GREENKRAFT, INC. - 10-K - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Edgar Glimpses |

Safe Harbor

This Annual Report on Form 10-K contains forward-looking statements that involve risks and uncertainties. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology including, "could" "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential" and the negative of these terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially.

While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested in this Annual Report.



Overview


RESULTS OF OPERATIONS


Working Capital



                                           Year ended      Year ended
                                          December  31,   December 31,
                                              2017            2016
              Current Assets              $               $
                                              2,027,386     1,781,735
              Current Liabilities             1,060,870     4,842,865
              Working Capital (Deficit)         966,516    (3,061,130)



 Cash Flows
                                                        Year ended     Year ended
                                                         December     December 31,
                                                         31, 2017         2016

 Cash Flows Provided by (Used in) Operating             $             $
 Activities                                              (360,739)     (1,389,872)

Cash Flows Provided by (Used in) Investing

 Activities                                                     0       1,506,152
 Cash Flows Used in Financing Activities                        0      (1,998,850)

Net Increase (Decrease) in Cash During

 Period                                                  (360,739)     (1,882,570)



Operating Revenues

During the year ended we earned revenues of $1,153,429 compared to revenues of $846,957 at the year ended .



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Operating Expenses and Net Loss

During the year ended , we incurred operating expenses of $1,420,196 compared with operating expenses of $935,968 during the year ended . The reason for the increase is due to company has share compensation expense of $867,100.

For the year ended , we incurred a loss from operations of $1,031,877 compared with a net loss of $792,962 for the year ended .

Liquidity and Capital Resources

As at , we had a cash and cash equivalents balance of $18,339 and total assets of $2,027,386 compared with $ $379,078 of cash and total assets of $2,394,577 as at . The decrease in cash was due to the line of credit and accounts payable being paid off in 2017.

As at , we had total liabilities of $4,711,120 compared with total liabilities of $4,850,865 at . The decrease in total liabilities was due to the line of credit and accounts payable being paid off in 2017.

As at , we had a working capital deficit of $966,516 compared with a working capital deficit of $3,061,130 as at .

Cash flow from Operating Activities

During the year ended , the cash used by operating activities total $360,739 compared to the cash provided by total $1,389,872 during the year ended . The cash was primarily used to pay out accounts payable in 2017 related to the inventory purchase for the e-vehicle project.

Cash flow from Investing Activities



During the year ended , the cash provided by investing activities total $0 compared to the cash used in total $1,506,152 during the year ended . Annual amounts primarily consist of capital expenditures to support our manufacturing efforts. Also included in investing cash flows for the years ended and 2016, are $0 and $1.5 million, respectively, related to changes in restricted cash to support collateral requirements for our line of credit facility.

Cash flow from Financing Activities

During the year ended , the cash used by financing activities total $0 compared with total $1,998,850 during the year ended . The 2017 result is due to an offset by $1,998,850 in repayment under the line of credit facility.



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Liquidity

The accompanying financial statements have been prepared in accordance to FASB Subtopic 205-40, Presentation of Financial Statements-Going Concern. In connection with preparing financial statements for each annual and interim reporting period, an entity's management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). Greenkraft's management evaluated the current financial situation of the company and believes the company has no going concern within one year.

During the year ended , the Company incurred a loss from continuing operation of $1,031,794 and a net loss $1,031,877, and the stockholders' deficit was $2,621,065 and the working capital deficit was $966,516. The working capital deficit have been majority funded by accounts payable to its related parties and related party debt. Based on the financial support letter from the CEO of Greenkraft, he and his related party entities, has no present or future plans or intentions to (A) liquidate Greenkraft, Inc.; (B) sell or otherwise dispose of all, or a significant portion of, its investment in the Company or otherwise change its capital structure; (C) discontinue providing financial support to Greenkraft, Inc; or (D) pursue the collection if the company has cash flow issues. Based on the cash burn calculation, the Company is expected to have sufficient cash flow to cover the normal business operations for the twelve months-ended . for the next 12 months following this filing, the Company will continue to receive sales orders, recognize revenue by selling the qualified trucks for the government incentive program, committed financial support from the owner and his related parties to fund its ongoing operation until the Company is able to meet its own obligation as they become due.

Management believes they will have sufficient funds to support their business based on the following: (a) revenues derived from signing up new dealers' contracts and delivering alternative fuel trucks to them; (b) reclassify accounts payable- related parties and related parties' debt as non- current liabilities in amount of $816,334 and $1,901,916, respectively, which is related to the financial support letter from the CEO, and (c) the CEO can raise additional funds needed to support our business plan. Management intends to seek new capital from owners and related parties to provide needed funds, as necessary. However, there can be no assurance that the Company can raise any additional funds, or if it can, that such funds will be on terms acceptable to the Company.

The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Off-Balance Sheet Arrangements

We have no significant 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 of operations, liquidity, capital expenditures or capital resources that is material to stockholders.



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