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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Amendment No. 1 to

FORM 10-Q/A

(Mark one)
   
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended November 30, 2011

OR

 
   
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________________to

 
Commission File Number: 0-54236
 

JA ENERGY

(Exact name of registrant as specified in its charter)

Nevada   27-3349143
(State or Other Jurisdiction   (I.R.S. Employer
of Incorporation or Organization)   Identification No.)

 

7495 W. Azure Dr. Suite 110, Las Vegas, NV   89130
(Address of principal executive offices)   (Zip Code)

(702) 515-4036
(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. Yes o No o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer or a smaller reporting company, defined in Rule 12b-2 of the Exchange Act (Check one).

 

Large accelerated filer o   Accelerated filer o
Non-accelerated filer o   Smaller Reporting Company þ
(Do not check if a smaller reporting company)    
       

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes þ No o

 

There were 34,156,703 shares of Common Stock outstanding as of January 18, 2012.

 
 

 

Explanatory Note

 

This Amendment No. 1 on Form 10-Q/A amends the JA Energy (“the Company” or “Registrant”) Quarterly Report on Form 10-Q filed with the U. S. Securities and Exchange Commission (“Commission”) on January 23, 2012 (the “Original Filing”). This Amendment is being filed to include the interactive data file required by Item 601(b)(101) of Regulation S-K.

 

There have been no changes from the Original Filing other than as herein. This Amendment No. 1 does not modify or update in any way the other disclosures made in the Original Filing.

______________________________________________________________________________

 

Table of Contents

JA Energy

Index to Form 10-Q

For the Quarterly Period Ended November 30, 2011

PART I Financial Information 3
     
ITEM 1. Financial Statements 3
  Balance Sheets 3
  Unaudited Statements of Operations 4
  Unaudited Statements of Cash Flows 5
  Notes to the Unaudited Financial Statements 6
     
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 10
     
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk 22
     
ITEM 4T. Controls and Procedures 23
     
PART II Other Information 26
     
ITEM 1. Legal Proceedings 26
     
ITEM 1A. Risk Factors 26
     
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 26
     
ITEM 3 Defaults Upon Senior Securities 26
     
ITEM 4 Submission of Matters to a Vote of Security Holders 26
     
ITEM 5 Other Information 26
     
ITEM 6 Exhibits 27
     
  SIGNATURES 28
     

 

2

 
 

 

 

Part I. Financial Information

Item 1. Financial Statements

JA Energy

(A Development Stage Company)

Balance Sheets

(Audited)   November 30,   August 31,
    2011   2011
    (Unaudited)   (Audited)
         
Assets        
         
Current assets        
Cash & cash equivalents   $ 10,960   $ 6,828
Prepaid expenses   1,333   6,059
Inventory   43,158   38,350
Deposits   2,995   2,000
Total current assets   58,446   53,237
         
Total assets   $ 58,446   $ 53,237
         
Liabilities & stockholders' equity (deficit)        
         
Current liabilities        
Accounts payable and accrued liabilities   $ 10,312   $ 1,554
Accounts payable to related parties   4,500   10,550
Loan from non related third party   15,000   15,000
Total current liabilities   29,812   27,104
         
Total liabilities   29,812   27,104
         
Stockholders' equity        
Preferred stock, $0.001 par value,        
5,000,000 shares authorized, none issued   -   -
Common stock, $0.001 par value, 70,000,000        
shares authorized, 34,156,703 and 31,156,703 issued and        
outstanding as of 11/30/11 and 8/31/11,        
Respectively   34,157   31,157
Additional paid-in capital   105,533   33,533
Stock subscription payable   -   37,500
Deficit accumulated during development stage   (111,056)   (76,057)
Total stockholders' equity   28,634   26,133
         
Total liabilities and stockholders' equity   $ 58,446   $ 53,237

The accompanying notes are an integral part of these financial statements.

3

 

 
 

 

 

JA Energy

(A Development Stage Company)

Statements of Operations

(Unaudited)

            From inception
    Three months   Three months   (August 26, 2010)
    ended   ended   to
    November 30, 2011   November 30, 2010   November 30, 2011
             
             
Revenue   $                    -   $                          -   $                               -
             
Expenses            
General and administrative   27032   1,750   66,089
Consulting fees   7,967   -   44,967
Total expenses   34,999   1,750   111,056
             
Net loss   $        (34,999)   $              (1,750)   $               (111,056)
             
Weighted average number of            
common shares outstanding -            
basic   33,398,461   0    
             
Net loss per share - basic   (0.00)   (0.00)    

The accompanying notes are an integral part of these financial statements.

4

 

 
 

 

 

JA Energy

(A Development Stage Company)

Statements of Cash Flows

(Unaudited)

            From inception
    Three months   Three months   (August 26, 2010)
    ended   Ended   to
    November 30, 2011   November 30, 2010   November 30, 2011
             
Operating activities:            
Net loss   $ (34,999)   $ (1,750)   $ (111,056)
Adjustments to reconcile net income to njet cash provided by operating activities:            
             
Changes in operating assets and liabilities:   -   -   -
Decrease/(increase) in prepaid   4,726   -   (1,333)
Increase in inventory   (4,808)   -   (43,158)
Increase in deposits   (995)   -   (2,995)
Increase/(Decrease) in accounts payable and accrued liabilities   (1,042)   (750)   512
Increase in accounts payable to related-parties   (750)   -   9,800
Net cash used by operating activities   (37,868)   (2,500)   (148,230)
             
Financing activities:            
Contributed capital   37,500   2,500   139,690
Proceeds from loan – related party   5,000   -   5,000
Payments on loan – related party   (500)   -   (500)
Proceeds from loan   -   -   15,000
Net cash provided by financing activities   42,000   2,500   159,190
             
Net increase (decrease) in cash   4,132   -   10,960
Cash - beginning   6,828   -   -
             
Cash - ending   10,960   -   10,960
             
             
Supplemental disclosures:            
Interest paid   -   -   -
             
Income taxes paid   -   -   -
             
Stock issued in spin off   $0   $0   $65,847
             
Stock issued for incurring plantation costs   $0   $0   $27,000
             
Stock issued for prepaid services   $0   $0   $4,000
             
Stock issued for settlement of common stock payable   $37,500   $0   $37,500

The accompanying notes are an integral part of these financial statements.

5

 

 
 

 

 

JA Energy

(A Development Stage Company)

Notes to Financial Statements

November 30, 2011

(Unaudited)

 

NOTE 1 - FINANCIAL STATEMENTS

The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at November 30, 2011 and for all periods presented have been made.

 

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in the Company's August 31, 2011 audited financial statements filed therewith along with its Form 10-K annual report. Operating results for the three months ended November 30, 2011 are not necessarily indicative of the results that may be expected for the year ending August 31, 2012. The Company is a development stage company, as defined in FASB ASC 915 "Development Stage Entities."

 

NOTE 2 - GOING CONCERN

 

These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company has an accumulated deficit since inception of $111,056. The Company has not generated any revenues to date, and its ability to continue as a going concern is contingent upon the successful completion of additional financing arrangements and its ability to achieve and maintain profitable operations. Management plans to raise equity capital to finance the operating and capital requirements of the Company. Amounts raised will be used for further development of the Company's products, to provide financing for marketing and promotion and for other working capital purposes. While the Company is putting forth its best efforts to achieve the above plans, there is no assurance that any such activity will generate funds that will be available for operations.

 

These conditions raise substantial doubt about the Company's ability to continue as a going concern. 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 this uncertainty.

 

6

 
 

 

 

JA Energy

(A Development Stage Company)

Notes to Financial Statements

November 30, 2011

(Unaudited)

 

NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES

 

The relevant accounting policies are listed below.

 

Basis of Accounting

The basis is United States generally accepted accounting principles.

 

Cash and Cash Equivalents

The Company considers all short-term investments with a maturity of three months or less at the date of purchase to be cash and cash equivalents.

 

Use of Estimates

In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates.

 

Advertising

Advertising costs are expensed when incurred. The Company has not incurred any advertising expenses since inception.

 

Income Taxes

The provision for income taxes is the total of the current taxes payable and the net of the change in the deferred income taxes. Provision is made for the deferred income taxes where differences exist between the period in which transactions affect current taxable income and the period in which they enter into the determination of net income in the financial statements.

 

Revenue recognition

The Company recognizes revenue from product sales once all of the following criteria for revenue recognition have been met: pervasive evidence that an agreement exists; the services have been rendered; the fee is fixed and determinable and not subject to refund or adjustment; and collection of the amount due is reasonably assured.

 

Cost of product sold

The types of costs included in cost of product sold are raw materials, packaging materials, manufacturing costs, plant administrative support and overheads, and freight and warehouse costs.

 

Inventories

Inventories are stated at the lower of cost (computed in accordance with the first-in, first-out method) or market. During the quarter ended November 30, 2011, the Company paid $2,683 in planting costs. The Company capitalizes these costs in accordance with ASC topic 905-360 and ASC 330 as Inventory – raw material. Elements of cost include materials, labor and overhead and are classified as follows:

7

 
 

 

JA Energy

(A Development Stage Company)

Notes to Financial Statements

November 30, 2011

(Unaudited)

 

    November 30,
2011
    August 31,
2011
 
                 
Raw materials and supplies   $ 43,158     $ 38,350  
In-process inventories     --       --  
Finished goods     --       --  
                 
    $ 43,158     $ 38,350  
                 

Year end

The Company's fiscal year-end is August 31.

 

Recent Accounting Pronouncements

The Company's management has evaluated all the recently issued accounting pronouncements through the filing date of these financial statements and does not believe that any of these pronouncements will have a material impact on the Company's financial position and results of operations.

 

NOTE 4 - Stockholders' (Equity) Deficit

 

The Company is authorized to issue 70,000,000 shares of its $0.001 par value common stock and 5,000,000 shares of its $0.001 par value preferred stock.

 

On September 23, 2011, the Company issued 3,000,000 shares of its $0.001 par value common stock to two shareholders pursuant to a Regulation S offering for cash of $75,000.

 

On January 14, 2011, a director of the Company contributed capital of $3,865 for transfer and audit fees.

 

There have been no other issuances of preferred or common stock.

 

NOTE 5 - Related Party Transactions

 

On January 14, 2011, a director of the Company contributed capital of $3,865 for transfer and audit fees.

 

On October 28, 2011, the Company entered into a Promissory Note with an officer to loan the Company $5,000 without interest, and no due date. As of November 30, 2011, the Company has repaid $500.

 

NOTE 6 - Loan Payable

 

On March 1, 2011, the Company received $15,000 as a loan from a non - related third party. The loan is unsecured, payable on demand and non interest bearing.

 

8

 
 

 

 

JA Energy

(A Development Stage Company)

Notes to Financial Statements

November 30, 2011

(Unaudited)

NOTE 7 - Inventory

 

The Company assesses the valuation of its inventories and reduces the carrying value of those inventories that are obsolete or in excess of the Company’s forecasted usage to their estimated net realizable value. The Company estimates the net realizable value of such inventories based on analyses and assumptions including, but not limited to, historical usage, future demand and market requirements. Reductions to the carrying value of inventories are recorded in cost of product sold. If the future demand for the Company’s products is less favorable than the Company’s forecasts, then the value of the inventories may be required to be reduced, which could result in additional expense to the Company and affect its results of operations.

 

During the quarter ended November 30, 2011, the Company reclassified plantation cost as Inventory in accordance with ASC 330. As of November 30, 2011, raw material consisted of direct material, direct labor and overhead costs incurred to grow the plant which will be used as a raw material to produce the Company’s final ethanol product. Elements of cost include materials, labor and overhead and are classified as follows:

 

    November 30,
2011
    August 31,
2011
 
                 
Raw materials and supplies   $ 43,158     $ 38,350  
In-process inventories     --       --  
Finished case goods     --       --  
                 
    $ 43,158     $ 38,350  

 

9

 
 

 

 

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

 

Item 2. - Management's Discussion and Analysis of Financial Condition and Results of Operations

 

Forward-Looking Information

 

This Quarterly Report on Form 10-Q/A contains forward-looking statements. When used in this Quarterly Report on Form 10-Q/A, the words "anticipate," "believe," "estimate," "will," "plan," "seeks," "intend," and "expect" and similar expressions identify forward-looking statements. Although we believe that our plans, intentions, and expectations reflected in any forward-looking statements are reasonable, these plans, intentions, or expectations may not be achieved. Our actual results, performance, or achievements could differ materially from those contemplated, expressed, or implied, by the forward-looking statements contained in this Quarterly Report on Form 10-Q/A. Important factors that could cause actual results to differ materially from our forward-looking statements are set forth in this Quarterly Report on Form 10-Q/A All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements set forth in this Quarterly Report on Form 10-Q/A. Except as required by federal securities laws, we are under no obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise.

 

Critical Accounting Policies

 

There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations", included in our Annual Report on Form 10-K for the fiscal year ended August 31, 2011.

 

Results of Operations

 

Corporate History

 

The Company was organized August 26, 2010 (Date of Inception) under the laws of the State of Nevada, as JA Energy. The Company was incorporated as a subsidiary of Reshoot Production Company, a Nevada corporation. At this time, we consider ourselves to be a shell company. We do not consider ourselves to be a blank check company as we do not have any intention to engage in a reverse merger with any entity in an unrelated industry.

 

10

 
 

 

 

 

JA Energy Business Plan

 

JA Energy will manufacture and sell the Modular Distillation Units ("MDU"), and Hydroponics Greenhouse packages to individuals, non profit organizations or companies. The company will organize and manage farm cooperatives for the growing of Jerusalem Artichoke, which will be used in the MDU to produce ethanol. JA Energy plans to use farm cooperatives growing Jerusalem Artichoke to control the expansion of the crop. Additionally, JA Energy will manage the processing the crop in the field, separating the pulp from the juice (the equipment is unique to this application). The "juice" will be harvest by a harvester which separates the juice for the plant pulp. The juice is transferred via the harvester to an accompanying tank truck. When each tank truck is filled it then drives to the centrally located processing plant. The juice will be transported to a centrally located processing plant to condense the juice to a syrup (JA Energy plans to apply for patent on this process). The "syrup" once processed will be packaged in containers commonly called totes (used primarily for the shipping of molasses). These totes will be shipped to the various MDU locations via trucking companies contracted by the cooperative for processing into ethanol. While the crop is expanding to satisfy demand the MDU will use molasses as the feedstock for the distillation process.

 

The Jerusalem Artichoke is a relative of the Sunflower and is not related to the Globe Artichoke. Jerusalem Artichoke normally produces a flower that has infertile seeds, requiring the crop to be expanded by using the root systems (tubers) similarly to the way potatoes are grown. Only authorized growers will be allowed to plant the crop. Limiting the number of growers and the acreage they are authorized to plant will control the expansion of the crop.

 

The Jerusalem Artichoke does not produce an oil. The inulin is converted in to ethanol, at a rate of 1,200 gallons of ethanol per acre per USDA statistics. The crop is used one hundred percent and there are no waste by-products. The stalks are juiced and processed into a syrup or directly into ethanol via distillation. The pulp of the stalks is used for cattle feed comparable to distillers grains. The root tubers are used a seed for planting next seasons' crop. Once the rate of cultivation slows the root tubers will be used for chicken or hog feed, and can be processed into a gluten free flour. JA Energy Inc. does not intend to be involved in these other areas.

 

The greenhouse gases from the distillation process are redirected into a hydroponics greenhouse that is attached to the modular distillation unit as is the liquid residue. The entire process is free of waste by-products, even the plant material from the greenhouses will be collected and mulched.

 

The condensed syrup will be packaged similarly to molasses and shipped by common carrier to modular distillation units that have contracted for the syrup. Each modular distillation unit will be purchased from JA Energy to be operated by the purchaser.

 

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We plan to establish small portable conversion plants in inner-cities. We plan to begin this program in Nevada. The conversion plants can only convert a limited amount of artichoke extract to ethanol. To add flexibility to the Company’s growth the Company will begin evaluating the feasibility of using molasses for the distillation process. We plan to have one of these portable conversion plants in operation during 2011. We shall be targeting local charities to assist in the payment and operations of this facility. We expect each facility will require six employees to operate the distilling equipment. The first unit was constructed and has been tested by Green Global Systems LLC. Mr. Lusk is currently a member of Green Global Systems and controls 100% of this limited liability company. Green Global Systems LLC had built a MDU using the specifications of a patent owned by our CEO. The cost of construction for the first unit was $35,000. Although Green Global Systems LLC spent $94,000 in research and development costs to build the first MDU. Now that the first prototype has been built, we have costed out the process to construct a small distillation unit. Currently the unit is being redesigned to be automated to operate for up to eight days. We believe we can produce the new design units for $50,000. The MDU is currently under the control of Green Global Systems, LLC which has agreed to a buyout of their interest for the amount of funds expended. The Company plans to setup a Modular Distillation Unit which was manufactured and tested by Green Global Systems, LLC, in Central Nevada. The unit will be permanently housed in Nevada as part of the company's demonstration and training facility. The unit will be operated by the Company. The Company will apply for the applicable permits for operation and use the ethanol produced as fuel to deliver the fruit and vegetables grown in the hydroponics greenhouses to customers in Las Vegas. The Company plans has leased 33 acres for a two year demonstration crop to supply the Jerusalem Artichoke juice. The company plans to establish a demonstration facility as well as a training facility to train the purchasers of the MDUs.

 

In the Spring of 2011, management identified and leased thirty-three acres of land in Alamo, Lincoln County, Nevada for its first planting. This land is arid and suitable for growing artichokes.

 

The Company purchased sufficient Jerusalem Artichoke tubers to plant on this leased property. This was considered a small test program to remove future problems with larger plantings. For example, management learned that it needs to add nitrogen to the soil before planting to improve the yields of the Jerusalem Artichoke, harvesting needs to take place at earlier intervals, and the MDU needs an improved exhaust system. This initial planting did not produce enough Jerusalem Artichoke to extend the planting so the company will purchase additional seed to plant approximately 80 more acres next planting season.

 

The company plans to form farmer cooperatives where the farmers will own 90% of crop grown and the company will own 10% of the crop. The farmers will be responsible for all the funding or financing to establish the processing plant and acquire the necessary equipment. The company plans to sign management agreements with the cooperatives whereby the Company will have control of processing production. The agreements will be for ten years with an option to renew for an additional ten years. The management of the cooperatives will require the farmers to create a board of directors for each cooperative. The purpose of the board is to give guidance to management.

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The farmers will be compensated by the amount of dry matter and juice their acreage produces. Dry matter will be valued by the ton while the juice will be by volume. The farmers are responsible for the cultivation of their farms. The cooperative will be responsible for the selling of the syrup, cattle feed (pulp), and tubers.

 

Since Jerusalem Artichokes grow like weeds, their stalks will provide three harvests during one calendar year. At the end of the calendar year, the remaining stalks (tuber) in the field can be used as seeds to multiply the harvest in the following year by twenty percent. When the harvest stalks are harvested, the harvesting machinery will divide the harvest into two parts: 1) animal feeds; and 2) juice that can be condense into syrup. The artichoke juice has a short shelf-life, as compared to the syrup that can be stored for a longer length of time. The Company has developed a small [size of a tractor trailer] distiller that can convert the artichoke syrup into 1,000 gallons of ethanol per week. The MDU was tested using molasses as the distillation feedstock. The test was designed to demonstrate the efficiency of the MDU, as a distillation unit for a variety of feedstocks. The unit will distill at a rate of 144 gallons per day which is the 1,000 gallons per week rate. The Company plans to control the harvesting of the crop via the management agreements with the cooperatives. At this time, the Company does not plan own or operate its own harvesting machinery.

 

We developed a model based on 50-acres of the Jerusalem artichoke crop. Based on three harvests, we believe this would produce a total 37,500 gallons of ethanol per year on 50-acres of land. We estimate our total operating costs, including equipment depreciation, seeds, costs to harvest and, overhead costs will equate to $1.24 per gallon. We estimate the residual animal feed for the 50 acres after costs will equal $23,120. Therefore, based on the current market price of ethanol of $2.25per gallon, we estimate our 50 acres will yield 37,500 gallons per year with a profit of $1.01 per gallon or $37,850 plus $23,120 in residual animal feed.

 

This estimated operating costs to produce one gallon of ethanol includes the necessary energy and water inputs. The energy cost savings associated with the MDU is derived from a design methodology to introduce distillate into the still area. This method of heating and the redirection of the waste heat into heat exchangers reduces the energy costs, which increase the effectiveness of the distillation process.

 

Jerusalem artichoke

 

The Jerusalem Artichoke is a relative of the Sunflower, it is considered a perennial native sunflower species, and is not related to the Globe Artichoke. This plant begins it growth from its underground roots. The plant produces a product called inulin, which is a white, starchlike polysaccharide that yields very sweet sugar called fructose. The plant stores the inulin in its stem until it flowers. When the plant begins to flower, the inulin is then translocated to the tuber, which are the roots of the plant.

 

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Jerusalem Artichoke stalk must be cut above the underground stems immediately before the plant flowers to retain all of the sugar in the stalk; the stalk is then ground in a hammermill to release the sugars from the center of the stalk; the sugar juices from the hammermill are collected; the remaining mass of the center of the stalk, and bark is squeezed to remove the remaining sugar juices; the entire collected sugar juice is then processed by heating and adding yeast, then fermenting. The remaining product is then distilled to produce ethanol. The method produces the maximum quantity of high grade ethanol per acre of plant of any known plant source.

 

Farm Cooperative Business Strategy

 

The Company plans to organize and manage Jerusalem Artichoke farm cooperatives under a management agreement with the cooperatives. The Company will hold a ten percent organizers share of the ownership of the cooperatives, in addition to being compensated as the manager. Each cooperative will have an advisory board to work with the contracted management team to advance the interest of the cooperative. Management is not aware of any Jerusalem Artichoke Growers cooperatives in the U.S. There is a farm association of Jerusalem Artichoke Growers on the East Coast. The uses of Jerusalem Artichokes include: animal feed usually grown by the user, health food produce, a flour used for a diabetic sensitive pasta and a by-product used in health foods.

 

Management is currently exploring opportunities for the establishment of growing districts. The control of establishing growing districts is important to the Company's business plan. An over-supply of the crop would depress prices and have an adverse effect on the future of Jerusalem Artichoke as a source of ethanol. Management expects to have the first growing districts in place by the 2013 growing season. The 2012 growing season will be dedicated to 33, in Central Nevada and 80 acres in Southwest Colorado.

 

The cooperatives will be organized similarly to the Citrus Growers cooperatives. For example, the Citrus Growers cooperatives are responsible for the farming or cultivation of the crop, and the cooperative is responsible for the harvesting and marketing the crop. Using this model, the cooperative members will be able to finance and share the costs for the equipment necessary for the harvesting and processing of the crop on a larger scale, while being freed of the marketing of the crop to the end user.

 

MDU unit purchaser needs to have a reliable supply of syrup for the production of ethanol. In order to help create reliable supplies of the syrup, the Company plans to place these contracts with the cooperatives, thereby matching customer with producer.

 

 

14

 
 

 

 

 

Each cooperative will be organized in a hub and spoke structure. The processing plant will be located as close as possible to the center of a growing district. The size of the growing district is expected not to exceed a twenty-five mile radius. This will reduce the transportation costs from the field to the condensing facilities. The facilities will be designed in such a manner that they can be expanded to accommodate addition cooperative growers.

 

The marketing will be done at a centralized marketing location to gain economies of scales. Each cooperative may elect to process their crop. The by-products of the tuber (root system) and the pulp portion of the crop are currently being researched to identify other commercial uses. Once a commercial size crop is grown, the by-products from the crop itself can offer the cooperatives another source of revenue.

 

The Ethanol Market

 

Ethanol is produced from starch or sugar-based feed products such as corn, potatoes, wheat, and sorghum, artichokes as well as from agricultural waste products including sugar, rice straw, cheese whey, beverage wastes and forestry and paper wastes. Historically, corn has been the primary source because of its relatively low cost, wide availability and ability to produce large quantities of carbohydrates that convert into glucose more easily than other products. Management believes that Jerusalem Artichokes, in which its stalks can be harvested three times per year, and can be grown in an arid climate offer a high percent of end product that can be converted into ethanol.

 

Ethanol has been utilized as a fuel additive since the late 1970's when its value as a product extender for gasoline was discovered during the OPEC oil embargo crisis. In the 1980's, ethanol began to see widespread use as an octane enhancer, replacing other environmentally harmful components in gasoline such as lead and benzene. Ethanol's use as an oxygenate continued to increase with the passage of the Clean Air Act Amendments of 1990, which required the addition of oxygenates to gasoline in the nation's most polluted areas. Ethanol contains approximately 35% oxygen and when combined with gasoline, it acts as an oxygenate that increases the percentage of oxygen in gasoline. As a result, the gasoline burns cleaner and releases less carbon monoxide and other exhaust emissions into the atmosphere. Although not all scientists agree about the existence or extent of environmental benefits associated with its use, the use of ethanol is commonly viewed as a way to improve the quality of automobile emissions.

 

 

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The most common oxygenate competing with ethanol is methyl tertiary butyl ether or "MTBE," which is cheaper than ethanol. Since the introduction and widespread use of MTBE as an oxygenate, it has been discovered in ground water, lakes and streams. Unlike ethanol, which is biodegradable, MTBE is petroleum-based. While MTBE has not been classified as a carcinogen, it has been shown to cause cancer in animals and its continued use has raised serious environmental concerns. As a result, by the end of 2005, according to the U.S. Department of Energy, 25 states, including California, Illinois and New York, had barred, or passed laws banning, any more than trace levels of MTBE in their gasoline supplies, and legislation to ban MTBE was pending in four others. Due in part to federal and state policies promoting cleaner air, the environmental concerns associated with MTBE, and federal and state tax and production incentives, the ethanol industry has grown substantially in recent years. The Renewable Fuels Association estimates that in 2004, approximately 1.95 billion gallons of ethanol were utilized as an oxygenate in the Federal Reformulated Gasoline Program, 290 million gallons in the federal winter Oxygenated Gasoline Program, 280 million gallons in Minnesota to satisfy the state's oxygenated fuels program, and 1.05 billion gallons in conventional gasoline markets as an octane enhancer and gasoline extender.

 

Government Incentives

 

In addition to the recently-enacted federal renewable fuel standard, the federal government and various state governments have created incentive programs to encourage ethanol production and to enable ethanol-blended fuel to better compete in domestic fuel markets with gasoline blended with MTBE. State incentive programs include production payments and income tax credits. However, these programs are not without controversy, due in part to their cost, and we cannot assure you that they will continue to be available in the future.

 

 

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Ethanol Pricing

 

The price of ethanol tends to be volatile. Historically, ethanol prices have tended to correlate with wholesale gasoline prices, due largely to the primary use of ethanol as an additive to gasoline. Over the last couple of years, however, as ethanol production has expanded rapidly, ethanol prices have been particularly volatile and ethanol and gasoline prices have at times diverged significantly.

 

JA Energy Funding Requirements

 

JA Energy needs funding to fully execute its business plan. JA Energy will require at least $1,500,000 to acquire other business opportunities, market its services and build a client base.

Future funding could result in potentially dilutive issuances of equity securities, the incurrence of debt, contingent liabilities and/or amortization expenses related to goodwill and other intangible assets, which could materially adversely affect the Company's business, results of operations and financial condition. Any future acquisitions of other businesses, technologies, services or product(s) might require the Company to obtain additional equity or debt financing, which might not be available on terms favorable to the Company, or at all, and such financing, if available,

might be dilutive.

 

Sales and Marketing

 

We plan to establish small portable conversion plants in inner-cities. We plan to begin this program in Nevada. Working with City redevelopment agencies and nonprofits organization to establish MDU's in their jurisdiction the community will help create jobs.

Once these units are established management hopes other communities will see the value of participating. If there is increased demand for the MDUs, the amount of crop acreage will be expanded creating jobs in the rural communities. The ethanol produced can be sold to local fuel blenders or to the municipalities for use in their fleets.

 

 

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The conversion plants can only convert a limited amount of artichoke extract to ethanol.

The marketing will be expanded to areas outside the inner cities, such as Indian Reservation where there is also a need for fresh produce and jobs. Beyond those areas the company intends to market to individuals or business that what to operate one of the MDU sites.

 

Competition

 

We expect to be in direct competition with producers of ethanol and other alternative fuel additives. Many of these producers have significantly greater resources than we do. We also expect the number of competitors to increase. The development of other ethanol plants, particularly those in close proximity to our ethanol plant, will increase the supply of ethanol and may result in lower local ethanol prices. Ethanol plants in close proximity will also compete with us for, among other things, resources and personnel. Because of their close proximity, these competitors may also be more likely to sell to the same markets that we intend to target for our ethanol product.

 

We will be in direct competition with numerous other ethanol plants. We plan to compete with other ethanol producers on the basis of price and delivery service. We believe that we will be able, if necessary, to sell some of our products at lower prices because of the amount of sugar available in the Jerusalem Artichoke. This is primarily due to the fact that the Jerusalem Artichoke can be harvested three times in the same year, and the average yield of alcohol per acre for the Jerusalem Artichoke is 1,200 gallons, as compared to Sugarcane (Hawaii) that yields 889 gallons per acre; sugar cane (Louisiana) that yields 555 gallons per acre; sugar beet that yields 412 gallons per acre; and corn that yield 400 gallons per acre, according the USDA.

 

 

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As of March 2007, according to the Renewable Fuels Association, 114 U.S. ethanol plants have the capacity to produce approximately 5.6 billion gallons of ethanol annually, with another 87 plants under construction or expansion expected to add approximately 6.4 billion more gallons of annual productive capacity. A majority of the ethanol production capacity is located in the Midwest, in the corn-producing states of Illinois, Iowa, Minnesota, Nebraska and South Dakota. The largest ethanol producers include Abengoa Bioenergy Corp., Archer Daniels Midland Company, Aventine Renewable Energy, LLC., Cargill, Inc., Hawkeye Renewables, LLC, New Energy Corp., US BioEnergy Corp. and VeraSun Energy Corporation.

 

We may also compete with ethanol that is produced or processed in certain countries in Central America and the Caribbean region, Brazil and other countries. Ethanol produced in the Caribbean basin and Central America may be imported into the United States at low tariff rates or free of tariffs under the Caribbean Basin Initiative and the Dominican Republic-Central America-United States Free Trade Agreement. According to the Renewable Fuels Association, Brazil produced approximately 4.5 billion gallons of ethanol in 2006. Although tariffs presently impede large imports of Brazilian ethanol into the United States, low production costs, other market factors or tariff reductions could make ethanol imports from various countries a major competitive factor in the U.S.

 

 

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Results of Operations for the three months ended November 30, 2011 Revenues

 

We earned no revenues since our inception through November 30, 2011. We are presently in the development stage of our business and we can provide no assurance that we will be successful.

For the period inception through November 30, 2011, we generated no income. Our loss was attributed to organizational expenses, audit fees, legal fees and planting Jerusalem artichokes. We anticipate our operating expenses will increase as we build our operations.

 

For the three months ending November 30, 2011, we experienced a net loss of $(34,999) as compared to a net loss of $(1,750) for the same period last year. The net loss for the three months ending November 30, 2011 was contributed to planting Jerusalem artichokes, consulting fees, legal fees and audit fees. Our auditor issued an opinion that our financial condition raises substantial doubt about the Company's ability to continue as a going concern.

 

Expenses

 

For the three month periods ending November 30, 2011 and November 30, 2010, the Company experienced general and administrative expenses of $27,032 and $1,750 respectfully. These expenses represented start-up costs as the Company begins its business operations.

 

For the three months ended November 30, 2011 and November 30, 2010, the Company had $(34,999) and $(1,750), respectfully in losses from operations. Since the Company's inception, on August 26, 2010, the Company had a net loss of $(111,056).

 

Going Concern

 

The financial statements included with this quarterly report have been prepared in accordance with generally accepted accounting principles applicable to a going concern which contemplates the realization of assets business. As of November 30, 2011, the Company has recognized no revenues and has accumulated operating losses of approximately $111,056 since inception. The Company's ability to continue as a going concern is contingent upon the successful completion of additional financing arrangements and its ability to achieve and maintain profitable operations. Management plans to raise equity capital to finance the operating and capital requirements of the Company. Amounts raised will be used to further development of the Company's products, to provide financing for marketing and promotion, to secure additional property and equipment, and for other working capital purposes. While the Company is putting forth its best efforts to achieve the above plans, there is no assurance that any such activity will generate funds that will be available for operations.

 

These conditions raise substantial doubt about the Company's ability to continue as a going concern. Our financial statements do not include any adjustments that might arise from this uncertainty.

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Plan of Operation

 

Management does not believe that the Company will be able to generate any significant profit during the coming year. Management believes that general and administrative costs and well as building its infrastructure will most likely exceed any anticipated revenues for the coming year.

The Company's need for capital may change dramatically if it can generate additional revenues from its operations. In the event the Company requires additional funds, the Company will have to seek loans or equity placements to cover such cash needs. There are no assurances additional capital will be available to the Company on acceptable terms.

 

Summary of any product research and development that we will perform for the term of our plan of operation.

 

JA Energy plans manufacture and sell the Modular Distillation Units which will convert Jerusalem Artichokes into ethanol. The Modular Distillation Units have been designed and a prototype has been built. The Company needs to raise funding to purchase this unit. The Company does not anticipate performing any additional significant product research and development under our current plan of operation.

 

Expected purchase or sale of plant and significant equipment

 

With the exception of Modular Distillation Units, we do not anticipate the purchase or sale of any plant or significant equipment; as such items are not required by us at this time.

 

Significant changes in the number of employees

 

As of November, 2011, we did not have any employees. We are dependent upon our officers and directors for our future business development. As our operations expand we anticipate the need to hire additional employees, consultants and professionals; however, the exact number is not quantifiable at this time.

 

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Liquidity and Capital Resources

 

As of November 30, 2011 the Company has assets of $58,446 and liabilities of $29,812. The Company is authorized to issue 70,000,000 shares of its $0.001 par value common stock and 5,000,000 shares of its $0.001 par value preferred stock. As of November 30, 2011, the Company has 34,246,703 shares of common stock issued and outstanding.

 

The Company has limited financial resources available, which has had an adverse impact on the Company's liquidity, activities and operations. These limitations have adversely affected the Company's ability to obtain certain projects and pursue additional business. Without realization of additional capital, it would be unlikely for the Company to continue as a going concern. In order for the Company to remain a Going Concern it will need to find additional capital. Additional working capital may be sought through additional debt or equity private placements, additional notes payable to banks or related parties (officers, directors or stockholders), or from other available funding sources at market rates of interest, or a combination of these. The ability to raise necessary financing will depend on many factors, including the nature and prospects of any business to be acquired and the economic and market conditions prevailing at the time financing is sought. No assurances can be given that any necessary financing can be obtained on terms favorable to the Company, or at all.

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results or operations, liquidity, capital expenditures or capital resources that is material to investors.

 

Critical Accounting Policies and Estimates

 

Revenue Recognition: We recognize revenue from product sales once all of the following criteria for revenue recognition have been met: pervasive evidence that an agreement exists; the services have been rendered; the fee is fixed and determinable and not subject to refund or adjustment; and collection of the amount due is reasonable assured.

 

New Accounting Standards

 

Management has evaluated recently issued accounting pronouncements through November, 2011 and concluded that they will not have a material effect on the financial statements as of November 30, 2011.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

 

Not required for smaller reporting companies.

 

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Item 4T. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

Our disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in rules and forms adopted by the SEC, and that such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosures.

 

Management, with the participation of the Chief Executive Officer and the Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on such evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that, our disclosure controls and procedures were not effective. Our disclosure controls and procedures were not effective because of the "material weaknesses" described below under "Management's report on internal control over financial reporting," which are in the process of being remediated as described below under "Management Plan to Remediate Material Weaknesses."

 

Management's Report on Internal Control over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting, as defined in rules promulgated under the Exchange Act, is a process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer and affected by our Board of Directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Internal control over financial reporting includes those policies and procedures that:

 

·         pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;

 

·         provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and our Board of Directors; and

 

·         provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

 

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Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable, not absolute, assurance that the objectives of the control system are met and may not prevent or detect misstatements. Internal control over financial reporting is a process that 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 override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. 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. Further, over time control may become inadequate because of changes in conditions or the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of our internal control over financial reporting as of August 31, 2011. In making its assessment, management used the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Based on its assessment, management has concluded that we had certain control deficiencies described below that constituted material weaknesses in our internal controls over financial reporting. As a result, our internal control over financial reporting was not effective as of August 31, 2011.

 

A "material weakness" is defined under SEC rules as a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of a company's annual or interim financial statements will not be prevented or detected on a timely basis by the company's internal controls. As a result of management's review of the investigation issues and results, and other internal reviews and evaluations that were completed after the end of quarter related to the preparation of management's report on internal controls over financial reporting required for this quarterly report on Form 10-Q, management concluded that we had material weaknesses in our control environment and financial reporting process consisting of the following:

 

1) lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; and

 

2) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements.

 

 

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We do not believe the material weaknesses described above caused any meaningful or significant misreporting of our financial condition and results of operations for the fiscal year ended August 31, 2011. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.

 

Management Plan to Remediate Material Weaknesses

 

Management is pursuing the implementation of corrective measures to address the material weaknesses described below. In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we have initiated, or plan to initiate, the following series of measures:

 

We will create a position to segregate duties consistent with control objectives and will increase our personnel resources and technical accounting expertise within the accounting function when funds are available to us. We plan to appoint one or more outside directors to our board of directors who shall be appointed to an audit committee resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures such as reviewing and approving estimates and assumptions made by management when funds are available to us.

 

We believe the remediation measures described above will remediate the material weaknesses we have identified and strengthen our internal control over financial reporting. We are committed to continuing to improve our internal control processes and will continue to diligently and vigorously review our financial reporting controls and procedures. As we continue to evaluate and work to improve our internal control over financial reporting, we may determine to take additional measures to address control deficiencies or determine to modify, or in appropriate circumstances not to complete, certain of the remediation measures described above.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

This amended quarterly report does not include an attestation report of the Corporation's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Corporation's registered public accounting firm pursuant to temporary rules of the SEC that permit the Corporation to provide only the management's report in this quarterly report.

 

Changes in internal controls over financial reporting

There was no change in our internal controls over financial reporting that occurred during the period covered by this report, that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

 

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PART II. OTHER INFORMATION

 

Item 1 -- Legal Proceedings

From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.

 

We are not presently a party to any material litigation, nor to the knowledge of management is any litigation threatened against us, which may materially affect us.

 

Item 1A - Risk Factors

 

See Risk Factors set forth in Part I, Item 1A of the Company's Registration Statement on S-1 for the fiscal year ended November 30, 2011 and the discussion in Item 1, above, under "Liquidity and Capital Resources."

 

Item 2 -- Unregistered Sales of Equity Securities and Use of Proceeds

 

None.

 

Item 3 -- Defaults Upon Senior Securities

 

None.

 

Item 4 -- Submission of Matters to a Vote of Security Holders

 

None.

 

Item 5 -- Other Information

 

None.

 

 

 

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Item 6. Exhibits

 

 

Exhibit Number   Ref   Description of Document
         
         
31.1       Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
         
32.1       Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
         
101   *   The following materials from this Quarterly Report on Form 10-Q for the quarter ended November 30, 2011, formatted in XBRL (eXtensible Business Reporting Language):
         
        (1) Balance Sheets at November 30, 2011 (unaudited), and May 31, 2011 (audited)
         
       

(2) Unaudited Statements of Operations for the three-month periods ended

November 30, 2011 and 2010, and the period from August 26, 2010 (inception)

to November 30, 2011

         
       

(3) Unaudited Statements of Cash Flows for the six-month periods ended November 30,

2011 and 2010, and the period from August 26, 2010 (inception) to November 30,

2011

         
        (4)    Notes to the financial statements statements.
         

 

* Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

 

 

 

 

 

 

 

 

 

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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.

 

 

 

JA Energy

Registrant

   
   
Date: March 2, 2012        /s/ James Lusk
  Name: James Lusk
 

Title: Chief Executive Officer

President and Director

Principal Executive, Financial,

and Accounting Officer

 

 

 

 

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