Prior to joining JA Energy, Mr. Lusk's experience includes 32 years in public
accounting where he worked with many businesses. He has a bachelor's degree
in Business Administration with a concentration in accounting from California
State University at San Bernardino (1978) and was issued CPA certificates in
1981 California and 1986 Nevada (Both are not current for lack of up to date
CPEs).
In March of 2009, he joined Pattie Montgomery CPA LLC as a principal.
39
From May, 2009 (inception) until December 2009, he was one of four
members of Green Global Systems, LLC, a Nevada Limited Liability Company.
Mr. Lusk is currently a member of Green Global Systems and controls 50% of
this limited liability company. His duties at Green Global Systems, LLC
included, the supervision of the building of the prototype Modular
Distillation Unit, working with the mechanical engineers, meetings with
consultants, researching the market place both domestic and foreign, meeting
with local government official, meeting with farmers, preparing cost analysis
for the various phases of the process and meeting with potential investors.
From 2007 to 2008, Mr. Lusk authored a book entitled "33 Cents a Day the Cost
of Good Government."
From 2004 to 2007, Mr. Lusk developed Test Only Smog Inspection Stations in
California under my Service Marked name of Smog Busters.
Steven Scott, Vice President, COO and Director
----------------------------------------------
Mr. Scott has over 30 years experience in marketing, sales, and management.
2009-Present, Veterinary Practice Owner, the Dewey Veterinary Medical Center
of Las Vegas.
1997-2007, Regional Vice President, VCA Animal Hospitals, Inc., managed as
many as 26 veterinary hospitals in 4-state region.
1993-2010 Co-Owner, The Quality Connection, Medical Practice Consulting.
Mr. Scott's business experience includes 21 years of managing and
administration in human medicine at hospitals in the Cleveland, Ohio area,
including 6 years at Metropolitan General Hospital and the Cleveland Clinic
Foundation (11 years).
U.S. Army Reserves, 1st Lt Medical Services Corps, Honorable Discharge
(1969-1978)
Education:
Ohio State University graduate (BA, Anthropology with completion of the pre-
medicine curriculum).
Attended The Weatherhead School of Business at Case Western Reserve
University and completed the CCF-sponsored curriculum for Hospital
Administration.
40
Marc Schechtman, Director
-------------------------
For the past five years, Mr. Schechtman has been involved in finding small
vegetable farms to produce organic vegetables and find a market for these
organic vegetables. Since the varietal Jerusalem artichoke will have by-
products upon harvesting that can be used as potential animal feed, Mr.
Schechtman, plans to help the Company find a market for this by-product.
May 2010 to present - Director of Planning for Reshoot Production Company,
Immokalee, FL.
April 2005 to present -- Business Developer Consultant, Custom Pak, Inc.
Division of LFC Enterprises 315 East New Market, Immokalee, FL. Custom Pak,
Inc. operates as a specialty repacker of vine ripened tomatoes and harvest
fresh vegetables. The company markets its fresh vegetables to grocery retail
customers and the food service industry in California, Florida, Georgia,
Mexico, North Carolina, Pennsylvania, South Carolina, and Virginia. Custom
Pak, Inc. was founded in 1994 and is headquartered in Immokalee, Florida.
Mr. Schechtman identifies small vegetable farming operations to market its
produce through Custom Pak, Inc.
Involvement in Certain Legal Proceedings
----------------------------------------
Our directors, executive officers and control persons have not been
involved in any of the following events during the past ten years and which
is material to an evaluation of the ability or the integrity of our director
or executive officer:
1. any bankruptcy petition filed by or against any business of which such
person was a general partner or executive officer either at the time
of the bankruptcy or within two years prior to that time;
2. any conviction in a criminal proceeding or being subject to a pending
criminal proceeding (excluding traffic violations and other minor
offences);
3. being subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise
limiting his involvement in any type of business, securities or banking
activities; and
4. being found by a court of competent jurisdiction (in a civil action), the
SEC or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law, and the judgment has not
been reversed, suspended, or vacated.
41
Compensation
------------
We presently do not pay our officers/directors any salary or consulting fee.
We do not anticipate paying compensation to officers/directors until our
Company can generate sufficient cash flows on a regular basis.
We do not have any employment agreements with our officer/director. We do
not maintain key-man life insurance for any our executive officers/directors.
We do not have any long-term compensation plans or stock option plans.
EXECUTIVE COMPENSATION
----------------------
Summary Compensation
--------------------
As a result of our Company's current limited available cash, no officer
or director received compensation since inception (August 26, 2010) of the
company through August 31, 2010. JA Energy has no intention of paying
any salaries at this time. JA Energy intends to pay salaries when cash
flow permits.
Stock Option Grants
-------------------
We did not grant any stock options to the executive officers or directors
from inception through August 31, 2010.
Term of Office
--------------
Our directors are appointed for a one-year term to hold office until the next
annual general meeting of our shareholders or until removed from office in
accordance with our bylaws. Our officers are appointed by our board of
directors and hold office until removed by the board.
Committees of the Board of Directors
------------------------------------
Currently, we do not have any committees of the Board of Directors.
Director and Executive Compensation
-----------------------------------
We do not pay to our directors any compensation for serving as a director on
our board of directors. We do not pay to our directors or officers any
salary or consulting fee.
42
Employment Agreements
---------------------
The Company currently does not have employment agreements with its executive
officers. The executive officers/directors of the Company have agreed to
take no salary until the Company can generate enough revenues to support
salaries on a regular basis. The officers will not be compensated for
services previously provided. They will receive no accrued remuneration.
Equity Incentive Plan
---------------------
We have not adopted an equity incentive plan, and no stock options or similar
instruments have been granted to any of our officers or directors.
Audit Committee Financial Expert
--------------------------------
We do not have an audit committee financial expert nor do we have an audit
committee established at this time.
Auditors; Code of Ethics; Financial Expert
------------------------------------------
Our principal independent accountant is De Joya Griffith & Company, LLC. We
do not currently have a Code of Ethics applicable to our principal executive,
financial and accounting officer. We do not have an audit committee or
nominating committee.
Potential Conflicts of Interest
-------------------------------
We are not aware of any current or potential conflicts of interest with any
of our sole officers/directors.
43
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
----------------------------------------------
Our Articles and By-laws provide to the fullest extent permitted by law, our
directors or officers, former directors and officers, and persons who act at
our request as a director or officer of a body corporate of which we are a
shareholder or creditor shall be indemnified by us. We believe that the
indemnification provisions in our By-laws are necessary to attract and retain
qualified persons as directors and officers. Insofar as indemnification for
liabilities arising under the Securities Act of 1933 (the "Act" or
"Securities Act") may be permitted to directors, officers or persons
controlling us pursuant to the foregoing provisions, or otherwise, we have
been advised that in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
Our officers/directors can be considered promoters of JA Energy in
consideration of their participation and managing of the business of
the company.
Mr. Marc Schechtman, a director of JA Energy will be the largest shareholder
of JA Energy. He is also the largest shareholder of Reshoot Production
Company. He will own approximately 43% of JA Energy common stock and
simultaneously owns approximately 43% of Reshoot Production's common stock.
This relationship could create, or appear to create, potential conflicts of
interest when Reshoot Production is faced with decisions that have different
implications for JA Energy or disputes arising out of any agreements between
the two companies. JA Energy does not have any formal procedure in place for
resolving such conflicts of interest which may arise in the future.
Mr. James Lusk, director and CEO has filed for a patent for the modular
distillation unit and accompanying hydroponics greenhouse. Upon the
completion of the spin-off, Mr. Lusk plans to donate the patent to the
Company without seeking any consideration.
44
Other than as set forth above, there are no transactions since our inception,
or proposed transactions, to which we were or are to be a party, in which any
of the following persons had or is to have a direct or indirect material
interest:
a) Any director or executive officer of the small business issuer;
b) Any majority security holder; and
c) Any member of the immediate family (including spouse, parents, children,
siblings, and in-laws) of any of the persons in the above.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------
The following table lists, the number of shares of Common Stock beneficially
owned by (i) each person or entity known to our Company to be the beneficial
owner of more than 5% of the outstanding common stock; (ii) each officer and
director of our Company; and (iii) all officers and directors as a group,
following the Distribution. Information relating to beneficial ownership of
common stock by our principal shareholders and management is based upon
information furnished by each person using "beneficial ownership" concepts
under the rules of the U. S. Securities and Exchange Commission. Under these
rules, a person is deemed to be a beneficial owner of a security if that
person has or shares voting power, which includes the power to vote or direct
the voting of the security, or investment power, which includes the power to
vote or direct the voting of the security. The person is also deemed to be a
beneficial owner of any security of which that person has a right to acquire
beneficial ownership within 60-days. Under the U. S. Securities and Exchange
Commission rules, more than one person may be deemed to be a beneficial owner
of the same securities, and a person may be deemed to be a beneficial owner
of securities as to which he or she may not have any pecuniary beneficial
interest. Except as noted below, each person has sole voting and investment
power.
45
The Company believes that all persons named in the table have sole voting
and investment power with respect to all shares of common stock shown as
being owned by them.
Amount and Nature of Percentage
Name of Beneficial Owner Title Beneficial Ownership of Class(1)
----------------------------------------------------------------------------
Jim Lusk (2) CEO/Director 28,700,000 43.5%
Steve Scott (3) Shareholders - -
Marc Schechtman (4) Director 28,700,000 43.5%
-----------------------------------------------------------------------------
Executive Officers, Directors
and others (as a group of 3)
(1) Percent of Class based on 65,846,667 shares of common stock issued
and outstanding.
(2) Mr. Jim Lusk, 4800 W. Dewey Drive, Las Vegas, NV 89118.
(3) Mr. Steve Scott, 4800 W. Dewey Drive, Las Vegas, NV 89118
(4) Mr. Marc Schechtman, 4370 La Jolla Village Drive, Suite 400 San Diego CA
92122.
We believe that all persons named have full voting and investment power with
respect to the shares indicated, unless otherwise noted in the table. Under
the rules of the Securities and Exchange Commission, a person (or group of
persons) is deemed to be a "beneficial owner" of a security if he or she,
directly or indirectly, has or shares the power to vote or to direct the
voting of such security, or the power to dispose of or to direct the
disposition of such security. Accordingly, more than one person to be a
beneficial owner of the same security. A person is also deemed to be a
beneficial owner of any security, which that person has the right to acquire
within 60 days, such as options or warrants to purchase our common stock.
46
THE DISTRIBUTION
----------------
Introduction
------------
In August 30, 2010, Reshoot Production Company board of directors declared
a Distribution payable to the holders of record of outstanding Reshoot
Production Company common stock at the close of business on [date], (the
"Record Date"). The Reshoot Production Company stock dividend was based on
65,846,667 shares of Reshoot Production's common stock that were issued and
outstanding as of the record date.
JA Energy is a wholly-owned subsidiary of Reshoot Production Company.
As a result of the Distribution, 100% of the outstanding JA Energy Common
Stock will be distributed to Reshoot Production Co. stockholders.
Immediately following the Distribution, Reshoot Production Co. will not
own any shares of JA Energy common stock and JA Energy will be an
independent public company, under common control immediately following the
distribution of shares in the spin-off transaction. The Company plans to
raise funding to further is business plan. Once we sell additional common
shares, the balance of control will shift.
The JA Energy common stock will be distributed by stock certificates, issued
by Empire Stock Transfer, Las Vegas, NV, our stock transfer agent.
JA Energy principal executive offices are located at 4800 W. Dewey Drive,
Las Vegas, NV 89118, and its telephone number is (702) 358-8775.
47
Reasons for the Distribution
----------------------------
The board of directors and management of Reshoot Production Co. believe that
the Distribution is in the best interests of Reshoot Production Co. and its
stockholders.
Our board of directors believes that spinning-off its wholly-owned
subsidiary, will accomplish a number of important objectives. The spin-off
will separate the two companies with different financial, investment and
operating characteristics so that each can adopt business strategies and
objectives tailored to their respective markets. This will allow both
companies to better prioritize the allocation of their management and their
financial resources for achievement of their individual corporate objectives.
The spin-off may provide greater access to capital by allowing the financial
community to focus solely on each business entity as a stand alone company.
In order to avoid any potential conflict of interest, Reshoot Production
Company and JA Energy will have different operational officers.
MANNER OF EFFECTING THE DISTRIBUTION
------------------------------------
The Distribution will be made on the basis of one-point-four (1.4) shares of
JA Energy Common Stock for one (1) share of Reshoot Production Company common
stock outstanding on the Record Date. This includes a total of 65,846,667
common shares of JA Energy to be issued and outstanding after the
Distribution.
At the time of the Distribution, the shares of JA Energy Common Stock to be
distributed will constitute 100% of the outstanding JA Energy. Immediately
following the Distribution, Reshoot Production Company will not own any JA
Energy Common Stock and JA Energy will be an independent public company.
The shares of JA Energy Common Stock being distributed in the Distribution
will be fully paid and non-assessable and the holders thereof will not be
entitled to preemptive rights. See "Description of Securities" beginning on
page 50.
Reshoot Production Company and JA Energy will notify Empire Stock Transfer
agent, their mutual stock transfer company to issue the common shares to the
JA Energy shareholders upon effectiveness of the JA Energy registration
statement. Following the Distribution, each record holder of Reshoot
Production Company stock on the Record Date will receive from the Transfer
Agent a share certificate of JA Energy Common Stock in the stockholder's name
based on a ratio of one-point-four for one (1.4:1) of shares owned in Reshoot
Production Company.
48
If you are not a record holder of Reshoot Production Company stock because
your shares are held on your behalf by your stockbroker or other nominee,
your shares of Reshoot Production Company Common Stock should be credited to
your account with your stockbroker or nominee following the effectiveness of
JA Energy's Registration Statement.
Reshoot Production Company stockholders will not be required to pay any cash
or other consideration for the shares of JA Energy Common Stock received in
the Distribution, or to surrender or exchange Reshoot Production Company
shares in order to receive shares of JA Energy Common Stock. The
Distribution will not affect the number of, or the rights attaching to,
outstanding Reshoot Production Company shares. No vote of Reshoot Production
Company stockholders is required or sought in connection with the
Distribution, and Reshoot Production Company. Stockholders will have no
appraisal rights in connection with the Distribution.
In order to receive shares of JA Energy Common Stock in the Distribution,
Reshoot Production Company stockholders must be stockholders at the close of
business on [date], the Record Date. The Distribution will take effect
subject to a Notice of Effectiveness for this Registration Statement.
Results of the Distribution
---------------------------
After the Distribution, JA Energy will be a separate company. Based on the
original 47,033,334 common shares of Reshoot Production Company shares
outstanding, JA Energy expects to have approximately 45 holders of record of
JA Energy Common Stock, and 65,846,667 common shares of JA Energy Common
Stock outstanding, immediately after the Distribution. The Distribution will
not affect the number of outstanding Reshoot Production Company shares or any
rights of Reshoot Production Company stockholders.
JA Energy Common Stock
----------------------
Neither Reshoot Production Company nor JA Energy makes any recommendations on
the purchase, retention or sale of shares of Reshoot Production's common
stock or shares of JA Energy Common Stock. You should consult with your own
financial advisors, such as your stockbroker, bank or tax advisor.
If you do decide to purchase or sell any Reshoot Production Company or JA
Energy shares, you should make sure your stockbroker, bank or other nominee
understands whether you want to purchase or sell Reshoot Production Co.
common stock or JA Energy Common Stock, or both. The following information
may be helpful in discussions with your stockbroker, bank or other nominee.
49
There is not currently a public market for the JA Energy Common Stock. We
intend to apply for admission to quotation of our securities on the OTC-
Bulletin Board after this prospectus is declared effective by the SEC. The
shares of JA Energy Common Stock distributed to Reshoot Production Company
stockholders will be freely transferable, except for (1) shares of JA Energy
Common Stock received by persons who may be deemed to be affiliates of
Reshoot Production Co. under the Securities Act of 1933, as amended (the
"Securities Act"), and (2) shares of JA Energy Common Stock received by
persons who hold restricted shares of Reshoot Production Co. common stock.
Persons who may be deemed to be affiliates of Reshoot Production Co. after
the Distribution generally include individuals or entities that control, are
controlled by, or are under common control with JA Energy and may include
certain directors, officers and significant stockholders of JA Energy.
Persons who are affiliates of JA Energy will be permitted to sell their
shares of JA Energy Common Stock only pursuant to an effective registration
statement under the Securities Act or an exemption from the registration
requirements of the Securities Act, such as the exemptions afforded by
Section 4(1) of the Securities Act and the provisions of Rule 144 thereunder.
JA Energy stockholders may sell their JA Energy common stock following the
Distribution. Whether an active trading market for JA Energy common stock
will be maintained after the Distribution and the prices for JA Energy common
stock will be determined in the marketplace and may be influenced by many
factors, including the depth and liquidity of the market for the shares, JA
Energy's results of operations, what investors think of JA Energy and its
industries, changes in economic conditions in its industries and general
economic and market conditions.
In addition, the stock market often experiences significant price
fluctuations that are unrelated to the operating performance of the specific
companies whose stock is quoted. Market fluctuations could have a material
adverse impact on the trading price of the Reshoot Production Co. Common
Stock and/or JA Energy's common stock.
50
Admission to Quotation on the OTC-Bulletin Board
------------------------------------------------
We hope to have our common stock be quoted on the OTC-Bulletin Board. If
our securities are not quoted on the OTC-Bulletin Board, a security holder
may find it more difficult to dispose of, or to obtain accurate quotations as
to the market value of our securities. The OTC-Bulletin Board differs from
national and regional stock exchanges in that it (1) is not situated in a
single location but operates through communication of bids, offers and
confirmations between broker-dealers, and (2) securities admitted to
quotation are offered by one or more Broker-dealers rather than the
"specialist" common to stock exchanges.
To qualify for quotation on the OTC-Bulletin Board, an equity security must
have one registered broker-dealer, known as the market maker, willing to list
bid or sale quotations and to sponsor the company listing. If it meets the
qualifications for trading securities on the OTC-Bulletin Board our
securities will trade on the OTC-Bulletin Board. We may not now or ever be
qualified for quotation on the OTC-Bulletin Board. We have not begun the
application process for listing on the OTC-Bulletin Board. We do not expect
to begin the application process until we receive a notice of effectiveness
for this Registration Statement and the shares have been distributed to our
shareholders.
To qualify for quotation on the OTC-Bulletin Board, an equity security must
have one registered broker-dealer, known as the market maker, willing to list
bid or sale quotations and to sponsor the company listing. If it meets the
qualifications for trading securities on the OTC-Bulletin Board our
securities will trade on the OTC-Bulletin Board. We may not now or ever
qualify for quotation on the OTC-Bulletin Board. We currently have no
market maker who is willing to list quotations for our securities.
Market for Our Shares
There is currently no market for any of our shares, and we cannot give any
assurance that our shares will have any market value. After the registration
statement becomes effective, and the shares are issued to the shareholders,
they may sell their shares of our common stock at a fixed price of $0.01 per
share until shares of our common stock are quoted on the OTC Bulletin Board,
and thereafter at prevailing market prices or privately negotiated prices.
There can be no assurance that we will be able to obtain an OTC-BB listing.
We will not receive any proceeds from the resale of common shares in this
offering.
51
If our common stock becomes quoted on the Over-the-Counter Bulletin Board
electronic quotation service, then the sales price to the public will vary
according to the selling decisions of the shareholder and the market for our
stock at the time of resale. In these circumstances, the sales price to the
public may be:
1. The market price of our common stock prevailing at the time of sale;
2. A price related to such prevailing market price of our common stock; or
3. Such other price as the future shareholders may determine from
time to time.
We can provide no assurance that all or any of the common stock offered will
be sold by the future shareholders.
We are bearing all costs relating to the registration of the common stock.
The future shareholders, however, will pay any commissions or other fees
payable to brokers or dealers in connection with any sale of the common
stock.
The future shareholders must comply with the requirements of the Securities
Act and the Exchange Act in the offer and sale of the common stock. The
future shareholders and any broker-dealers who execute sales for the future
shareholders may be deemed to be an "underwriter" within the meaning of the
Securities Act in connection with such sales. In particular, during such
times as the future shareholders may be deemed to be engaged in a
distribution of the common stock, and therefore be considered to be an
underwriter, they must comply with applicable law and may, among other
things:
1. Not engage in any stabilization activities in connection with our common
stock;
2. Furnish each broker or dealer through which common stock may be offered,
such copies of this prospectus, as amended from time to time, as may be
required by such broker or dealer; and
3. Not bid for or purchase any of our securities or attempt to induce any
person to purchase any of our securities other than as permitted under
the Exchange Act.
We and the future shareholders will be subject to applicable provisions of
the Exchange Act and the rules and regulations under it, including, without
limitation, Rule 10b-5 and, insofar as a selling stockholder is a
distribution participant and we, under certain circumstances, may be a
distribution participant, under Regulation M. All of the foregoing may affect
the marketability of the common stock.
Any shares of common stock covered by this prospectus which qualify for sale
pursuant to Rule 144 under the Securities Act, as amended, may be sold under
Rule 144 rather than pursuant to this prospectus. See section entitled
"Shares Eligible for Future Sale."
52
Penny Stock Regulations
-----------------------
You should note that our stock is a penny stock. The Securities and Exchange
Commission has adopted Rule 15g-9 which generally defines "penny stock" to be
any equity security that has a market price (as defined) less than $5.00 per
share or an exercise price of less than $5.00 per share, subject to certain
exceptions. Our securities are covered by the penny stock rules, which impose
additional sales practice requirements on broker-dealers who sell to persons
other than established customers and "accredited investors". The term
"accredited investor" refers generally to institutions with assets in excess
of $5,000,000 or individuals with a net worth in excess of $1,000,000 or
annual income exceeding $200,000 or $300,000 jointly with their spouse. The
penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from the rules, to deliver a standardized risk
disclosure document in a form prepared by the SEC which provides information
about penny stocks and the nature and level of risks in the penny stock
market. The broker-dealer also must provide the customer with current bid and
offer quotations for the penny stock, the compensation of the broker-dealer
and its salesperson in the transaction and monthly account statements showing
the market value of each penny stock held in the customer's account. The bid
and offer quotations, and the broker-dealer and salesperson compensation
information, must be given to the customer orally or in writing prior to
effecting the transaction and must be given to the customer in writing before
or with the customer's confirmation. In addition, the penny stock rules
require that prior to a transaction in a penny stock not otherwise exempt
from these rules, the broker-dealer must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive
the purchaser's written agreement to the transaction. These disclosure
requirements may have the effect of reducing the level of trading activity in
the secondary market for the stock that is subject to these penny stock
rules. Consequently, these penny stock rules may affect the ability of
broker-dealers to trade our securities. We believe that the penny stock rules
discourage investor interest in and limit the marketability of our common
stock.
53
Blue Sky Restrictions on Resale
-------------------------------
If a future shareholder wants to sell shares of our common stock under
this registration statement in the United States, the future shareholder
will also need to comply with state securities laws, also known as "Blue
Sky laws," with regard to secondary sales. All states offer a variety of
exemption from registration for secondary sales. Many states, for example,
have an exemption for secondary trading of securities registered under
Section 12(g) of the Securities Exchange Act of 1934 or for securities of
issuers that publish continuous disclosure of financial and non-financial
information in a recognized securities manual, such as Standard & Poor's.
The broker for a future shareholder will be able to advise a future
shareholder which states our common stock is exempt from registration with
that state for secondary sales. Any person who purchases shares of our
common stock from a future shareholder under this registration statement
who then wants to sell such shares will also have to comply with Blue Sky
laws regarding secondary sales.
When the registration statement becomes effective, and a future shareholder
indicates in which state(s) he desires to sell his shares, we will be able
to identify whether it will need to register or it will rely on an exemption.
FEDERAL INCOME TAX CONSIDERATIONS
---------------------------------
General
-------
The following discusses U.S. federal income tax consequences of the spin-off
transactions to Reshoot Production Company stockholders who hold Reshoot
Production Company common stock as a capital asset. The discussion which
follows is based on the Internal Revenue Code, Treasury Regulations issued
under the Internal Revenue Code, and judicial and administrative
interpretations of the Code, all as in effect as of the date of this
Prospectus, all of which are subject to change at any time, possibly with
retroactive effect. This summary is not intended as a complete description
of all tax consequences of the spin-off, and in particular may not address
U.S. federal income tax considerations applicable to Reshoot Production
Company stockholders who are subject to special treatment under U.S. federal
income tax law. Stockholders subject to special treatment include, for
example:
54
o foreign persons (for income tax purposes, a non-U.S. person is a person who
is not a citizen or a resident of the United States, or an alien individual
who is a lawful permanent resident of the United States, or meets the
substantial presence residency test under the federal income tax laws, or
a corporation, partnership or other entity that is not organized in or under
the laws of the United States or any state thereof or the District of
Columbia);
o financial institutions;
o dealers in securities;
o traders in securities who elect to apply a market-to-market method of
accounting;
o insurance companies;
o tax-exempt entities;
o holders who acquire their shares pursuant to the exercise of employee
stock options or other compensatory rights, and;
o holders who hold Reshoot Production Company common stock as part of a hedge,
straddle, conversion or constructive sale.
Further, no information is provided in this Prospectus with respect to the
tax consequences of the spin-off under applicable foreign or state or local
laws. Reshoot Production Co. stockholders are urged to consult with their tax
advisors regarding the tax consequences of the spin-off to them, as
applicable, including the effects of U.S. federal, state, local, foreign and
other tax laws.
Based upon the assumption that the spin-off fails to qualify as a tax-free
Distribution under Section 355 of the Code, then each Reshoot Production
stockholder receiving our shares of common stock in the spin-off generally
would be treated as if such stockholder received a taxable Distribution in an
amount equal to the fair market value of our common stock when received. This
would result in:
o a dividend to the extent paid out of Reshoot Production current and
accumulated earnings and profits at the end of the year in which the spin-
off occurs; then
o a reduction in your basis in Reshoot Production common stock to the extent
that the fair market value of our common stock received in the spin-off
exceeds your share of the dividend portion of the distribution;
o referenced above; and then
55
o gain from the sale or exchange of Reshoot Production common stock to the
extent the amount received exceeds the sum of the portion taxed as a
dividend and the portion treated as a reduction in basis;
o each shareholder's basis in our common stock will be equal to the fair
market value of such stock at the time of the spin-off. If a public trading
market for our common stock develops, we believe that the fair market value
of the shares will be equal to the public trading price of the shares on
the Distribution date. However, if a public trading market for our shares
does not exist on the Distribution date, other criteria will be used to
determine fair market value, including such factors as recent transactions
in our shares, our net book value and other recognized criteria of value.
Following completion of the Distribution, information with respect to the
allocation of tax basis among Reshoot Production and our common stock will be
made available to the holders of Reshoot Production Co. common stock.
Back-up Withholding Requirements
--------------------------------
U.S. information reporting requirements and back-up withholding may apply
with respect to dividends paid on and the proceeds from the taxable sale,
exchange or other disposition of our common stock unless the stockholder:
o is a corporation or comes within certain other exempt categories and, when
required, demonstrates these facts; or
o provides a correct taxpayer identification number, certifies that there
has been no loss of exemption from back-up withholding and otherwise
complies with applicable requirements of the back-up withholding rules
A stockholder who does not supply Reshoot Production Company with his, her or
its correct taxpayer identification number may be subject to penalties
imposed by the I.R.S. Any amount withheld under these rules will be
creditable against the stockholder's federal income tax liability.
Stockholders should consult their tax advisors as to their qualification for
exemption from back-up withholding and the procedure for obtaining such
exemption. If information reporting requirements apply to the stockholder,
the amount of dividends paid with respect to the stockholder's shares will be
reported annually to the I.R.S. and to the stockholder.
56
FEDERAL SECURITIES LAWS CONSEQUENCES
------------------------------------
Of the 65,846,667 shares of JA Energy common stock distributed to Reshoot
Production Company stockholders in the spin-off, following the effectiveness
of this Registration Statement, all 65,846,667 shares will be freely
transferable under the Act, except for those securities received by persons
who may be deemed to be affiliates of Reshoot Production Co. under Securities
Act rules. Persons who may be deemed to be affiliates after the spin-off
generally include individuals or entities that control, are controlled by or
are under common control with JA Energy, such as our director and executive
officer. Approximately 10,720,238 shares of our common stock will be held by
affiliates after completion of the spin-off.
Persons who are affiliates of JA Energy generally will not be permitted to
sell their shares of JA Energy common stock received in the spin-off and will
only be able to sell their shares pursuant to Rule 144 under the Securities
Act. As a result, JA Energy common stock received by JA Energy affiliates
pursuant to the spin-off may be sold if pursuant to certain provisions of
Rule 144 under the Securities Act. See "Shares Eligible for Future Sale" on
Page 52.
DESCRIPTION OF SECURITIES
-------------------------
General
-------
Our authorized common stock consists of 70,000,000 shares of common stock,
with a par value of $0.001 per share. Upon Distribution, there will be
65,846,667 common shares outstanding which were held by approximately forty-
five (45) stockholders of record. There are 5,000,000 preferred shares
authorized and none issued.
57
Common Stock
------------
Our common stock is entitled to one vote per share on all matters submitted to
a vote of the stockholders, including the election of directors. Except as
otherwise required by law, the holders of our common stock will possess all
voting power. Generally, all matters to be voted on by stockholders must be
approved by a majority (or, in the case of election of directors, by a
plurality) of the votes entitled to be cast by all shares of our common stock
that are present in person or represented by proxy. Holders of our common
stock representing fifty-one percent (51%) of our capital stock issued,
outstanding and entitled to vote, represented in person or by proxy, are
necessary to constitute a quorum at any meeting of our stockholders. A vote
by the holders of a majority of our outstanding shares is required to
effectuate certain fundamental corporate changes such as liquidation, merger
or an amendment to our Articles of Incorporation. Our By-laws do not provide
for cumulative voting in the election of directors.
Holders of our common stock have no pre-emptive rights, no conversion rights
and there are no redemption provisions applicable to our common stock.
Share Purchase Warrants
-----------------------
We have not issued and do not have outstanding any warrants to purchase
shares of our common stock.
Options
-------
We have not issued and do not have outstanding any options to purchase shares
of our common stock.
Convertible Securities
----------------------
We have not issued and do not have outstanding any securities convertible
into shares of our common stock or any rights convertible or exchangeable
into shares of our common stock.
58
SHARES ELIGIBLE FOR FUTURE SALE
-------------------------------
Future sales of a substantial number of shares of our common stock in the
public market could adversely affect market prices prevailing from time to
time. The shares of our common stock offered may be resold without
restriction or further registration under the Securities Act, except that any
shares purchased by our "affiliates," as that term is defined under the
Securities Act, may generally only be sold in compliance with Rule 144 under
the Securities Act.
Rule 144
--------
In general, Rule 144 promulgated by the Securities and Exchange Commission
pursuant to the Securities Act, provides:
If the issuer of the securities is, and has been for a period of at least 90
days immediately before the sale, subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, a minimum of six months must elapse
between the later of the date of the acquisition of the securities from the
issuer, or from an affiliate of the issuer, and any resale of such securities
in reliance on this section for the account of either the acquirer or any
subsequent holder of those securities.
If the issuer of the securities is not, or has not been for a period of at
least 90 days immediately before the sale, subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, a minimum of one
year must elapse between the later of the date of the acquisition of the
securities from the issuer, or from an affiliate of the issuer, and any
resale of such securities in reliance on this section for the account of
either the acquirer or any subsequent holder of those securities.
Except as provided in Rule 144, the amount of securities sold for the account
of an affiliate of the issuer in reliance upon this section shall be
determined as follows: If any securities are sold for the account of an
affiliate of the issuer, regardless of whether those securities are
restricted, the amount of securities sold, together with all sales of
securities of the same class sold for the account of such person within the
preceding three months, shall not exceed the greatest of: (A) one percent of
the shares or other units of the class outstanding as shown by the most
recent report or statement published by the issuer, or (B) the average weekly
reported volume of trading in such securities on all national securities
exchanges and/or reported through the automated quotation system of a
registered securities association during the four calendar weeks preceding
the filing of notice required by paragraph (h) of Rule 144, or if no such
notice is required the date of receipt of the order to execute the
transaction by the broker or the date of execution of the transaction
directly with a market maker, or (C) the average weekly volume of trading in
such securities reported pursuant to an effective transaction reporting plan
or an effective national market system plan during the four-week period
specified in paragraph (e)(1)(ii) of Rule 144.
59
Special provisions for "Shell Companies
---------------------------------------
Since we consider ourselves to be a shell company, Rule 144 safe harbor is
unavailable for the resale of shares issued by us unless and until we have
ceased to be a shell company and have satisfied the requirements of Rule
144(i)(1)(2).
Notwithstanding paragraph (i)(1) of Rule 144, if the issuer of the
securities previously had been a shell company described in paragraph
(i)(1)(i) but has ceased to be a shell company described in paragraph
(i)(1)(i); is subject to the reporting requirements of Section 13 or 15(d)
of the Exchange Act; has filed all reports and other materials required to
be filed by Section 13 or 15(d) of the Exchange Act, as applicable, during
the preceding 12 months (or for such shorter period that the issuer was
required to file such reports and materials), other than Form 8-K reports,
and has filed current "Form 10 information" with the SEC reflecting its
status as an entity that is no longer a shell company described in paragraph
(i)(1)(i), then those securities may be sold subject to the requirements of
Rule 144 after one year has elapsed from the date that the issuer filed
"Form 10 information" with the SEC.
The term "Form 10 information" means the information that is required by SEC
Form 10, to register under the Exchange Act each class of securities being
sold under Rule 144. The Form 10 information is deemed filed when the
initial filing is made with the SEC.
In order for Rule 144 to be available, JA Energy must cease to be a shell
company, and satisfy the requirements of Rule 144(i)(1)(2) described above.
Nevada Anti-Takeover laws
-------------------------
Nevada revised statutes sections 78.378 to 78.3793 provide state regulation
over the acquisition of a controlling interest in certain Nevada corporations
unless the articles of incorporation or bylaws of the corporation provide that
the provisions of these sections do not apply. Our articles of incorporation
and bylaws do not state that these provisions do not apply. The statute
creates a number of restrictions on the ability of a person or entity to
acquire control of a Nevada company by setting down certain rules of conduct
and voting restrictions in any acquisition attempt, among other things. The
statute is limited to corporations that are organized in the state of Nevada
and that have 200 or more stockholders, at least 100 of whom are stockholders
of record and residents of the State of Nevada; and does business in the State
of Nevada directly or through an affiliated corporation. Because of these
conditions, the statute does not apply to our company.
60
Expenses of Issuance and Distribution
-------------------------------------
We have agreed to pay all expenses incident to the Distribution to the
public of the shares being registered other than any commissions and
discounts of underwriters, dealers or agents and any transfer taxes, which
shall be borne by the future shareholders. The expenses which we are
paying are set forth in the following table.
Nature of Expenses:
Amount
------
U. S. Securities and Exchange Commission registration fee $ 47
Legal fees and miscellaneous expenses* $ 2,000
Audit Fees $ 2,500
Transfer Agent Fees* $ 900
Printing* $ 403
-------
Total $ 5,850
=======
*Estimated Expenses.
61
DIVIDEND POLICY
---------------
We have not declared or paid dividends on our Common Stock since our
formation, and we do not anticipate paying dividends in the foreseeable
future. Declaration or payment of dividends, if any, in the future, will be
at the discretion of our Board of Directors and will depend on our then
current financial condition, results of operations, capital requirements and
other factors deemed relevant by the board of directors. There are no
contractual restrictions on our ability to declare or pay dividends.
TRANSFER AGENT
--------------
We are currently utilizing the services of Empire Stock Transfer Co.,
1859 Whitney Mesa Dr., Henderson, NV 89014, Telephone: (702) 818-5898.
Empire Stock Transfer serves in the capacity as our transfer agent to have
us track and facilitate the transfer of our stock.
LEGAL MATTERS
-------------
Law Offices of Thomas C. Cook has opined on the validity of the shares of
common stock being offered hereby.
EXPERTS
-------
The financial statements included in this prospectus and in the registration
statement have been audited by De Joya Griffith & Company, LLC, an independent
registered public accounting firm, to the extent and for the period set forth
in their report appearing elsewhere herein and in the registration statement,
and are included in reliance upon such report given upon the authority of
said firm as experts in auditing and accounting.
Interest of Named Experts and Counsel
-------------------------------------
No expert or counsel named in this prospectus as having prepared or certified
any part of this prospectus or having given an opinion upon the validity of
the securities being registered or upon other legal matters in connection
with the registration or distribution of the common stock was employed on a
contingency basis or had, or is to receive, in connection with the
distribution, a substantial interest, directly or indirectly, in the
registrant or any of its parents or subsidiaries. Nor was any such person
connected with the registrant or any of its parents, subsidiaries as a
promoter, managing or principal underwriter, voting trustee, director,
officer or employee.
62
Our officers/directors can be considered promoters of JA Energy in
consideration of her participation and managing of the business of
the company since its incorporation.
WHERE YOU CAN FIND MORE INFORMATION
-----------------------------------
We have filed a registration statement on Form S-1 under the Securities Act
of 1933, as amended, relating to the shares of common stock being offered by
this prospectus, and reference is made to such registration statement. This
prospectus constitutes the prospectus of JA Energy filed as part of the
registration statement, and it does not contain all information in the
registration statement, as certain portions have been omitted in accordance
with the rules and regulations of the Securities and Exchange Commission.
We are subject to the informational requirements of the Securities Exchange
Act of 1934 which requires us to file reports, proxy statements and other
information with the Securities and Exchange Commission. Such reports, proxy
statements and other information may be inspected at public reference
facilities of the SEC at 100 F Street N.E., Washington D.C. 20549. Copies of
such material can be obtained from the Public Reference Section of the SEC at
100 F Street N.E., Washington, D.C. 20549 at prescribed rates. Because we
file documents electronically with the SEC, you may also obtain this
information by visiting the SEC's Internet website at http://www.sec.gov.
The public may read and copy any materials with the Commission at the SEC's
Public Reference Room at 100 F Street, NE., Washington, DC 20549, on official
business days during the hours of 10 a.m. to 3 p.m. The public may obtain
information on the operation of the Public Reference Room by calling the
Commission at 1-800-SEC-0330.
We intend to furnish our stockholders with annual reports containing audited
financial statements.
63
FINANCIAL STATEMENTS
--------------------
JA Energy
FINANCIAL STATEMENTS
August 31, 2010
64
De Joya Griffith & Company, LLC
CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
-------------------------------------------------------
To the Board of Directors and Stockholders
JA Energy, Inc.
Las Vegas, Nevada
We have audited the accompanying balance sheet of JA Energy, Inc. (A
Development Stage Company) as of August 31, 2010, and the statements of
operations, stockholders' deficit and cash flows from Inception (August 26,
2010) through August 31, 2010. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of JA Energy, Inc. (A
Development Stage Company) as of August 31, 2010, and the results of its
operations and cash flows from Inception (August 26, 2010) through August 31,
2010, in conformity with generally accepted accounting principles in the
United States.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 3 to the financial
statements, the Company has not commenced its planned operations and the
Company has not generated any revenue since inception, which all raise
substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 3.
The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
De Joya Griffith & Company, LLC
/s/ De Joya Griffith & Company, LLC
-----------------------------------
Henderson, Nevada
September 9, 2010
F-1
JA Energy
(A Development Stage Company)
Balance Sheet
August 31,
2010
-------------
Assets
Current assets:
Cash and equivalents $ -
-------------
Total current assets -
Total assets $ -
=============
Liabilities and Stockholders' Deficit
Current liabilities:
Accrued expense $ 2,500
-------------
Total current liabilities 2,500
Total liabilities $ 2,500
=============
Stockholders' deficit:
Preferred stock, $0.001 par value, 5,000,000
shares authorized, none issued -
Common stock, $0.001 par value, 70,000,000
shares authorized, none issued and outstanding
as of 8/31/10 -
Additional paid-in capital 325
Deficit accumulated during development
stage (2,825)
-------------
Total stockholders' deficit (2,500)
-------------
Total liabilities and stockholders' deficit $ -
=============
The accompanying notes are an integral part of these financial statements.
F-2
JA Energy
(A Development Stage Company)
Statement of Operations
From Inception
(August 26, 2010)
to August 31,
2010
----------------
Revenue $ -
----------------
Expenses:
General & administrative 2,825
----------------
Total expenses 2,825
----------------
Net loss $ (2,825)
================
Weighted average number of
common shares outstanding-basic 0
================
Net loss per share-basic $ (0.00)
================
The accompanying notes are an integral part of these financial statements.
F-3
JA Energy
(A Development Stage Company)
Statement of Stockholders' Deficit
For the Period from Inception (August 26, 2010) to August 31, 2010
Preferred Deficit
Stock Common Stock Additional Accumulated Total
------------------ ------------------ Paid-in During Stockholders'
Shares Amount Shares Amount Capital Development Equity
---------- ------- ---------- ------- -------- ---------- ----------
Inception
August 26,
2010 - $ - - $ - $ - $ - $ -
Contributed
Capital - - - - 325 - 325
Net loss - - - - - (2,825) (2,825)
---------- ------- ---------- ------- -------- ---------- --------------
Balance,
August 31,
2010 - $ - - $ - $ 325 $ (2,825) $ (2,500)
========== ======= ========== ======= ======== ========== ==========
The accompanying notes are an integral part of these financial statements.
F-4
JA Energy
(A Development Stage Company)
Statement of Cash Flows
From Inception
(August 26, 2010)
to August 31,
2010
----------------
Operating activities:
Net loss $ (2,825)
Adjustments to reconcile net loss to net cash
used by operating activities:
Increase in accrued expense 2,500
----------------
Net cash used by operating activities (325)
----------------
Financing activities:
Additional paid-in capital 325
----------------
Net cash provided by financing activities 325
----------------
Net increase (decrease) in cash -
Cash - beginning -
----------------
Cash - ending $ -
================
Supplemental disclosures:
Interest paid $ -
================
Income taxes paid $ -
================
Non-cash transactions $ -
================
The accompanying notes are an integral part of these financial statements.
F-5
JA Energy
(A Development Stage Company)
Notes to Financial Statements
NOTE 1. General Organization and Business
The Company was organized August 26, 2010 (Date of Inception) under the laws
of the State of Nevada, as JA Energy. The Company was incorporated as a
subsidiary of Reshoot Production Company, a Nevada corporation. Reshoot
Production Company was incorporated October 31, 2007, and, at the time of
spin off was listed on the Over the Counter Bulletin Board. The Company is a
Development Stage Company as defined by FASB ASC 915 "Development Stage
Entities". The Company plans to use a patented varietal Jerusalem Artichoke,
whereby the syrup by-product from the artichoke will be converted and
processed into ethanol.
Upon obtaining a Notice of Effectiveness from filing a Registration Statement
with the U.S. Securities and Exchange Commission, the record shareholders of
Reshoot Production Company will receive one-point-four (1.4) common shares,
par value $0.001, of JA Energy common stock for every one (1) share of
Reshoot Production Company common stock owned. The JA Energy stock dividend
will be based on 47,033,334 shares of Reshoot Production Company common stock
that are issued and outstanding as of the record date. Since JA Energy
business is related to an ethanol producer, whereas Reshoot Production
Company's business was related to food distribution, the Reshoot Production
Company directors decided it was in the best interest of the shareholders to
spin off JA Energy in order to minimize any potential of conflict of
interest, in accessing funding.
The spin-off will be valued at par value since the company holds no assets,
is uncertain as to future benefit, the stock is not trading, and the company
has not received a stock symbol.
NOTE 2. Summary of Significant Accounting Policies
The Company has no cash assets and liabilities of $2,500 as of August 31,
2010. The relevant accounting policies are listed below.
Basis of Accounting
-------------------
The basis is United States generally accepted accounting principles.
F-6
JA Energy
(A Development Stage Company)
Notes to Financial Statements
NOTE 2. Summary of Significant Accounting Practices (Continued)
Earnings per Share
------------------
The basic earnings (loss) per share is calculated by dividing the Company's
net income (loss) available to common shareholders by the weighted average
number of common shares issued and outstanding during the year. The diluted
earnings (loss) per share is calculated by dividing the Company's net income
(loss) available to common shareholders by the diluted weighted average
number of shares outstanding during the year. The diluted weighted average
number of shares outstanding is the basic weighted number of shares adjusted
as of the first of the year for any potentially dilutive debt or equity.
The Company has not issued any options or warrants or similar securities
since inception.
Revenue recognition
-------------------
The Company recognizes revenue on an accrual basis as it invoices for
services.
Dividends
---------
The Company has not yet adopted any policy regarding payment of dividends.
No dividends have been paid during the period shown.
Income Taxes
------------
The provision for income taxes is the total of the current taxes payable and
the net of the change in the deferred income taxes. Provision is made for
the deferred income taxes where differences exist between the period in which
transactions affect current taxable income and the period in which they enter
into the determination of net income in the financial statements.
Year-end
--------
The Company has selected August 31 as its year-end.
Fair value of financial instruments
-----------------------------------
Fair value estimates discussed herein are based upon certain market
assumptions and pertinent information available to management as of
August 31, 2010. The respective carrying value of certain on balance sheet
financial instruments approximated their fair values. These financial
instruments include cash and accounts payable. Fair values were assumed to
approximate carrying values for cash and payables because they are short term
in nature and their carrying amounts approximate fair values or they are
payable on demand.
Advertising
-----------
Advertising is expensed when incurred. There has been no advertising
during the period.
F-7
JA Energy
(A Development Stage Company)
Notes to Financial Statements
NOTE 2. Summary of Significant Accounting Practices (Continued)
Use of Estimates
----------------
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 disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts
of revenue and expenses during the reporting period. Actual results could
differ from those estimates.
NOTE 3 - Going concern
The Company's financial statements are prepared using the generally accepted
accounting principles applicable to a going concern, which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. However, the Company has not commenced its planned principal
operations and it has not generated any revenues. In order to obtain the
necessary capital, the Company is seeking equity and/or debt financing.
There are no assurances that the Company will be successful, without
sufficient financing it would be unlikely for the Company to continue as
a going concern. The accompanying financial statements do not include any
adjustments relating to the recoverability and classification of recorded
asset amounts or amounts and classification of liabilities that might result
from the outcome of this uncertainty.
NOTE 4 - Stockholders' Deficit
The Company is authorized to issue 70,000,000 shares of its $0.001 par value
common stock and 5,000,000 shares of its $0.001 par value preferred stock.
There have been no issuances of common or preferred stock.
On August 26, 2010, a director of the Company contributed capital of $325
for incorporating fees.
F-8
JA Energy
(A Development Stage Company)
Notes to Financial Statements
NOTE 5. Related Party Transactions
The Company does not lease or rent any property. Office services are
provided without charge by a director. Such costs are immaterial to the
financial statements and, accordingly, have not been reflected therein. The
officers and directors of the Company are involved in other business
activities and may, in the future, become involved in other business
opportunities. If a specific business opportunity becomes available, such
persons may face a conflict in selecting between the Company and their other
business interests. The Company has not formulated a policy for the
resolution of such conflicts.
NOTE 6. Provision for Income Taxes
The Company accounts for income taxes under FASB Accounting Standard
Codification ASC 740 "Income Taxes". ASC 740 requires use of the liability
method. ASC 740 provides that deferred tax assets and liabilities are
recorded based on the differences between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes,
referred to as temporary differences. Deferred tax assets and liabilities at
the end of each period are determined using the currently enacted tax rates
applied to taxable income in the periods in which the deferred tax assets and
liabilities are expected to be settled or realized.
As of August 31, 2010, the Company had net operating loss carry forwards of
$2,825 that may be available to reduce future years' taxable income through
2010. Future tax benefits which may arise as a result of these losses have
not been recognized in these financial statements, as their realization is
determined not likely to occur and accordingly, the Company has recorded a
valuation allowance for the deferred tax asset relating to these tax loss
carry-forwards. Net operation losses will begin to expire in 2030.
F-9
JA Energy
(A Development Stage Company)
Notes to Financial Statements
NOTE 6. Provision for Income Taxes (continued)
Components of net deferred tax assets, including a valuation allowance, are
as follows at August 31, 2010:
2010
--------
Deferred tax assets:
Net operating loss carry forward $ 2,825
Total deferred tax assets 989
Less: valuation allowance (989)
---------
Net deferred tax assets $ -
---------
The valuation allowance for deferred tax assets as of August 31, 2010 was
$989. In assessing the recovery of the deferred tax assets, management
considers whether it is more likely than not that some portion or all of the
deferred tax assets will not be realized. The ultimate realization of
deferred tax assets is dependent upon the generation of future taxable income
in the periods in which those temporary differences become deductible.
Management considers the scheduled reversals of future deferred tax assets,
projected future taxable income, and tax planning strategies in making this
assessment. As a result, management determined it was more likely than not
the deferred tax assets would not be realized as of August 31, 2010.
The provision for income taxes differs from the amount computed by applying
the statutory federal income tax rate to income before provision for income
taxes. The sources and tax effects of the differences are as follows:
U.S federal statutory rate (35.0%)
Valuation reserve 35.0%
------
Total -%
At August 31, 2010, we had an unused net operating loss carryover
approximating $2,825 that is available to offset future taxable income which
expires beginning 2030.
NOTE 7. Operating Leases and Other Commitments
The Company has no lease or other obligations.
F-10
JA Energy
(A Development Stage Company)
Notes to Financial Statements
NOTE 8. Recent Accounting Pronouncements
In January 2010, the FASB issued Accounting Standards Update 2010-01, "Equity
(Topic 505): Accounting for Distributions to Shareholders with Components of
Stock and Cash (A Consensus of the FASB Emerging Issues Task Force)". This
amendment to Topic 505 clarifies the stock portion of a distribution to
shareholders that allows them to elect to receive cash or stock with a limit
on the amount of cash that will be distributed is not a stock dividend for
purposes of applying Topics 505 and 260. This update is effective for
interim and annual periods ending on or after December 15, 2009, and would
be applied on a retrospective basis. The Company does not expect the
provisions of ASU 2010- 01 to have a material effect on the financial
position, results of operations or cash flows of the Company.
In January 2010, the FASB (Financial Accounting Standards Board) issued
Accounting Standards Update 2010-06 (ASU 2010-06), Fair Value Measurements
and Disclosures (Topic 820): Improving Disclosures about Fair Value
Measurements. This amendment to Topic 820 has improved disclosures about
fair value measurements on the basis of input received from the users of
financial statements. This is effective for interim and annual reporting
periods beginning after December 15, 2009, except for the disclosures about
purchases, sales, issuances, and settlements in the roll forward of activity
in Level 3 fair value measurements. Those disclosures are effective for
fiscal years beginning after December 15, 2010, and for interim periods
within those fiscal years. Early adoption is permitted. The Company does
not expect the provisions of ASU 2010-06 to have a material effect on the
financial position, results of operations or cash flows of the Company.
In February 2010, the FASB issued Accounting Standards Update 2010-09 (ASU
2010-09), Subsequent Events (Topic 855), amending guidance on subsequent
events to alleviate potential conflicts between FASB guidance and SEC
requirements. Under this amended guidance, SEC filers are no longer required
to disclose the date through which subsequent events have been evaluated in
originally issued and revised financial statements. This guidance was
effective immediately and we adopted these new requirements for the period
ended June 30, 2010. The adoption of this guidance did not have a material
impact on our financial statements.
F-11
JA Energy
(A Development Stage Company)
Notes to Financial Statements
NOTE 8. Recent Accounting Pronouncements (Continued)
In April 2010, the FASB (Financial Accounting Standards Board) issued
Accounting Standards Update 2010-18 (ASU 2010-18), Receivables (Topic 310):
Effect of a Loan Modification When the Loan is Part of a Pool That Is
Accounted for as a Single Asset-a consensus of the FASB Emerging Task Force.
The amendments in this Update are effective for modifications of loans
accounted for within pools under Subtopic 310-30 occurring in the first
interim or annual period ending on or after July 15, 2010. The amendments
are to be applied prospectively. Early application is permitted. The Company
does not expect the provisions of ASU 2010-18 to have a material effect on
the financial position, results of operations or cash flows of the Company.
In April 2010, the FASB (Financial Accounting Standards Board) issued
Accounting Standards Update 2010-17 (ASU 2010-17), Revenue Recognition-
Milestone Method (Topic 605): Milestone Method of Revenue Recognition. The
amendments in this Update are effective on a prospective basis for milestones
achieved in fiscal years, and interim periods within those years, beginning
on or after June 15, 2010. Early adoption is permitted. If a vendor elects
early adoption and the period of adoption is not the beginning of the
entity's fiscal year, the entity should apply the amendments retrospectively
from the beginning of the year of adoption. The Company does not expect the
provisions of ASU 2010-17 to have a material effect on the financial
position, results of operations or cash flows of the Company.
In April 2010, the FASB (Financial Accounting Standards Board) issued
Accounting Standards Update 2010-15 (ASU 2010-15), Financial Services-
Insurance (Topic 944): How Investments held through Separate Accounts Affect
an Insurer's Consolidation Analysis of Those Investments-a consensus of the
FASB Emerging Issues Task Force. The amendments in this Update are effective
for fiscal years, and interim periods within those fiscal years, beginning
after December 15, 2010. Early adoption is permitted. The amendments in
this Update should be applied retrospectively to all prior periods upon the
date of adoption. The Company does not expect the provisions of ASU 2010-15
to have a material effect on the financial position, results of operations or
cash flows of the Company.
F-12
JA Energy
(A Development Stage Company)
Notes to Financial Statements
NOTE 8. Recent Accounting Pronouncements (Continued)
In July 2010, the FASB (Financial Accounting Standards Board) issued
Accounting Standards Update 2010-20 (ASU 2010-20), Receivables (Topic 310):
Foreign Currency Issues: Disclosures about the Credit Quality of Financing
Receivables and the Allowance for Credit Losses. For public entities, the
disclosures as of the end of a reporting period are effective for interim and
annual reporting periods ending on or after December 15, 2010. The
disclosures about activity that occurs during a reporting period are
effecting for interim and annual reporting periods beginning on or after
December 15, 2010. The Company does not expect the provisions of ASU 2010-20
to have a material effect on the financial position, results of operations or
cash flows of the Company.
In May 2010, the FASB (Financial Accounting Standards Board) issued
Accounting Standards Update 2010-19 (ASU 2010-19), Foreign Currency (Topic
830): Foreign Currency Issues: Multiple Foreign Currency Exchange Rates. The
amendments in this Update are effective as of the announcement date of March
18, 2010. The Company does not expect the provisions of ASU 2010-19 to have a
material effect on the financial position, results of operations or cash
flows of the Company.
The company evaluated all of the other recent accounting pronouncements
through ASU 2010-20 and deemed that they were immaterial.
NOTE 9.
The Company is not currently involved in any legal proceedings at this
time. Management is aware of one potential situation that could lead to the
commencement of legal proceedings. This would result from a payment owed to
a Green Global Systems, LLC by Jim Lusk, the Company's president, was one
of four members of this LLC. Green Global Systems, LLC was suppose to raise
funds to advance the conversion of artichokes into ethanol. Management of
the Company is negotiating to dissolve Green Global Systems from the third
parties for $94,000, to release the Modular Distillation Unit the Company
needs to convert the Jerusalem artichokes harvest to ethanol. If the
Company is unable to raise $94,000 to dissolve this LLC, the Company might
face a potential claim. If this matter is not settled with the Green Global
Systems, LLC, the Company would need to expend its own funds to research and
develop its own Modular Distillation Unit. It is possible this may cost
more than $94,000. As with any dispute, the outcome is uncertain.
F-13
INFORMATION NOT REQUIRED IN PROSPECTUS
--------------------------------------
Indemnification Of Directors, Officers, Employees And Agents
------------------------------------------------------------
Our officers and directors are indemnified as provided by the Nevada Revised
Statutes and our bylaws. Under the Nevada Revised Statutes, director
immunity from liability to a company or its shareholders for monetary
liabilities applies automatically unless it is specifically limited by a
company's Articles of Incorporation. Our Articles of Incorporation do not
specifically limit our directors' immunity. Excepted from that immunity are:
(a) a willful failure to deal fairly with the company or its stockholders in
connection with a matter in which the director has a material conflict of
interest; (b) a violation of criminal law, unless the director had reasonable
cause to believe that his or her conduct was lawful or no reasonable cause to
believe that his or her conduct was unlawful; (c) a transaction from which
the director derived an improper personal profit; and (d) willful misconduct.
Our Articles and bylaws provide that we will indemnify our directors and
officers to the fullest extent not prohibited by Nevada law; provided,
however, that we may modify the extent of such indemnification by individual
contracts with our directors and officers; and, provided, further, that we
shall not be required to indemnify any director or officer in connection with
any proceeding, or part thereof, initiated by such person unless such
indemnification: (a) is expressly required to be made by law, (b) the
proceeding was authorized by our board of directors, (c) is provided by us,
in our sole discretion, pursuant to the powers vested in us under Nevada law
or (d) is required to be made pursuant to the bylaws.
Our Articles and bylaws also provide that we may indemnify a director or former
director of subsidiary corporation and we may indemnify our officers, employees
or agents, or the officers, employees or agents of a subsidiary corporation and
the heirs and personal representatives of any such person, against all expenses
incurred by the person relating to a judgment, criminal charge, administrative
action or other proceeding to which he or she is a party by reason of being or
having been one of our directors, officers or employees.
Our directors cause us to purchase and maintain insurance for the benefit of a
person who is or was serving as our director, officer, employee or agent, or as
a director, officer, employee or agent or our subsidiaries, and his or her
heirs or personal representatives against a liability incurred by him as a
director, officer, employee or agent.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to our directors, officers and control persons pursuant to the
foregoing provisions or otherwise, we have been advised that, in the opinion of
the Securities and Exchange Commission, such indemnification is against public
policy, and is, therefore, unenforceable.
II-1
Other Expenses Of Issuance And Distribution
-------------------------------------------
The following table sets forth the expenses in connection with the issuance and
distribution of the securities being registered hereby. All such expenses will
be borne by the registrant; none shall be borne by any selling stockholders.
Expenses:
Amount
------
U. S. Securities and Exchange Commission registration fee $ 47
Legal fees and miscellaneous expenses* $ 2,000
Audit Fees $ 2,500
Transfer Agent Fees* $ 900
Printing* $ 403
-------
Total $ 5,850
=======
*Estimated expenses
Recent Sales of Unregistered Securities
---------------------------------------
JA Energy is a wholly-owned subsidiary of Reshoot Production Co.
Reshoot Production Co. plans to spin-off JA Energy There have been no
shares issued to the shareholders of JA Energy. Shares will be issued to
JA Energy subject to a Notice of Effectiveness of this Registration
Statement.
II-2
Exhibits
--------
(a) Exhibits:
The following exhibits are filed as part of this registration statement:
---------------------------------------------------------------------------
EXHIBITS
SEC REFERENCE TITLE OF DOCUMENT LOCATION
NUMBER
---------------------------------------------------------------------------
3.1 Articles of Incorporation This filing
---------------------------------------------------------------------------
3.2 Bylaws of the Registrant This filing
---------------------------------------------------------------------------
5.1 Opinion of Thomas C. Cook, Esq. This filing
regarding the legality of the
securities being registered
---------------------------------------------------------------------------
23.1 Consent of De Joya Griffith. This filing
& Company, LLC
---------------------------------------------------------------------------
23.2 Consent of Thomas C. Cook, Esq. This filing
(included in Exhibit 5.1).
---------------------------------------------------------------------------
24.1 Power of Attorney (Contained on This filing
the signature page of this
registration statement)
---------------------------------------------------------------------------
II-3
UNDERTAKINGS
------------
Item 28. Undertakings
The undersigned Registrant hereby undertakes:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b) (1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
II-4
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints James Lusk, his true and lawful attorneys-
in-fact, with full power of substitution and resubstitution, for his and in
his name, place and stead, in any and all capacities to sign any and all
amendments (including post-effective amendments) to this registration
statement and to sign a registration statement pursuant to Section 462(b) of
the Securities Act of 1933, and to file the same with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact, full power and authority to
do and perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact or his substitute or substitutes, may lawfully do or cause
to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets
all the requirements for filing on Form S-1/A and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Las Vegas, and the State of Nevada.
JA Energy
------------
(Registrant)
Date: December 9, 2010 By: /s/ James Lusk
---------------- -----------------------------------------
James Lusk
Title: Chief Executive Officer
President and Director
Principal Executive, Financial,
and Accounting Officer
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
December 9, 2010 /s/ James Lusk Chairman of the Board
---------------- ---------------- Chief Executive Officer
James Lusk President, Director
Principal Executive,
Financial, and Accounting
Officer
December 9, 2010 /s/ Steve Scott Director
---------------- ----------------- Chief Operating Officer
Steve Scott
December 9, 2010 /s/ Marc Schechtman Director
---------------- --------------------
Marc Schechtman
II-5
EXHIBIT INDEX
-------------
Exhibits.
Incorporated by reference
-------------------------
Filed Period Filing
Exhibit Exhibit Description herewith Form ending Exhibit date
------------------------------------------------------------------------------
3.1 Articles of Incorporation, S-1 8/31/10 3.1 9/20/10
as currently in effect
------------------------------------------------------------------------------
3.2 Bylaws S-1 8/31/10 3.2 9/20/10
as currently in effect
------------------------------------------------------------------------------
5.1 Opinion of Thomas C. Cook, Esq. S-1 8/31/10 5.1 9/20/10
regarding the legality of the
securities being registered
------------------------------------------------------------------------------
23.1 Consent of De Joya Griffith S-1 8/31/10 5.1 9/20/10
& Company, LLC
------------------------------------------------------------------------------
23.2 Consent of Thomas C. Cook, Esq. S-1 8/31/10 5.1 9/20/10
(included in Exhibit 5.1).
------------------------------------------------------------------------------
23.3 Consent of De Joya Griffith S-1/A 8/31/10 23.3 10/28/10
& Company, LLC
------------------------------------------------------------------------------
23.4 Consent of De Joya Griffith S-1/A 8/31/10 23.4 11/30/10
& Company, LLC
------------------------------------------------------------------------------
23.5 Consent of De Joya Griffith X
& Company, LLC
------------------------------------------------------------------------------
II-6
