Attached files
| file | filename |
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| EX-32 - 906 CERTIFICATION - IA Energy Corp. | ex32_906certification.htm |
| EX-31.2 - 302 CFO CERTIFICATION - IA Energy Corp. | ex312_302cfoceritifcate.htm |
| EX-31.1 - 302 CEO CERTIFICATION - IA Energy Corp. | ex311_302ceocertification.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||
|
For the fiscal year ended December 31, 2020 | ||
Commission file number: 333-220706
IA ENERGY CORP.
(Exact name of registrant as specified in its charter)
| Wyoming | 81-1002497 | |
|
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
|
One World Trade Center, Suite 130 Long Beach, CA |
90831 | |
| (Address of principal executive offices) | (Zip Code) |
(310) 891-1959
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
|
Title of each class |
Trading Symbols(s) |
Name of each exchange on which registered |
| N/A |
Securities registered pursuant to Section 12(g) of the Act None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes ☐ No ☒
Indicate by check mark whether the issuer (1) filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth 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 |
| [X] Non-Accelerated Filer | [X] Smaller Reporting Company |
| [X] Emerging Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
☐ Yes ☒ No
Issuer’s revenues for its most recent fiscal year: $0.
Since our common stock has not yet been approved for quotation, the aggregate market value of the common stock of IA Energy Corp. held by non-affiliates as of June 30, 2020 was $0.
As of April 13, 2021, there were 36,603,800 shares of common stock issued and outstanding.
Documents Incorporated By Reference: None.
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IA ENERGY CORP.
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FORWARD-LOOKING STATEMENTS
This report contains statements that constitute “forward-looking statements.” These forward-looking statements can be identified by the use of predictive, future-tense or forward-looking terminology like “believes,” “anticipates,” “expects,” “estimates,” “envisions,” “plans,” “projects” or similar terms. These statements appear in a number of places in this report and include statements regarding our intent, belief or current expectations and those of our directors or officers with respect to, among other things: (i) trends affecting our financial condition or results of operations, (ii) our business and growth strategies, and (iii) our financing plans. You are cautioned that any forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors. Factors that could adversely affect actual results and performance include, among others, the effect of inflation and other negative economic trends and developments on the business of our customers and other barriers, examples being government regulation and competition. All forward-looking statements attributable to us are expressly qualified in their entirety by this foregoing cautionary statement.
Unless otherwise noted, references in this report to the “Company,” “IAEC,” “we,” “our,” or “us” means IA Energy Corp.
PART I.
| ITEM 1. | BUSINESS |
Company History
IA Energy Corp., a Wyoming corporation, is a start-up global waste-to-energy company. We were incorporated on January 6, 2016 in the state of Wyoming. Our business office and mailing address is One World Trade Center, Suite 130, Long Beach, California 90831, and our telephone number is (310) 891-1959.
IA Energy Corp. has never filed for bankruptcy and has never been subject to receivership or similar proceedings.
Financial Information
The audited financial statements for the fiscal year ended December 31, 2020 are attached hereto as Item 8 in this annual report.
Operational Overview
Our operations to date have been devoted primarily to start-up and development activities, which include: (i) formation of the Company; (ii) development of our business plan; (iii) development of our proprietary waste-to-energy technology; and (iv) marketing of our proprietary waste-to-energy technology. Though to date, significant research and development has been done, as described in more detail herein. We have not completed development of our proprietary waste-to-energy technology and there is no assurance that we will be successful in completing the development.
From our inception on January 6, 2016, until the present, we have had limited operating activities. During the period from inception on January 6, 2016 through December 31, 2020 we have had no revenues. During the period from inception on January 6, 2016 to December 31, 2020 we have had operating expenses of $5,997,690 which have consisted mainly of consulting and business development expenses.
OZS Management Consultancy Services
On January 6, 2016, we entered into an agreement with OZS Management Consultancy Services (OZS) to develop our contracts in the Philippines and to establish our first operating facility. OZS is located in Makati, the business district of Philippines, and provides business services to foreign and local companies setting up operations in the Philippines, including business registration, government tax incentives, tax holidays and accounting.
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OZS has been working on waste to energy projects in the Philippines for over five years now and have worked as a consultant with many public landfills for waste to energy projects including but not limited to gasification, pyrolysis, and RDFs (refuse derived fuels). OZS is working in conjunction with a group of retired government officials from the Metropolitan Manila Development Authority who have overseen all landfills and municipal solid waste government recycling programs in the Philippines for the last 30 years.
Business and Technology Description
Our initial focus will be to build and operate a pilot facility to process waste tires, which are in great supply in the Philippines due to both a shortage of disposal capacity for these tires, and the lack of desire to create landfill capacity or alternative solutions. The supply of tires for processing is readily available, at low or no cost to us.
The tires will be converted by pyrolysis into bunker fuel and other recyclable biproducts that we will use to operate our own generators and sell electricity to local utilities or the national grid. The bunker fuel, which is a type of diesel, will be utilized to run generators which will produce electricity and sold to utility companies in the local municipality.
In the Philippines, electricity is in short supply and many communities have daily scheduled power outages to conserve power. Unplanned power outages are common throughout the Philippines. We are confident in the demand for this newly generated electricity from the processing of the tires for use as bunker fuel. We believe that due to shortages and the increasing electricity demand in the Philippines, these fuel oils represent a significant opportunity for the Company.
The second stage of our business plan will be to process plastics in addition to the tires for the creation of the bunker fuel.
Power generation in the Philippines is not considered as a public utility operation, which means interested parties do not need to secure a congressional franchise to operate a power generation company. However, power generation is regulated by the Energy Regulation Commission (ERC) who must issue a certificate of compliance to interested parties to ensure that the standards set forth in the Electric Power Industry Reform Act of 2011 (EPIRA) are followed. The ERC is also responsible for determining any power abuse or anti-competitive behavior. Power generation is a value added tax zero-rated (i.e. not subject to 12% VAT) to ensure lower rates for end-users. Electricity in the Philippines is produced from various sources such as coal, oil, natural gas, as well as renewable sources.
According to several articles and news sites, the Philippines faced a power supply shortage leading to rolling blackouts across the country during the years 2014-2015. In late 2014, President Aquino requested the Congress to pass a resolution giving him emergency power to allow the government to provide additional supply and prevent a power shortage in 2015. However, the passing of the resolution was delayed, and Aquino admitted that his original plan was no longer feasible. His proposal was modified, and the resulting Interruptible Load Program (ILP) was recommended for use in the Luzon power grid instead. The ILP essentially enrolls large establishments, including government owned and controlled corporations, with their own generators to voluntarily disconnect from the main grid and switch to their generators instead when a power outage was predicted. Their rationale was that a power outage would cause these establishments to run on generators anyway, so it is more beneficial for them to run their generators in an organized fashion.
Pyrolysis
Pyrolysis is the process of molecular breakdown where larger molecules are broken down into smaller molecules. Pyrolysis is a thermo chemical decomposition or cracking of organic material at elevated temperatures inside a closed chamber where oxygen is removed and not allowed. The long chain polymer is broken down into smaller chains of Hydrocarbon Gas and Pyrolysis Oil during this process. After further processing in a distillation machine, this waste plastic pyrolysis oil can be changed into diesel oil which can be directly used for diesel oil generators, tractors and trucks, etc. In pyrolysis, the polymer waste is not burned; instead it is broken down into usable finished products like Pyrolysis Oil, Hydrocarbon Gas and Charcoal.
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Using pyrolysis to turn waste plastic into fuel has several benefits, including lower emissions, controlling the waste plastic pollution, and recovering the unused energy from the waste plastic. Petroleum is a component of plastic, it can represent 60-80% of the source material by weight; thereby through pyrolysis technology, the petroleum component of the plastics could be recovered instead of burying in the landfills.
Though the Pyrolysis System is a technology that has been implemented worldwide for over 40 years, we will be the first to implement this technology in the Philippines. Initially, the Company will manually process the garbage to be converted into bunker oil, carbon black, and self-sustaining gas used as fuel for daily operations. The Company intends to as soon as is economically feasible acquire a Trommel unit capable of extracting approximately 300 tons of plastics, rubber and tires per 1,000 tons of garbage processed daily with very high precision. However, there is no assurance that the company will ever be able to acquire a Trommel unit.
The pilot project is intended to establish proof of concept that can be potentially replicated in additional Philippine locations. The budget for this pilot project is $1,000,000. There is no assurance that the company will be able to source financing to implement this objective. Further, intermediate term expansion is contemplated to require an additional $8,000,000. in capital expenditures. Similarly, there is no assurance that the company will be able to source this additional capital financing.
Competition
The waste-to-energy industry is highly competitive and rapidly changing. Our ability to compete depends upon many factors, both within and outside our control, including the timely development and introduction to market of effective, cost-efficient waste-to-energy solutions. We expect additional competition from other emerging companies. Many of our existing and potential competitors are substantially larger than us and have significantly greater financial, technical and marketing resources. As a result, they may be able to respond more quickly to technology changes and have greater resources for the development and promotion of their products and services. There can be no assurance that we will be able to compete successfully against current or future competitors or that competitive pressure will not have a material adverse effect on our business, operating results and financial condition.
Employees
As of the date of this report, we have one employee, our CEO, Thomas K. Emmitt.
From 2016 to 2020, we outsourced certain services to OZS. We intend to continue to use the services of independent consultants and contractors to perform various professional services. We believe that this use of third-party service providers will enhance our ability to contain general and administrative expenses.
Available Information
IA Energy Corp. files quarterly and annual reports, as well as other information with the Securities and Exchange Commission (“Commission”) under File No. 333-220706. Such reports and other information filed with the Commission can be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates, and at various regional and district offices maintained by the Commission throughout the United States. Information about the operation of the Commission’s public reference facilities may be obtained by calling the Commission at 1-800-SEC-0330. The Commission also maintains a website at http://www.sec.gov that contains reports and other information regarding the Company and other registrants that file electronic reports and information with the Commission.
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| ITEM 1A. | RISK FACTORS |
FORWARD-LOOKING STATEMENTS
This report contains statements that constitute “forward-looking statements.” These forward-looking statements can be identified by the use of predictive, future-tense or forward-looking terminology like “believes,” “anticipates,” “expects,” “estimates,” “envision” or similar terms. These statements appear in a number of places in this report and include statements regarding our intent, belief or current expectations and those of our directors or officers with respect to, among other things: (i) trends affecting our financial condition or results of operations, (ii) our business and growth strategies, and (iii) our financing plans. You are cautioned that any forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors. Factors that could adversely affect actual results and performance include, among others, the effect of inflation and other negative economic trends and developments on the business of our customers and other barriers, government regulation and competition. All forward-looking statements attributable to us are expressly qualified in their entirety by the foregoing cautionary statement. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as the result of new information, future events or otherwise.
The global pandemic may disrupt our business or the business of our customers.
In December 2019, COVID-19, a novel strain of coronavirus was reported to have surfaced in Wuhan, China. In 2020, this coronavirus spread to other countries, including the United States, and efforts to contain the spread of this coronavirus intensified. The occurrence of an uncontrollable event such as the COVID-19 pandemic is likely to negatively affect our operations. Efforts to contain the spread of the coronavirus have intensified, including social distancing, travel bans and quarantine, and this has limited access to facilities, customers, management, support staff and professional advisors. These, in turn, will not only impact our operations, financial condition and demand for our products and services but our overall ability to react timely to mitigate the impact of this event. Also, it will substantially hamper our efforts to provide our investors with timely information and comply with our filing obligations with the Securities and Exchange Commission.
Unforeseeable circumstances could delay or disrupt our operations and negatively impact our operating results and financial condition.
Fire, riot, strikes, labor disputes, freight embargoes or transportation delays, acts of God or of the public enemy, war, acts or threats of terrorism, or civil disturbances, extreme weather conditions or natural disasters such as floods, earthquakes, hurricanes and tsunamis, and their related consequences and effects, including energy shortages and public health issues, any existing or future laws, rules, regulations or acts of any government (including any orders, rules or regulations issued by any official or agency or such government), or any cause beyond the Company’s reasonable control (each a “Force Majeure Event”), affecting our business, could delay or disrupt our operations, and the operations of our vendors, other suppliers and their operations or result in economic instability that may negatively impact our operating results and financial condition.
An overall economic downturn could negatively impact our earnings.
Any weakening of economic activity in our markets could result in a loss of customers, which could adversely affect our revenues or restrict our future growth. It may become more difficult for customers to pay their bills, leading to slow collections and higher-than-normal levels of accounts receivable. This could increase our financing requirements and bad debt expense. The foregoing could negatively affect earnings and liquidity, reducing our ability to grow the business.
Climate change, carbon neutral or energy efficiency legislation or regulations could restrict our market opportunities, negatively affecting our growth, cash flows and earnings.
The federal and/or state governments may enact legislation or regulations that attempt to control or limit the causes of climate change, including greenhouse gas emissions such as carbon dioxide and emissions of methane. Such laws or regulations could impose additional costs or operational requirements. They could also provide a cost advantage to alternative energy sources. The focus on climate change could negatively impact the reputation of fossil fuel products or services.
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We are subject to physical and financial risks associated with climate change.
Climate change can create physical and financial risk. Climate change may impact a region’s economic health, which could impact our revenues. Our financial performance is tied to the health of the regional economies we serve. The price of energy has an impact on the economic health of our communities. The cost of additional regulatory requirements, such as regulation of CO2 emissions, or additional environmental regulation could impact the prices charged
We may have difficulty managing the expansion of our operations.
In order to effectively manage our operations and growth, including growth in the sales of, and services related to, our business, we may need to:
| · | scale our internal infrastructure, including establishing additional facilities on a timely basis; |
| · | attract and retain sufficient numbers of talented personnel, including application engineers, customer support staff and production personnel; |
| · | continue to enhance our compliance and quality assurance systems; and |
| · | continue to improve our operational, financial and management controls and reporting systems and procedures. |
Rapid expansion of our operations could place a strain on our senior management team, support teams, manufacturing lines, information technology platforms and other resources. In addition, we may be required to place more reliance on our strategic partners and suppliers, some of whom may not be capable of meeting our production demands in terms of timing, quantity, quality or cost. Difficulties in effectively managing the budgeting, forecasting and other process control issues presented by any rapid expansion could harm our business, prospects, results of operations or financial condition.
Changes in environmental and regulatory policies could hurt the market for our products.
Our business is affected by government environmental policies, mandates and regulations around the world, most significantly with respect to emission standards. There can be no assurance that these policies, mandates and regulations will be continued or expanded as assumed in our growth strategy.
The adoption of new, more stringent and burdensome government regulations, whether at the foreign, federal, state, or local level, in markets in which we supply our products, may require modification of our processes. Thus, we might incur unanticipated expenses in meeting future compliance requirements and may be required to increase our research and product development expenditures. Increases in such costs and expenses could necessitate increases in the prices we charge our customers for our product, which could adversely affect demand for them.
Business, political and economic factors may affect our operations, the manner in which we conduct our business and our rate of growth.
If the world economic conditions deteriorate or do not improve, our target consumer base may be disproportionately affected. Stagnant economic growth is likely to negatively affect our customers' ability to purchase our goods. The resulting impact of such economic conditions on our customers and on consumer spending could have a material adverse effect on demand for our products and on our business, financial condition and operating results.
Our performance is influenced by a variety of economic, social, and political factors
Our performance is influenced by a variety of economic, social, and political factors. Economic uncertainty, unfavorable employment levels, declines in consumer confidence, increases in consumer debt levels, increased commodity prices, and other economic factors may affect our customer spending and adversely affect the demand for our products. Economic conditions also affect governmental political and budgetary policies. As a result, economic conditions can have an effect on the sale of our products to our customers.
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A global economic crisis could result in decreases in customer spending
We operate in competitive and evolving markets. These markets are subject to rapid technological change and changes in demand. In seeking market acceptance we will encounter competition. Many of these competitors have substantially greater financial, marketing and other resources than the Company. Our revenue could be materially adversely affected if we are unable to compete successfully with these other providers.
The Company is subject to foreign business, political and economic disruption risks
Our operations take place in both the United States and the Philippines. As a result, we are exposed to foreign business, political and economic risks, which could adversely affect our financial position and results of operations, including:
| · | difficulties in managing relationships from outside of the jurisdiction; |
| · | political and economic instability; |
| · | less developed business and political infrastructures; |
| · | susceptibility to business interruption in foreign areas due to war, terrorist attacks, medical epidemics, changes in political regimes, and general interest rate and currency instability; |
| · | exposure to possible litigation or claims in foreign jurisdictions; and, |
| · | competition from foreign-based providers and the existence of protectionist laws and business practices that favor such providers. |
Early stage of the Company and its products
We have no revenue from operations and may not generate any significant revenue in the near future. To achieve profitable operations we must successfully initiate, sell and distribute our products. The time frame necessary to achieve market success for any individual product is uncertain. There can be no assurance that our efforts will be successful, or that any of our products will prove to meet the anticipated levels of approval or effectiveness, or that we will be able to obtain and retain customers.
Uncertainty of future sales
We require the commitment of substantial resources to advertisement, marketing and distribution of our products, however there can be no assurance that our products will meet the effectiveness required to be competitive in the marketplace and that our products achieve customer acceptance.
Future capital requirements; uncertainty of future funding
Substantial expenditures will be required to enable us to conduct existing product research, manufacturing, marketing and distribution of our products. We will need to raise additional capital to facilitate growth. We have no established bank-financing arrangements and until we have sufficient assets, capital, and inventory or accounts receivable, it is not anticipated that we will secure any bank financing in the near future. We will need to seek additional financing through subsequent future sales of our securities, including equity securities. We may also seek funding through strategic partnerships and other arrangements with corporate partners. There can be no assurance, however, that such collaborative arrangements or additional funds will be available when needed, or on terms acceptable to us, if at all. Any such additional financing may result in significant dilution to existing stockholders. If adequate funds are not available, we may be required to curtail one or more of our programs.
C Corporation tax status
We are a C Corporation under the Internal Revenue Code of 1986. All items of income and loss are taxed first at the corporate level and any dividends distributed to shareholders are taxed at the shareholder level as well.
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Limited current sales and marketing capability
We must either retain and hire the necessary personnel to distribute and market our products or enter into collaborative arrangements or distribution agreements with third parties who will market such products or develop our own marketing and sales force with technical expertise and supporting distribution capability. There can be no assurance that we will be able to retain or hire the personnel with sufficient experience and knowledge to distribute and market our products or be able to enter into collaborative or distribution arrangements or develop our own sales force, or that such sales and marketing efforts will be successful.
No dividends
No cash dividends have been paid. Payment of dividends on the Common Stock is within the discretion of the Board of Directors, is subject to state law, and will depend upon our earnings, if any, its capital requirements, financial condition and other relevant factors.
We are subject to the periodic reporting requirements of the Securities Exchange Act of 1934, which require us to incur audit fees and legal fees in connection with the preparation of such reports. These additional costs could reduce our ability to earn a profit.
We file periodic reports with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder. In order to comply with these requirements, our independent registered public accounting firm has to review our financial statements on a quarterly basis and audit our financial statements on an annual basis. Moreover, our legal counsel will have to review and assist in the preparation of such reports. The costs charged by these professionals for such services cannot be accurately predicted at this time because factors such as the number and type of transactions that we engage in and the complexity of our reports cannot be determined at this time and will have a major effect on the amount of time to be spent by our auditors and attorneys. However, the incurrence of such costs will obviously be an expense to our operations and thus have a negative effect on our ability to meet our overhead requirements and earn a profit. We may be exposed to potential risks resulting from requirements under Section 404 of the Sarbanes-Oxley Act of 2002. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our common stock could drop significantly.
Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, as amended by SEC Release 33-8889 we are required to include in our annual report our assessment of the effectiveness of our internal control over financial reporting as of the end of the year. If we fail to achieve and maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. Moreover, effective internal controls, particularly those related to revenue recognition, are necessary for us to produce reliable financial reports and are important to help prevent financial fraud. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our stock could drop significantly.
Management believes that these reporting obligations will increase out annual legal and accounting costs.
Penny stock regulations
If our stock is below $5.00 per share, or we do not have $2,000,000 in net tangible assets, or are not listed on an exchange or on the NASDAQ National Market System, among other conditions, our shares may be subject to a rule promulgated by the Securities and Exchange Commission (the “SEC”) that imposes additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and institutional accredited investors. For transactions covered by the rule, the broker-dealer must make a special suitability determination for the purchaser and receive the purchaser's written consent to the transaction prior to the sale. Furthermore, if the price of our stock is below $5.00, and does not meet the conditions set forth above, sales of our stock in the secondary market will be subject to certain additional new rules promulgated by the SEC. These rules generally require, among other things, that brokers engaged in secondary trading of stock provide customers with written disclosure documents, monthly statements of the market value of penny stocks, disclosure of the bid and asked prices, and disclosure of the compensation to the broker-dealer and disclosure of the sales person working for the broker-dealer. These rules and regulations may affect the ability of broker-dealers to sell our securities, thereby limiting the liquidity of the securities. They may also affect the ability of shareholders to resell their securities in the secondary market.
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ITEM 2. | PROPERTIES |
IA Energy Corp.’s corporate office is located at One World Trade Center, Suite 130, Long Beach, California 90831. As the company continues to grow, the facilities and employment-related expenses will likely increase significantly. We lease our offices at this location pursuant to a written sub-lease on a month-to-month basis. We occupy approximately 800 square feet at this location in exchange for $500 per month. We believe our facilities are suitable for our present needs. We also intend to secure additional office and administrative facilities when necessary.
| ITEM 3. | LEGAL PROCEEDINGS |
We are not a party to any pending legal proceeding. No federal, state or local governmental agency is presently contemplating any proceeding against the Company. No director, executive officer or affiliate of the Company or owner of record or beneficially of more than five percent of the Company's common stock is a party adverse to the Company or has a material interest adverse to the Company in any proceeding.
PART II.
| ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
Market Information
Currently, our securities are not traded on any market.
Holders
We had 37 registered stockholders of record of our common stock as of December 31, 2020. Registered holders do not include those stockholders whose stock has been issued in street name.
Dividends
Common Stock - No dividends have ever been paid on the Common Stock and the Company does not currently anticipate paying any cash or other dividends on the Common Stock. Future dividend policy will be determined by the Board of Directors of the Company in light of prevailing financial need and earnings, if any, of the Company and other relevant factors.
Preferred Stock - Under our articles of incorporation, our Board of Directors is authorized, without stockholder action, to issue preferred stock in one or more series and to fix the number of shares and rights, preferences, and limitations of each series. Among the specific matters that may be determined by the Board of Directors are the dividend rate, the redemption price, if any, conversion rights, if any, the amount payable in the event of any voluntary liquidation or dissolution of our company, and voting rights, if any. As of the date of this report, no shares of preferred stock were issued and outstanding.
Securities Authorized for Issuance Under Equity Compensation Plans
As of December 31, 2020 the Company has not adopted any equity compensation or similar type of plans.
Issuer Purchases of Equity Securities
There were no stock repurchases during the year ended December 31, 2020.
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Recent Sales of Unregistered Securities
On January 8, 2020, the Company issued 100,000 restricted shares of Common Stock to a third-party service provider in consideration of services provided to the Company valued at $10,000. With respect to the transaction, no solicitation was made and no underwriting discounts were given or paid. The Company believes that the issuance of the shares was exempt from registration provided by Section 4(a)(2) of the Securities Act of 1933.
| ITEM 6. | SELECTED FINANCIAL DATA |
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
| ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and related notes to the financial statements included elsewhere in this annual report. Some of the statements under “Management’s Discussion and Analysis,” “Business” and elsewhere herein may include forward-looking statements which reflect our current views with respect to future events and financial performance. Statements which include the words “expect,” “intend,” “plan,” “believe,” “project,” “anticipate,” “will,” and similar statements of a future or forward-looking nature identify forward-looking statements for purposes of the federal securities laws or otherwise.
All forward-looking statements address such matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. We undertake no obligation to publicly update or review any forward-looking statements, whether as a result of new information, future developments or otherwise.
If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary materially from what we projected. Any forward-looking statements you read herein reflect our current views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to our written and oral forward-looking statements attributable to us or individuals acting on our behalf and such statements are expressly qualified in their entirety by this paragraph.
Overview
We are an emerging growth waste-to-energy solutions company. Our operations to date have been devoted primarily to start-up and development activities, which include: (i) formation of the Company; (ii) development of our business plan; (iii) development of our proprietary waste-to-energy technology; and (iv) marketing of our waste-to-energy technology. General and administrative expenses have been comprised of consulting and business development fees; occupancy and office expenses; outside legal, accounting and other professional fees; travel and other miscellaneous office and administrative expenses.
Because we have incurred losses, income tax expenses are immaterial. No tax benefits have been booked related to operating loss carryforwards, given our uncertainty of being able to utilize such loss carryforwards in future years. We anticipate incurring additional losses during the coming year.
Results of Operations
For the years ended December 31, 2020 and 2019
Revenues. For the years ended December 31, 2020 and 2019, net revenues were $-0-.
Consulting and business development. Consulting and business development fees for the years ended December 31, 2020 and 2019 were $77,000 and $913,167, respectively. During the year ended December 31, 2018, the Company issued a total of 10,475,000 shares of its common stock for consulting services to be rendered to the Company. The shares were valued at $0.50 per share or $5,237,500 and were expensed over the terms of the respective Consulting Agreements ranging from 3 to 6 months. During the year ended December 30, 2020, $829,167 of this amount was expensed as consulting and business development fees.
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Professional and accounting fees. Professional and accounting fees for the years ended December 31, 2020 and 2019 were $50,409 and $26,102, respectively. Professional fees consist mainly of the fees for the audits and reviews of the Company’s financial statements as well as the filings with the SEC. The Company anticipates that professional fees will increase commensurate with an increase in our operations.
Other selling, general and administrative expenses. Other selling, general and administrative expenses for the years ended December 31, 2020 and 2019 were $7,759 and $8,050, respectively. We expect that selling, general and administrative expenses will increase as we add personnel to build our business.
Other Income (Expense). The Company had other income (expenses) of $-0- for the years ended December 31, 2020 and 2019.
Liquidity and Capital Resources
As of December 31, 2020, our primary source of liquidity consisted of $1,010 in cash and cash equivalents. We hold most of our cash reserves in local checking accounts with local financial institutions. Since inception, we have financed our operations through a combination of short and long-term loans, and through the private placement of our common stock.
We have sustained significant net losses which have resulted in an accumulated deficit at December 31, 2020 of $5,997,690 and are currently experiencing a substantial shortfall in operating capital which raises doubt about our ability to continue as a going concern. We generated a net loss for the year ended December 31, 2020 of $135,168. Without additional revenues, working capital loans, or equity investment, there is substantial doubt as to our ability to continue operations.
We believe these conditions have resulted from the inherent risks associated with small public companies. Such risks include, but are not limited to, the ability to (i) generate revenues and sales of our products and services at levels sufficient to cover our costs and provide a return for investors, (ii) attract additional capital in order to finance growth, and (iii) successfully compete with other comparable companies having financial, production and marketing resources significantly greater than those of the Company.
We believe that our capital resources are insufficient for ongoing operations, with minimal current cash reserves, particularly given the resources necessary to expand our business. We will likely require considerable amounts of financing to make any significant advancement in our business strategy. There is presently no agreement in place that will guarantee financing for our Company, and we cannot assure you that we will be able to raise any additional funds, or that such funds will be available on acceptable terms. Funds raised through future equity financing will likely be substantially dilutive to current shareholders. Lack of additional funds will materially affect our Company and our business and may cause us to substantially curtail or even cease operations. Consequently, you could incur a loss of your entire investment in the Company.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
Critical Accounting Policies
We believe the following more critical accounting policies are used in the preparation of our financial statements:
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 amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. On a periodic basis, management reviews those estimates, including those related to valuation allowances, loss contingencies, income taxes, and projection of future cash flows.
| 13 |
Research and Development. Research and development costs are charged to operations when incurred and are included in operating expenses.
Recent Accounting Pronouncements
There were various accounting standards and interpretations recently issued, none of which are expected to a have a material impact on the Company's consolidated financial position, operations or cash flows.
| ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
| 14 |
| ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
IA ENERGY CORP.
FINANCIAL STATEMENTS
December 31, 2020 and 2019
| 15 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of IA Energy Corp.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of IA Energy Corp. (the “Company”) as of December 31, 2020 and 2019 and the related statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended December 31, 2020 and 2019, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of IA Energy Corp. as of December 31, 2020 and 2019 and the results of its operations and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Going Concern Uncertainty
The accompanying financial statements referred to above have been prepared assuming that the Company will continue as a going concern. As discussed in Note 5 to the financial statements, the Company’s present financial situation raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to this matter are also described in Note 5. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there were no critical audit matters.
/s/ Michael T. Studer CPA P.C.
Michael T. Studer CPA P.C.
Freeport, New York
April 15, 2021
We have served as the Company’s auditor since 2017.
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| IA ENERGY CORP. | ||||||||
| Balance Sheets | ||||||||
| ASSETS | ||||||||
| December 31, | December 31, | |||||||
| 2020 | 2019 | |||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 1,010 | $ | 1,128 | ||||
| TOTAL CURRENT ASSETS AND TOTAL ASSETS | $ | 1,010 | $ | 1,128 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable, related parties | $ | 21,000 | $ | 15,000 | ||||
| Loans payable, related party | 215,800 | 96,750 | ||||||
| Total Current Liabilities | 236,800 | 111,750 | ||||||
| TOTAL LIABILITIES | 236,800 | 111,750 | ||||||
| STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
| Preferred stock, $0.0001 par value; 20,000,000 shares authorized, | ||||||||
| -0- shares issued | — | — | ||||||
| Common stock, $0.0001 par value; 500,000,000 shares authorized, | ||||||||
| 36,603,800 and 36,503,800 shares issued | ||||||||
| and outstanding, respectively | 3,660 | 3,650 | ||||||
| Additional paid-in capital | 5,758,240 | 5,748,250 | ||||||
| Accumulated deficit | (5,997,690 | ) | (5,862,522 | ) | ||||
| Total Stockholders' Equity (Deficit) | (235,790 | ) | (110,622 | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $ | 1,010 | $ | 1,128 | ||||
The accompanying notes are an integral part of these financial statements
| 17 |
| IA ENERGY CORP. | ||||||||
| Statements of Operations | ||||||||
| For the Years Ended | ||||||||
| December 31, | ||||||||
| 2020 | 2019 | |||||||
| NET REVENUES | $ | — | $ | — | ||||
| OPERATING EXPENSES | ||||||||
| Consulting and business development (including | ||||||||
| stock based compensation of $10,000 | ||||||||
| and $829,167, respectively) | 77,000 | 913,167 | ||||||
| Professional and accounting fees | 50,409 | 26,102 | ||||||
| Other selling, general and administrative | 7,759 | 8,050 | ||||||
| Total Operating Expenses | 135,168 | 947,319 | ||||||
| LOSS FROM OPERATIONS | (135,168 | ) | (947,319 | ) | ||||
| OTHER INCOME (EXPENSES) | — | — | ||||||
| NET LOSS | $ | (135,168 | ) | $ | (947,319 | ) | ||
| Net loss per common share - basic and diluted | $ | (0.00 | ) | $ | (0.03 | ) | ||
| Weighted average common shares | ||||||||
| outstanding - basic and diluted | 36,602,430 | 36,472,207 | ||||||
The accompanying notes are an integral part of these financial statements
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The accompanying notes are an integral part of these financial statements
| 19 |
| IA ENERGY CORP. | ||||||||
| Statements of Cash Flows | ||||||||
| For the Years Ended | ||||||||
| December 31, | ||||||||
| 2020 | 2019 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (135,168 | ) | $ | (947,319 | ) | ||
| Adjustments to reconcile net loss to net | ||||||||
| cash used by operating activities: | ||||||||
| Stock-based compensation | 10,000 | 829,167 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts payable, related parties | 6,000 | 6,000 | ||||||
| Net Cash Used by Operating Activities | (119,168 | ) | (112,152 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | — | — | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from sale of common stock | — | 100,000 | ||||||
| Proceeds from related party loans | 119,050 | 66,750 | ||||||
| Payments on related party loans | — | (54,000 | ) | |||||
| Net Cash Provided by Financing Activities | 119,050 | 112,750 | ||||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (118 | ) | 598 | |||||
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 1,128 | 530 | ||||||
| CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 1,010 | $ | 1,128 | ||||
| SUPPLEMENTAL CASH FLOW INFORMATION | ||||||||
| Cash Payments For: | ||||||||
| Interest | $ | — | $ | — | ||||
| Taxes | $ | — | $ | — | ||||
The accompanying notes are an integral part of these financial statements
| 20 |
IA ENERGY CORP.
Notes to the Financial Statements
December 31, 2020
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
IA Energy Corp. (the Company) was incorporated in the State of Wyoming on January 6, 2016. Our operations to date have been devoted primarily to start-up and development activities, which include: (i) formation of the Company; (ii) development of our business plan; (iii) development of our proprietary waste-to-energy technology; and (iv) marketing of our proprietary waste-to-energy technology. We have not completed development of our proprietary waste-to-energy technology and there is no assurance that we will be successful in completing the development.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of the Company is presented to assist in understanding the Company’s financial statements. The financial statements and notes are representations of the Company’s management who are responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements. The following policies are considered to be significant:
a. Accounting Method
The Company recognizes income and expenses based on the accrual method of accounting. The Company has elected a calendar year-end.
b. Cash and Cash Equivalents
Cash equivalents are generally comprised of certain highly liquid investments with original maturities of less than three months.
c Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted accounting principles 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 revenues and expenses during the reporting period. Actual results could differ from those estimates.
d. Revenue Recognition
Revenue will be recognized when all of the following criteria are met: (1) persuasive evidence of an arrangement exists, (2) the price is fixed or determinable, (3) collectability is reasonably assured, and (4) delivery of products or services has occurred. To date, the Company has not recognized any revenues.
e. Income Taxes
The Company accounts for income taxes using the asset and liability method. Under this method, deferred income taxes are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which differences are expected to reverse. A valuation allowance is established to reduce deferred tax assets if it is more likely than not that all or some portion of such deferred tax assets will not be realized. A full allowance against deferred tax assets was provided as of December 31, 2020 and 2019.
At December 31, 2020, the Company had net operating loss carryforwards of approximately $625,000 which may be offset against future taxable income. Approximately $280,000 expires in 2036 and 2037 and approximately $345,000 does not expire. No tax benefit has been reported in the financial statements because the potential tax benefits of the net operating loss carryforwards are offset by a valuation allowance of the same amount.
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IA ENERGY CORP.
Notes to the Financial Statements
December 31, 2020
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued)
Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carryforwards for Federal income tax reporting purposes are subject to annual limitations when substantial changes in ownership occur.
f. Basic and Diluted Net Loss per Share of Common Stock
Basic net loss per common share is based on the weighted average number of shares outstanding during the periods presented. Diluted earnings per share is computed using the weighted average number of common shares plus dilutive common share equivalents outstanding during the period. For the periods presented, the issued and outstanding warrants (See Note 3) were excluded from the calculation of diluted shares outstanding as the effect of their inclusion would be anti-dilutive.
g. Recent Accounting Pronouncements
Certain accounting pronouncements have been issued by the FASB and other standard setting organizations which are not yet effective and have not yet been adopted by the Company. The impact on the Company’s financial position and results of operations from adoption of these standards is not expected to be material.
NOTE 3 - EQUITY TRANSACTIONS
The Company has 500,000,000 shares of common stock authorized with a par value of $0.0001. 25,000,000 shares of common stock were issued to the founder of the Company on incorporation.
On August 1, 2018, the Company issued a total of 10,475,000 shares of its common stock to one consulting firm entity and nine individuals for consulting services to be rendered to the Company pursuant to Consulting Agreements dated August 1, 2018 for terms ranging from 3 to 6 months. The shares were valued at $0.50 per share or $5,237,500 total which was expensed as consulting and business development expenses on the statement of operations over the terms of the respective Consulting Agreements. $4,408,333 (of the $5,237,500 total) was expensed in the year ended December 31, 2018, and $829,167 (of the $5,237,500 total) was expensed in the year ended December 31, 2019.
On March 12, 2019, the Company sold 200,000 shares of its common stock (and 200,000 Warrants) to an investor at a price of $0.50 per share or $100,000 total.
On January 8, 2020, the Company issued 100,000 restricted shares of its common stock to a third-party service provider in consideration of consulting services rendered to the Company. The shares were valued at $0.10 per share or $10,000 total which is included in consulting and business development expenses on the statement of operations for the three months ended March 31, 2020. Because there was no market for the common stock at January 8, 2020, the Company estimated the fair value of the issuance at the estimated fair value of the services rendered by the consultant.
Warrants
A summary of Warrants activity for the years ended December 31, 2019 and 2020 follows:
| Balance, January 1, 2019 | 213,800 | |||
| Issued in 2019 | 200,000 | |||
| Expired in 2019 | (150,000 | ) | ||
| Balance, December 31, 2019 | 263,800 | |||
| Issued in 2020 | — | |||
| Expired in 2020 | (63,800 | ) | ||
| Balance, December 31, 2020 | 200,000 |
Each Warrant is exercisable into shares of our common stock at an exercise price of $1.00 per share and expires two years from the date of its issuance.
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IA ENERGY CORP.
Notes to the Financial Statements
December 31, 2020
Each Warrant is exercisable into shares of our common stock at an exercise price of $1.00 per share and expires two years from the date of its issuance.
NOTE 4 - FINANCIAL INSTRUMENTS
Our financial instruments consist of cash and cash equivalents, accounts payable and loans payable. The carrying amount of these assets and liabilities approximate fair value due to their short-term nature.
NOTE 5 - GOING CONCERN
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has sustained significant net losses which have resulted in an accumulated deficit at December 31, 2020 of $5,997,690 and has experienced periodic cash flow difficulties, all of which raise substantial doubt regarding the Company’s ability to continue as a going concern.
Continuation of the Company as a going concern is dependent upon obtaining additional working capital. The management of the Company has developed a strategy which it believes will accomplish this objective through short term loans from related parties and additional equity investments which will enable the Company to continue operations for the coming year. However, there is no assurance that these objectives will be met. These 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 6 - RELATED PARTY TRANSACTIONS
Loans Payable, Related Party
The Company periodically receives advances from a corporation controlled by John Munoz, beneficial owner of 25,000,000 shares of our common stock and Chief Executive Officer of the Company from inception on January 6, 2016 to July 25, 2017. These loans are non-interest bearing and due on demand. During the year ended December 31, 2020, the Company received additional loans of $119,050. The amount of loans payable to this corporation as of December 31, 2020 and 2019 was $215,800 and $96,750, respectively.
Sublease Agreements
On July 1, 2017, the Company entered into a Sublease Agreement with another corporation controlled by John Munoz. The Sublease Agreement provided for the Company’s use of office space in Harbor City, California at a Monthly Base Rent of $500 per month. The term of the Sublease commenced on July 1, 2017 and ended October 31, 2019.
Effective November 1, 2019, the Company entered into a Sublease Agreement with the related party described in the first paragraph of Note 6 for the Company’s use of office space in Long Beach, California at a Monthly Base Rent of $500 per month. The Sublease is month to month and terminable by either party upon 30 days written notice.
For the years ended December 31, 2020 and 2019, the Company recorded $6,000 and $6,000, respectively, in rent expense which is included in other selling, general and administrative expenses. The amount due on the Sublease Agreements as of December 31, 2020 and 2019 was $21,000 and $15,000, respectively.
NOTE 7 – SUBSEQUENT EVENTS
On February 22, 2021, Renato A. Paraiso resigned as the sole officer of the Company to take a position with another alternative energy company.
On March 1, 2021, Aristotle Popolizio was appointed as a director and the sole acting officer of the Company.
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|
ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
None.
| ITEM 9A. | CONTROLS AND PROCEDURES |
Management’s Report on Disclosure Controls and Procedures
We attempt to maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, to allow for timely decisions regarding required disclosure.
As of December 31, 2020, the end of our fiscal year covered by this report, we carried out an evaluation, under the supervision of our Chief Executive Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, we concluded that our disclosure controls and procedures were ineffective as of the end of the period covered by this annual report because there was no segregation of the duties with only a sole member in our management team and our board of directors does not have a formal audit committee.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act, as amended). In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of control procedures. The objectives of internal control include providing management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management’s authorization and recorded properly to permit the preparation of financial statements in conformity with accounting principles generally accepted in the United States.
Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2020. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework.
Our management has concluded that, as of December 31, 2020, our internal control over financial reporting is ineffective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with US generally accepted accounting principles.
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.
Inherent limitations on effectiveness of controls
Internal control over financial reporting has inherent limitations which include but is not limited to the use of independent professionals for advice and guidance, interpretation of existing and/or changing rules and principles, segregation of management duties, scale of organization, and personnel factors. Internal control over financial reporting is a process which involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements on a timely basis, however these inherent limitations are known features of the financial reporting process and it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
| 24 |
Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Changes in Internal Control over Financial Reporting
There have been no changes in internal control over financial reporting that occurred during our fourth fiscal quarter of 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
| ITEM 9B. | OTHER INFORMATION |
Subsequent Events
On February 22, 2021, subsequent to the period covered by this report, Renato A. Paraiso resigned as an officer of the Corporation to take a position with another alternative energy company.
On March 1, 2021, subsequent to the period covered by this report, Aristotle Popolizio was appointed as a director and the sole acting officer of the corporation.
On April 12, 2021, subsequent to the period covered by this report, Aristotle Popolizio resigned as an officer and director of the Corporation, and concurrently therewith Thomas K. Emmitt was appointed as the dole director and as the President, Secretary and Treasurer of the Corporation. The biography of Mr. Emmitt is set forth below.
PART III.
| ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
Identification of directors and executive officers
Our current sole director and executive officer of the Company is as follows:
|
Name |
Age |
Title |
Director Since | ||
| Thomas K. Emmitt | 58 | Director, President, CEO, CFO and Secretary | April 2021 | ||
All of the Company’s directors hold office until the next annual general meeting of the shareholders or until their successors are elected and qualified. The officers are appointed by our Board of Directors and hold office until their earlier death, retirement, resignation or removal.
Significant Employees
There are no significant employees other than Mr. Paraiso.
Family Relationships
There are no family relationships between any directors or executive officers of the Company, either by blood or by marriage.
Business Experience
The business experience during the past five years of each of the persons presently listed above as an Officer or Director of IAEC or a Significant Employee is as follows:
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Thomas K. Emmitt was appointed as our Chief Executive Officer and a director in April 12, 2021. In addition to these roles, Mr. Emmitt is a director and Chief Executive Officer of Bakhu Holdings Corp.. Mr. Emmitt is also the principal of the Law Office of Tom Emmitt, a law firm specializing in civil litigation. Mr. Emmitt has successfully prosecuted over 400 civil cases in the areas of personal injury and employment law. From March 2009 through January 2016, Mr. Emmitt was in-house counsel to Green Medica Holdings Corporation, a nutraceutical company specializing in mushroom derivatives and DHA/GPC products. Beginning in January 2016, and continuing through the present, Mr. Emmitt has been in-house counsel to the OZ Corporation, a management consulting company providing services to small and mid-cap companies and overseeing processes, strategic planning, startup funding and recruitment of management executives. Finally, Mr. Emmitt has been the President of Belltower Entertainment Corp. (BTOW), a publicly traded entity since December 2017. Mr. Emmitt is experienced in all phases of financial analysis, information technology and marketing. Mr. Emmitt is a graduate of Ventura College, and the West Los Angeles School of Law, and resides in Santa Monica, California with his wife of 23 years.
Directorships
No Director of the Company or person nominated or chosen to become a Director holds any other directorship in any company with a class of securities registered pursuant to section 12 of the Exchange Act or subject to the requirements of section 15(d) of such Act or any other company registered as an investment company under the Investment Company Act of 1940.
Involvement in Certain Legal Proceedings
During the past ten years, no present or former director, executive officer or person nominated to become a director or an executive officer of the Company has been or filed:
| 1. | A petition under the Federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing; |
| 2. | Such person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses); |
| 3. | Such person was the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities: |
| i. | Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity; |
| ii. | Engaging in any type of business practice; or |
| iii. | Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws; |
| 26 |
| 4. | Such person was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (f)(3)(i) of this section, or to be associated with persons engaged in any such activity; |
| 5. | Such person was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated; |
| 6. | Such person was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated; |
| 7. | Such person was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: |
| i. | Any Federal or State securities or commodities law or regulation; or |
| ii. | Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or |
| iii. | Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or |
| 8. | Such person was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
Promoters and Control Persons
None.
Section 16(a) Beneficial Ownership Reporting Compliance
We are required to identify each person who was an officer, director or beneficial owner of more than 10% of our registered equity securities during our most recent fiscal year and who failed to file on a timely basis reports required by Section 16(a) of the Securities Exchange Act of 1934.
Based upon a review of out shareholder list, we have determined that our sole officer and director as well as certain beneficial holders of more than ten percent of our issued and outstanding shares of Common Stock have failed to timely file the required Reports pursuant to Section 16(a) of the Exchange Act of 1934. We are in the process of taking action to remediate this failure.
Code of Ethics
The Company expects that its Officers and Directors will maintain appropriate standards of honesty and ethical conduct in connection with the performance of their duties on behalf of the Company. In recognition of this expectation, the Company has adopted a Code of Ethics. The purpose of this Code of Ethics is to codify standards the Company believes are reasonably necessary to deter wrongdoing and to promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships and full, fair, accurate, timely and understandable disclosure in reports and documents that the Company files with, or submits to, the Securities and Exchange Commission (the “SEC”), or other regulatory bodies and in other public communications made by the Company.
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Audit Committee and Audit Committee Financial Expert
We also do not have an “audit committee financial expert” as such term is described in Item 401 of Regulation S-K promulgated by the SEC.
| ITEM 11. | EXECUTIVE COMPENSATION |
Summary Compensation Table
Summary Compensation Table
The following table summarizes the total compensation for the two fiscal years ended December 31, 2020 of each person who served as our principal executive officer or principal financial and accounting officer collectively, (the “Named Executive Officers”) including any other executive officer who received more than $100,000 in annual compensation from the Company. We did not award cash bonuses, stock options or non-equity incentive plan compensation to any Named Executive Officer during the two fiscal years ended December 31, 2020 and 2019; thus these items are omitted from the table below:
Summary Compensation Table
|
Name and Principal Position |
Year Ended Dec. 31 |
Salary ($) |
Stock Award(s) ($) |
Option Awards $ | Non-Equity Incentive Plan Compensation | All Other Compensation ($) | Total ($) |
| Renato A. Paraiso | 2020 | $ | - | - | $ | - | - | $ | - | $ | - |
| CEO, President, | 2019 | $ | - | - | $ | - | - | $ | - | $ | - |
On February 22, 2021, Mr. Paraiso resigned as an officer and director of the Corporation to take a position with another alternative energy company.
Compensation of Directors
Each director may be reimbursed for certain expenses incurred in attending board of directors and committee meetings.
There are no employment contracts, compensatory plans or arrangements, including payments to be received from the Company with respect to any Director that would result in payments to such person because of his or her resignation with the Company, or its subsidiaries, any change in control of the Company IAEC. There are no agreements or understandings for any Director to resign at the request of another person. None of our Directors or executive officers acts or will act on behalf of or at the direction of any other person.
Outstanding Equity Awards at Fiscal Year-End
There are no outstanding equity awards to our Named Executive Officers or directors as of December 31, 2020.
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| ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
We have determined beneficial ownership as shown in the following two tables in accordance with the rules of the SEC. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the two tables below have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to applicable community property laws.
Applicable percentage ownership as shown in the two tables below is based on 36,603,800 shares of common stock outstanding on April 13, 2021. In computing the number of shares of common stock beneficially owned by a person and the percentage ownership of that person, we deemed as outstanding shares of common stock subject to options held by that person that are currently exercisable or exercisable within 60 days of April 13, 2021. However, we did not deem these shares outstanding for the purpose of computing the percentage ownership of any other person.
Security Ownership of Certain Beneficial Owners
The following table shows the amount of common stock beneficially owned by holders of more than 5% of the outstanding shares of any class of our voting securities.
|
Title of Class |
Name and Address of Beneficial Owner |
Amount and Nature of Beneficial Owner |
Percent of Class | |||||
|
Common Stock |
John R. Munoz One World Trade Center Suite 130 Long Beach, CA 90831 |
25,025,000 | 68.37% | |||||
|
Common Stock |
OZS Management Consultancy Services 310 San Miguel Magalang Pampanga, Philippines 2011 |
4,950,000 | 13.52% | |||||
| Common Stock |
Lady Jho Pineda Dimitui 310 San Miguel Magalang Pampanga, Philippines 2011 |
4,950,000 | 13.52% |
Security Ownership of Management
The following table sets forth the amount and nature of beneficial ownership of any class of our voting securities held by all of the Company’s current directors and executive officers.
|
Title of Class |
Name and Address of Beneficial Owner |
Amount and Nature of Beneficial Owner |
Percent of Class | |||||
|
Common Stock |
Thomas K. Emmitt Suite 130 Long Beach, CA 90831 |
0 | 0.0% | |||||
|
Common Stock |
Directors and Executive Officers as a Group (1 Person) |
0 | 0.0% |
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Change of Control
Neither management nor our shareholders have had preliminary contact or discussions with, nor do we have any present plans, proposals, arrangements or understandings with, any representatives of the owners of any business or company regarding the possibility of an acquisition or merger, change of control, or similar transaction.
Securities Authorized for Issuance Under Equity Compensation Plans
We have no equity compensation plans, previously approved or not by stockholders.
| ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
Certain Relationships and Related Transactions
We occupy office space in accordance with a sublease from The OZ Corporation. The beneficial shareholder of The OZ Corporation is John R. Munoz, who is the controlling shareholder of the Company. No rent has been paid and rent started to accrue at the rate of $500 per month on November 1, 2019.
Review, Approval or Ratification of Transactions with Related Persons
Not Applicable.
Promoters and Certain Control Persons
There have been no material transactions, series of similar transactions, currently proposed transactions, or series of similar transactions, to which the Company is to be a party, in which any promoter or founder, or any member of the immediate family of any of the foregoing persons, had a material interest.
Director Independence
Our Board of Directors has not established Audit, Compensation, and Nominating or Governance Committees as standing committees. The Board does not have an executive committee or any committees performing a similar function. We are not currently listed on a national securities exchange or in an inter-dealer quotation system that has requirements that a majority of the board of directors be independent. Our director and sole officer, Aristotle Popolizio is not “independent” under the definition set forth in the listing standards of the NASDAQ Stock Market, Inc., which is the definition that the Board has chosen to use for the purposes of determining independence, as the OTC Markets does not provide such a definition.
| ITEM 14. | PRINCIPAL ACCOUNTING FEES AND SERVICES |
The following table sets forth fees invoiced by our independent registered accounting firm Michael T. Studer, CPA P.C. for the fiscal years ended December 31, 2020 and 2019:
| 2020 | 2019 | |||||||
| Audit Fees | $ | 17,500 | $ | 17,500 | ||||
| Audit Related Fees | -0- | -0- | ||||||
| Tax Fees | -0- | -0- | ||||||
| All Other Fees | -0- | -0- | ||||||
| Total Fees | $ | 17,500 | $ | 17,500 | ||||
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It is the policy of the Board of Directors, which presently completes the functions of the Audit Committee, to engage the independent accountants selected to conduct our financial audit and to confirm, prior to such engagement, that such independent accountants are independent of the company. All services of the independent registered accounting firms reflected above were pre-approved by the Board of Directors.
Audit Fees
During the fiscal year ended December 31, 2020, we incurred $17,500 in fees to our principal independent accountants for professional services rendered in connection with the audit and reviews of our financial statements for fiscal year ended December 31, 2020.
During the fiscal year ended December 31, 2019, we incurred $17,500 in fees to our principal independent accountants for professional services rendered in connection with the audit and reviews of our financial statements for fiscal year ended December 31, 2019.
Audit-Related Fees
The aggregate fees billed during the fiscal years ended December 31, 2020 and 2019 for assurance and related services by our principal independent accountants that are reasonably related to the performance of the audit or review of our financial statements (and are not reported under Item 9(e)(1) of Schedule 14A was $-0- and $-0-, respectively.
Tax Fees
The aggregate fees billed during the fiscal years ended December 31, 2020 and 2019 for professional services rendered by our principal accountant for tax compliance, tax advice and tax planning was $-0- and $-0-, respectively.
All Other Fees
The aggregate fees billed during the fiscal years ended December 31, 2020 and 2019 for products and services provided by our principal independent accountants (other than the services reported above) was $-0- and $-0-, respectively.
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PART IV.
| ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES |
| 1. | Financial Statements. The following financial statements are filed as part of this report: |
| Page | |
| Audited Financial Statements for the Years Ended December 31, 2020 and 2019: | |
| Report of Independent Registered Public Accounting Firm | 16 |
| Balance Sheets as of December 31, 2020 and 2019 | 17 |
| Statements of Operations for the Years Ended December 31, 2020 and 2019 | 18 |
| Statements of Stockholders’ Equity (Deficit) for the Years Ended December 31, 2020 and 2019 | 19 |
| Statements of Cash Flows for the Years Ended December 31, 2020 and 2019 | 20 |
| Notes to the Financial Statements | 21 |
3. Exhibits. The following exhibits are either filed as a part hereof or are incorporated by reference. Exhibit numbers correspond to the numbering system in Item 601 of Regulation S-K.
|
Exhibit Number* |
Description of Exhibit | |
| 3(i) | Articles of Incorporation of IA Energy Corp. (1) | |
| 3(ii) | By-Laws of IA Energy Corp. (1) | |
| 31(i) | CEO certification pursuant to Section 302 of the Sarbanes – Oxley Act of 2002 (7) | |
| 31(ii) | CFO certification pursuant to Section 302 of the Sarbanes – Oxley Act of 2002 (7) | |
| 32 | CEO and CFO certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (7) | |
| 101** | The following materials from the Company's Annual Report on Form 10-K for the year ended December 31, 2020 formatted in Extensible Business Reporting Language ("XBRL"): (i) the balance sheets (unaudited); (ii) the statements of operations (unaudited); (iii) the statements of cash flows (unaudited); and, (iv) related notes. | |
| 101.INS | XBRL Instance Document | |
| 101.SCH | XBRL Taxonomy Extension Schema | |
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase | |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase | |
| 101.LAB | XBRL Taxonomy Extension Label Linkbase |
| (1) | Previously filed on Form S-1 on September 29, 2017 |
| (2) | Filed herewith |
| * | All exhibits are numbered with the number preceding the decimal indicating the applicable SEC reference number in Item 601 and the number following the decimal indicating the sequence of the particular document. |
| ** | Users of this data are advised that, pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or Annual Report for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Exchange Act of 1934 and otherwise are not subject to liability. |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Dated: April 15, 2021 | /s/ Thomas K. Emmitt | ||
| By: Thomas K. Emmitt | |||
| Its: Chief Executive Officer and Principal Accounting Officer | |||
| Dated: April 15, 2021 | /s/ Thomas K. Emmitt | ||
| By: Thomas K. Emmitt, Director |
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