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EX-32.1 - SECTION 906 CERTIFICATION - UBI Blockchain Internet LTD-DEex321sec906.htm
EX-31.1 - SECTION 302 CERTIFICATION - UBI Blockchain Internet LTD-DEex311sec302.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

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

For the Quarterly Period Ended May 31, 2012

OR

 
   
[ ] 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: 000-54236
 

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 [X] No [ ]

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). Yes [ ] No [ ] Not Applicable

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company [X]

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

APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section S 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes o No [X]

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of July 16, 2012, the registrant’s outstanding common stock consisted of 37,256,703 shares, $0.001 par value.

 

 
 

 

 

Table of Contents

JA Energy

Index to Form 10-Q

For the Quarterly Period Ended May 31, 2012

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 25
     
ITEM 4T. Controls and Procedures 26
     
PART II Other Information 30
     
ITEM 1. Legal Proceedings 30
     
ITEM 1A. Risk Factors 30
     
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 30
     
ITEM 3 Defaults Upon Senior Securities 30
     
ITEM 4 Mine Safety Disclosures 31
     
ITEM 5 Other Information 31
     
ITEM 6 Exhibits 31
     
  SIGNATURES 32
     

 

2

 
 

PART I - FINANCIAL INFORMATION

 

Item I. Financial Statements.

JA Energy

(A Development Stage Company)

Balance Sheets

 

        May 31, 2012   August 31, 2011
    ASSETS   (Unaudited)    
Current assets:        
  Cash and cash equivalents   11,433   6,828
  Prepaid expenses   11,845   6,059
  Inventory   49,188   38,350
  Deposits   3,355   2,000
    Total current assets   75,821   53,237
             
Fixed assets:        
  Vehicle, net of accumulated depreciation of $736   21,386   -
    Total fixed assets   21,386   -
TOTAL ASSETS   97,207   53,237
             
    LIABILITIES AND STOCKHOLDERS' EQUITY  (DEFICIT)      
Current liabilities:        
  Accounts payable and accrued liabilities   4,182   1,554
  Accounts payable to related parties   9,800   10,550
  Loan payable – current   3,502   -
  Loan payable - related party   99,000   -
  Loan from non related third party   15,000   15,000
    Total current liabilities   131,484   27,104
             
Long term liabilities:        
  Loan payable - long term   15,955   -
    Total long term liabilities   15,955   -
    Total liabilities   147,439   27,104
             
Stockholders' equity (deficit):        
  Preferred stock, $0.001 par value, 5,000,000 shares -   -
    authorized, none issued        
  Common stock, $0.001 par value, 70,000,000 shares 37,157   31,157
    authorized, 37,156,703 and 31,156,703 issued and      
    outstanding as of 5/31/12 and 8/31/11, respectively        
  Additional paid-in capital   155,533   33,533
  Stock subscription payable   24,519   37,500
  Deficit accumulated during development stage   (264,441)   (76,057)
    Total stockholders' equity (deficit)   (50,232)   26,133
TOTAL LIABILITIES AND STOCKHOLDERS'        
  EQUITY (DEFICIT)   $97,207   $53,237

 

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

3

 
 

JA Energy

(A Development Stage Company)

Statements of Operations

(Unaudited)

 

      For the three months ending May 31, 2012   For the three months ending May 31, 2011   For the nine months ending May 31, 2012   For the nine months ending May 31, 2011   From August 26, 2010 (inception) to May 31, 2012
Revenue $5,000   $-   $5,000   $-   $5,000
Cost of goods sold (3,750)   -   (3,750)   -   (3,750)
Gross profit 1,250   -   1,250   -   1,250
                       
Operating expenses:                  
  General & administrative 75,763   9,410   163,667   13,300   202,724
  Consulting fees 8,500   27,000   25,967   27,000   62,967
                       
    Total expenses 84,263   36,410   189,634   40,300   265,691
                       
Net loss (83,013)   (36,410)   (188,384)   (40,300)   (264,441)
                       
Weighted average number of common                  
  shares outstanding- basic 34,156,703   36,615,181   33,915,827   19,333,887    
                       
Net loss per share $0.00   $0.00   $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)

 

      For the nine months ending May 31, 2012   For the nine months ending May 31, 2011   From August 26, 2010 (inception) to May 31, 2012
OPERATING ACTIVITIES          
Net loss (188,384)   (40,300)   (264,441)
Adjustment to reconcile net loss to net cash          
  used by operating activities:          
    Stock compensation 24,519   4,000   24,519
  Changes in operating assets and liabilities:        
    Depreciation 736   -   736
    Increase in prepaid (5,786)   (12,708)   (11,845)
    Increase in inventory (10,838)   (11,350)   (49,188)
    Increase in deposits (1,355)   (2,000)   (3,355)
    Increase in accounts payable and accrued liabilities 2,629   6,998   4,183
    Increase (decrease) in accounts payable to related-parties (750)   -   9,800
Net cash used by operating activities (179,230)   (55,360)   (289,592)
               
INVESTING ACTIVITIES          
  Purchase of fixed asset - vehicle (22,122)   -   (22,122)
Net cash used by investing activities (22,122)   -   (22,122)
               
FINANCING ACTIVITIES          
Proceeds from sale of common stock 37,500   -   102,190
Contributed capital 50,000   33,365   105,095
Proceeds from loan - related party 104,000   -   104,000
Payments on loan-related party (5,000)   -   (5,000)
Proceeds from loan 20,000   26,350   35,000
Payments on loan (543)   -   (543)
Net cash provided by financing activities 248,553   59,715   340,742
               
NET INCREASE IN CASH 4,605   4,355   11,433
CASH - BEGINNING OF THE PERIOD 6,828   -   -
CASH - END OF THE PERIOD 11,433   4,355   11,433
               
SUPPLEMENTAL DISCLOSURES:          
Stock issued in spin off -   65,847   -
Stock issued for settlement of common          
  stock payable 37,500   -   37,500
Interest paid 1,064   -   1,064

 

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

 

5

 
 

JA Energy

(A Development Stage Company)

Notes to Financial Statements

May 31, 2012

(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 May 31, 2012 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 May 31, 2012 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 $264,441. 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

May 31, 2012

(Unaudited)

 

NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES

 

The relevant accounting policies are listed below.

 

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.

 

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.

 

7

 
 

JA Energy

(A Development Stage Company)

Notes to Financial Statements

May 31, 2012

(Unaudited)

 

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.

 

As part of the Director of Research and Developments Employment agreement the company has agreed to pay one half of the $10,000 monthly salary in common stock at a value of $0.25 per share. The shares vest over a one year period bi-weekly. As of May 31, 2012, $20,769 is included in shares payable. During the nine months ended May 31, 2012 the Company accrued an expense for $15,000.

 

During the nine months ended May 31, 2012, the Company completed a $75,000 Subscription agreement for 3 million shares, $50,000 was paid during the period.

 

During the nine months ended May 31, 2012, an officer of the Company contributed $50,000 to fund operating expenses.

 

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

 

NOTE 5 - RELATED PARTY TRANSACTIONS

 

During the nine months ended May 31, 2012, an officer of the Company contributed $50,000 to fund operating expenses.

 

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

 

 

8

 
 

JA Energy

(A Development Stage Company)

Notes to Financial Statements

May 31, 2012

(Unaudited)

 

 

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 May 31, 2012, the Company has repaid $5,000.

 

The Chief Executive Officer loaned to the Company $99,000 during the current period. The terms of the loan are due upon demand with an annual interest rate of 5%. The Company paid the balance on the prior officer loan of $1,500 which was non-interest bearing.

 

 

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.

 

On March 12, 2012, the Company purchased a 2011 Ford Taurus for $22,122, secured by a $20,000 7% five year note.

 

 

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 nine months ended May 31, 2012, the Company reclassified plantation cost as Inventory in accordance with ASC 330. As of May 31, 2012, 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:

 

    May 31,
2012
    August 31,
2011
 
                 
Raw materials and supplies   $ 49,188     $ 38,350  
In-process inventories     --       --  
Finished case goods     --       --  
                 
    $ 49,188     $ 38,350  

 

9

 

 

 

JA Energy

(A Development Stage Company)

Notes to Financial Statements

May 31, 2012

(Unaudited)

 

NOTE 8 – SUBSEQUENT EVENTS

 

On June 20, 2012, the Company sold 100,000 unregistered restricted shares to an accredited investor for $50,000.

 

 

NOTE 9 – RESTATEMENT

 

The Company intends to restate its financial statements for the quarter ended February 29, 2012 to correct items relating to a related party loan. Accordingly, our previously filed financial statements for the quarter ended February 29, 2012 cannot be relied upon. Our February 29, 2012 Form 10-Q will be restated to include the issuance of a $35,000 loan from the Company’s CEO.

 

10

 
 

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 contains forward-looking statements. When used in this Quarterly Report on Form 10-Q, 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. 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. 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. 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.

 

10

Overview

 

JA Energy is working on developing a suite of products with a view of finding global energy solutions. Management believes non-oil-producing, agricultural-based countries are spending large amounts of their gross domestic product to pay for fossil fuel to power their economies, and ethanol from sugar beets or sugar cane to provide the electricity to replace diesel generation. With the base load power augmented by the photovoltaic and CSP products, countries will be able to provide some of their energy needs from within and lessen their imports.

 

 

JA Energy Business Plan

 

JA Energy will manufacture and sell Modular Distillation Units (“MDU”) to individuals, nonprofit organizations and/or companies. The primary application for ethanol, produced utilizing JA Energy’s MDU, will be as an oxygenator of motor vehicle fuel. The Company will organize and manage Jerusalem Artichoke farms and all aspects of farming to maintain control of the expansion of the crop. The Company also plans to establish a demonstration facility as well as a training facility to train the purchasers of the MDUs.

 

As the MDU is tested and proven domestically, it will open the door to renewable base load electricity, biodiesel (vegetable oil and ethanol mix), establishment of greenhouse complexes, and the creation of international business opportunities. When the first unit is operational and placed in Alamo, Nevada, the Company will begin building the second unit, which should be located in an economically-challenged section of the Las Vegas Valley. Units three and four are earmarked to be located in Hawaii and San Francisco.

 

The focus on the foreign joint venture for the first 50 Units will allow for the creation of manufacturing and time to establish a U.S. sales infrastructure. We plan to create business parks in the inner cities and have the MDUs located there. It will be necessary to come to agreement with individual cities and to do the necessary improvement to the sites. Utilizing the redevelopment programs for the blighted inner cities, the Company should be able to achieve long-term leases on land for the business parks. The construction of the infrastructure will require the Company to acquire funding and the cooperation of the building departments of each city. Our first goal will be to establish a business park in the Las Vegas Valley, working with the cities of Las Vegas and North Las Vegas. Sales in the U.S. will be assisted by a U.S. Department of Energy program administered by the U.S. Department of Agriculture (USDA) and a U.S. immigration program referred to as EB-5. For the MDU to qualify for the USDA program, one of the Company’s units must be in operation for 12 months. By doing the foreign joint ventures, time will pass that will allow the production from the second half of 2013 to qualify. The EB-5 program will need to be drawn up and approved before it can be utilized.

 

 

11

 
 

 

 

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 distills at a rate of 144 gallons per day or 1,000 gallons per week.

 

The 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 that introduces distillate into the still area. This method of heating and the redirection of the waste heat into heat exchangers reduces the energy costs, which increases the effectiveness of the distillation process.

 

 

The Business Outlook

 

The U.S. market is unique by its nature. The requirement for ethanol in fuel as an oxygenator to improve air quality provides opportunities not available in most of the world. This demand provides an additional benefit with the production of table vegetables when a hydroponic greenhouse is paired up with a MDU and produce is grown close to the consumer. The added freshness and food security (over one-half of table vegetables are imported), not to mention the reduction of imports, gives rise to business opportunities in the most challenged areas of our cities. Placing MDUs in inner cities will provide a new economic use for land and people, which would otherwise not be utilized by society.

 

 

Jerusalem Artichoke

 

The Jerusalem Artichoke is a relative of the sunflower, is considered a perennial native sunflower species, and is not related to the globe artichoke. The plant begins it growth from its underground roots. It produces a product called inulin, which is a white, starchy polysaccharide that yields fructose (a very sweet sugar). The plant stores the inulin in its stem until it flowers. When the plant begins to flower, the inulin is translocated to the tuber, which is the root of the plant.

 

JA Energy will manage the processing the Jerusalem Artichoke crop in the field, which involves separating the pulp from the juice (the equipment is unique to this application). The juice will be extracted by a harvester that separates the juice from the plant pulp. The juice is transferred via the harvester to an accompanying tank truck. When each tank truck is filled, the juice is transported to a centrally located processing plant to condense the juice to a syrup (JA Energy plans to apply for patent on this process). Once it is processed, the syrup will be packaged in containers commonly called totes (used primarily for the shipping of molasses).

 

12

 
 

 

 

The Jerusalem Artichoke 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 produced by the Jerusalem Artichoke is a sweetener, which the human body does not absorb (bacteria in the intestines thrive on inulin to create probiotics). The entire crop is used with no waste byproducts: the stalks are juiced and processed into syrup; the pulp of the stalks is used for cattle feed, which is comparable to distillers’ grains; and the root tubers are seeds for planting next season’s 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 will evaluate the profitability of being involved in these other product lines.

 

The greenhouse gases from the distillation process and the liquid residue are redirected into a hydroponic greenhouse, which is attached to the MDU. The entire process is free of waste byproducts; even the plant material from the greenhouses will be collected and mulched.

 

In spring 2012, management replanted the leased 33 acres of land in Alamo, Lincoln County, Nev., for its second planting. This land is arid and suitable for growing Jerusalem Artichokes. The Company purchased sufficient Jerusalem Artichoke tubers to plant on the leased property. This was considered a small test program to remove and reduce future problems with larger plantings. For example, management learned that nitrogen needs to be added to the soil before planting to improve the yields of the Jerusalem Artichoke and harvesting needs to take place at earlier intervals.

 

The Company plans to purchase or lease farms long term where the farmers will be paid a base rent plus a share in the crop. The Company will be responsible for all the funding or financing to establish the processing plant and acquire the necessary equipment. The Company plans to have control of processing production. The lease agreements will be for 10 years with an option to renew for an additional 10 years.

 

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 (tubers) in the field can be used as seeds to multiply the following year’s harvest by 20 percent. The harvesting machinery will divide the stalks into two parts: 1) animal feed and 2) juice to be condensed into syrup. The Jerusalem Artichoke juice has a short shelf-life compared to the syrup, which can be stored for a longer length of time.

 

 

13

 
 

 

 

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 ground in a hammer mill to release the sugars from the center of the stalk; the sugar juices from the hammer mill are collected; and the remaining mass of the center of the stalk and bark are squeezed to remove the remaining sugar juices.

 

 

Sugar Beets

 

With just 60 acres of either sugar beets or sugar cane, the MDU is designed to produce 50,000 gallons of ethanol. Sugar used to operate the MDU will require processing. Therefore, a second 60 acres and MDU may be utilized to produce the fuel, to operate the farm equipment, or to sell to provide the currency to purchase fossil fuel for the tractors (diesel in farming equipment is more effective than ethanol). In the case of sugar cane, once it is dried and the juice is extracted, the fibrous residue of the plant is a source of fuel to reduce the juice to syrup. The reduction of the cane or sugar beet juice to a 30-percent sugar solution is all that is necessary to process it into ethanol.

 

This process would allow, even the remotest of locations in the world to be able to generate electricity from this locally produced energy source. The wide-ranging effects will include processing local resources for market, increasing health-related services, and improved water quality. The most important benefit of MDU electricity generation is the ability to preserve food via refrigeration. This will be achieved in a cost-effective manner that does not require the installation of transmission lines to bring in the power from long distances. In the U.S., the utilization of the technology will allow for the addition of inexpensive local generation to supplement electricity from existing transmission lines or placement on military installations to provide a safe and secure source of power independent of the electric grid.

 

Farm Business Strategy

 

The Company plans to organize and manage Jerusalem Artichoke farms as cooperatives under a management agreement with each farmer. The Company will hold 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 grower 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, and flour used for diabetic-sensitive pasta and as a byproduct in health foods.

 

 

14

 
 

 

 

Management is currently exploring opportunities for the establishment of growing districts. The control of the establishment of growing districts is important to the Company's business plan. An oversupply of the crop would depress prices and have an adverse effect on the future of Jerusalem Artichoke as a source of inulin. Management expects to have the first growing districts established by the 2013 growing season. The 2012 growing season will be dedicated to 33 acres in Central Nevada and 8 acres in Southwest Colorado.

 

Each farming area 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 not expected to exceed a 25-mile radius. This will reduce transportation costs from the field to the condensing facilities. The facilities will be designed for easy expansion and to accommodate additional cooperative growers.

 

The marketing will be done at a centralized marketing location to gain economies of scale. Each area may elect to process their crop. The byproducts 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 byproducts from the crop 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, and artichokes, and from agricultural waste products, which include 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 can be converted into glucose more easily than other products.

Ethanol has been utilized as a fuel additive since the late 1970s when its value as a product extender for gasoline was discovered during the OPEC oil embargo crisis. In the 1980s, ethanol saw 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 oxygenators to gasoline in the nation's most polluted areas. Ethanol contains approximately 35 percent oxygen and, when combined with gasoline, it acts as an oxygenator 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, 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 (“MTBE”), which is cheaper than ethanol. Since its introduction and widespread use as an oxygenator, MTBE 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 oxygenator 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.

 

Foreign Marketing Plan

 

Once the first five MDU’s are established, a production facility must be brought on board. As the MDU is proven, management plans to work with foreign investors to establish joint ventures in up to 10 countries. The joint ventures will be funded by the partners in each country with International Letters of Credit (“ILC”) and in-country financing once the units are in place and secured by future contracts for the production of ethanol.

 

The in-country financing may be helped by international alternative energy loan guarantee programs. Two programs are currently in place and it may be possible to get this guaranteed via the Export-Import Bank of the United States. By using the ILC as collateral, the Company plans to establish a line of credit with our bank to fund the manufacturing of the units for each country. Since this is a joint venture, we will not be earning a profit on the first units manufactured. The Company will add to the direct cost of each unit, the overhead of the manufacturing and draw down the ILC. Once the units arrive in the joint venture country and are operational, with project production for the first five years sold to users, long-term financing will be put in place and the ILC paid. The Company will be responsible to oversee the operation of the joint venture (a 50-50 partnership) with complete operational control. The goal is to place five units in each country to create adequate cash flow to support the joint venture operation.

 

 

 

 

 

 

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Domestic Marketing Plan

 

The focus of the project in the inner cities will provide numerous benefits to each community that joins in the expansion of the MDU. In Southern Nevada, the impact will be greatest in the short term, resulting in manufacturing jobs, jobs in the construction and operations of the greenhouse, ethanol, transportation, and the creation of the Company infrastructure. As the expansion moves out of Southern Nevada, each community will have jobs in the construction and operation of the greenhouses, ethanol and transportation.

 

Unique benefits will be gained by providing a new customer for an existing local product. For example, Hawaii will be able to utilize their locally grown sugar cane to provide the feedstock for the distillation process. The modular business model allows for the expansion of the crop in lockstep with the placement of MDUs, and building the refinery may be done simultaneously with planting the crop for distillation of ethanol for motor vehicle fuel. With the current cost of fuel in the $6 per gallon range, communities will benefit both economically and environmentally from the locally produced fuel.

 

Sales and Marketing

 

We plan to establish in inner cities, and begin this program in Nevada. Working with city redevelopment agencies and nonprofit organizations to establish MDUs in their community jurisdictions will help create jobs.

 

Once these units are established, management hopes other communities will see the value of participating. The ethanol produced can be sold to local fuel blenders or to municipalities for use in fleets.

 

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

 

 

 

 

 

 

 

 

 

 

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Government Incentives

 

In addition to the 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 MTBE-blended gasoline. The federal incentive programs direct payments to eligible producers for increased ethanol production and federal income tax credits, which eligible producers may earn. State incentive programs include production payments and income tax credits. However, these programs are not without controversy, due in part to their cost, and we cannot assure you that they will continue to be available in the future.

 

As for our Company, we only plan to produce ethanol at the demonstration site in Central Nevada. The licensing as a small producer will be done by those groups, individuals or companies purchasing MDUs.

 

Ethanol Pricing

 

The price of ethanol tends to be volatile. Historically, ethanol prices 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 expanded rapidly, ethanol prices have been particularly volatile and ethanol and gasoline prices have at times diverged significantly.

 

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. The MDUs can be located near the areas that grow the feedstock such as: sugar cane (Hawaii), yielding 889 gallons per acre; sugar cane (Louisiana), yielding 555 gallons per acre; sugar beet, yielding 412 gallons per acre; and corn, yielding 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 that are 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 Corp.

 

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 U.S. 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 U.S., low production costs, other market factors or tariff reductions could make ethanol imports from various countries a major competitive factor in the U.S.

 

Alternative Fuel Additives

 

Alternative fuels, gasoline oxygenates and ethanol production methods are continually under development by various ethanol and oil companies that have far greater resources than we do. New products or methods of ethanol production developed by larger and better-financed competitors could provide competitive advantages over us and harm our business.

 

Need For Governmental Approval of Principle Products or Services

 

For the establishment of an ethanol plant, we will need to obtain and comply with various permitting requirements. There are three levels of permitting requirements: 10,000 gallons or less per year for own-use requires a simple application and compliance with local codes; more that 10,000 gallons but less than 500,000 requires an application with a bond; and over 500,000 gallons requires an application with a bond. The bonding process for JA Energy is expected to take six months with a bond of no more than $50,000. This is for the demonstration unit in Central Nevada. The Company does not plan to operate any other units. The permitting requirement for the 10,000 gallons is a 30-day process. The MDU must comply with all local building codes, which are subject to the individual municipalities. The demonstration unit has already been conditionally approved by the municipality subject to an approved set of engineered drawings.

 

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As a condition to granting necessary permits, regulators could make demands, which could increase our costs of construction and operations and we could be forced to obtain additional debt or equity capital. Environmental issues such as contamination and compliance with applicable environmental standards could arise at any time during the construction and operation of the ethanol plant.

 

The ethanol plant will be subject to environmental regulation by the state in which the plant is located and by the U.S. Environmental Protection Agency (“EPA”). For example, our future ethanol facilities will be subject to environmental regulations of Nevada and the EPA. These regulations could result in significant compliance costs and may change in the future. Although carbon dioxide emissions are not currently regulated, some authorities support restrictions on carbon dioxide emissions. If adopted, this could significantly impact our operating costs because we may have to emit a significant amount of carbon dioxide into the air. Also, the state environmental agencies or the EPA may seek to implement additional regulations or implement stricter interpretations of existing regulations. Recently, the EPA cautioned ethanol producers that it is prepared to sue companies whose plants do not comply with applicable laws and regulations. In a recent test of certain ethanol plants, the EPA expressed concerns over the discovery of certain "volatile organic compounds," some of which may be carcinogenic. Changes in environmental regulations or stricter interpretation of existing regulations may require additional capital expenditures or increase our operating costs.

 

The ethanol plant could also be subject to environmental nuisance or related claims by employees, property owners or residents near the ethanol plant arising from air or water discharges. Individuals and entities may object to the air emissions from our ethanol plant. Ethanol production has been known to produce an unpleasant odor, which could result in objections from surrounding residents and property owners. Environmental and public nuisance claims, or tort claims based on emissions, or increased environmental compliance costs could significantly increase our operating costs.

 

Effect of Existing or Probable Governmental Regulations on the Business

 

Various federal and state laws, regulations and programs have led to increased use of ethanol in fuel. These laws, regulations and programs are constantly changing. Federal and state legislators and environmental regulators could adopt or modify laws, regulations or programs that could adversely affect the use of ethanol. Certain states oppose the use of ethanol because they must ship ethanol in from other corn-producing states, which could significantly increase their gasoline prices. Material changes in environmental regulations regarding the use of MTBE, or the required oxygen content of automobile emissions, or the enforcement of such regulations could decrease the need to use ethanol. For example, the recently enacted Energy Policy Act of 2005 eliminated the reformulated oxygenate standards under the Clean Air Act. Future changes in the law may further postpone or waive requirements to use ethanol.

 

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Patent, Trademark, License and Franchise Restrictions and Contractual Obligations and Concessions

 

James Lusk, CEO of JA Energy, filed a patent with the U.S. Patent and Trademark Office in Washington, D.C., for the “Ethanol Distillation System and Apparatus.” Subsequently, Mr. Lusk assigned this patent application to JA Energy. The “Ethanol Distillation System and Apparatus,” serial number 12/565,111 application, was published by the U.S. Patent and Trademark Office on March 24, 2011. The Company elected to abandon this patent application in favor of filing a new patent for the fully automated distillation system that is currently under development. The fully automated unit is being assembled in Las Vegas and it is anticipated that the unit will be ready for testing in August 2012.

 

Research and Development Activities and Costs

 

The majority of JA Energy’s expenses involved costs related to research and development, and improving the efficiencies of its MDU.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Results of Operations for the nine months ended May 31, 2012

 

Revenues

 

We earned $5,000 in revenues since our inception through May 31, 2012. These revenues represent the sale of 5,000 pounds of Jerusalem Artichoke Seeds at $1.00 per pound. These seeds came from a Jerusalem Artichoke planting that took place in Colorado last growing season. This sale represents the entire crop available for sale, as the balance of the crop was lost due to an early season heat wave in Colorado. The Company’s inventory located in Nevada was not affected.

 

For the nine months ending May 31, 2012, we experienced a net loss of $(188,384) as compared to a net loss of $(40,300) for the same period last year. The net loss for the nine months ending May 31, 2012 consisted of general and administrative expenses of $163,667 and consulting fees

of $25,967. For the three months ending May 31, 2012, we experienced a net loss of $(83,013) as compared to a net loss of $(36,410) for the same period last year. The net loss for the three months ending May 31, 2012 consisted of general and administrative expenses of $75,763 and consulting fees of $8,500. 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 nine month period ending May 31, 2012, the Company experienced general and administrative expenses of $163,667 as compared $13,330 for the same period last year. For the nine month period ending May 31, 2012, the Company experienced consulting fees of $25,967 as compared to $27,000 for the same period last year. For the three month period ending May 31, 2012, the Company experienced general and administrative expenses of $75,763 as compared $9,410 for the same period last year. For the three month period ending May 31, 2012, the Company experienced consulting fees of $8,500 as compared to $27,000 for the same period last year. These expenses represented increased start-up costs as the Company begins its business operations. We anticipate our operating expenses will increase as we build our operations.

 

For the nine months ended May 31, 2012, the Company had a net loss $(188,384) as compared to $(40,300) for the same period last year. For the three months ended May 31, 2012, the Company had a net loss $(83,013) as compared to $(36,410) for the same period last year. Since the Company's inception, on August 26, 2010, the Company had a net loss of $(264,441).

 

 

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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 May 31, 2012, the Company has recognized $5,000 in revenues and has accumulated operating losses of approximately $264,441 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.

 

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 Unit has 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.

 

 

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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 May, 2012, 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.

 

 

Liquidity and Capital Resources

 

As of May 31, 2012 the Company has cash and cash equivalents of $11,433, current assets of $75,821 and current liabilities of $131,484. As of May 31, 2012, the Company’s total assets were $97,207 and total liabilities of $147,439. 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 May 31, 2012, the Company has 37,156,703 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.

 

 

 

 

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JA Energy Funding Requirements

 

JA Energy needs funding to fully execute its business plan. JA Energy will require at least $1.5 million 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. This could materially adversely affect the Company's business, results of operations and financial condition. Any future acquisitions of other businesses, technologies, services or products 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.

 

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 May 31, 2012.

 

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.

 

 

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This 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, which 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 Annual Report on 10-K for the fiscal year ended August 31, 2011 and the discussion in Item 1, above, under "Liquidity and Capital Resources."

 

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

 

On or about June 20, 2012, the Registrant sold 100,000 unregistered restricted shares to an accredited investor for $50,000.

 

The shares will be issued pursuant to the exemption from registration provided by Section 4(2) of the Securities Act. We believed that Section 4(2) was available because the offer and sale did not involve a public offering and there was not general solicitation or general advertising involved in the offer or sale. The shares were issued pursuant to the Regulation D offering. The investor is an accredited individual. Before he received these unregistered securities, he was known to us and our management, through pre-existing business relationships. We did not engage in any form of general solicitation or general advertising in connection with this transaction. The investor was provided access to all material information, which he requested and all information necessary to verify such information and was afforded access to our management in connection with this transaction. The investor acquired these securities for investment and not with a view toward distribution, acknowledging such intent to us. He understood the ramifications of his actions. The shares of common stock issued contained a legend restricting transferability absent registration or applicable exemption.

 

Item 3 -- Defaults Upon Senior Securities

 

None.

 

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Item 4 -- Mine Safety Disclosures

 

None.

 

Item 5 -- Other Information

 

RESTATEMENT

 

The Company intends to restate its financial statements for the quarter ended February 29, 2012 to correct items relating to a related party loan. Accordingly, our previously filed financial statements for the quarter ended February 29, 2012 cannot be relied upon. Our February 29, 2012 Form 10-Q will be restated to include the issuance of a $35,000 loan from the Company’s CEO.

 

 

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 May 31, 2012, formatted in XBRL (eXtensible Business Reporting Language):
         
        (1) Balance Sheets at May 31, 2012 (unaudited), and August 31, 2011 (audited)
         
       

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

May 31, 2012 and 2011, and the period from August 26, 2010 (inception) to

May 31, 2012

         
       

(3) Unaudited Statements of Cash Flows for the three and nine-month periods ended May

31, 2012 and 2011, and the period from August 26, 2010 (inception) to May 31, 2012

         
        (4)    Notes to the financial 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: July 16, 2012        /s/ James Lusk
  Name: James Lusk
 

Title: Chief Executive Officer

President and Director

Principal Executive, Financial,

and Accounting Officer

 

 

 

 

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