UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For
the Quarterly Period Ended
or
For the Transition Period from _________ to _________
Commission
file number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S.
Employer |
(Address of principal executive offices) (zip code)
(Registrant’s telephone number, including area code)
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 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.
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted 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 and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| 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 ☐
Securities registered pursuant to Section 12(b) of the Act: None.
As of May 5, 2023, there were shares of registrant’s common stock outstanding.
VISION ENERGY CORPORATION
INDEX
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PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VISION ENERGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
| March 31, 2023 | December 31, 2022 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Sales tax receivable | ||||||||
| Total current assets | ||||||||
| Deferred offering cost | ||||||||
| Website development costs, net | ||||||||
| Total non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Total current liabilities | ||||||||
| Total noncurrent liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity (deficit) | ||||||||
| Preferred stock - $ par value; shares authorized; shares issued and outstanding | ||||||||
| Common stock - $ par value; shares authorized; shares issued and outstanding as of March 31, 2023, and December 31, 2022 | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive gain | ( | ) | ||||||
| Total stockholders’ equity (deficit) | ||||||||
| TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY (DEFICIT) | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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VISION ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
| For the Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Revenue | ||||||||
| Sales | $ | $ | ||||||
| Total revenue | ||||||||
| Cost of goods sold | ||||||||
| Direct costs | ||||||||
| Total cost of goods sold | ||||||||
| Gross profit | ||||||||
| Operating expenses | ||||||||
| General and administrative expenses | ||||||||
| Management fees – related party | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other (income) expense | ||||||||
| Total other expenses | ||||||||
| Income tax provision | ||||||||
| Net loss from continuing operations | $ | ( | ) | $ | ( | ) | ||
| Discontinued operations (see Note 5) | ( | ) | ||||||
| Net loss | ( | ) | ( | ) | ||||
| Foreign currency translation adjustment | ( | ) | ||||||
| Comprehensive loss | $ | ( | ) | $ | ( | ) | ||
| Loss per share (continuing operations) | ||||||||
| Basic and diluted | $ | ( | ) | $ | ( | ) | ||
| Loss per share (discontinued operations) | ||||||||
| Basic and diluted | $ | ( | ) | $ | ( | ) | ||
| Weighted average common shares outstanding | ||||||||
| Basic and diluted | ||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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VISION ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2022 (UNAUDITED)
| Common Stock | Preferred Stock | |||||||||||||||||||||||||||||||
| Number
of Shares | Amount | Number
of shares | Amount | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Gain (Loss) | Total
| |||||||||||||||||||||||||
| Beginning, January 1, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Ending, March 31, 2022 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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VISION ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2023 (UNAUDITED)
| Common Stock | Preferred Stock | |||||||||||||||||||||||||||||||
| Number
of Shares | Amount | Number
of shares | Amount | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Gain (Loss) | Total
Stockholders’ Equity (Deficit) | |||||||||||||||||||||||||
| Beginning, January 1, 2023 | $ | $ | $ | $ | ( | ) | $ | | ||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Ending, March 31, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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VISION ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
| For the Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss from continuing operations | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Change in operating assets and liabilities: | ||||||||
| Prepaid expenses and other costs | ||||||||
| Sales tax receivable | ( | ) | ||||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Net cash used in in operating activities – continuing operations | ( | ) | ( | ) | ||||
| Net cash used in in operating activities – discontinued operations | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Net cash used in in investing activities – continuing operations | ||||||||
| Net cash used in in investing activities – discontinued operations | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from related party notes | ||||||||
| Net cash used in in financing activities – continuing operations | ||||||||
| Net cash used in financing activities – discontinued operations | ||||||||
| Net cash provided by financing activities | ||||||||
| Net increase (decrease) in cash and cash equivalents | ( | ) | ( | ) | ||||
| Effect of foreign currency translation on cash | ( | ) | ( | ) | ||||
| Cash and cash equivalents - beginning of period | ||||||||
| Cash and cash equivalents - end of period | $ | |||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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VISION ENERGY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2023 AND 2022
1. ORGANIZATION AND LINE OF BUSINESS
Vision Energy Corporation (“we,” the “Company,” or “Vision ) identifies energy commodities and focuses on originating and developing energy infrastructure projects and assets which facilitate the energy transition through low-carbon energy solutions. The Company leverages its experienced Team with a vast proven track-record in site procurement, accelerating development permitting, facilities design, engineering studies and project management to deliver an efficient and method driven project development process. Vision pursues commercial relationships and operating partnerships with energy industry participants and off-takers seeking carbon abatement across feedstock and fuels. Vision Energy is committed to providing low carbon energy solutions whilst targeting an attractive investment yield, by utilizing and leveraging existing gas, power, and logistics infrastructure to enable import and or distribution of reduced-carbon energy for domestic and global value chains.
The Company was incorporated in Nevada on August 17, 2015, as H/Cell Energy Corporation and is based in Jersey City, New Jersey. The Company changed its name to Vision Hydrogen Corporation in October 2020, and then to Vision Energy Corporation in November 2022. Since inception, the Company has been involved in the hydrogen and renewable energy space. The Company has six subsidiaries: Vision Energy Holdings AG (f/k/a VisionH2 Holdings AG), Vision Hydrogen BV, Evolution Operating BV, Evolution Terminals SPV II BV, Evolution Terminals BV (“ETBV”), and Vision Energy UK Ltd.
At each reporting period, the Company evaluates whether there are conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. The Company’s evaluation entails analyzing prospective operating budgets and forecasts for expectations of the Company’s cash needs and comparing those needs to the current cash and cash equivalent balances. The Company is required to make certain additional disclosures if it concludes substantial doubt exists and it is not alleviated by the Company’s plans, or when its plans create substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. This basis of accounting contemplates the recovery of the Company’s assets and the satisfaction of liabilities in the normal course of business. These condensed consolidated financial statements do not include any adjustments to the specific amounts and classifications of assets and liabilities, which might be necessary should the Company be unable to continue as a going concern.
As
reflected in the quarterly financial statements, the Company had a net loss from continuing operations of $
Despite
generating $
Management has evaluated the significance of these conditions and found that they raise substantial doubt about Vision’s ability to continue as a going concern. To alleviate these concerns, the Company is planning to conduct an equity raise during 2023, and will continue to develop our assets.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Company’s condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and following the requirements of the Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. These interim financial statements have been prepared on the same basis as the Company’s annual financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair statement of the Company’s financial information. These interim results are not necessarily indicative of the results to be expected for the year ending December 31, 2022, or any other interim period or for any other future year. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2022, included in the Company’s 2022 Annual Report on Form 10-K filed with the SEC. The balance sheet as of December 31, 2022, has been derived from audited financial statements at that date but does not include all the information required by U.S. GAAP for complete financial statements.
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VISION ENERGY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2023 AND 2022
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, 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. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable in the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Reclassification
Certain prior period amounts have been reclassified to conform to current period presentation specifically as it relates to the reclassification of assets, liabilities, operating results, and cash flows.
Accounts Receivable
Accounts
receivables are recorded when invoices are issued and are presented in the balance sheet net of the allowance for doubtful accounts.
The allowance for doubtful accounts is estimated based on the Company’s historical losses, the existing economic conditions in
the construction industry, and the financial stability of its customers. Accounts are written off as uncollectible after collection efforts
have failed. In addition, the Company does not generally charge interest on past-due accounts or require collateral. As of March 31,
2023, and December 31, 2022, there was
Comprehensive Gain/Loss
Comprehensive
loss consists of two components: net loss and other comprehensive loss. The Company’s other comprehensive loss is comprised of
foreign currency translation adjustments. The balance of accumulated other comprehensive loss is $
For
the three months ended March 31, 2023, and 2022 the Company recorded comprehensive loss of $
Currency Translation
The Company translates its foreign subsidiaries’ assets and liabilities denominated in foreign currencies into U.S. dollars at current rates of exchange as of the balance sheet date and income and expense items at the average exchange rate for the reporting period. Translation adjustments resulting from exchange rate fluctuations are recorded in accumulated other comprehensive income. The Company records gains and losses from changes in exchange rates on transactions denominated in currencies other than each reporting location’s functional currency in net income (loss) for each period. Items included in the financial statements of each entity in the group are measured using the currency of the primary economic environment in which the entity operates (“functional currency”).
The functional and reporting currency of the Company is the United States Dollar (“U.S. Dollar”).
Website Development Costs
Website
development costs were for a new company website created in 2021 and updated in 2022, and are amortized over
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VISION ENERGY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2023 AND 2022
Leases
Right of use assets represent the right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease right of use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an explicit rate, the Company uses an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The operating lease right of use asset also excludes lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
Please see “Note 3” for further information.
Asset acquisitions
Asset acquisitions are measured based on their cost to us, including transaction costs incurred by us. The cost of an asset acquisition or the consideration transferred by us is assumed to be equal to the fair value of the net assets acquired. If the consideration transferred is cash, measurement is based on the amount of cash we paid to the seller, as well as transaction costs incurred by us. Consideration given in the form of nonmonetary assets, liabilities incurred, or equity interests issued is measured based on either the cost to us or the fair value of the assets or net assets acquired, whichever is more clearly evident. The cost of an asset acquisition is allocated to the assets acquired based on their estimated relative fair values. We engage third-party appraisal firms to assist in the fair value determination of inventories, identifiable long-lived assets, and identifiable intangible assets. Goodwill is not recognized in an asset acquisition.
3. LEASES
Operating Leases
For leases with a term of 12 months or less, the Company is permitted to make and has made an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities, and we recognize lease expense for such leases on a straight-line basis over the lease term.
The Company maintains its principal office at 95 Christopher Columbus Drive, 16th Floor, Jersey City, NJ 07302.
Finance Leases
As
of March 31, 2023, and December 31, 2022, the Company had
4. RECENT ACCOUNTING PRONOUNCEMENTS
The FASB issued ASU 2016-02 in February 2016, which has since been amended, most recently in 2022. This ASU requires an entity to recognize a right of use asset and lease liability for all leases with terms of more than 12 months. Recognition, measurement, and presentation of expenses will depend on classification of the underlying lease as either finance or operating. Similar modifications have been made to lessor accounting in-line with revenue recognition guidance. The amendments also require certain quantitative and qualitative disclosures about leasing arrangements. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. The new standard was effective for the Company on January 1, 2019. Entities are required to adopt ASU 2016-02 using a modified retrospective transition method. Full retrospective transition is prohibited. The guidance permits an entity to apply the standard’s transition provisions at either the beginning of the earliest comparative period presented in the financial statements or the beginning of the period of adoption (i.e., on the effective date). The Company adopted the new standard on its effective date.
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VISION ENERGY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2023 AND 2022
In September 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (ASC 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”). ASU 2018-07 simplifies the accounting for non-employee share-based payment transactions. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. The new standard will become effective for the Company beginning January 1, 2019, with early adoption permitted. The Company has adopted this standard and has no impact on its consolidated financial statements and disclosures.
In August 2018, the FASB issue ASU 2018-13, Fair Value Measurement (ASC 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements for fair value measurements by removing, modifying, or adding certain disclosures. The new standard will become effective for the Company January 1, 2020, with early adoption permitted. The Company has adopted this standard and has no impact on its consolidated financial statements and disclosures.
In January 2020, the FASB issued ASU 2020-01, Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivative and Hedging (Topic 815), which clarifies the interaction of rules for equity securities, the equity method of accounting, and forward contracts and purchase options on certain types of securities. The guidance clarifies how to account for the transition into and out of the equity method of accounting when considering observable transactions under the measurement alternative. The ASU is effective for annual reporting periods beginning after December 15, 2020, including interim reporting periods within those annual periods, with early adoption permitted. The Company has adopted this standard and there is no impact on the current financial statements.
In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. This ASU amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity’s own equity, and also improves and amends the related EPS guidance for both Subtopics. The ASU will be effective for annual reporting periods after December 15, 2021, and interim periods within those annual periods and early adoption is permitted. The Company has adopted this standard and has no impact on its consolidated financial statements and disclosures.
5. DISCONTINUED OPERATIONS
On
May 6, 2022, we, through our wholly owned Swiss subsidiary,
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VISION ENERGY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2023 AND 2022
The results of discontinued operations are as follows:
| Three
months ended March 31,2022 | ||||
| General and administrative expenses | ||||
| Discontinued operations for the period | $ | ( | ) | |
6. ASSET ACQUISTION FROM RELATED PARTY
On May 30, 2022, we entered into a Stock Purchase Agreement (the “Purchase Agreement”) with Evolution Terminals B.V., a Dutch corporation (“ETBV”), and ETBV’s sole shareholder. ETBV is developing a green energy terminal for the storage and handling of sustainable products and fuels.
On
May 30, 2022, we entered into a Stock Purchase Agreement (the “Purchase Agreement”) with Evolution Terminals B.V., a Dutch
corporation (“ETBV”), pursuant to which we acquired ETBV (the “Acquisition”) from an investment firm of which
our CEO is principal for $
The
asset had capitalized project development costs which consisted of financial models, environmental impact assessments, layout
drawings, terminal operation simulations, and other various permitting reports and storage designs. These capitalized project
development costs were determined to be In-Process-Research-and-Development. In-Process-Research-and-Development can only be
capitalized under GAAP once project viability has been achieved. Since the acquisition was a related party transaction, the
accounting should be acknowledged at predecessor cost and not historical cost. Predecessor cost is what the predecessor owner had
recorded, and per the explanation above, all the amounts are expensed. The total purchase price consideration was expensed in the
year ended December 31, 2022, and consisted of $
7. RELATED PARTY TRANSACTIONS
The Company has entered into agreements to indemnify its directors and executive officers in addition to the indemnification provided for in the Company’s articles of incorporation and bylaws. These agreements, among other things, provide for indemnification of the Company’s directors and executive officers for certain expenses (including attorneys’ fees), judgments, fines, and settlement amounts incurred by any such person in any action or proceeding, including any action by or in the right of the Company, arising out of such person’s services as a director or executive officer of the Company, any subsidiary of the Company, or any other company or enterprise to which the person provided services at the Company’s request. The Company believes that these provisions and agreements are necessary to attract and retain qualified people as directors and executive officers.
On
November 8, 2021, we acquired the
On
May 30, 2022, we acquired Evolution Terminals B.V., a Dutch corporation (“ETBV”) from an investment firm of which our CEO
is principal for a purchase price of $
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VISION ENERGY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2023 AND 2022
On
June 20, 2022, we entered into a Management Services Agreement (the “MSA’) with a company controlled by our CEO pursuant
to which we receive executive, business consulting and advisory, business development, and other services. The MSA had an
initial term of three years and would have automatically renewed for one or more additional two-year renewal periods unless terminated. The $
8. SIGNIFICANT CONCENTRATIONS OF CREDIT RISK
Cash
is maintained at authorized deposit-taking institutions (banks) incorporated in the United States, Canada and The Netherlands, and are
insured by the U.S. Federal Deposit Insurance Corporation (FDIC), the Canada Deposit Insurance Corporation (CDIC), and the Dutch Central
Bank (DNB) for up to $
The Company currently has shares issued and outstanding, out of its authorized. We have authorized of preferred stock, none of which are issued and outstanding.
On
November 8, 2022, we effectuated a
There were no 2016 Incentive Stock Option Plan stock options issued or exercised during either of the three month periods ended March 31, 2023, and 2022. As of March 31, 2023, there was unrecognized compensation expense or dilutive securities.
11. PREPAID ASSETS
The table below present a reconciliation of the Company’s prepaid assets costs:
| Balance at January 1, 2023 | $ | |||
| Expense | ( | ) | ||
| Balance at March 31, 2023 | $ |
The balance of prepaid expenses as of both December 31, 2022 and March 31, 2023 are comprised of prepaid investor relations work that has yet to commence.
12. ACCOUNTS PAYABLE
At March 31, 2023 and December 31, 2022, accounts payable and accrued expenses were comprised of the following:
| March 31, 2023 | December 31, 2022 | |||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
The balance of accounts payable and accrued expenses as of both December 31, 2022 and March 31, 2023 are comprised of vendors in relation to development of the Green Energy Hub.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management’s Discussion and Analysis of Financial Condition and Results of Operations includes a number of forward-looking statements that reflect Management’s current views with respect to future events and financial performance. You can identify these statements by forward-looking words such as “may,” “will,” “expect,” “anticipate,” “believe,” “estimate” and “continue,” or similar words. Those statements include statements regarding the intent, belief or current expectations of us and members of our management team as well as the assumptions on which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risk and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements.
Readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the Securities and Exchange Commission. Important factors currently known to Management could cause actual results to differ materially from those in forward-looking statements. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in the future operating results over time. We believe that our assumptions are based upon reasonable data derived from and known about our business and operations. No assurances are made that actual results of operations or the results of our future activities will not differ materially from our assumptions. Factors that could cause differences include, but are not limited to, expected market demand for our products, fluctuations in pricing for materials, and competition.
Business Overview
Vision Energy is a renewable energy company developing energy infrastructure to provide low-carbon energy solutions for the commercial, industrial and transportation sectors through site procurement , permitting, pre-development, grid and logistics integration. The Company is committed to delivering energy projects whilst targeting an attractive investment yield through the development of storage, distribution, processing and production facilities for the European renewable economy and supply chain.
Evolution Terminals is a wholly owned subsidiary developing a substantial Green Energy Hub for import, storage and throughput of new energy products, hydrogen carriers and low-carbon fuels, and will facilitate in Europe’s Energy Transition ambitions for greater carbon-abatement to net zero.
Results of Operations
For the three months ended March 31, 2023, and 2022
Revenue and Cost of Revenue
The Company had no revenues for the three months March 31, 2023, and March 31, 2022, as it has committed itself to investing in the development of our Green Energy Hub. We plan to generate revenue by divesting our assets in full or in part to energy industry participants and/or selling fractional ownership interests in sites under development. We are currently in discussion with various parties, such as private landowners, energy companies, commodity traders, utilities, and industrial process customers.
General and Administrative Expenses
During the three months ended March 31, 2023, our general and administrative expenses were $1,626,358, which included $1,197,507 in project development costs, $131,273 in investor relations, $125,000 of management fees-related party, $46,564 in legal, $40,500 in consulting, $32,157 in accounting fees, $22,500 in director fees, and $30,857 in miscellaneous expense.
During the three months ended March 31, 2022, our general and administrative expenses were $348,398, which included $225,000 of management fees related party, $79,305 in accounting fees, $13,112 in dues and subscriptions, $15,000 in director fees, $12,000 in legal fees, and $3,981 other miscellaneous and administrative costs.
As a result of the foregoing, we had net losses from continuing operations of $1,626,358 and $348,398 for the three months ended March 31, 2023, and 2022, respectively.
We incurred $0 and $608,964 in discontinued operations for the periods ended March 31, 2023, and 2022 along with no other expense for both periods.
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We incurred a foreign currency translation loss of $4,233 and gain of $12,189 for the three months ended March 31, 2023, and 2022 respectively.
Comprehensive loss was $1,630,591 for March 31, 2023, and $945,173 for March 31, 2023 and 2022.
Liquidity and Capital Resources
As of March 31, 2023, we had working capital of $2,370,098, comprised of current assets of $2,119,405 in cash, $359,555 in prepaid expenses, and $42,113 in sales tax receivable, offset by $150,975 in accounts payable and accrued expenses. We had $83,598 in website development costs, $25,000 of deferred offering cost in long-term assets, and no long-term liabilities.
As of December 31, 2022, we had working capital of $3,998,834, consisting of $3,712,826 in cash, $432,295 in prepaid expenses, and $29,266 in sales tax receivable offset by $175,553 in accounts payable. Non-current assets included $85,453 in website development costs and $25,000 in deferred offering cost. There were no long-term liabilities.
For the three months ended March 31, 2023, we used $1,89,188 of cash in operating activities – continuing operations, consisting of $1,855 in amortization, $72,740 in prepaid expenses, , offset by $24,578 in accounts payable and $12,847 in sales tax receivable.
We had no investing or financing activities for the three months ended March 31, 2023.
For the three months ended March 31, 2022, we used $292,634 of cash in operating activities – continuing operations, consisting of $51,879 in accounts payable and $3,975 in amortization. Net cash provided by discontinued operations was $91,017.
For the three months ended March 31, 2022, we had no investing activities for continuing operations and $43,393 in discontinued operations.
We generated $60,000 in financing activities in proceeds from related notes payable for the three months ended March 31, 2022, and $36,614 in discontinued operations.
In the future, we expect to incur expenses related to compliance for being a public company. We expect that our general and administrative expenses will increase as we expand our business development, add infrastructure, and incur additional costs related to being a public company, including incremental audit fees, investor relations programs, and increased professional services.
Our future capital requirements will depend on several factors, including the progress of our sales and marketing of our services, the timing and outcome of potential acquisitions, the costs involved in operating as a public reporting company, the status of competitive services, the availability of financing and our success in developing markets for our services. We believe our existing cash will be sufficient to fund our operating expenses and capital equipment requirements for at least the next 12 months.
Critical Accounting Policies
Please refer to Note 2 in the accompanying financial statements.
Recent Accounting Pronouncements
Please refer to Note 4 in the accompanying financial statements.
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ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not required under Regulation S-K for “smaller reporting companies.”
ITEM 4 - CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures.
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 as of the end of the period covered by this Quarterly Report on Form 10-Q. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Based on management’s evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2023, as a result of the material weaknesses described below, our disclosure controls and procedures are not designed at a reasonable assurance level and are ineffective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. The material weaknesses, which relate to internal control over financial reporting, that were identified are:
| a) | Due to our small size, we did not have sufficient personnel in our accounting and financial reporting functions. As a result, we were not able to achieve adequate segregation of duties and were not able to provide for adequate review of the financial statements. This control deficiency, which is pervasive in nature, results in a reasonable possibility that material misstatements of the consolidated financial statements will not be prevented or detected on a timely basis; and |
| b) | We lacked sufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of U.S. GAAP and SEC disclosure requirements and the approval of related party transactions. |
We intend to create written policies and procedures for accounting and financial reporting with respect to the requirements and application of U.S. GAAP and SEC disclosure requirements in the future.
We will continue to monitor and evaluate the effectiveness of our disclosure controls and procedures and our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.
Changes in internal control over financial reporting.
There were no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
We are not currently party to any material legal proceedings or claims.
Item 1A. Risk Factors
Not required under Regulation S-K for “smaller reporting companies.”
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
None.
Item 5. Other Information
None.
Item 6. Exhibits
| * | Furnished herewith. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| VISION ENERGY CORPORATION | ||
| Date: May 5, 2023 | By: | /s/ ANDREW HROMYK |
| Andrew Hromyk | ||
| Chief Executive Officer | ||
| Date: May 5, 2023 | By: | /s/ MATTHEW HIDALGO |
| Matthew Hidalgo | ||
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | ||
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