NOTE 1 - NATURE OF OPERATIONS
QUANTUM ENERGY INC. (“the Company”) was incorporated under the name “Boomers Cultural Development Inc.” under the laws of the State of Nevada on February 5, 2004. On May 18, 2006, the Company changed its name to Quantum Energy, Inc.
The Company is a development stage diversified holding company with an emphasis in land holdings, refinery and fuel distribution.
The Company is domiciled in the Unites States of America and trades on the OTC market under the symbol QEGY.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies is presented to assist in understanding the financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”).
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries FTPM Resources Ltd. and Dominion Energy Processing Group, Inc. after elimination of the intercompany accounts and transactions.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles 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 revenues and expenses during the reporting period. Actual results could differ from those estimates.
Risks and uncertainties
The Company’s operations are subject to significant risks and uncertainties, including financial, operational, technological and other risks associated with operating an emerging business, including the potential risk of business failure.
Cash and cash equivalents
The Company considers all highly liquid investments with original maturities of three months or less when acquired to be cash equivalents.
Fair value of financial instruments
The Company's financial instruments include cash and cash equivalents, promissory notes payable, and promissory notes payable - related parties. All instruments are accounted for on a cost basis, which, due to the short maturity of these financial instruments, approximates fair value at February 28, 2021 and February 29, 2020, respectively.
When required to measure assets or liabilities at fair value, the Company uses a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used. The Company determines the level within the fair value hierarchy in which the fair value measurements in their entirety fall. The categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Level 1 uses quoted prices in active markets for identical assets or liabilities, Level 2 uses significant other observable inputs, and Level 3 uses significant unobservable inputs. The amount of the total gains or losses for the period are included in earnings that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date.
At February 28, 2021 and February 29, 2020, the Company had no assets or liabilities accounted for at fair value on a recurring basis.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES – continued
Long-Lived Assets
The Company reviews long-lived assets which include a deposit on land purchase for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Events relating to recoverability may include significant unfavorable changes in business conditions or a forecasted inability to achieve break-even operating results over an extended period. The Company evaluates the recoverability of long-lived assets based upon forecasted undiscounted cash flows and reports any impairment at the lower of the carrying amount or the fair value less costs to sell.
Stock-based Compensation
The Company estimates the fair value of options to purchase common stock using the Black-Scholes model, which requires the input of some subjective assumptions. These assumptions include estimating the length of time stock options will be held before they are exercised (“expected life”), the estimated volatility of the Company’s common stock price over the expected term (“volatility”), forfeiture rate, the risk-free interest rate and the dividend yield. Changes in the subjective assumptions can materially affect the estimate of fair value of stock-based compensation. Options granted have a ten-year maximum term and varying vesting periods as determined by the Board of Directors. The value of shares of common stock awards is determined based on the closing price of the Company’s stock on the date of the award.
Related Parties
In accordance with ASC 850 “Related Party Disclosure”, a party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company; its directors, officers, and management; members of the immediate families of principal owners of the Company and its management; and other parties with which the Company may deal with if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests.
New Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect and is evaluating any that may impact its financial statements, including the new lease standard. The Company does not have any leases and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
NOTE 3 – GOING CONCERN
These consolidated financial statements have been prepared in accordance with U.S. GAAP to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for the next twelve months.
As shown in the accompanying financial statements, the Company has incurred operating losses since inception. As of February 28, 2021 and February 29, 2020, the Company has limited financial resources with which to achieve the objectives and obtain profitability and positive cash flows. As shown in the accompanying consolidated balance sheets and consolidated statements of operations, the Company has an accumulated deficit and a working capital deficit at February 28, 2021 and February 29, 2020. Achievement of the Company's objectives will be dependent upon the ability to obtain additional financing, generate revenue from current and planned business operations, and control costs. The Company plans to fund its future operations by joint venturing, obtaining additional financing from investors, and/or lenders, and attaining additional commercial revenue. However, there is no assurance that the Company will be able to achieve these objectives, therefore substantial doubt about its ability to continue as a going concern exists.
NOTE 4 – EARNINGS PER SHARE
Basic Earnings Per Share (“EPS”) is computed as net income (loss) available to common stockholders divided by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur from common shares issuable through stock options and warrants.
The dilutive effect of outstanding securities as of February 28, 2021 and February 29, 2020, respectively, would be as follows:
|
|
February 28, 2021
|
|
|
February 29, 2020
|
|
Warrants
|
|
|
2,925,000
|
|
|
|
3,925,000
|
|
TOTAL POSSIBLE DILUTION
|
|
|
2,925,000
|
|
|
|
3,925,000
|
|
At February 28, 2021 and February 29, 2020, respectively, the effect of the Company's outstanding options and warrants would have been anti-dilutive.
NOTE 5 – OTHER ASSETS – continued
Peconic Note Receivable
On April 17, 2019, the Company loaned funds under a secured convertible promissory note (“Peconic Note”) to Peconic Energy, Inc. (“Peconic”) for the principal amount of $30,000 with the principal balance and all accrued interest being due and payable 18 months from the date of the note. Interest shall be accrued at rate of 12% per annum or 40% of the gross revenues generated by the maker, whichever is greater. The Peconic Note is secured by 100% of the Peconic’s assets and is convertible at any time during the term of the note into 40% of the Peconic’s assets. For the period ended May 31, 2019, it was determined that it was highly unlikely that the Company would collect this note receivable. Therefore, the Company allowed for this note in the amount of $30,000 on May 31, 2019.
Deposit on land purchase
On December 5, 2016, the Company executed a Farm Contract of Purchase and Sale with a landowner in Stoughton, Saskatchewan (“the Stoughton Agreement”). The purchase price of the property is $500,000 (Canadian) subject to certain terms and conditions including approval of the purchase by the Saskatchewan Farmland Review board, the Company completing various test for hydrology and land suitability, the proposed refinery project meeting all requirements of various Saskatchewan government laws and bylaws, and full approval by all levels of provincial government and agencies. The Company paid $7,822 as a deposit on the property.
The purchase contract originally expired on December 15, 2017; however, the contract was amended to extend the closing date to July 10, 2018 for removal of all terms and conditions to the purchase.
On June 8, 2018, the Company amended the Stoughton Agreement to a purchase price of $525,000 (Canadian) and extended the option to purchase the property until December 31, 2018 for no additional consideration. The Stoughton Agreement expired on December 31, 2018.
On June 3, 2019, by mutual agreement of the parties, the Stoughton Agreement was extended until October 31, 2019 for no additional consideration. At the date of the report for the period ended May 31, 2019, the Stoughton Agreement had been terminated. (Note 13). Due to the termination of the agreement, the Company reclassed this deposit of $7,822 to accounts payable related party as the deposit was refunded but the money was given to a related party to pay amounts due him.
Deposits – Related Party
Deposits – Related Party consist of deposits made to a related party that share board members of the Company. A letter of intent signed on October 12, 2021 calls for the purchase of shares of common stock of the related party to obtain a majority stake at $2.10 for up to eighteen (18) months with closing on December 15, 2022. The letter of intent is non-binding and if the majority shares are not obtained the deal is terminated and the money is refunded. Hence, the classification of deposits of $1,200,000 at February 28, 2021. The Company is expecting to acquire majority ownership by the closing date.
NOTE 6 – PROMISSORY and CONVERTIBLE NOTES PAYABLE
The Company’s outstanding notes payable are summarized as follows:
|
|
February 28, 2021
|
|
|
February 29 2020
|
|
0% unsecured note payable - December 2013, due on demand
|
|
$
|
2,000
|
|
|
$
|
2,000
|
|
0% unsecured note payable - November 2015, due on demand
|
|
|
980
|
|
|
|
980
|
|
8% unsecured note payable - October 2018, due on demand
|
|
|
5,000
|
|
|
|
5,000
|
|
6% unsecured note payable – April 2019, due on demand
|
|
|
3,325
|
|
|
|
3,325
|
|
8% unsecured notes payable - October 2019, due on demand
|
|
|
65,000
|
|
|
|
65,000
|
|
|
|
|
|
|
|
|
|
|
Total Notes Payable
|
|
$
|
76,305
|
|
|
$
|
76,305
|
|
Interest expense for the years ended February 28, 2021 and February 29, 2020 was $5,807and $2,805, respectively.
Convertible note payable consists of one note payable in the amount of $67,500 at February 28, 2021 and February 29, 2020, respectively. The note which was issued in April 2019 for $45,000 accrues interest at an annual rate of 12% and matures in April 2020. In the event of default, the note principal is increased by 150% times the outstanding principal and provides for default interest at 22%. Interest expense for the years ended February 28, 2021 and February 29, 2020 was $14,852 and $34,144, respectively. Due to the conversation features of this note the Company calculated a derivative utilizing a Black Scholes method. This method used the following inputs to obtain the derivative value on February 28, 2021. Stock value of $0.75, discounted exercise price of 39% of the lowest stock market price 20 days prior to the valuation date, volatility of 403.96%. Discount Bond equivalent yield of 0.080%. Derivative liability at February 28, 2021 was $116,399 and (gain) loss on derivatives for the years ended February 28, 2021 and February 29, 2020 was $(21,787) and $138,185, respectively.
NOTE 6 – PROMISSORY and CONVERTIBLE NOTES PAYABLE – continued
The conversion option expires on October 7, 2020. On June 18, 2019, the Company received a default notice from Power Up stating that the Company is in default under the Power Up Note because, among other reasons, the Company failed to comply with the reporting requirements of the Securities Exchange Act of 1934 as required by the Note, and therefore accelerating the terms of the Power Up Note and demanding that the Company pay the default sum of $67,500 together with accrued interest and accrued default interest with respect to the Power Up Note. The Company reached a settlement of this matter with Power Up as of April 2021 in the amount of $70,200.
NOTE 7 – PROMISSORY NOTES PAYABLE, RELATED PARTY AND OTHER RELATED PARTY TRANSACTIONS
The Company’s outstanding notes payable, related party are summarized as follows:
|
|
February 28, 2021
|
|
|
February 29, 2020
|
|
0% unsecured note payable - October 2015, due on demand
|
|
$
|
2,300
|
|
|
$
|
2,300
|
|
0% unsecured note payable – November 2015, due on demand
|
|
|
2,000
|
|
|
|
2,000
|
|
8% unsecured note payable - October 2018, due on demand
|
|
|
60,000
|
|
|
|
60,000
|
|
6% unsecured note payable – April 2019, due on demand
|
|
|
15,825
|
|
|
|
15,825
|
|
6% unsecured note payable – April 2019, due on demand
|
|
|
15,890
|
|
|
|
15,890
|
|
8% unsecured note payable - October 2019, due on demand
|
|
|
10,000
|
|
|
|
10,000
|
|
TOTAL
|
|
$
|
106,015
|
|
|
$
|
106,015
|
|
Interest expense for the years ended February 28, 2021 and February 29, 2020 was $7,598 and $8,794, respectively.
Starting January 1, 2019, the Company began accruing a monthly management fee of $15,000 due to an advisory company owned by Andrew J. Kacic, the Company’s former chief executive officer (“CEO”). During the year ended February 28, 2019, the Company recognized management fees of $30,000 under this agreement which amount is included in “Accounts payable and accrued liabilities, related parties” on the consolidated balance sheet at February 28, 2019. Since February 28, 2019, no additional management fees have been accrued since the parties are in dispute. There were no similar management fees due the CEO prior to December 31, 2018. Certain directors and officers of the Company dispute the management fee asserting that no consulting agreement has been executed. It is possible that the amount ultimately paid to the advisory company will be other than the accrued balance of $30,000 due to continuing negotiations between the board of directors and the former CEO. The disputed amount as of the date of these financials is $150,000, which is the remaining 10 (ten) months of the management fee for the calendar year ended 2019. Amounts due to Andrew Kacic at February 28, 2021 and February 29, 2020 were $107,868 and $17,868, respectively.
Certain officers, directors and other related parties of the Company have paid various expenses on behalf of the Company. Balances due to the officers, directors and a related company for reimbursement of these expenses were $197,302 and $158,969 at February 28, 2021and February 29, 2020, respectively, which amounts are included in “Accounts payable and accrued liabilities - related parties” on the consolidated balance sheets.
NOTE 8 – COMMON STOCK PAYABLE
Common Stock Payable – for Contracts/Agreements
Common stock payable for contracts/agreements consist of 1 million shares owed to Raul Factor per the joint venture agreement (Note 11) and 1 million shares owed to landlord for rent. The shares value was based on the market price of the Company’s common stock of $0.75 on February 28, 2021. The difference between the cost at the agreement date and the market value at February 28, 2021 of $1,060,000 is included in unrealized loss common stock payable on the statement of operations for the year ended February 28 ,2021.
Common Stock Payable – Deposits Received on Subscriptions Agreements
Common stock payable for deposits received on stock subscription agreements consist of 12,170,806 shares owed to various investors who have paid for these shares. The shares value was based on the market price of the Company’s common stock of $0.75 on February 28, 2021. The difference between the cost at the agreement date and the market value at February 28, 2021 of $5,748,276 is included in unrealized loss common stock payable on the statement of operations for the year ended February 28 ,2021.
NOTE 9 – COMMON STOCK
Common stock
The Company is authorized to issue 495,000,000 shares of its common stock with a par value of $0.001 per share. All shares of common stock are equal to each other with respect to voting, liquidation, dividend, and other rights. Owners of shares are entitled to one vote for each share owned at any Shareholders’ meeting.
Preferred stock
The Company is authorized to issue 5,000,000 shares of its preferred stock with a no-par value per share with no designation of rights and preferences.
NOTE 10 - WARRANTS
On July 10, 2017, in conjunction with a Private Placement, the Company issued 500,000 warrants to purchase shares of the Company’s common stock with an exercise price of $0.21 per share expiring in one year. In March 2018, by mutual agreement, the Company amended 500,000 common stock purchase warrants from an exercise price of $0.21 per share to $1.00 per share and extended the expiration date to June 9, 2020.
On March 20, 2019 and April 17, 2019, the Company issued 1,250,000 and 675,000 warrants respectively to purchase 1,925,000 additional shares of its common stock to eight investors. Each warrant is for thirty-six months from date of issuance with an exercise price of $0.25. The value of the warrants calculated at March 20 and April 17, 2019 was $200,439 and $76,243 for a combined total of $276,682 and is in included in interest expense - warrants on the consolidated statements of operations for the year ended February 29, 2020. The value of the warrants was calculated utilizing a Black Scholes method which used the market value of the stock based on the issue date, an exercise price of $0.25, a volatility of 228% and a discount bond equivalent range of 2.34% - 2.37%.
On June 28, 2019, the Company issued 1,000,000 warrants with an exercise price of $0.25. On the same date the Company also extended the term of 1,000,000 warrants and adjusted the exercise price of these warrants to $0.25. The term of the new warrants are for eighteen months from date of issuance. The extended warrants term is 500,000 for two years and 500,000 for two and a half years. The value of the warrants calculated was $176,579 and is in included in interest expense -warrants on the consolidated statements of operations for the year ended February 29, 2020. The value of the warrants was calculated utilizing a Black Scholes method which used the market value of the stock based on the issue date, an exercise price of $0.25, volatility of 360.99%, 351.88% and 339.45% and a discount bond equivalent of 1.75 and 1.71%
The following is a summary of the Company’s warrants issued and outstanding:
|
|
February 28, 2021
|
|
|
February 28, 2020
|
|
|
|
Warrants
|
|
|
Price (a)
|
|
|
Warrants
|
|
|
Price (a)
|
|
Beginning balance
|
|
|
3,925,000
|
|
|
$
|
.25
|
|
|
|
2,129,802
|
|
|
$
|
1.00
|
|
Issued
|
|
|
––
|
|
|
|
––
|
|
|
|
2,925,000
|
|
|
|
.19
|
|
Exercised
|
|
|
––
|
|
|
|
––
|
|
|
|
––
|
|
|
|
––
|
|
Expired
|
|
|
(1,000,000
|
)
|
|
|
––
|
|
|
|
(1,129,802
|
)
|
|
|
––
|
|
Ending balance
|
|
|
2,925,000
|
|
|
$
|
0.25
|
|
|
|
3,925,000
|
|
|
$
|
.25
|
|
|
(a)
|
Weighted average exercise price per shares
|
The following table summarizes additional information about the warrants granted by the Company as of February 28, 2021 and February 29, 2020:
Date of Grant
|
|
Warrants
outstanding
|
|
|
Warrants
exercisable
|
|
|
Price
|
|
|
Remaining
term
(years)
|
|
November 19, 2016
|
|
|
500,000
|
|
|
|
500,000
|
|
|
$
|
.25
|
|
|
|
0.22
|
|
July 10, 2017
|
|
|
500,000
|
|
|
|
500,000
|
|
|
|
.25
|
|
|
|
0.78
|
|
March 20, 2019
|
|
|
1,250,000
|
|
|
|
1,250,000
|
|
|
|
.25
|
|
|
|
1.05
|
|
April 17, 2019
|
|
|
675,000
|
|
|
|
675,000
|
|
|
|
.25
|
|
|
|
1.13
|
|
Total warrants
|
|
|
2,925,000
|
|
|
|
2,925,000
|
|
|
$
|
.25
|
|
|
|
.89
|
|
NOTE 11 – OTHER MATTERS- Joint Venture
Easy Energy Systems Inc. Memorandums of Understanding
On April 2, 2019, the Company and its subsidiary FTPM Resources, Inc. entered into a Non-Binding Memorandum of Understanding (“MOU-1”) with Easy Energy Systems, Inc. (“EESI Systems”). Pursuant to the MOU-1, if certain conditions are met, including the availability of financing: (i) EESI Systems and FTPM will enter into a joint venture, which would be owned 33% by FTPM and 67% by EESI Systems, for the purpose of developing and marketing of “clear glucose”; FTPM will have a 90-day option beginning April 30, 2019, to merge with EESI Systems, whereby EESI Systems will be the surviving entity; EESI Systems will have the right to acquire shares of preferred stock of the Registrant, with such rights and preferences as the parties shall agree; and EESI Systems will have the right to appoint members to the board of directors of the Registrant. EESI Systems designs, manufacturers, operates and sells its patented 1M, 2M, and 5M gallon per year, small-scale, modular biorefineries for the production of alternative liquid biofuels from organic waste streams.
On April 16, 2016 the Company entered into a separate Non-Binding Memorandum of Understanding (“MOU-2”) to acquire EESI Infrastructure Series, LLC (“EESI Infrastructure”). The prospective EESI Infrastructure acquisition, if consummated as provided in the MOU-2, would provide a guarantee for the construction of an addition to the existing plant of EESI Systems in Emmetsburg, Iowa. This addition will add a 9.3 Mega Watt dual gas power plant to EESI Systems’ Emmetsburg facility at an anticipated cost of approximately $10 million. Upon signing the MOU-2, the Company paid $25,000 to the EESI Infrastructure. Due to the uncertainty of this agreement, the $25,000 deposit has been expensed in General and Administrative expenses for the year ended February 29, 2020.
As of May 9, 2021, no action has been performed under either MOU.
Private Placement – Raul Factor
In furtherance of the June 28, 2019, Binding Letter of Intent with EESI and to monetize the distribution rights to EES’ modular Technologies, (a) on July 8, 2019, JV-1 entered into a License and Operating Agreement – Major Terms Summary with Raul Factor BV (“RF”) pursuant to which the RF and JV-1 created a new joint venture to be named Easy Energy Systems – Europe (“EES-E”) and pursuant to which the EES-E joint venture purchased the distribution rights for the EESI “MEPS®” technology for the territory of the European Union, and (b) on July 8, 2019, JV-1 entered into a License and Operating Agreement – Major Terms Summary with RF pursuant to which the parties created a new joint venture to be named Easy Energy Turf & Carpet (“EETC”) and pursuant to which the EETC joint venture purchased the global distribution rights to EESI’s MEPS® technology for turf & carpet feedstock. Each of EES-E and EETC is owned 25% by us, 25% by EES and 50% by Raul Factor The aggregate purchase price paid for the licensing and distribution for EES-E and EETC was $150,000 (US). At February 29, 2020, the purchase price for the joint venture was expensed as it was determined that the joint venture was not viable.
In connection with and as part of the foregoing joint venture transactions with JV-1 and RF, on July 11, 2019, the principals of RF, who are existing holders of our common stock, purchased for an aggregate price of $200,000, 1,000,000 additional restricted shares of our common stock and warrants to purchase 1,000,000 restricted shares (at an exercise price of $0.25 per share) of our common stock, and pursuant to the EES-E and EETC Joint Ventures the Company agreed to use the proceeds from the sale of such shares and warrants to purchase from EESI the above mentioned EES-E and EETC distribution rights for an aggregate price of $150,000, and the Company then assigned such distribution rights to EES-E and EETC respectively. Raul Factor also agreed to invest the required reasonable funding as determined by the board of directors of EETC for the startup, working capital, specific module development and required 6 months of economic demonstration of carpet and artificial turf into energy or value-added products for EETC. Also, EES agreed to contribute its module technologies developed by or available via license agreements from others to EES further on to EES-E via license agreements conforming to the terms set forth in these License and Operating Agreements. Raul Factor also agreed to fund additional capital requirements.
Pursuant to this June 28, 2019, Binding Letter of Intent, the parties agreed to, among other things, that within 90 days from the date of the Binding Letter of Intent, the Company would raise $10,000,000 in capital for use by EESI. As of the date of this report, the Company was not able to raise such capital. In connection therewith, on October 29, 2019, delivered to us the terms of a proposed termination of the June 28, 2019 Binding Letter of Intent. As of the date of this report this the terms of such termination have not been finalized.
NOTE 11 – OTHER MATTERS- Joint Venture - continued
Pursuant to these two License and Operating Agreements, the principals of Raul Factor BV agreed to provide an aggregate of $200,000 (USD) to purchase an aggregate of 1,000,000 units of Quantum at a price of $0.20 per Unit, (for an aggregate of 1,000,000 shares of the Company’s common stock plus 18 month warrants to purchase an aggregate of 1,000,000 shares of the Company’s common stock at a price of $0.25 per share. Pursuant to these transactions, the Company agreed to use $150,000 of the proceeds from the sale of the Units to purchase the distribution rights of EES-E and EETC and in turn the Company would assign such distribution rights to EES-E and EETC respectively. Also, Raul Factor agreed to invest the required reasonable funding as determined by the board of directors of EETC for the startup, working capital, specific module development and required 6 months of economic demonstration of carpet and artificial turf into energy or value-added products for EETC. Also, EES agreed to contribute its module technologies developed by or available via license agreements from others to EES further on to EES-E via license agreements conforming to the terms set forth in these License and Operating Agreements. Raul Factor also agreed to fund additional capital requirements. At the date of this report, while the $200,000 was received from Raul Factor, the stock has yet to be issued. As of February 28, 2021 the stock was valued at $750,000 utilizing the closing price on February 28, 2021.
Also, as part of the transactions contemplated by these agreements: (i) the stock purchase warrant issued on November 20, 2016, to Kevin Holinaty to purchase 500,000 shares of the Company’s common stock (“Warrant No. 002”) was amended to extend the exercise period of the warrant through May 19, 2021 and to change the exercise price to $0.25 per share; (ii) the stock purchase warrant issued to Kevin Holinaty issued on June 9, 2017, and amended on March 15, 2018, to purchase 250,000 shares of the Company’s common stock (“Warrant No. 003”) was amended to extend the exercise period to December 9, 2021, and to change the exercise price to $0.25 per share; (iii) the stock purchase warrant issued to Haaye de Jong to purchase 250,000 shares of the Company’s common stock was amended to extend the exercise period to December 9, 2021, and to change the exercise price to $0.25 per share; (iv) the Company issued a warrant to Kevin Holinaty to purchase 500,000 shares of the common stock at a price of $0.25 per share, which warrant has an exercise period until December 20, 2020; (v) the Company issued a warrant to Haaye de Jong to purchase 500,000 shares of the common stock at a price of $0.25 per share, which warrant has an exercise period until December 20, 2020. (See Note 10).
The sale of the Units and the warrants to Kevin Holinaty and Haaye de Jong, the principals of Raul Factor, who have represented that they are “accredited investors” and non-U.S. citizens and in offshore transactions, was made in reliance on Rule 506 of Regulation D and on Regulation S.
NOTE 12 – RESTATEMENT OF FINANCIAL STATEMENTS
The Company restated its previously issued financial statements as of February 28, 2021 to correct accounting errors caused by a change in personnel and related miscommunication within the Company, which caused the Company’s assets, liabilities and operating expenses for the period to be understated.
The following tables summarize the effect of the restatement on the specific items presented in our previously reported financial statements:
QUANTUM ENERGY, INC.
CONSOLIDATED BALANCE SHEET
|
|
|
February 28,
|
|
|
|
|
|
|
February 28,
|
|
|
|
2021
|
|
|
|
|
|
|
2021
|
|
|
|
(As Filed)
|
|
|
Adjustments
|
|
|
(As Restated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
47
|
|
|
$
|
1,969,461
|
|
|
$
|
1,969,508
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Current Assets
|
|
|
47
|
|
|
|
1,969,461
|
|
|
|
1,969,508
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits - Related Party
|
|
|
—
|
|
|
|
1,200,000
|
|
|
|
1,200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
47
|
|
|
$
|
3,169,461
|
|
|
$
|
3,169,508
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts Payable and Accrued Expenses
|
|
$
|
220,140
|
|
|
$
|
—
|
|
|
$
|
220,140
|
|
Accounts Payable and Accrued Expenses - Related Parties
|
|
|
343,770
|
|
|
|
(38,600
|
)
|
|
|
305,170
|
|
Common Stock Payable - for Contracts/Agreements
|
|
|
200,000
|
|
|
|
1,300,000
|
|
|
|
1,500,000
|
|
Common Stock Payable - Deposits Received on Subscription Agreements
|
|
|
—
|
|
|
|
9,128,104
|
|
|
|
9,128,104
|
|
Convertible Note Payable
|
|
|
67,500
|
|
|
|
—
|
|
|
|
67,500
|
|
Derivative Liability
|
|
|
116,399
|
|
|
|
—
|
|
|
|
116,399
|
|
Promissory Notes Payable
|
|
|
76,305
|
|
|
|
—
|
|
|
|
76,305
|
|
Promissory Notes Payable - Related Parties
|
|
|
106,015
|
|
|
|
—
|
|
|
|
106,015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Current Liabilities
|
|
|
1,130,129
|
|
|
|
10,389,504
|
|
|
|
11,519,633
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
1,130,129
|
|
|
|
10,389,504
|
|
|
|
11,519,633
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock - $0.001 Par; 495,000,000 Shares Authorized, 48,491,485 Issued and Outstanding, Respectively
|
|
|
48,491
|
|
|
|
—
|
|
|
|
48,491
|
|
Additional Paid-In-Capital
|
|
|
11,449,681
|
|
|
|
—
|
|
|
|
11,449,681
|
|
Accumulated Deficit
|
|
|
(12,628,254
|
)
|
|
|
(7,220,043
|
)
|
|
|
(19,848,297
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Stockholders' Deficit
|
|
|
(1,130,082
|
)
|
|
|
(7,220,043
|
)
|
|
|
(8,350,125
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders' Deficit
|
|
$
|
47
|
|
|
$
|
3,169,461
|
|
|
$
|
3,169,508
|
|
QUANTUM ENERGY, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
|
For the Year Ended
|
|
February 28,
|
|
|
|
|
|
|
February 28,
|
|
|
|
2021
|
|
|
|
|
|
|
2021
|
|
|
|
(As Filed)
|
|
|
Adjustments
|
|
|
(Restated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Advertising and Marketing
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Management Fees and Consulting
|
|
|
98,334
|
|
|
|
—
|
|
|
|
98,334
|
|
General and Administrative
|
|
|
—
|
|
|
|
240,467
|
|
|
|
240,467
|
|
Professional Fees
|
|
|
112,595
|
|
|
|
171,300
|
|
|
|
283,895
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Operating Expenses
|
|
|
210,929
|
|
|
|
411,767
|
|
|
|
622,696
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (Income) and Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Bad Debts
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Unrealized Loss Common Stock Payable
|
|
|
—
|
|
|
|
6,808,276
|
|
|
|
6,808,276
|
|
Gain on Derivative
|
|
|
(21,787
|
)
|
|
|
—
|
|
|
|
(21,787
|
)
|
Interest Expense
|
|
|
28,257
|
|
|
|
—
|
|
|
|
28,257
|
|
Interest Expense - Warrants
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Joint Venture - Write Off
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Other (Income) and Expenses
|
|
|
6,470
|
|
|
|
6,808,276
|
|
|
|
6,814,746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss Before Income Tax Expense
|
|
|
217,399
|
|
|
|
7,220,043
|
|
|
|
7,437,442
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Tax Expense
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
217,399
|
|
|
$
|
7,220,043
|
|
|
$
|
7,437,442
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Number of Common Shares -
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted
|
|
|
48,491,485
|
|
|
|
|
|
|
|
48,491,485
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss Per Common Shares -
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted
|
|
$
|
0.00
|
|
|
|
|
|
|
$
|
0.15
|
|
QUANTUM ENERGY, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
|
|
|
February 28,
|
|
|
|
|
|
|
February 28,
|
|
For the Year Ended
|
|
2021
|
|
|
|
|
|
|
2021
|
|
|
|
(As Filed)
|
|
|
Adjustments
|
|
|
(Restated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Operating Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(217,399
|
)
|
|
$
|
(7,220,043
|
)
|
|
$
|
(7,437,442
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Cash Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock Subscribed for Rent
|
|
|
—
|
|
|
|
240,000
|
|
|
|
240,000
|
|
Bad Debts
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Unrealized Loss Common Stock Payable
|
|
|
—
|
|
|
|
6,808,276
|
|
|
|
6,808,276
|
|
Deposits Written Off
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Gain on Derivative
|
|
|
(21,787
|
)
|
|
|
—
|
|
|
|
(21,787
|
)
|
Interest on Default of Convertible Note
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Interest Expense on Convertible Note Warrants
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Joint Venture - Write Off
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Changes in Assets and Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes Receivable
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Accounts Payable and Accrued Expenses
|
|
|
72,253
|
|
|
|
—
|
|
|
|
72,253
|
|
Accounts Payable and Accrued Expenses - Related Parties
|
|
|
166,933
|
|
|
|
(38,600
|
)
|
|
|
128,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Flows Used In Operating Activities
|
|
|
—
|
|
|
|
(210,367
|
)
|
|
|
(210,367
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in Joint Venture
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Deposits - Related Party
|
|
|
—
|
|
|
|
(1,200,000
|
)
|
|
|
(1,200,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Flows Used In Investing Activities
|
|
|
—
|
|
|
|
(1,200,000
|
)
|
|
|
(1,200,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from Notes Payable
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Proceeds from Stock Subscription
|
|
|
—
|
|
|
|
3,379,828
|
|
|
|
3,379,828
|
|
Cash Proceeds Received from Convertible Note Payable
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Proceeds from Notes Payable - Related Parties
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Flows Provided by Financing Activities
|
|
|
—
|
|
|
|
3,379,828
|
|
|
|
3,379,828
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Change in Cash
|
|
|
—
|
|
|
|
1,969,461
|
|
|
|
1,969,461
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash - Beginning of Year
|
|
|
47
|
|
|
|
—
|
|
|
|
47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash - End of Year
|
|
$
|
47
|
|
|
$
|
1,969,461
|
|
|
$
|
1,969,508
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Paid During the Year for:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
—
|
|
|
|
|
|
|
$
|
—
|
|
Income Taxes
|
|
$
|
—
|
|
|
|
|
|
|
$
|
—
|
|
QUANTUM ENERGY, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT FOR THE YEAR ENDED FEBRUARY 28, 2021
|
|
|
Common Stock
|
|
|
Additional
|
|
|
|
|
|
|
Total
|
|
|
|
$0.001 Par
|
|
|
Paid-In
|
|
|
Accumulated
|
|
|
Stockholders'
|
|
As Filed
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - March 1, 2020
|
|
|
48,491,485
|
|
|
$
|
48,491
|
|
|
$
|
11,449,681
|
|
|
$
|
(12,410,855
|
)
|
|
$
|
(912,683
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss - (As Filed)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(217,399
|
)
|
|
|
(217,399
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - February 28, 2021 - (As Filed)
|
|
|
48,491,485
|
|
|
$
|
48,491
|
|
|
$
|
11,449,681
|
|
|
$
|
(12,628,254
|
)
|
|
$
|
(1,130,082
|
)
|
|
|
Common Stock
|
|
|
Additional
|
|
|
|
|
|
|
Total
|
|
|
|
$0.001 Par
|
|
|
Paid-In
|
|
|
Accumulated
|
|
|
Stockholders'
|
|
As Restated
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - March 1, 2020
|
|
|
48,491,485
|
|
|
$
|
48,491
|
|
|
$
|
11,449,681
|
|
|
$
|
(12,410,855
|
)
|
|
$
|
(912,683
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss - (Restated)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(7,437,442
|
)
|
|
|
(7,437,442
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - February 28, 2021 - (Restated)
|
|
|
48,491,485
|
|
|
$
|
48,491
|
|
|
$
|
11,449,681
|
|
|
$
|
(19,848,297
|
)
|
|
$
|
(8,350,125
|
)
|