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EX-32.1 - SECTION 906 CERTIFICATION - JA Energyex321sec906.htm
EX-31.1 - SECTION 302 CERTIFICATION - JA Energyex311sec302.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-K

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

For the fiscal year Ended August 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 if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.

Yes o No þ

 

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 þ No o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, 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 o No o Not Applicable

 

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

 

Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to

this Form 10-K. [X]

 

 

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 o No þ

 

The aggregate market value of the Company's common shares of voting stock held by non-affiliates of the Company at December 12, 2012, computed by reference to the $0.96 per-share price quoted on the OTC-BB was $7,820,834.

 

As of December 12, 2012, there were 37,276,703 shares of common stock, par value $0.001 per share, of the registrant outstanding.

 
 

2

 

INDEX

 

  TITLE PAGE
     
ITEM 1. Business   5
     
ITEM 2. Properties  27
     
ITEM 3. Legal Proceedings 27
     
ITEM 4.  Mine Safety Disclosures 27
     
ITEM 5. Market for Common Equity and Related Stockholder Matters 28
     
ITEM 7. Management’s Discussion and Analysis of Financial Condition 30
     
ITEM 8. Financial Statement and Supplementary Data 33
     
ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 34
     
ITEM 9A. Controls and Procedures 34
     
ITEM 10. Directors, Executive Officers and Corporate Governance 37
     
ITEM 11. Executive Compensation 41
     
ITEM 12. Security Ownership of Certain Beneficial Owners Management and Related Stockholder Matters 43
     
ITEM 13. Certain Relationships and Related Transactions and Director Independence 44
     
ITEM 14. Principal Accounting Fees and Services 45
     
ITEM 15. Exhibits, Financial Statement Schedules 46
     

 

2

 

 

 
 

 

FORWARD-LOOKING STATEMENTS

 

This Annual Report on Form 10-K contains forward-looking statements. When used in this Quarterly Report on Form 10-K, the words "may," "could," "estimate," "intend," "continue," "believe," "expect" or "anticipate" 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 Annual Report on Form 10-K. 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-K. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the dates on which they are made. 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 Annual Report on Form 10-K. 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.

 

Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties. The factors impacting these risks and uncertainties include, but are not limited to:

 

·         inability to raise additional financing for working capital;

 

·         inability to find customers for our Modular Dissolution Units;

 

·         deterioration in general or regional economic, market and political conditions;

 

·         the fact that our accounting policies and methods are fundamental to how we report our financial condition and results of operations, and they may require management to make estimates about matters that are inherently uncertain;

 

·         adverse state or federal legislation or regulation that increases the costs of compliance, or adverse findings by a regulator with respect to existing operations;

 

·         changes in U.S. GAAP or in the legal, regulatory and legislative environments in the markets in which we operate;

 

·         inability to efficiently manage our operations;

 

·         inability to achieve future operating results;

 

·         our ability to recruit and hire key employees;

 

·         the inability of management to effectively implement our strategies and business plans; and

 

·         the other risks and uncertainties detailed in this report.

 

In this form 10-K references to "JA Energy", "the Company", "we," "us," and "our" refer to JA Energy.

 

 

3

 
 

 

 

AVAILABLE INFORMATION

 

We file annual, quarterly and special reports and other information with the SEC. You can read these SEC filings and reports over the Internet at the SEC's website at www.sec.gov. You can also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, NE, Washington, DC 20549 on official business days between the hours of 10:00 am and 3:00 pm. Please call the SEC at (800) SEC-0330 for further information on the operations of the public reference facilities. We will provide a copy of our annual report to security holders, including audited financial statements, at no charge upon receipt to of a written request to us at JA Energy, 7495 W. Azure Dr. Suite 110, Las Vegas, NV 89130.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4

 

 

 
 

 

 

PART I

 

ITEM 1. BUSINESS

 

Corporate History

 

The Company was organized August 26, 2010 (Date of Inception) under the laws of the State of Nevada, as JA Energy. The Company was incorporated as a subsidiary of Reshoot Production Company, a Nevada corporation. In April of 2012 the Company removed the Shell Status. We do not consider ourselves to be a blank check company as we do not have any intention to engage in a reverse merger with any entity in an unrelated industry.

 

 

JA Energy is working to develop 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. Management is reviewing the viability of managing farming co-ops and expects to reach a decision by Q2 2013. 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 200 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.

 

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

 

Market and legislative forces are steadily increasing the domestic demand for ethanol. Under the Energy Independence and Security Act (EISA) of 2007, the volume of renewable fuel required to be blended into transportation fuel increased from 9 billion gallons in 2008 to 36 billion gallons by 2022. The story is much the same in the international market. The European Union requires 5% of all vehicle fuel to be renewable. Even in the face of this mandate some EU member nations currently have no ethanol production capacity.

 

US operators can gain 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.

 

There is a vast and untapped overseas market for base load electricity. Using sugar beets or sugar cane to produce ethanol, then using the ethanol to generate electricity, gives remote communities energy self sufficiency. Placing an MDU and an MEG in an area lacking dependable base load power provides 1 megawatt of electricity annually, enough to power 100 US homes.

 

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.

 

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 2011, approximately 13.9 billion gallons of ethanol were produced in the US.

 

 

 

 

 
 

Power from Sugar

 

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 same type of installation can use blackstrap molasses to provide 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.

 

Foreign Marketing Plan

 

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 20 units in each country to create adequate cash flow to support the joint venture operation.

 

 

 

 

 

 

 

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.

 

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.

 

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.

 

 

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.

 

As of January 2011, according to the Renewable Fuels Association, 204 U.S. ethanol plants had the capacity to produce approximately 13.5 billion gallons of ethanol annually, with another 10 plants under construction or expansion that are expected to add approximately 522 million 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.

 

Recent Event

 

Management continues to make progress in building its first working model of the MDU. As of January 9, 2013: all the parts are in place and the tanks, insulation and pluming are done. The Programmed Logic Control (“PLC”) system and all the valves are set to be tested in February, 2013 before installing them in the MDU. The contract electrician is currently consulting with the valve manufacturer and the PLC programmer to verify his understanding of the system. Once he is comfortable with the system, the MDU will be tested as assembled. Once tested, the all of the other components will be moved into the MDU. Management hopes to have the testing and final installation completed before the end of February, 2013, barring any unforeseen delays.

 

 

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 than 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.

 

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. Legislative trends, however, indicate a continued and increasing mandate for ethanol use in motor fuels, including diesel. For example, the Energy Independence and Security Act (EISA) of 2007, increased the volume of renewable fuel required to be blended into transportation fuel from 9 billion gallons in 2008 to 36 billion gallons by 2022.

 

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 February 2013.

 

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.

 

 

 

 

Compliance With Environmental Laws

 

We seek to comply with all applicable statutory and administrative requirements concerning environmental quality. We have made, and will continue to make, expenditures for environmental compliance and protection. Expenditures for compliance with environmental laws have not had, and are not expected to have, a material effect on our capital expenditures, results of operation or competitive position.

 

Physical Plants

 

JA Energy currently operates an R&D facility and a separate manufacturing facility, both in Las Vegas, NV. The manufacturing facility has a current capacity of 50 units annually. Management has agreements in place that will allow for rapid expansion of manufacturing capacity as demand dictates. There are no plans to expand the size of the R&D facility in the near term.

 

Employees

 

We have no employees at the present time. Our officers and directors are responsible for all planning, developing and operational duties and will continue to do so throughout the early stages of our growth. The Company has no intention at this time to add employees until it can become a profitable entity. The Company from time to time may retain independent consultants in connection with its operations.

 

(i)                 The Company's performance is dependent on the performance of its officers. In particular, the Company's success depends on their ability to develop a business strategy which will be successful for the Company.

 

(ii)               The Company does not carry key person life insurance on any of its personnel. The loss of the services of any of its executive officers or other key employees could have a material adverse effect on the business, results of operations and financial condition of the Company. The Company's future success also depends on its ability to retain and attract highly qualified technical and managerial personnel.

 

(iii)             There can be no assurance that the Company will be able to retain its key managerial and technical personnel or that it will be able to attract and retain additional highly qualified technical and managerial personnel in the future. The inability to attract and retain the technical and managerial personnel necessary to support the growth of the Company's business, due to, among other things, a large increase in the wages demanded by such personnel, could have a material adverse effect upon the Company's business, results of operations and financial condition.

 

 

 

12

 
 

 

 

Item 1A. Risk Factors.

 

 

All parties and individuals reviewing this prospectus and considering us as an investment should be aware of the financial risk involved. When deciding whether to invest or not, careful review of the risk factors set forth herein and consideration of forward-looking statements contained in this annual report should be adhered to. Prospective investors should be aware of the difficulties encountered as we face all the risks including competition, and the need for additional working capital. If any of the following risks actually occur, our business, financial condition, results of operations and prospects for growth would likely suffer. As a result, you could lose all or part of your investment.

 

You should read the following risk factors carefully before purchasing our common stock.

 

 

RISK FACTORS RELATING TO OUR COMPANY

 

1. SINCE WE ARE A DEVELOPMENT STAGE COMPANY, AND WE HAVE NOT GENERATED ANY REVENUES, THERE ARE NO ASSURANCES THAT OUR BUSINESS PLAN WILL EVER BE SUCCESSFUL.

 

Our company was incorporated on August 26, 2010 as a spin-off of Reshoot Production Company. The Company removed its Shell Status in April of 2012. We have realized $5,000 in revenue from the sale of Jerusalem Artichoke tubers. We have no solid operating history upon which an evaluation of our future prospects can be made. Based upon current plans, we expect to incur operating losses in future periods as we incur significant expenses associated with the initial startup of our business. Further, there are no assurances that we will be successful in realizing revenues or in achieving or sustaining positive cash flow at any time in the future. Any such failure could result in the possible closure of our business or force us to seek additional capital through loans or additional sales of our equity securities to continue business operations, which would dilute the value of any shares you purchase in this Distribution.

 

 

2. IF OUR BUSINESS PLAN IS NOT SUCCESSFUL, WE MAY NOT BE ABLE TO CONTINUE OPERATIONS AS A GOING CONCERN AND OUR STOCKHOLDERS MAY LOSE THEIR ENTIRE INVESTMENT IN US.

 

As discussed in the Notes to Financial Statements included in this Annual Report, at August 31, 2012, we experienced a net loss from operations for the year ending August 31, 2012.

 

These factors raise substantial doubt that we will be able to continue operations as a going concern, and our independent auditors included an explanatory paragraph regarding this uncertainty in their report on our financial statements for the period inception (August 26, 2010) to August 31, 2012. Our ability to continue as a going concern is dependent upon our generating cash flow sufficient to fund operations and reducing operating expenses. Our business plans may not be successful in addressing these issues. If we cannot continue as a going concern, our stockholders may lose their entire investment in us.

 

3. WE EXPECT LOSSES IN THE NEAR FUTURE, ALTHOUGH WE did generate $5,000 in revenue from the sale of Jerusalem Artichoke tubers.

 

We have generated $5,000 in revenues to date, we expect losses over the next eighteen to twenty-four months based on the expenses associated in executing our business plan. We cannot guarantee that we will ever be successful in generating significant revenues in the future. We recognize that if we are unable to generate significant revenues, we will not be able to earn profits or continue operations as a going concern. There is no history upon which to base any assumption as to the likelihood that we will prove successful, and we can provide investors with no assurance that we will generate any operating revenues or ever achieve profitable operations.

 

 

4. WE HAVE NO OPERATING HISTORY AS AN INDEPENDENT PUBLIC COMPANY AND WE MAY BE UNABLE TO OPERATE PROFITABLY AS A STAND-ALONE COMPANY.

 

JA Energy does not have an operating history as an independent public company. Following the Distribution, JA Energy will maintain its own credit and banking relationships and perform its own financial and investor relations functions. JA Energy may not be able to successfully put in place the financial, administrative and managerial structure necessary to operate as fully reporting independent public company, and the development of such structure will require a significant amount of management's time and other resources.

 

 

5. OUR OFFICERS AND DIRECTORS HAVE NO PRIOR EXPERIENCE IN RUNNING A FULLY REPORTING COMPANY.

 

Our executive officers have no experience in operating a fully reporting company, and no experience converting artichokes to ethanol. Due to their lack of experience, our executive officers may make wrong decisions and choices regarding the conversion of artichokes to ethanol on behalf of the Company. Consequently, our Company may suffer irreparable harm due to management's lack of experience in this industry. As a result we may have to suspend or cease operations which will result in the loss of your investment.

 

 

6. OUR BUSINESS MAY REQUIRE ADDITIONAL CAPITAL AND IF WE DO OBTAIN

ADDITIONAL FINANCING OUR THEN EXISTING SHAREHOLDERS MAY SUFFER SUBSTANTIAL DILUTION.

 

We may require additional capital to finance our growth, purchase technologies and build our infrastructure. Our capital requirements may be influenced by many factors, including:

 

·         the demand for our products and services;

·         the timing and extent of our investment in new technology;

·         the level and timing of revenue;

·         the expenses of sales and marketing and new product development;

·         the cost of facilities to accommodate a growing workforce;

·         the extent to which competitors are successful in developing new

·         products and increasing their market shares; and

·         the costs involved in maintaining and enforcing intellectual property rights.

 

To the extent that our resources are insufficient to fund our future activities, we may need to raise additional funds through public or private financing. However, additional funding, if needed, may not be available on terms attractive to us, or at all. Our inability to raise capital when needed could have a material adverse effect on our business, operating results and financial condition. If additional funds are raised through the issuance of equity securities, the percentage ownership of our company by our current shareholders would be diluted.

 

 

7. WE MAY NOT BE ABLE TO RAISE SUFFICIENT CAPITAL OR GENERATE ADEQUATE REVENUE TO MEET OUR OBLIGATIONS AND FUND OUR OPERATING EXPENSES.

 

Failure to raise adequate capital and generate adequate sales revenues to meet our obligations and develop and sustain our operations could result in reducing or ceasing our operations. Additionally, even if we do raise sufficient capital and generate revenues to support our operating expenses, there can be no assurances that the revenue will be sufficient to enable us to develop business to a level where it will generate profits and cash flows from operations. These matters raise substantial doubt about our ability to continue as a going concern. Our independent auditors currently included an explanatory paragraph in their report on our financial statements regarding concerns about our ability to continue as a going concern.

 

 

8. JERUSALEM ARTICHOKES ARE NOT CONSIDERED A COMMERCIAL PLANT; THEREFORE, WE SHALL BE UNABLE TO INSURE OUR CROP AND FACE RISK OF LOSS.

 

Since Jerusalem Artichokes are not considered a commercial plant, we will most likely be unable to purchase insurance to protect us from risk of loss. For example, adverse weather conditions would most likely adversely affect our crop yields and subsequently hurt our ethanol production. Therefore, since we are unable to carry insurance we face risks related to poor crop yields that have the potential to hurt all aspects of our business operations.

 

 

9. IF WE ARE UNABLE TO ATTRACT KEY EMPLOYEES, WE MAY BE UNABLE TO SUPPORT THE GROWTH OF OUR BUSINESS.

 

Our success depends in part on our ability to attract and retain competent personnel. We must hire qualified managers, engineers, accounting, human resources, operations and other personnel. Competition for employees in the ethanol industry is intense. We cannot assure you that we will be able to attract and maintain qualified personnel. If we are unable to hire and maintain productive and competent personnel, the amount of ethanol we produce may decrease and we may not be able to efficiently operate our ethanol business. Competition for talent among companies in the our industry is intense and we cannot assure you that we will be able to continue to attract or retain the talent necessary to support the growth of our business.

 

 

10. OUR SINGLE LARGEST SHAREHOLDER OWNS APPROXIMATELY 40% OF THE CONTROLLING INTEREST IN OUR VOTING STOCK AND INVESTORS WILL NOT HAVE ANY VOICE IN OUR MANAGEMENT, WHICH COULD RESULT IN DECISIONS ADVERSE TO OUR GENERAL SHAREHOLDERS.

 

Our single largest shareholder, beneficially have the right to vote approximately 40% of our outstanding common stock. As a result, these shareholders will have the ability to control substantially all matters submitted to our stockholders for approval including:

 

a) election of our board of directors;

 

b) removal of any of our directors;

 

c) amendment of our Articles of Incorporation or bylaws; and

 

d) adoption of measures that could delay or prevent a change in control or

impede a merger, takeover or other business combination involving us.

 

As a result of their ownership and positions, these five individuals have the ability to influence all matters requiring shareholder approval, including the election of directors and approval of significant corporate transactions. In addition, the future prospect of sales of significant amounts of shares held by our director and executive officer could affect the market price of our common stock if the marketplace does not orderly adjust to the increase in shares in the market and the value of your investment in the company may decrease. Management's stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, which in turn could reduce our stock price or prevent our stockholders from realizing a premium over our stock price.

 

 

11. THE USE AND DEMAND FOR ETHANOL IS DEPENDENT ON VARIOUS ENVIRONMENTAL REGULATIONS AND GOVERNMENTAL PROGRAMS THAT COULD CHANGE AND CAUSE THE DEMAND FOR ETHANOL TO DECLINE.

 

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

 

Other laws, regulations and programs provide economic incentives to ethanol producers and users. The passage of pending federal or state energy legislation or any other revocation or amendment of any one or more of these laws, regulations or programs could have a significant adverse effect on the ethanol industry and our business. We cannot assure you that any of these laws, regulations or programs will continue in the future. Some of these laws, regulations and programs will expire under their terms unless extended, such as the federal partial excise tax exemption for gasoline blenders who use ethanol in their gasoline. Government support of the ethanol industry could change and Congress and state legislatures could remove economic incentives that enable ethanol to compete with other fuel additives. The elimination or reduction of government subsidies and tax incentives could cause the cost of ethanol-blended fuel to increase. The increased price could cause consumers to avoid ethanol-blended fuel and cause the demand for ethanol to decline.

 

 

12. IN THE FUTURE, WE WILL INCUR INCREMENTAL COSTS AS A RESULT OF OPERATING AS A PUBLIC COMPANY, AND OUR MANAGEMENT WILL BE REQUIRED TO DEVOTE SUBSTANTIAL TIME TO COMPLIANCE INITIATIVES.

 

As a fully reporting company, we will incur legal, accounting and other expenses.. Moreover, the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"), as well as new rules subsequently implemented by the SEC, have imposed various new requirements on public companies, including requiring changes in corporate governance practices. Our management will need to devote a substantial amount of time to these new compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. We expect to incur approximately $15,000 of incremental operating expenses in 2012-2013. The incremental costs are estimates, and actual incremental expenses could be materially different from these estimates.

 

The Sarbanes-Oxley Act also requires, among other things, that we maintain effective internal controls for financial reporting and disclosure controls and procedures. We must perform system and process evaluation and testing of our internal controls over financial reporting to allow management and our independent registered public accounting firm to report on the effectiveness of our internal controls over financial reporting, as required by the Sarbanes-Oxley Act. Our testing, or the subsequent testing by our independent registered public accounting firm, may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses. Our compliance with Sarbanes-Oxley will require that we incur substantial accounting expense and expend significant management efforts. Moreover, if we are not able to comply with the requirements of Sarbanes-Oxley in a timely manner, or if we or our independent registered public accounting firm identifies deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses, the market price of our stock could decline, and we could be subject to sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial and management resources.

 

 

RISKS RELATING TO OUR COMMON SHARES

 

13. WE MAY, IN THE FUTURE, ISSUE ADDITIONAL COMMON SHARES, WHICH WOULD REDUCE INVESTORS' PERCENT OF OWNERSHIP AND MAY DILUTE OUR SHARE VALUE.

 

Our Articles of Incorporation authorize the issuance of 70,000,000 shares of common stock and 5,000,000 preferred shares. The future issuance of common stock may result in substantial dilution in the percentage of our common stock held by our then existing shareholders. We may value any common stock issued in the future on an arbitrary basis. The issuance of common stock for future services or acquisitions or other corporate actions may have the effect of diluting the value of the shares held by our investors, and might have an adverse effect on any trading market for our common stock.

 

14. ALTHOUGH OUR SHARES OF COMMON STOCK ARE QUOTED ON A THE OTC-BB, THEY ARE PENNY STOCKS.

 

The Securities Enforcement and Penny Stock Reform Act of 1990 requires additional disclosures relating to the market for penny stocks in connection with trades in any stock defined as a penny stock. SEC regulations generally define a penny stock to be an equity security that has a market or exercise price of less than $5.00 per share, subject to certain exceptions. Such exceptions include any equity security listed on NASDAQ and any equity security issued by an issuer that has net tangible assets of at least $100,000, if that issuer has been in continuous operation for three years.

 

Unless an exception is available, the regulations require delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock market and the associated risks. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock, details of the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations and broker-dealer and salesperson compensation information must be given to the customer orally or in writing prior to effecting the transaction and must be given in writing before or with the customer's confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from such rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for securities that become subject to the penny stock rules. Since our securities are highly likely to be subject to the penny stock rules, should a public market ever develop, any market for our shares of common stock may not be liquid.

 

 

15. Although our stock is listed on the OTC-BB, a trading market has not developED, purchasers of our securities may have difficulty selling their shares.

 

There is currently no active trading market in our securities and there are no assurances that a market may develop or, if developed, may not be sustained. If no market is ever developed for our common stock, it will be difficult for you to sell any shares in our Company. In such a case, you may find that you are unable to achieve any benefit from your investment or liquidate your shares without considerable delay, if at all.

 

 

16. BECAUSE WE DO NOT INTEND TO PAY ANY CASH DIVIDENDS ON OUR COMMON STOCK, OUR STOCKHOLDERS WILL NOT BE ABLE TO RECEIVE A RETURN ON THEIR SHARES UNLESS THEY SELL THEM.

 

We intend to retain any future earnings to finance the development and expansion of our business. We do not anticipate paying any cash dividends on our common stock in the foreseeable future. Unless we pay dividends, our stockholders will not be able to receive a return on their shares unless they sell them. There is no assurance that stockholders will be able to sell shares when desired.

 

 

17. WE MAY ISSUE SHARES OF PREFERRED STOCK IN THE FUTURE THAT MAY ADVERSELY IMPACT YOUR RIGHTS AS HOLDERS OF OUR COMMON STOCK.

 

Our articles of incorporation authorize us to issue up to 5,000,000 shares of preferred stock. Accordingly, our board of directors will have the authority to fix and determine the relative rights and preferences of preferred shares, as well as the authority to issue such shares, without further stockholder approval. As a result, our board of directors could authorize the issuance of a series of preferred stock that would grant to holders preferred rights to our assets upon liquidation, the right to receive dividends before dividends are declared to holders of our common stock, and the right to the redemption of such preferred shares, together with a premium, prior to the redemption of the common stock. To the extent that we do issue such additional shares of preferred stock, your rights as holders of common stock could be impaired thereby, including, without limitation, dilution of your ownership interests in us. In addition, shares of preferred stock could be issued with terms calculated to delay or prevent a change in control or make removal of management more difficult, which may not be in your interest as holders of common stock.

 

 

Item 1B. Unresolved Staff Comments.

 

Not Applicable.

 

Item 2. Properties.

 

The Company owns no real property. Our offices are currently located at 7495 W. Azure Dr. Suite 110, Las Vegas, NV 89130. Our telephone number is (702) 515-4036. The office space is a small area in the office warehouse. Management believes that its current facilities are adequate for its needs through the next twelve months, and that, should it be needed, suitable additional space will be available to accommodate expansion of the Company's operations on commercially reasonable terms, although there can be no assurance in this regard.

 

Item 3. 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 4. Mine Safety Disclosures

 

No matters were submitted to the shareholder for the fiscal year ending August 31, 2012.

27

 

PART II

 

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

 

(a) Market Information

 

JA Energy Common Stock, $0.001 par value, can be found on the OTC-Bulletin Board under the symbol: JAEN. The Stock was first cleared for quotation on September 22, 2011.

 

There has been limited trading of the Company’s stock, since it was listed on the OTC-BB, there are no assurances that a market will ever develop for the Company's stock.

 

Year ended August 31, 2012

  High     Low  
First Quarter   $ 0.50*     $ 0.50  
Second Quarter   $ 0.04     $ $0.04  
Third Quarter   $ 0.26     $ 0.55  
Fourth Quarter   $ 0.85     $ 0.85  
     
                         

 

* The first trade of the Company’s stock took place on October 25, 2011.

 

(b) Holders of Common Stock

 

As of December 12, 2012, there were approximately seventy-five (75) holders of record of our Common Stock.

 

(c) Dividends

 

In the future we intend to follow a policy of retaining earnings, if any, to finance the growth of the business and do not anticipate paying any cash dividends in the foreseeable future. The declaration and payment of future dividends on the Common Stock will be the sole discretion of board of directors and will depend on our profitability and financial condition, capital requirements, statutory and contractual restrictions, future prospects and other factors deemed relevant.

 

(d) Securities Authorized for Issuance under Equity Compensation Plans

 

There are no outstanding grants or rights or any equity compensation plan in place.

 

(e) Recent Sales of Unregistered Securities

 

The Company sold 100,000 shares in June of 2012 and 20,000 shares in August 2012 totaling 120,000 shares of stock during the fiscal year ending August 31, 2012. 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 investors who received the shares are financially sophisticated individuals. Before they received these unregistered securities, they were known to us and our management, through pre-existing business relationships, as a long standing business associate. We did not engage in any form of general solicitation or general advertising in connection with this transaction. The investors were provided access to all material information, which they requested and all information necessary to verify such information and was afforded access to our management in connection with this transaction. The investors acquired these securities for investment and not with a view toward distribution, acknowledging such intent to us. They understood the ramifications of their actions. The shares of common stock issued contained a legend restricting transferability absent registration or applicable exemption.

.

 

28

 
 

 

 

(f) Issuer Purchases of Equity Securities

 

We did not repurchase any of our equity securities during the years ended August 31, 2012 or August 31, 2011.

 

Item 6. Selected Financial Data.

 

Not applicable.

 

 

 

 

 

 

 

 

 

 

 

 

 

29

 
 

 

 

 

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

 

Overview of Current Operations

 

This section of this Annual Report includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our predictions. The following discussion should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in this Prospectus. The discussion of results, causes and trends should not be construed to imply any conclusion that these results or trends will necessarily continue into the future.

 

Results of Operations for the year ended August 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.

 

Expenses

 

For the year ending August 31, 2012, we experienced a net loss of $276,050 as compared to a net loss of $73,232 last year. The net loss for the year ending August 31, 2012 consisted of general and administrative expenses of $236,356 and consulting fees of $40,967. Our auditor issued an opinion that our financial condition raises substantial doubt about the Company's ability to continue as a going concern.

 

Cash Flows

 

During the fiscal year ending August 31, 2012, the Company used net cash of $((194,447) in operations, used net cash of $(82,066) in investing activities, that included the purchase of MDU and a vehicle as a fixed asset and generated cash of $270,084 from financing activities.

 

Going Concern

 

The financial statements included with this annual 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 August 31, 2012, the Company has recognized $5,000 in revenues and has accumulated operating losses of approximately $352,107 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 (MDU) which will convert blackstrap molasses into ethanol. The Modular Distillation Unit has been designed and a prototype has being 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. The prototype MDU is recorded as an asset on the balance sheet,$59,944, at year end, approximately an additional $40,000 will be spend to complete the unit during the first two quarters of fiscal year end August 31, 2013.

 

 

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 August 31, 2012 the Company has cash and cash equivalents of $399, current assets of $72,487 and current liabilities of $154,895. As of August 31, 2012, the Company’s total assets were $153,081 and total liabilities of $169,977. 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 August 31, 2012, the Company has 37,256,703 shares of common stock issued and outstanding. $99,000 of the long-term liabilities is a note payable to James Lusk the company’s CEO. Subsequent to the fiscal year end the CEO has loaned the company an additional $101,176. The funds are repayable upon demand and have a simple interest rate of 5%, with interest paid monthly.

 

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.

 

 

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 August, 2012 and concluded that they will not have a material effect on the financial statements as of August 31, 2012.

 

Recent 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.

 

 

Item 7A. Quantitative and Qualitative Disclosures about Market Risk.

 

Not applicable.

 

 

 

 

 

32

 
 

 

 

 

Item 8. Financial Statements and Supplementary Data.

 

Index to Financial Statements

 

 

Financial Statements of JA Energy:

Page

 

Report of Independent Registered Public Accounting Firm

 

F-1

Balance Sheets as of August 31, 2012 and August 31, 2011

 

F-2

 

Statements of Operations for year ended August 31, 2012, August 31, 2011 and the Period from June 26, 2009 (Inception) to August 31, 2012

 

F-3

 

Statement of Stockholders' Deficit for the Period From June 26, 2009 (Inception) to August 31, 2012

 

F-4

 

Statement of Cash Flows for year ended August 31, 2012, August 31, 2011 and the Period From June 26, 2009 (Inception) to August 31, 2012

 

F-5

 

Notes to the Financial Statements

 

F-6

 

33

 
 

 

De Joya Griffith

Certified Public Accountants and Consultants

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors and Stockholders

JA Energy, Inc.

 

We have audited the accompanying balance sheets of JA Energy, Inc. (A Development Stage Company) (the “Company”) as of August 31, 2012 and 2011, and the related statements of operations, stockholders’ deficit, and cash flows for each of the years in the two-year period ended August 31, 2012 and 2011, and for the period from inception (August 26, 2010) through August 31, 2012. JA Energy, Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of JA Energy, Inc. (A Development Stage Company) as of August 31, 2012 and 2011, and the results of its operations, and its cash flows for each of the years in the two-year period ended August 31, 2012 and 2011, and for the period from inception (August 26, 2010) through August 31, 2012 in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has suffered losses from operations, which raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

 

/s/ De Joya Griffith, LLC

Henderson, Nevada

December 13, 2012

 

 

De Joya Griffith, LLC ● 2580 Anthem Village Dr. ● Henderson, NV ● 89052

Telephone (702) 563-1600 ● Facsimile (702) 920-8049

www.dejoyagriffith.com

 

F-1

 

 

 
 

 

JA Energy

(A Development Stage Company)

Balance Sheets

(Audited)

 

        August 31, 2012   August 31, 2011
    ASSETS        
Current assets:        
  Cash and cash equivalents   $                  399   $               6,828
  Prepaid expenses   7,210   6,059
  Inventory   62,323   38,350
  Deposits   2,555   2,000
    Total current assets   72,487   53,237
             
Fixed assets:        
  Modular distillation unit   59,944    -
  Vehicle, net of accumulated depreciation of $1,472   20,650   -
    Total fixed assets   80,594   -
TOTAL ASSETS   153,081   53,237
             
    LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)       
Current liabilities:        
  Accounts payable and accrued liabilities   27,593   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   154,895   27,104
             
Long term liabilities:        
  Loan payable - long term   15,082   -
    Total long term liabilities   15,082   -
    Total liabilities   169,977   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 37,257   31,157
    authorized, 37,256,703 and 31,156,703 issued and      
    outstanding as of 8/31/12 and 8/31/11,        
    respectively        
  Additional paid-in capital   207,433   33,533
  Stock subscription payable   90,521   37,500
  Deficit accumulated during development stage   (352,107)   (76,057)
    Total stockholders' equity (deficit)   (16,896)   26,133
TOTAL LIABILITIES AND STOCKHOLDERS'        
  EQUITY (DEFICIT)   $           153,081   $             53,237

 

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

 

F-2

JA Energy

(A Development Stage Company)

Statements of Operations

(Audited)

 

     

Year

ended

August 31, 2012

 

Year

ended

August 31, 2011

 

From inception

(August 26, 2010)

to

August 31, 2012

Revenue $                5,000   $                     -   $                  5,000
Cost of goods sold (3,750)   -    (3,750)
Gross profit 1,250   -   1,250
               
Operating expenses:          
  General & administrative 236,356   36,232   275,413
  Consulting fees 40,967   37,000   77,967
    Total expenses 277,323   73,232   353,380
           
Other income:          
  Interest income 23   -   23
    Total other income 23   -   23
               
Net loss $           (276,050)   $           (73,232)   $           (352,107)
               
Weighted average number of common          
  shares outstanding- basic 35,905,610   18,027,126    
               
Net loss per share - basic $      (0.01 $                (0.00)    

 

 

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

 

F-3

 
 

 

JA Energy

(A Development Stage Company)

Statement of Stockholders’ Equity (Deficit)

(Audited)

 

                            Deficit    
                            Accumulated   Total
    Preferred Stock   Common Stock   Additional Paid-In   Stock subscription   During Development   Stockholders'
    Shares   Amount   Shares   Amount   Capital   payable   Stage   Equity (Deficit)

Inception

August 26, 2010

  -   $         -   -   $            -   $            -   $            -   $             -   $            -
                                 
Contributed Capital                   325           325
                                 
Net loss                           (2,825)   (2,825)
                                 
Balance, August 31, 2010   -   -   -   -   325   -   (2,825)   (2,500)
                                 

November 8, 2012

Contributed Capital

                  2,500           2,500
                                 

January 14, 2011

Contributed Capital

                  3,865           3,865
                                 

January 31, 2011

Shares issued to reshoot

production

          34,246,703   34,247   (34,247)           -
                                 

March 1, 2011

Contributed Capital

                  5,000           5,000
                                 

April 18, 2011

Contributed Capital

                  2,000           2,000
                                 

April 21,2011

Shares issued for incurring plantation costs

                               
            270,000   270   26,730           27,000

May 3, 2011

Shares Cancelled

          (3,400,000)   (3,400)   3,400           -
                                 

May 4, 2011

Shares issued for services

          40,000   40   3,960           4,000
                                 

May 20, 2011

Contributed Capital

                               
                    20,000           20,000

June 15, 2011

Stock subscription payable

                      37,500       37,500
                                 
Net Loss                           (73,232)   (73,232)
                                 
Balance, August 31, 2011   -   -   31,156,703   31,157   33,533   37,500   (76,057)   26,133
                                 
Private placement $0.25 per share, 1,500,000 shares issued 9/23/11           1,500,000   1,500   36,000   (37,500)       -
                                 
Private placement $0.25 per share, 1,500,000 shares issued 9/23/11           1,500,000   1,500   36,000           37,500
                                 
January 10, 2012, Shares issued for cash pursuant to Reg. S offering           3,000,000   3,000   52,000           55,000
                                 
Stock compensation                       73,846       73,846
                                 
Shares to be issued for seed purchase                       3,750       3,750
                                 
June 21, 2012, Shares issued for cash           100,000   100   49,900           50,000
                                 
Shares purchased by Director                       10,000       10,000
                                 
Shares issued for compensation                       2,500       2,500
                                 
Shares issued for compensation                       425       425
                                 
Net loss                           (276,050)   (276,050)
                                 
Balance, August 31, 2012   -   $         -   37,256,703   $  37,257   $  207,433   $  90,521   $ (352,107)   $  (16,896)

 

 

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

 

F-4

 
 

 

JA Energy

(A Development Stage Company)

Statements of Cash Flows

 

     

Period

ended

August 31, 2012

 

Period

ended

August 31, 2011

 

From inception

(August 26, 2010) to

August 31, 2012

OPERATING ACTIVITIES          
Net loss $      (276,050)   $         (73,232)   (352,107)
Adjustment to reconcile net loss to net cash          
  used by operating activities:          
    Stock Compensation 84,521   -   84,521
  Changes in operating assets and liabilities:        
    Depreciation 1,472   -   1,472
    Increase in prepaid (5,151)   (2,059)   (7,210)
    Increase in inventory (23,973)   (11,350)   (62,323)
    Increase in deposits (555)   (2,000)   (2,555)
    Increase/(decrease) in accounts payable and accrued liabilities 26,039   (946)   27,593
    Increase/(decrease) in accounts payable to related-parties (750)   10,550   9,800
Net cash used by operating activities (194,447)   (79,037)   (304,809)
               
INVESTING ACTIVITIES          
  Purchase of MDU fixed asset (59,944)   -   (59,944)
  Purchase of fixed asset - vehicle (22,122)   -   (22,122)
Net cash used by investing activities (82,066)   -   (82,066)
               
FINANCING ACTIVITIES          
Proceeds from sale of common stock 152,500   37,500   190,000
Contributed capital -   33,365   33,690
Proceeds from loan - related party 105,000   -   105,000
Payments on loan - related party (6,000)   -   (6,000)
Proceeds from loan 20,000   15,000   35,000
Payments on loan (1,416)   -   (1,416)
Net cash provided by financing activities 270,084   85,865   356,274
               
NET INCREASE IN CASH (6,429)   6,828   399
CASH - BEGINNING OF THE PERIOD 6,828   -   -
CASH - END OF THE PERIOD 399   6,828   399
               
SUPPLEMENTAL DISCLOSURES:          
Stock issued for planting costs -   27,000   27,000
Stock issued for prepaid services -   4,000   -
Interest paid 2,550   -   2,550

 

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

 

F-5

JA Energy

(A Development Stage Company)

Notes to Financial Statements

August 31, 2012

 

NOTE 1. General Organization and Business

 

The Company was organized August 26, 2010 (Date of Inception) under the laws of the State of Nevada, as JA Energy. The Company was incorporated as a subsidiary of Reshoot Production Company, a Nevada corporation. Reshoot Production Company was incorporated October 31, 2007, and, at the time of spin off was listed on the Over the Counter Bulletin Board. The Company is a Development Stage Company as defined by FASB ASC 915 "Development Stage Entities". The Company plans to use a patented varietal Jerusalem Artichoke, whereby the syrup by-product from the artichoke is converted and processed into ethanol.

 

NOTE 2. Summary of Significant Accounting Policies

 

Basis of Accounting

The basis is United States generally accepted accounting principles.

 

Earnings per Share

The basic earnings (loss) per share is calculated by dividing the Company's net income (loss) available to common shareholders by the weighted average number of common shares issued and outstanding during the year. The diluted earnings (loss) per share is calculated by dividing the Company's net income (loss) available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted as of the first of the year for any potentially dilutive debt or equity.

 

The Company has not issued any options or warrants or similar securities since inception.

 

Revenue recognition

The Company recognizes revenue on an accrual basis as it invoices for services.

 

Dividends

The Company has not yet adopted any policy regarding payment of dividends. No dividends have been paid during the period shown.

 

Income Taxes

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

 

 

F-6

 
 

 

JA Energy

(A Development Stage Company)

Notes to Financial Statements

August 31, 2012

 

Year-end

The Company has selected August 31 as its year-end.

 

Fair value of financial instruments

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of August 31, 2012. The respective carrying value of certain on balance sheet financial instruments approximated their fair values. These financial instruments include cash and accounts payable. Fair values were assumed to approximate carrying values for cash and payables because they are short term in nature and their carrying amounts approximate fair values or they are payable on demand.

 

Advertising

Advertising is expensed when incurred. There has been no advertising during the period.

 

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

 

NOTE 3 - Going concern

 

The Company's financial statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company has only recently commenced its planned principal operations and it has generated limited revenues. In order to obtain the necessary capital, the Company is seeking equity and/or debt financing. There are no assurances that the Company will be successful, without sufficient financing it would be unlikely for the Company to continue as a going concern. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from the outcome of this uncertainty.

 

 

F-7

 
 

 

JA Energy

(A Development Stage Company)

Notes to Financial Statements

August 31, 2012

 

NOTE 4 - Stockholders' Deficit

 

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

 

On September 1, 2010, a director of the Company contributed capital of $325 for incorporating fees.

 

On November 8, 2010, a director of the Company contributed capital of $2,500 for audit fees.

 

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

 

The Company was a subsidiary of Reshoot Production Company. On January 31, 2011, the record shareholders of Reshoot Production Company received a spin off dividend of one point 4 (1.4) common shares, par value $0.001, of JA Energy common stock for every share of Reshoot Production Company common stock owned for a total 65,846,703 common shares issued.

 

In March 2011, an officer of the Company returned 31,600,000 shares to treasury.

 

On March 1, 2011, a director of the Company contributed capital of $5,000 for operating expenses.

 

On April 18, 2011, a director of the Company contributed capital of $2,000 for operating expenses.

 

On April 21, 2011, the Company issued 270,000 shares of its $0.001 par value common stock valued at $27,000 in exchange for Jerusalem Artichoke tubers. These tubers were essential in order for the Company to grow Jerusalem Artichokes for the subsequent conversion into ethanol.

 

On May 3, 2011, a former officer of the Company returned 3,400,000 shares to treasury as part of an initiative to restructure the Company’s capital stock. Accordingly, the return of these shares have been accounted for similar to a reverse stock split and have been applied on a retroactive basis.

 

On May 4, 2011, the Company issued 40,000 shares of its $0.001 par value common stock valued at $4,000 in exchange for bookkeeping and office support services.

 

On May 20, 2011, $20,000 was received for shares to be issued on January 10, 2012.

 

On September 23, 2011, the Company issued 3,000,000 shares of its $0.001 par value common stock for cash of $75,000.

 

On January 10, 2012, the Company issued 3,000,000 shares of its $0.001 par value common stock for cash of $75,000, of which $20,000 was received on May 20, 2011.

 

On June 21, 2012, the Company issued 100,000 shares of its $0.001 par value common stock for cash of $50,000.

 

On August 30, 2012 the Company sold 20,000 shares of its $0.001 par value common stock for cash for $10,000. The shares were issued after year end and the amount is included in the Common Stock Payable.

 

On April 23, 2012, the Company recorded a common stock payable of $3,750 for the shares due under contract to Rockey Farms, Owned by Director Sheldon Rockey, for farming costs. As of August 31, 2012 no shares have been issued.

 

On January 16, 2012, the Company executed a consulting contract with Desert Resources for an annual fee of $60,000 and 240,000 shares of common stock. The shares were valued according to the fair value of the common stock based on the agreement date. Desert Resources is compensated in bi-weekly installments. As of August 31, 2012, no shares have been issued and a total of $73,846 has been recorded to common stock payable.

 

On January 30, 2012, the Company recorded a $2,500 common stock payable cash for services rendered. As of August 31, 2012, no shares have been issued.

 

On August 30, 2012, the Company received $10,000 from a director for shares to be issued.

 

On August 31, 2012, the Company recorded a common stock payable for 500 shares of common stock due to a consultant for services rendered. The shares were valued at $425 according to the fair value of the common stock based on the record date.

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

F-8

 
 

JA Energy

(A Development Stage Company)

Notes to Financial Statements

August 31, 2012

 

NOTE 5. Related Party Transactions

 

On September 1, 2010, a director of the Company contributed capital of $325 for incorporating fees.

 

On November 8, 2010, a director of the Company contributed capital of $2,500 for audit fees.

 

On May 31, 2012, the Company entered into a promissory note with the CEO and director for value loaned to the Company in the sum of $99,000 with terms of due upon demand with a simple interest of 5% due monthly.

 

On April 23, 2012 the Company recorded a Common Stock Payable of $3,750 for the shares due under contract to Rockey Farms, Owned by Director Sheldon Rockey for farming costs. As of August 31, 2012 no shares have been issued.

 

 

NOTE 6. Fixed Assets

 

The Company purchased a 2011 Ford Taurus for $22,122 during the current year and constructed a prototype Modular Distillation Unit (MDU) for $59,944. The MDU is not completed and there will be an additional expenditure to complete the unit.

 

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

    August 31,
2012
    August 31,
2011
 
                 
Raw materials and supplies   $ 62,323     $ 38,350  
In-process inventories     --       --  
Finished case goods     --       --  
                 
    $ 62,323     $ 38,350  

 

 

 

 

NOTE 8. Loan Payable

 

The Company has received $15,000 as a loan from a non - related third party. The loan is unsecured, payable on demand and non interest bearing. The loan was received on 03/01/2011 in the amount of $15,000.

 

The Company received a loan from US Bank in the amount of $20,000 secured by the 2011 Ford Taurus. The loan is a fully amortized loan with monthly payments of $389 for 60 months.

 

Year Principle Interest Payments

2013 $3,502 $1,166 $4,668

2014 $3,829 $839 $4,668

2015 $4,124 $544 $4,668

2016 $4,421 $247 $4,668

2017 $2,708 $15 $2,723

 

NOTE 9. Provision for Income Taxes

 

The Company accounts for income taxes under FASB Accounting Standard Codification ASC 740 “Income Taxes”. ASC 740 requires use of the liability method. ASC 740 provides that deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, referred to as temporary differences. Deferred tax assets and liabilities at the end of each period are determined using the currently enacted tax rates applied to taxable income in the periods in which the deferred tax assets and liabilities are expected to be settled or realized.

 

As of August 31, 2012, the Company had net operating loss carry forwards of $271,586 that may be available to reduce future years’ taxable income through 2012. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards. Net operation losses will begin to expire in 2030.

 

 

 

 

 

 

 

F-9

 
 

 

JA Energy

(A Development Stage Company)

Notes to Financial Statements

August 31, 2012

 

Components of net deferred tax assets, including a valuation allowance, are as follows at August 31, 2011 and 2010:

    2012   2011
Deferred tax assets:        
Net operating loss carry forward   $        195,529   $         76,057
         
Total deferred tax assets     68,435     26,620
Less: valuation allowance   (68,435)   (26,620)
Net deferred tax assets   $                   -   $                   -

 

The valuation allowance for deferred tax assets as of August 31, 2012 was $68,435, as compared to $26,620 as of August 31, 2011. In assessing the recovery of the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the periods in which those temporary differences become deductible. Management considers the scheduled reversals of future deferred tax assets, projected future taxable income, and tax planning strategies in making this assessment. As a result, management determined it was more likely than not the deferred tax assets would not be realized as of August 31, 2012 and August 31, 2011.

 

The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income before provision for income taxes. The sources and tax effects of the differences are as follows:

 

U.S federal statutory rate (35.0%)

Valuation reserve 35.0%

Total -%

 

At August 31, 2012, we had an unused net operating loss carryover approximating $271,586 that is available to offset future taxable income which expires beginning 2030.

 

NOTE 10. 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 11. Subsequent Events

 

On September 15, 2012 Company issued 20,000 unregistered restricted shares to an accredited investor for $10,000 which was previously recorded as Common stock payable as of August 31, 2012.

 

 

 

F-10

 

 
 

 

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

 

None.

 

Item 9A(T). 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.

 

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, 2012. 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, 2012.

 

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 annual report on Form 10-K, 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.

 

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 annual 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 annual report.

 

Item 9B. Other Information.

 

None.

 

 

 

 

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PART III

 

 

Item 10. Director, Executive Officer and Corporate Governance.

 

The following table sets forth certain information regarding our current director and executive officer. Our executive officers serve one-year terms. Set forth below are the names, ages and present principal occupations or employment, and material occupations, positions, offices or employments for the past five years of our current director and executive officer.

 

Name Age Position & Offices Held
     
James Lusk 60 President, Chief Executive Officer and Director
     
Sheldon Rockey 36 Director

 

The business address for our officers/directors is: c/o JA Energy, 7495 W. Azure Dr. Suite 110, Las Vegas, NV 89130.

 

All directors hold office until the next annual meeting of stockholders of the Company and until their successors have been elected and qualified. Directors currently receive no fees for services provided in that capacity. The officers of the Company are elected annually and serve at the discretion of the Board of Directors.

 

Set forth below is a brief description of the background and business experience of our officers and directors.

 

James Lusk, President/CEO/Director

 

Mr. Lusk has spent the past twelve months, prior to the incorporation of JA Energy, researching the business plan for JA Energy. This includes identifying the varietal Jerusalem artichoke, where to grow the artichoke, how to harvest the artichoke, and process the final product into ethanol. He brings to the company the know-how to make the business plan operational.

 

Prior to joining JA Energy, Mr. Lusk's experience includes 32 years in public accounting where he worked with many businesses. He has a bachelor's degree in Business Administration with a concentration in accounting from California State University at San Bernardino (1978) and was issued CPA certificates in 1981 California and 1986 Nevada (Both are not current for lack of up to date CPEs).

 

In March of 2009, he joined Pattie Montgomery CPA LLC as a principal.

 

 

 

From May, 2009 (inception) until December 2009, he was one of four members of Green Global Systems, LLC, a Nevada Limited Liability Company. Mr. Lusk is currently a member of Green Global Systems and controls 50% of this limited liability company. His duties at Green Global Systems, LLC included, the supervision of the building of the prototype Modular Distillation Unit, working with the mechanical engineers, meetings with consultants, researching the market place both domestic and foreign, meeting with local government official, meeting with farmers, preparing cost analysis for the various phases of the process and meeting with potential investors.

 

From 2007 to 2008, Mr. Lusk authored a book entitled "33 Cents a Day the Cost of Good Government."

 

From 2004 to 2007, Mr. Lusk developed Test Only Smog Inspection Stations in California under my Service Marked name of Smog Busters.

 

Biography of Sheldon Rockey, Director

 

2002- Present, Mr. Sheldon Rockey is a partner and manager of Rockey Farms LLC located in Center, Colorado.

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires our executive officer and director, and persons who beneficially own more than ten percent of our common stock, to file initial reports of ownership and reports of changes in ownership with the SEC. Executive officers, directors and greater than ten percent beneficial owners are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. Based upon a review of the copies of such forms furnished to us and written representations from our executive officer and director, we believe that as of the date of this report they were not current in his 16(a) reports.

 

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Board of Directors

 

Our board of directors currently consists of three members, Mr. James Lusk, Mr. Steve Scott

and Mr. Sheldon Rockey. Our directors serve one-year terms.

 

Audit Committee

 

The company does not presently have an Audit Committee. No qualified financial expert has been hired because the company is too small to afford such expense.

 

Committees and Procedures

 

(1) The registrant has no standing audit, nominating and compensation committees of the

Board of Directors, or committees performing similar functions. The Board acts itself

in lieu of committees due to its small size.

 

(2) The view of the board of directors is that it is appropriate for the registrant not to have

such a committee because its directors participate in the consideration of director

nominees and the board and the company are so small.

 

(3) The members of the Board who acts as nominating committee is not independent,

pursuant to the definition of independence of a national securities exchange registered

pursuant to section 6(a) of the Act (15 U.S.C. 78f(a).

 

(4) The nominating committee has no policy with regard to the consideration of any

director candidates recommended by security holders, but the committee will consider

director candidates recommended by security holders.

 

(5) The basis for the view of the board of directors that it is appropriate for the registrant

not to have such a policy is that there is no need to adopt a policy for a small company.

 

(6) The nominating committee will consider candidates recommended by security holders,

and by security holders in submitting such recommendations.

 

(7) There are no specific, minimum qualifications that the nominating committee believes

must be met by a nominee recommended by security holders except to find anyone

willing to serve with a clean background.

 

(8) The nominating committee's process for identifying and evaluation of nominees for

director, including nominees recommended by security holders, is to find qualified

persons willing to serve with a clean backgrounds. There are no differences in the

manner in which the nominating committee evaluates nominees for director based on

whether the nominee is recommended by a security holder, or found by the board.

 

 

Code of Ethics

 

We have not adopted a Code of Ethics for the Board and any salaried employees.

 

 

Limitation of Liability of Directors

 

Pursuant to the Nevada General Corporation Law, our Articles of Incorporation exclude personal liability for our Directors for monetary damages based upon any violation of their fiduciary duties as Directors, except as to liability for any breach of the duty of loyalty, acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, or any transaction from which a Director receives an improper personal benefit. This exclusion of liability does not limit any right which a Director may have to be indemnified and does not affect any Director's liability under federal or applicable state securities laws. We have agreed to indemnify our directors against expenses, judgments, and amounts paid in settlement in connection with any claim against a Director if he acted in good faith and in a manner he believed to be in our best interests.

 

Nevada Anti-Takeover Law and Charter and By-law Provisions

 

The anti-takeover provisions of Sections 78.411 through 78.445 of the Nevada Corporation Law apply to JA Energy. Section 78.438 of the Nevada law prohibits the Company from merging with or selling more than 5% of our assets or stock to any shareholder who owns or owned more than 10% of any stock or any entity related to a 10% shareholder for three years after the date on which the shareholder acquired the JA Energy shares, unless the transaction is approved by JA Energy's Board of Directors. The provisions also prohibit the Company from completing any of the transactions described in the preceding sentence with a 10% shareholder who has held the shares more than three years and its related entities unless the transaction is approved by our Board of Directors or a majority of our shares, other than shares owned by that 10% shareholder or any related entity. These provisions could delay, defer or prevent a change in control of JA Energy.

 

 
 

 

 

Item 11. Executive Compensation.

 

The following table sets forth summary compensation information for the fiscal year ended August 31, 2012 for our Chief Executive Officer, who was appointed on August 26, 2010.

 

JA Energy Summary Compensation Table

 

        Year       Compen-    
      Principal Ending Salary Bonus Awards sation Total  
Name Position Aug. 31, ($) ($) ($) ($) ($)  
                     
James Lusk CEO/Director 2012 - - - 40,687 40,687  
      2011 - - - 21,000 21,000  
                     
                     
Sheldon Rockey      Director 2012 - - - - -  
        2011 - - - - -  
       
                                                 

 

We do not maintain key-man life insurance for our executive officer/director. We do not have any long-term compensation plans, stock option plans or employment agreements with our executive officers/directors.

 

Stock Option Grants

 

We did not grant any stock options to the executive officers or directors from inception through fiscal year end August 31, 2012 or August 31, 2011.

 

 

Outstanding Equity Awards at 2012 Fiscal Year-End

 

We did not have any outstanding equity awards as of August 31, 2012 or August 31, 2011.

 

Option Exercises for Fiscal 2012

 

There were no options exercised by our named executive officers in fiscal 2012 or 2011.

 

Potential Payments Upon Termination or Change in Control

 

We have not entered into any compensatory plans or arrangements with respect to our named executive officers, which would in any way result in payments to such officer(s) because of their resignation, retirement, or other termination of employment with us or our subsidiaries, or any change in control of, or a change in their responsibilities following a change in control.

 

 

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Director Compensation

 

Our directors were not paid any compensation during the fiscal year ending August 31, 2012 or August 31, 2011.

 

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

 

The following table presents information, to the best of our knowledge, about the ownership of our common stock on December 12, 2012 relating to those persons known to beneficially own more than 5% of our capital stock and by our named executive officer and sole director.

 

Beneficial ownership is determined in accordance with the rules of the U. S. Securities and Exchange Commission and does not necessarily indicate beneficial ownership for any other purpose. Under these rules, beneficial ownership includes those shares of common stock over which the stockholder has sole or shared voting or investment power. It also includes shares of common stock that the stockholder has a right to acquire within 60 days after December 12, 2012 pursuant to options, warrants, conversion privileges or other right.

 

The percentage ownership of the outstanding common stock, however, is based on the assumption, expressly required by the rules of the U. S. Securities and Exchange Commission, that only the person or entity whose ownership is being reported has converted options or warrants into shares of JA Energy's common stock.

 

We do not have any outstanding options, warrants or other securities exercisable for or convertible into shares of our common stock.

         
Name and Address of Beneficial Owner  

Number of Shares

Beneficially Owned

 

Percentage

of Outstanding

Shares of Common

Stock (1)

         
James Lusk (2)   14,910,600   39.9%
         
Sheldon Rockey (3)   350,000   0.7%
         
All Directors and Officers as a Group   15,260,600   40.6%

 

1) Percent of Class is based on 37,276,703 shares issued and outstanding.

2) James Lusk, 7495 W. Azure Dr. Suite 110, Las Vegas, NV 89130.

3) Sheldon Rockey, 7495 W. Azure Dr. Suite 110, Las Vegas, NV 89130.

 

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We are not aware of any arrangements that may result in "changes in control" as that term is defined by the provisions of Item 403(c) of Regulation S-B.

 

We believe that all persons named have full voting and investment power with respect to the shares indicated, unless otherwise noted in the table. Under the rules of the Securities and Exchange Commission, a person (or group of persons) is deemed to be a "beneficial owner" of a security if he or she, directly or indirectly, has or shares the power to vote or to direct the voting of such security, or the power to dispose of or to direct the disposition of such security. Accordingly, more than one person may be deemed to be a beneficial owner of the same security. A person is also deemed to be a beneficial owner of any security, which that person has the right to acquire within 60 days, such as options or warrants to purchase our common stock.

 

 

Item 13. Certain Relationships and Related Transactions, and Director Independence.

 

Our Chief Executive Officer is also our primary shareholder. Our Chief Executive Officer controls 14,910,600 shares of our common stock, or approximately 39.9% of our outstanding common stock.

 

The Company's Director has contributed office space for our use for all periods presented. There is no charge to us for the space, and the director will not seek compensation for the use of this space.

 

Our sole officer and director, James Lusk can be considered a promoter of JA Energy in consideration of his participation and managing of the business of the company since its incorporation.

 

Except as otherwise indicated herein, there have been no related party transactions since our inception, or any other transactions or relationships required to be disclosed pursuant to Item 404 and Item 407(a) of Regulation S-K.

 

 

 

 

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Item 14. Principal Accountant Fees and Services.

 

De Joya Griffith, LLC served as our principal independent public accountants for fiscal year ending August 31, 2012. Aggregate fees billed to us for the years ended August 31, 2012 and August 31, 2011 to De Joya Griffith, LLC were as follows:

 

  For Year Ended Aug. 31,               For the Year Ended Aug. 31,      
  2012   2011      
(1)   Audit Fees (1)  $11,250   $5,750      
(2)   Audit-Related Fees             
(3)   Tax Fees             
(4)   All Other Fees            

 

 

Total fees paid or accrued to our principal auditor

 

(1) Audit Fees include fees billed and expected to be billed for services performed to comply with Generally Accepted Auditing Standards (GAAS), including the recurring audit of the Company's financial statements for such period included in this Annual Report on Form 10-K and for the reviews of the quarterly financial statements included in the Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission.

 

 

Audit Committee Policies and Procedures

 

We do not have an audit committee; therefore our sole director pre-approves all services to be provided to us by our independent auditor. This process involves obtaining (i) a written description of the proposed services, (ii) the confirmation of our Principal Accounting Officer that the services are compatible with maintaining specific principles relating to independence, and (iii) confirmation from our securities counsel that the services are not among those that our independent auditors have been prohibited from performing under SEC rules. Our directors then makes a determination to approve or disapprove the engagement of De Joya Griffith, LLC for the proposed services. In the fiscal year ending August 31, 2012, all fees paid to De Joya Griffith, LLC were unanimously pre-approved in accordance with this policy.

 

Less than 50 percent of hours expended on the principal accountant's engagement to audit the registrant's financial statements for the most recent fiscal year were attributed to work performed by persons other than the principal accountant's full-time, permanent employees.

 

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PART IV

 

Item 15. Exhibits, Financial Statement Schedules.

 

 

The following information required under this item is filed as part of this report:

 

(a) 1. Financial Statements

  Page
   
   
Management's Report on Internal Control Over Financial Reporting 34

 

Report of Independent Registered Public Accounting Firm

 

F-1

Balance Sheets

 

F-2

 

Statements of Operations

 

F-3

 

Statements of Stockholders' Equity

 

F-4

 

Statements of Cash Flows

 

F-5

 

 

 

(b) Financial Statement Schedules

 

None.

 

 

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(c) Exhibit Index

 

      Incorporated by reference  
Exhibit Exhibit Description Filed herewith Form Period Ending Exhibit Filing Date  
3.1 Articles of Incorporation   S-1 8/31/10 3.1 09/20/10  
  3.2 By-laws as currently in effect   S-1 8/31/10 3.2 09/20/10
  23.1 Consent of De Joya Griffith & Company, LLC of August 31, 2012 financial statements X        
  31.1 Certification of Principal Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act X        
  32.1 Certification of Principal Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley Act X        
  101   *  

The following materials from this Annual Report on Form 10-K for the year ended August 31, 2012, formatted in XBRL (eXtensible Business Reporting Language).

 

1)        Balance Sheets at August 31, 2012 and August 31, 2011.

2)        Statements of Operations for the years ending August 31, 2012, August 31, 2011, and the period from inception to August 31, 2012.

3)        Statement of Stockholders’ Deficit for the period from inception to August 31, 2012.

4)        Statements of Cash Flows for the years ending August 31, 2012, June 30, 2011 and the period from inception to June 30, 2011.

5)        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:  January 9, 2013        /s/ James Lusk  
  Name: James Lusk  
   

Title: President, Director

Principal Executive Officer

Principal Financial Officer

     
         

Pursuant to the requirements of the Securities Exchange Act of 1934, the following persons on behalf of the Registrant and in the capacities and on the dates indicated have signed this report below.

         

Signature

 

Title

 

Date

       

/s/ James Lusk

James Lusk

 

President, Director and

Chief Executive Officer,

Chief Financial Officer

  January 9, 2013  
                   

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