form10q.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
____________________
FORM
10-Q
(Mark
One)
T
|
QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
quarterly period ended December 31, 2008
£
|
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
333-52040
____________________
INTERNATIONAL
ENERGY, INC.
(Exact
name of registrant as specified in its charter)
Nevada
|
98-0195748
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification Number)
|
|
|
1200
G Street, NW, Suite 800
Washington,
District of Columbia
|
20005
(Zip
Code)
|
(Address
of principal executive offices)
|
|
(800)
676-1006
(Registrant's
telephone number, including area code)
___________________
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes T No
o.
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.
Large
accelerated filer
|
£
|
|
Accelerated
filer
|
£
|
|
|
|
|
|
|
|
Non-accelerated
filer (Do not check if a smaller reporting company)
|
£
|
|
Smaller
reporting company
|
T
|
|
Indicate
by check mark whether the registrant is a shell company (as defined in 12b-2 of
the Exchange Act.) Yes £ No
T.
Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date: 42,249,166 shares of Common Stock, par
value $0.001, were outstanding on February 1, 2009.
FORM
10-Q
For
the Quarterly Period Ended December 31, 2008
Table
of Contents
PART
I FINANCIAL INFORMATION
|
|
|
|
Item
1.
|
Financial
Statements (Unaudited).
|
|
|
|
|
|
3
|
|
|
|
|
4
|
|
|
|
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5
|
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7
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8
|
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|
Item
2.
|
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15
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|
Item 4T.
|
|
20
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|
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|
PART
II OTHER INFORMATION
|
|
|
|
Item
1.
|
|
21
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|
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|
Item
2.
|
|
21
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|
Item
3.
|
|
21
|
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|
Item
4.
|
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21
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|
Item
5.
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|
21
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|
Item
6.
|
|
21
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|
|
|
|
|
|
Certifications
|
|
Item
1. Financial Statements
(Formerly
"e.Deal.net, Inc.")
(A
Development Stage Company)
CONSOLIDATED
BALANCE SHEETS
DECEMBER
31, 2008 AND MARCH 31, 2008
(Expressed
in U.S. Dollars)
(Unaudited)
|
|
December 31,
|
|
|
March 31,
|
|
|
|
2008
|
|
|
2008
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$ |
1,407,476 |
|
|
$ |
797,725 |
|
Other current assets
|
|
|
3,023 |
|
|
|
- |
|
Total
current assets
|
|
|
1,410,499 |
|
|
|
797,725 |
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$ |
1,410,499 |
|
|
$ |
797,725 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$ |
36,784 |
|
|
$ |
- |
|
Accrued
liabilities
|
|
|
37,335 |
|
|
|
83,750 |
|
Accrued management fees - related party (Note
9)
|
|
|
- |
|
|
|
162,945 |
|
Total current liabilities
|
|
|
74,119 |
|
|
|
246,695 |
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
74,119 |
|
|
|
246,695 |
|
|
|
|
|
|
|
|
|
|
Commitments
and Contingencies (Note 5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
|
|
|
|
Preferred
stock: $0.01 par value; 1,000,000 shares authorized, no shares issued and
outstanding
|
|
|
- |
|
|
|
- |
|
Common
stock: $0.001 par value; 100,000,000 shares authorized, 42,249,166 and
36,932,500 shares issued and outstanding
|
|
|
42,249 |
|
|
|
36,933 |
|
Additional
paid-in capital
|
|
|
4,489,164 |
|
|
|
1,353,596 |
|
Common
stock issuable
|
|
|
- |
|
|
|
1,259,000 |
|
Deficit accumulated during the development
stage
|
|
|
(3,195,033 |
) |
|
|
(2,098,499 |
) |
|
|
|
|
|
|
|
|
|
Total stockholders' equity
|
|
|
1,336,380 |
|
|
|
551,030 |
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders'
equity
|
|
$ |
1,410,499 |
|
|
$ |
797,725 |
|
(The
accompanying notes are an integral part of these consolidated financial
statements)
(Formerly
"e.Deal.net, Inc.")
(A
Development Stage Company)
CONSOLIDATED
STATEMENTS OF OPERATIONS
FOR
THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2008 AND 2007
AND
FROM INCEPTION (NOVEMBER 6, 1998) TO DECEMBER 31, 2008
(Expressed
in U.S. Dollars)
(Unaudited)
|
|
Three
Months Ended December 31,
|
|
|
Nine
Months Ended December 31,
|
|
|
From
Inception (November 6, 1998) to December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investor
relations
|
|
|
5,700 |
|
|
|
227,000 |
|
|
|
547,200 |
|
|
|
227,000 |
|
|
|
774,200 |
|
Director
fees - related party
|
|
|
15,726 |
|
|
|
2,500 |
|
|
|
20,926 |
|
|
|
4,700 |
|
|
|
237,194 |
|
Research
and development
|
|
|
35,480 |
|
|
|
29,835 |
|
|
|
105,214 |
|
|
|
29,835 |
|
|
|
194,719 |
|
Professional
fees
|
|
|
39,718 |
|
|
|
5,142 |
|
|
|
107,142 |
|
|
|
14,719 |
|
|
|
204,428 |
|
Salaries
and benefits
|
|
|
27,940 |
|
|
|
- |
|
|
|
178,984 |
|
|
|
- |
|
|
|
1,113,987 |
|
Website
fees - related party
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
48,050 |
|
Write
off of oil, gas and mineral leases
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
112,000 |
|
Other operating expenses
|
|
|
21,833 |
|
|
|
5,799 |
|
|
|
145,099 |
|
|
|
12,178 |
|
|
|
461,401 |
|
Total
operating expenses
|
|
|
146,397 |
|
|
|
270,276 |
|
|
|
1,104,565 |
|
|
|
288,432 |
|
|
|
3,145,979 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
loss
|
|
|
(146,397 |
) |
|
|
(270,276 |
) |
|
|
(1,104,565 |
) |
|
|
(288,432 |
) |
|
|
(3,145,979 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
2,188 |
|
|
|
1,961 |
|
|
|
17,769 |
|
|
|
2,337 |
|
|
|
34,712 |
|
Interest
expense
|
|
|
- |
|
|
|
(8,813 |
) |
|
|
(195 |
) |
|
|
(12,812 |
) |
|
|
(77,480 |
) |
Loss
on disposal of fixed assets
|
|
|
- |
|
|
|
- |
|
|
|
(9,800 |
) |
|
|
- |
|
|
|
(9,800 |
) |
Foreign exchange gain
(loss)
|
|
|
- |
|
|
|
(80 |
) |
|
|
257 |
|
|
|
69 |
|
|
|
3,514 |
|
Total
other income (expense)
|
|
|
2,188 |
|
|
|
(6,932 |
) |
|
|
8,031 |
|
|
|
(10,406 |
) |
|
|
(49,054 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$ |
(144,209 |
) |
|
$ |
(277,208 |
) |
|
$ |
(1,096,534 |
) |
|
$ |
(298,838 |
) |
|
$ |
(3,195,033 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share -
basic and
diluted
|
|
$ |
(0.00 |
) |
|
$ |
(0.01 |
) |
|
|
(0.03 |
) |
|
$ |
(0.01 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of
common shares
outstanding - basic and
diluted
|
|
|
42,249,166 |
|
|
|
36,932,500 |
|
|
|
41,633,772 |
|
|
|
36,932,500 |
|
|
|
|
|
(The
accompanying notes are an integral part of these consolidated financial
statements)
(Formerly
"e.Deal.net, Inc.")
(A
Development Stage Company)
CONSOLIDATED
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FROM
INCEPTION (NOVEMBER 6, 1998) TO DECEMBER 31, 2008
(Expressed
in U.S. Dollars)
(unaudited)
|
|
Common
Stock
|
|
|
Additional
|
|
|
Common
Stock
|
|
|
Deficit
Accumulated During the Development
|
|
|
Total Stockholders'
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Paid-in Capital
|
|
|
Issuable
|
|
|
Stage
|
|
|
Equity (Deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inception,
November 6, 1998
|
|
|
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued at $0.001 per share to a related party for management
services
|
|
|
20,000,000 |
|
|
|
20,000 |
|
|
|
(15,000 |
) |
|
|
- |
|
|
|
- |
|
|
|
5,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for cash at $0.25 per share fiscal year ended March 31,
1999
|
|
|
1,360,000 |
|
|
|
1,360 |
|
|
|
83,640 |
|
|
|
- |
|
|
|
- |
|
|
|
85,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss,
inception (November 6, 1998) to March 31, 1999
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(7,470 |
) |
|
|
(7,470 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
March 31, 1999
|
|
|
21,360,000 |
|
|
|
21,360 |
|
|
|
68,640 |
|
|
|
- |
|
|
|
(7,470 |
) |
|
|
82,530 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss,
year ended March 31, 2000
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(16,185 |
) |
|
|
(16,185 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
March 31, 2000
|
|
|
21,360,000 |
|
|
|
21,360 |
|
|
|
68,640 |
|
|
|
- |
|
|
|
(23,655 |
) |
|
|
66,345 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss,
year ended March 31, 2001
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(171,793 |
) |
|
|
(171,793 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
March 31, 2001
|
|
|
21,360,000 |
|
|
|
21,360 |
|
|
|
68,640 |
|
|
|
- |
|
|
|
(195,448 |
) |
|
|
(105,448 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for cash at $0.10 per share, October 17, 2001
|
|
|
10,000,000 |
|
|
|
10,000 |
|
|
|
240,000 |
|
|
|
- |
|
|
|
- |
|
|
|
250,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss,
year ended March 31, 2002
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(144,541 |
) |
|
|
(144,541 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
March 31, 2002
|
|
|
31,360,000 |
|
|
|
31,360 |
|
|
|
308,640 |
|
|
|
- |
|
|
|
(339,989 |
) |
|
|
11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued to a related party for services rendered at $0.08 per share,
August 5, 2002
|
|
|
2,402,500 |
|
|
|
2,403 |
|
|
|
45,647 |
|
|
|
- |
|
|
|
- |
|
|
|
48,050 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued to a related party for services rendered at $0.08 per share,
August 5, 2002
|
|
|
1,200,000 |
|
|
|
1,200 |
|
|
|
22,800 |
|
|
|
- |
|
|
|
- |
|
|
|
24,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cancellation
of previously issued common stock, February 4, 2003
|
|
|
(1,200,000 |
) |
|
|
(1,200 |
) |
|
|
(22,800 |
) |
|
|
- |
|
|
|
- |
|
|
|
(24,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss,
year ended March 31, 2003
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(149,933 |
) |
|
|
(149,933 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
March 31, 2003
|
|
|
33,762,500 |
|
|
|
33,763 |
|
|
|
354,287 |
|
|
|
- |
|
|
|
(489,922 |
) |
|
|
(101,872 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss,
year ended March 31, 2004
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(70,132 |
) |
|
|
(70,132 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
March 31, 2004
|
|
|
33,762,500 |
|
|
|
33,763 |
|
|
|
354,287 |
|
|
|
- |
|
|
|
(560,054 |
) |
|
|
(172,004 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss,
year ended March 31, 2005
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(59,494 |
) |
|
|
(59,494 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTERNATIONAL
ENERGY, INC.
(Formerly
"e.Deal.net, Inc.")
(A
Development Stage Company)
CONSOLIDATED
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FROM
INCEPTION (NOVEMBER 6, 1998) TO DECEMBER 31, 2008
(Expressed
in U.S. Dollars)
(unaudited)
|
|
Common
Stock
|
|
|
Additional
|
|
|
Common
Stock
|
|
|
Deficit
Accumulated During the Development
|
|
|
Total
Stockholders'
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Paid-in Capital
|
|
|
Issuable
|
|
|
Stage
|
|
|
Equity (Deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
March 31, 2005
|
|
|
33,762,500 |
|
|
|
33,763 |
|
|
|
354,287 |
|
|
|
- |
|
|
|
(619,548 |
) |
|
|
(231,498 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued upon exercise of warrants, at $0.05 per
share, June 9, 2005& June 30, 2005
|
|
|
3,120,000 |
|
|
|
3,120 |
|
|
|
152,880 |
|
|
|
- |
|
|
|
- |
|
|
|
156,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued upon exercise of stock option, at $0.13 per share, October 7,
2005
|
|
|
50,000 |
|
|
|
50 |
|
|
|
6,450 |
|
|
|
- |
|
|
|
- |
|
|
|
6,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
based compensation expense
|
|
|
- |
|
|
|
- |
|
|
|
785,536 |
|
|
|
- |
|
|
|
- |
|
|
|
785,536 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss,
year ended March 31, 2006
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(842,155 |
) |
|
|
(842,155 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
March 31, 2006
|
|
|
36,932,500 |
|
|
|
36,933 |
|
|
|
1,299,153 |
|
|
|
- |
|
|
|
(1,461,703 |
) |
|
|
(125,617 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
based compensation expense
|
|
|
- |
|
|
|
- |
|
|
|
54,443 |
|
|
|
- |
|
|
|
- |
|
|
|
54,443 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss,
year ended March 31, 2007
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(224,862 |
) |
|
|
(224,862 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
March 31, 2007
|
|
|
36,932,500 |
|
|
|
36,933 |
|
|
|
1,353,596 |
|
|
|
- |
|
|
|
(1,686,565 |
) |
|
|
(296,036 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issuable in March 2008
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,259,000 |
|
|
|
- |
|
|
|
1,259,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss,
year ended March 31, 2008
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(411,934 |
) |
|
|
(411,934 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
March 31, 2008
|
|
|
36,932,500 |
|
|
|
36,933 |
|
|
|
1,353,596 |
|
|
|
1,259,000 |
|
|
|
(2,098,499 |
) |
|
|
551,030 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock and warrants issued for cash and placement fees in April 2008,
net
|
|
|
4,100,000 |
|
|
|
4,100 |
|
|
|
2,395,900 |
|
|
|
(1,259,000 |
) |
|
|
- |
|
|
|
1,141,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
based compensation expense
|
|
|
- |
|
|
|
- |
|
|
|
10,884 |
|
|
|
- |
|
|
|
- |
|
|
|
10,884 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued upon exercise of warrants, at $0.60 per share in May
2008
|
|
|
1,216,666 |
|
|
|
1,216 |
|
|
|
728,784 |
|
|
|
- |
|
|
|
- |
|
|
|
730,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss,
nine months ended December 31, 2008
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1,096,534 |
) |
|
|
(1,096,534 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2008
|
|
|
42,249,166 |
|
|
$ |
42,249 |
|
|
$ |
4,489,164 |
|
|
$ |
- |
|
|
$ |
(3,195,033 |
) |
|
$ |
1,336,380 |
|
(The
accompanying notes are an integral part of these consolidated financial
statements)
(Formerly
"e.Deal.net, Inc.")
(A
Development Stage Company)
CONSOLIDATED
STATEMENTS OF CASH FLOWS
FOR
THE NINE MONTHS ENDED DECEMBER 31, 2008 AND 2007
AND
FROM INCEPTION (NOVEMBER 6, 1998) TO DECEMBER 31, 2008
(Expressed
in U.S. Dollars)
(Unaudited)
|
|
Nine
Months Ended December 31,
|
|
|
From
Inception (November 6, 1998) to December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from operating activities
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$ |
(1,096,534 |
) |
|
$ |
(298,838 |
) |
|
$ |
(3,195,033 |
) |
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
595 |
|
|
|
219 |
|
|
|
6,268 |
|
Common
stock issued for services
|
|
|
- |
|
|
|
- |
|
|
|
53,050 |
|
Stock
based compensation expense
|
|
|
10,884 |
|
|
|
- |
|
|
|
850,863 |
|
Loss
on disposal of fixed assets
|
|
|
9,800 |
|
|
|
- |
|
|
|
9,800 |
|
Write
off of oil, gas and mineral leases
|
|
|
- |
|
|
|
- |
|
|
|
112,000 |
|
Change
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease
(increase) in other current assets
|
|
|
(3,023 |
) |
|
|
27 |
|
|
|
(3,023 |
) |
Increase
(decrease) in accounts payable
|
|
|
36,784 |
|
|
|
(169 |
) |
|
|
36,784 |
|
Increase
(decrease) in accrued liabilities
|
|
|
(46,415 |
) |
|
|
850 |
|
|
|
37,335 |
|
Decrease
in accrued management fees -related party
|
|
|
(162,945 |
) |
|
|
- |
|
|
|
- |
|
Increase in accrued interest -related
party
|
|
|
- |
|
|
|
12,812 |
|
|
|
- |
|
Net cash used in operating
activities
|
|
|
(1,250,854 |
) |
|
|
(285,099 |
) |
|
|
(2,091,956 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase
of property and equipment
|
|
|
(10,395 |
) |
|
|
- |
|
|
|
(16,068 |
) |
Purchase of oil, gas and mineral
leases
|
|
|
- |
|
|
|
- |
|
|
|
(112,000 |
) |
Net cash used in investing
activities
|
|
|
(10,395 |
) |
|
|
- |
|
|
|
(128,068 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from issuance of common stock and warrants
|
|
|
1,871,000 |
|
|
|
- |
|
|
|
3,627,500 |
|
Proceeds
from loans from related party
|
|
|
- |
|
|
|
300,000 |
|
|
|
510,000 |
|
Repayment of loans from related
party
|
|
|
- |
|
|
|
- |
|
|
|
(510,000 |
) |
Net cash provided by financing
activities
|
|
|
1,871,000 |
|
|
|
300,000 |
|
|
|
3,627,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase
in cash and cash equivalents
|
|
|
609,751 |
|
|
|
14,901 |
|
|
|
1,407,476 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents at beginning of period
|
|
|
797,725 |
|
|
|
23,531 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of
period
|
|
$ |
1,407,476 |
|
|
$ |
38,432 |
|
|
$ |
1,407,476 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
paid in cash
|
|
$ |
195 |
|
|
$ |
- |
|
|
$ |
77,480 |
|
Income tax paid in cash
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash
investing and financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock and warrants as
commission
|
|
$ |
60,000 |
|
|
$ |
- |
|
|
$ |
60,000 |
|
(The
accompanying notes are an integral part of these consolidated financial
statements)
INTERNATIONAL ENERGY, INC.
(Formerly
“e.Deal.net, Inc.”)
(A
Development Stage Company)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
December
31, 2008
(Expressed
in U.S. dollars)
(Unaudited)
Note
1. Organization and Nature of Operations
International
Energy, Inc. (the “Company”) was incorporated under the laws of the State of
Nevada on November 6, 1998, under the name “e.Deal.net, Inc.,” with an
authorized capital of 100,000,000 shares of common stock, par value of $0.001
per share, and 1,000,000 preferred stock, par value of $0.01. On June 20, 2005,
the Company amended its Articles of Incorporation to effect a change of name to
International Energy, Inc. from e.Deal.net, Inc.
On June
9, 2005, the Company incorporated two wholly owned subsidiaries; International
Energy Corp. and e.Deal Enterprises Corp. Both subsidiaries are incorporated
under the laws of the State of Nevada.
Through
International Energy Corp., the Company was involved in the investigation,
acquisition and exploration for petroleum and natural gas in various parts of
the United States and Canada. Until August 31, 2007, the Company focused
solely on petroleum and natural gas exploration. From September 2007 and
onwards, the Company has shifted its focus to the development of technologies
for the production of biofuels derived directly from the photosynthesis of green
microalgae.
In 2005,
the Company ceased its business of providing online automotive information
through e.Deal Enterprises Corp. The assets and liabilities, the results of
operations and cash flows related to the business were not classified as
discontinued operations as the amounts were not significant.
Note
2. Going Concern Uncertainties
The
Company has been an exploration/development stage company and has an accumulated
deficit of $3,195,033 as of December 31, 2008, and does not have positive cash
flows from operating activities. The accompanying consolidated financial
statements have been prepared in conformity with generally accepted accounting
principles in the United States of America, which contemplates continuation of
the Company as a going concern, which is dependent upon the Company’s ability to
establish itself as a profitable business.
Due to
the start-up nature of the Company’s business, the Company expects to incur
additional losses as it continues to develop its technology. To date, the
Company’s cash flow requirements have been primarily met by debt and equity
financings and proceeds received from the exercise of warrants. Management
recognizes that in order to meet the Company’s capital requirements, and
continue to operate, additional financing will be necessary. The
Company expects to raise additional funds through private or public equity
investments in order to expand the range and scope of its business operations.
The Company will seek access to private or public equity but there is no
assurance that such additional funds will be available for the Company to
finance its operations on acceptable terms, if at all. Furthermore,
there is no assurance the net proceeds from any successful financing arrangement
will be sufficient to cover cash requirements during the initial stages of the
Company’s operations. If the Company is unable to raise additional capital
or generate positive cash flow, it is unlikely that the Company will be able to
continue as a going concern.
In view
of these conditions, the ability of the Company to continue as a going concern
is in substantial doubt and dependent upon achieving a profitable level of
operations and on the ability of the Company to obtain necessary financing to
fund ongoing operations. Management believes that its current and future plans
provide the opportunity for the Company to continue as a going concern. These
consolidated financial statements do not give effect to any adjustments which
will be necessary should the Company be unable to continue as a going concern
and therefore be required to realize its assets and discharge its liabilities in
other than the normal course of business and at amounts different from those
reflected in the accompanying consolidated financial statements.
Note 3. Presentation of Interim
Information
The
accompanying unaudited interim consolidated financial statements have been
prepared in accordance with Form 10-Q instructions and in the opinion of
management of International Energy, Inc, include all adjustments (of
a normal recurring nature) considered necessary to present fairly the
consolidated financial position of the Company as of December 31, 2008 and March
31, 2008, and the consolidated results of operations for the three and nine
months ended December 31, 2008 and 2007, and cash flows for the nine months
ended December 31, 2008 and 2007. These results have been determined on the
basis of generally accepted accounting principles and practices in the United
States and applied consistently with those used in the preparation of the
Company's 2008 Annual Report on Form 10-K.
Certain
information and footnote disclosure normally included in the financial
statements presented in accordance with generally accepted accounting principles
in the United States have been condensed or omitted. It is suggested that the
accompanying unaudited interim consolidated financial statements be read in
conjunction with the financial statements and notes thereto incorporated by
reference in the Company's 2008 Annual Report on Form 10-K.
Recently
Issued Accounting Standards
In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (SFAS
157), which defines fair value, establishes a framework for measuring fair
value, and expands disclosures about fair-value measurements required under
other accounting pronouncements. It does not change existing guidance as to
whether or not an instrument is carried at fair value. SFAS 157 is effective for
financial statements issued for fiscal years beginning after November 15, 2007,
and interim periods within those fiscal years. In February 2008, the FASB issued
FASB Staff Position No. FAS 157-1 (FSP 157-1), which excludes SFAS No. 13,
“Accounting for Leases” and certain other accounting pronouncements that address
fair value measurements under SFAS 13, from the scope of SFAS 157. In February
2008, the FASB issued FASB Staff Position No. 157-2 (FSP 157-2), which provides
a one-year delayed application of SFAS 157 for nonfinancial assets and
liabilities, except for items that are recognized or disclosed at fair value in
the financial statements on a recurring basis (at least annually). The Company
is required to adopt SFAS 157 as amended by FSP 157-1 and FSP 157-2
on April 1, 2009, the beginning of its fiscal year 2010. The Company
does not expect the application of SFAS No. 157 to have a material effect on the
Company’s consolidated financial statements.
In
October 2008, the FASB issued FASB Staff Position No. FAS 157-3, “Determining
the Fair Value of a Financial Asset in a Market That Is Not Active” (FSP 157-3),
which clarifies the application of SFAS 157 when the market for a financial
asset is inactive. Specifically, FSP 157-3 clarifies how (1) management’s
internal assumptions should be considered in measuring fair value when
observable data are not present, (2) observable market information from an
inactive market should be taken into account, and (3) the use of broker quotes
or pricing services should be considered in assessing the relevance of
observable and unobservable data to measure fair value. The guidance in FSP
157-3 is effective immediately. The adoption of FSP 157-3 is not
expected to have a material effect on the Company’s consolidated financial
statements.
In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities, Including an Amendment to FASB No.
115” (SFAS 159). Under SFAS 159, entities may elect to measure specified
financial instruments and warranty and insurance contracts at fair value on a
contract-by-contract basis, with changes in fair value recognized in earnings
each reporting period. The election, called the fair value option, will enable
entities to achieve an offset accounting effect for changes in fair value of
certain related assets and liabilities without having to apply more complex
hedge accounting provisions. SFAS No. 159 is effective for fiscal
years beginning after November 15, 2007. The Company did not elect
the fair value option for any of its existing financial assets or financial
liabilities; therefore, this statement did not have a material impact on the
Company’s consolidated financial statements.
In June
2008, the FASB issued Staff Position EITF 03-06-1, “Determining Whether
Instruments Granted in Share-Based Payment Transactions Are Participating
Securities” (FSP EITF 03-06-1). FSP EITF 03-06-1 provides that unvested
share-based payment awards that contain non-forfeitable rights to dividends or
dividend equivalents (whether paid or unpaid) are participating securities and
shall be included in the computation of earnings per share pursuant to the
two-class method in SFAS No. 128, “Earnings per Share.” FSP
EITF 03-06-1 did not have any impact on the Company’s consolidated financial
statements.
In June
2007, the Emerging Issues Task Force of the FASB issued EITF Issue No. 07-3,
“Accounting for Nonrefundable Advance Payments for Goods or Services to be Used
in Future Research and Development Activities,” (EITF 07-3) which is effective
for new contracts entered into for fiscal years beginning after December 15,
2007. EITF 07-3 requires that nonrefundable advance payments for
future research and development activities be deferred and capitalized. Such
amounts will be recognized as an expense as the goods are delivered or the
related services are performed. The Company adopted EITF 07-3 on
April 1, 2008, the beginning of its fiscal year 2009. The adoption of
EITF 07-3 did not have a material impact on the Company’s consolidated financial
statements.
In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements, an Amendment of Accounting Research Bulletin
No 51” (SFAS 160). SFAS 160 establishes accounting and reporting standards for
ownership interests in subsidiaries held by parties other than the parent,
changes in a parent’s ownership of a noncontrolling interest, calculation and
disclosure of the consolidated net income attributable to the parent and the
noncontrolling interest, changes in a parent’s ownership interest while the
parent retains its controlling financial interest and fair value measurement of
any retained noncontrolling equity investment. SFAS 160 is effective for
financial statements issued for fiscal years beginning after December 15, 2008,
and interim periods within those fiscal years. Early adoption is prohibited. The
Company must adopt SFAS 160 on April 1, 2009, the beginning of its fiscal year
2010. The Company does not expect the application of SFAS No. 160 to
have a material effect on its consolidated financial statements.
In
December 2007, the FASB issued SFAS No. 141R, “Business Combinations” (SFAS
141R), which establishes principles and requirements for the reporting entity in
a business combination, including recognition and measurement in the financial
statements of the identifiable assets acquired, the liabilities assumed, and any
noncontrolling interest in the acquiree. SFAS 141R applies prospectively to
business combinations for which the acquisition date is on or after the
beginning of the first annual reporting period beginning on or after December
15, 2008, and interim periods within those fiscal years. The Company must adopt
SFAS 141R on April 1, 2009, the beginning of its fiscal year
2010. The Company does not expect the application of SFAS 141R to
have a material effect on its consolidated financial statements.
Note
4. Net Loss Per Share
Basic net
loss per share is computed by dividing the net loss by the weighted average
number of common shares outstanding during the period. Diluted net
loss per share is computed by dividing the net loss by the weighted average
number of common and dilutive common equivalent shares outstanding during the
period. All per share and per share information are adjusted
retroactively to reflect stock splits and changes in par value, when
applicable. As the Company had a net loss in each of the periods
presented, basic and diluted net loss per share are the same.
Excluded
from the computation of diluted net loss per share for the three and nine months
ended December 31, 2008 and 2007, because their effect would be antidilutive,
are stock options and warrants to acquire 10,983,334 and 14,830,000 shares of
common stock with weighted-average exercise prices of $0.26 and $0.09 per
share.
Following
is the computation of basic and diluted net loss per share for the three and
nine months ended December 31, 2008 and 2007:
|
|
Three
Months Ended
|
|
|
Nine
Months Ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator
- net loss
|
|
$ |
(144,209 |
) |
|
$ |
(277,208 |
) |
|
$ |
(1,096,534 |
) |
|
$ |
(298,838 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator
- weighted average number of common shares outstanding
|
|
|
42,249,166 |
|
|
|
36,932,500 |
|
|
|
41,633,772 |
|
|
|
36,932,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted net loss per common share
|
|
$ |
(0.00 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.01 |
) |
Note
5. UOC Research Agreement
On
September 17, 2007, International Energy, Inc., through its wholly owned
subsidiary, International Energy Corp., entered into a Research Agreement with
The Regents of the University of California (“UOC”) (the “UOC Research
Agreement”) in the area of algal biochemistry and photosynthesis aiming to
develop protocols for the growth of microalgal cultures and for the generation
of long chain liquid hydrocarbons. The contract is for a period of two years
until September 16, 2009. The Company can negotiate with UOC for a license at
commercially reasonable royalty rates and license fees to commercialize the
related products. The Company has the right to apply for a patent on any
invention made through the research. The Company has agreed to pay a total of
$238,680 to UOC for the support of research, payable in equal installments
of $29,835 each on a quarterly basis.
As
of December 31, 2008, the Company has paid a total of $149,175 and accrued
an additional $29,835 related to the UOC Research Agreement. In
addition to contractual obligations pursuant to the UOC Research Agreement, the
Company reimbursed UOC $645 and $10,709 during the three and nine months ended
December 31, 2008 for other out-of-pocket costs that are included in research
and development expense.
Note
6. Capital Stock
Preferred
Stock
At
December 31, 2008, there were 1,000,000 shares of preferred stock having a par
value of $0.01 per share authorized, of which no shares were issued and
outstanding. The Board of Directors has the authority to divide the
preferred stock into series and to fix and determine the relative rights and
preferences of the shares of any such series so established to the full extent
permitted by the laws of the State of Nevada and the Articles of
Incorporation. Holders of the preferred stock are entitled to one vote for
each share held of record. Holders of the preferred stock vote with holders of
the common stock as one class.
Common
Stock
On April
17, 2008, the Company completed a $2,400,000 self directed private placement
(the “2008 Private Placement”). The 2008 Private Placement consisted of the sale
of 4,000,000 units (the "Units") at a price of $0.60 per
Unit. Each Unit consisted of one share
(collectively “Unit Shares”) of the Company’s common
stock and one Series B Warrant to purchase a share of common stock at $0.60 per
share for a period of two years from the date of issuance. In
connection with the Private Placement, the Company agreed to file a registration
statement for the purpose of registering the Unit Shares and the shares issuable
upon the exercise of the Series B Warrants, for resale by the
Investors. On December 31, 2008, in response to a comment letter
received from the Securities and Exchange Commission (the “SEC”) dated July 17,
2008, the Company filed a Form S-1/A Pre-Effective Registration
Statement (the “Registration Statement”) with the SEC to register the Unit
Shares and additional shares held by certain selling stockholders in private
transactions. As of the date of this report, this Registration
Statement was not effective.
In
connection with the 2008 Private Placement, the Company paid a commission of
100,000 Units (the “Commission Units”) to one registered broker dealer. The
Commission Units do not have any registration rights but otherwise have the same
terms and conditions as the Units.
The fair
value of the warrants as calculated using the Black-Scholes model was
$5,330,000. The proceeds from the 2008 Private Placement allocated to
the warrants were $1,066,000.
Note
7. Stock Options
On
September 30, 2002, the stockholders of the Company approved its 2002 Incentive
Stock Plan (the “2002 Plan”), which has 20,000,000 shares reserved for issuance
thereunder, all of which were registered under Form S-8 on August 24,
2005. The 2002 Plan provides shares available for options granted to
employees, directors and others. The options granted to employees under the
Company’s 2002 Plan generally vest over one to five years or as otherwise
determined by the plan administrator. Options to purchase shares expire no later
than ten years after the date of grant.
On
October 15, 2008, pursuant to an Employment Agreement between the Company and
the Company’s Chief Executive Officer and President (the “CEO”), the Company
agreed to grant a stock option to the CEO within 60 days of the Employment
Agreement to purchase 750,000 shares of common stock. As of December
31, 2008, the Company had not granted or executed the stock option agreement and
accordingly did not record any stock compensation expense related to this future
stock option grant. When granted, the stock option to purchase
750,000 shares of the Company’s common stock will have an exercise price equal
to the fair market value of the Company’s common stock on the date of
grant. The stock option will vest as follows: 225,000 in three equal
annual installments of 75,000 options each commencing on January 1, 2010, and
annually thereafter; 275,000 vest and become exercisable in the event that the
Company, or any subsidiary thereof, with the prior approval of the Board of
Directors: successfully executes any partnership agreement or joint-venture
agreement of any technology under current or future development; or successfully
completes the sale of any subsidiary or any technology under current or future
development; and 250,000 vest and become exercisable upon: commencing commercial
sales of products derived from any technology under current or future
development; or successfully achieving commercial gross annual sales exceeding
$10,000,000 of those products and/or services which are not derived from
technologies under current or future research and development by the Company; or
successfully completing the sale of International Energy, Inc. to a third party,
subject to shareholder and Board of Directors approval.
On
October 15, 2008, the Company granted a stock option to one of its directors
permitting the purchase of, subject to applicable vesting provisions, 50,000
shares of the Company’s common stock at an exercise price of $0.40 per share.
Each stock option vests in five equal annual installments of 10,000 options
each, commencing on October 15, 2009, and annually thereafter. The stock
option is further subject to the terms and conditions of a stock option
agreement between its director and the Company. Under the terms of the
stock option agreement, the stock option agreement will terminate and there will
be no further vesting of stock options effective as of the date that the
director ceases to be a director of the Company. Upon termination of such
service, the director will have a specified period of time to exercise vested
stock options, if any. The fair value of the 50,000 stock options
granted was estimated at $0.36 each, for a total of $18,000, using the
Black-Scholes Option Pricing Model with the following weighted average
assumptions: expected volatility of 128%, risk-free interest rate of 3.40%,
expected life of 6.5 years, and a 0% dividend yield.
On
September 12, 2008, the Company granted stock options to each of two of its
directors permitting each to purchase, subject to applicable vesting provisions,
50,000 shares of common stock at an exercise price of $0.83 per
share. Each stock option vests in five equal annual installments of
10,000 options each, commencing on September 12, 2009, and annually thereafter.
The stock option is further subject to the terms and conditions of a stock
option agreement between each director and the Company. Under the
terms of the stock option agreement, the stock option agreement will terminate
and there will be no further vesting of stock options effective as of the date
that the director ceases to be a director of the Company. Upon termination
of such service, the director will have a specified period of time to exercise
vested stock options, if any. The fair value of the aggregate 100,000
stock options granted was estimated at $0.74 each, for a total of $74,000, using
the Black-Scholes option pricing model with the following weighted average
assumptions: expected volatility of 123%, risk-free interest rate of
3.32%, expected lives of 6.5 years, and a 0% dividend yield.
A summary
of the Company’s stock option activity for the nine month period ended December
31, 2008 and related information follows:
|
|
Number
of Options
|
|
|
Weighted
Average Exercise
Price
|
|
Weighted
Average Remaining Contractual
Term
|
|
Aggregate
Intrinsic Value
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
at March 31, 2008
|
|
|
7,950,000 |
|
|
$ |
0.13 |
|
|
|
|
|
Granted
|
|
|
150,000 |
|
|
|
0.69 |
|
|
|
|
|
Outstanding
at December 31, 2008
|
|
|
8,100,000 |
|
|
$ |
0.14 |
|
6.50
years
|
|
$ |
318,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable
at December 31, 2008
|
|
|
7,950,000 |
|
|
$ |
0.13 |
|
6.44
years
|
|
$ |
318,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available
for grant at December 31, 2008
|
|
|
11,850,000 |
|
|
|
|
|
|
|
|
|
|
The
aggregate intrinsic value in the table above represents the total pretax
intrinsic value for all “in-the-money” options (i.e. the difference between the
Company’s closing stock price on the last trading day of its third quarter of
2009 and the exercise price, multiplied by the number of shares) that would have
been received by the option holders had all option holders exercised their
options on December 31, 2008. The intrinsic value changes based on the fair
market value of the Company’s common stock.
There
were no stock options exercised during the three months ended December 31,
2008. The weighted average fair value of stock options granted during
the three months ended December 31, 2008 was $0.36 per share.
At
December 31, 2008, the Company had unvested stock options to purchase 150,000
shares of the Company’s common stock at a weighted average fair value of $0.61
per share.
During
the three and nine months ended December 31, 2008, stock-based compensation
expense of $9,476 and $10,884 was recognized for options previously granted and
vesting over time. No stock-based compensation expense was recognized during the
three and nine months ended December 31, 2007. As of December 31,
2008, the Company had $81,116 of total unrecognized compensation expense related
to unvested stock options which is expected to be recognized over a period of
five years.
The
following table summarizes information about stock options outstanding and
exercisable at December 31, 2008:
|
|
Stock Options Outstanding
|
|
|
Stock Options Exercisable
|
|
Exercise
Prices
|
|
Number
of Options Outstanding
|
|
|
Weighted
Average Exercise Price
|
|
|
Weighted
Average Remaining Contractual Life
(Years)
|
|
|
Number
of Options Exercisable
|
|
|
Weighted
Average Exercise Price
|
|
|
Weighted
Average Remaining Contractual Life
(Years)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ 0.13
|
|
|
7,950,000 |
|
|
$ |
0.13 |
|
|
|
6.44 |
|
|
|
7,950,000 |
|
|
$ |
0.13 |
|
|
|
6.44 |
|
0.40
|
|
|
50,000 |
|
|
|
0.40 |
|
|
|
9.79 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
0.83
|
|
|
100,000 |
|
|
|
0.83 |
|
|
|
9.70 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
$ 0.13 -
$ 0.83
|
|
|
8,100,000 |
|
|
$ |
0.14 |
|
|
|
6.50 |
|
|
|
7,950,000 |
|
|
$ |
0.13 |
|
|
|
6.44 |
|
The
Company does not repurchase shares to fulfill the requirements of options that
are exercised. Further, the Company issues new shares when options are
exercised.
Note
8. Warrants
On April
17, 2008, the Company completed the 2008 Private Placement (see Note 6 Capital
Stock). Pursuant to the 2008 Private Placement and payment of a
commission to a broker dealer, the Company issued 4,100,000 Series B Warrants,
each to purchase a share of common stock at $0.60 per share for a period of two
years from the date of issuance.
The fair
value of the 4,100,000 Series B Warrants issued was estimated using the
Black-Scholes option pricing model with the following assumptions:
Risk-free
interest rate
|
2.13%
|
Expected
life
|
2.0
years
|
Expected
volatility
|
107.9%
|
Dividend
per share
|
$0.00
|
The fair
value of the Series B Warrants was $5,330,000 and the allocated value was
$1,066,000.
A summary
of the Company’s warrant activity for the nine months ended December 31, 2008
and related information follows:
|
|
Number
of Warrants
Outstanding
|
|
|
Weighted Average Exercise Price
|
|
|
|
|
|
|
|
|
Outstanding
at March 31, 2008
|
|
|
6,880,000 |
|
|
$ |
0.05 |
|
Issued
|
|
|
4,100,000 |
|
|
|
0.60 |
|
Expired
|
|
|
(6,880,000 |
) |
|
|
0.05 |
|
Exercised
|
|
|
(1,216,666 |
) |
|
|
0.60 |
|
Outstanding
at December 31, 2008
|
|
|
2,883,334 |
|
|
$ |
0.60 |
|
All
warrants outstanding at December 31, 2008 were fully vested Series B Warrants
with an exercise price of $0.60 per share, expiring on April 17,
2010.
Note
9. Related Party Transactions
Salaries
and benefits
During
the three and nine months ended December 31, 2008 the Company incurred
$5,823 and $26,781 in cash wages and benefits expense for services
rendered by Mr. Greg O’Reilly, the former President, Chief Executive Officer,
and Director of the Company. Mr. O’Reilly resigned from all
executive and Board positions effective October 15, 2008. Upon
Mr. O’Reilly’s resignation, the Company simultaneously appointed
Mr. Charles Bell as the President, Chief Executive Officer and
Director of the Company. During the three and nine months ended
December 31, 2008, the Company incurred $25,482 in cash wages and benefits
expense for services rendered by Mr. Bell.
On
October 15, 2008, pursuant to an Employment Agreement between the Company and
Mr. Bell, the Company agreed to grant a stock option to Mr. Bell within 60 days
of the Employment Agreement to purchase 750,000 shares of common
stock. As of December 31, 2008, the Company had not granted or
executed the stock option agreement and as such did not record any stock
compensation expense related to this stock option. When granted, the
stock option to purchase 750,000 shares of the Company’s common stock will have
an exercise price equal to the fair market value of the Company’s common stock
on the date of grant. See Note 7 Stock Options for the vesting
provisions of this stock option.
Director
fees
During
the three and nine months ended December 31, 2008, the Company incurred $15,726
and $20,926 in non-employee director fees. Included in these amounts
is $9,476 and $10,884 of stock-based compensation expense for the three and
nine months ended December 31, 2008 for options previously granted and vesting
over time (see Note 7 Stock Options).
Accrued
management fees
During
the nine months ended December 31, 2008, the Company repaid $162,945 accrued in
previous periods for management services provided by two directors in previous
years.
All
related party transactions are recorded at the exchange amount established and
agreed to between related parties and are in the normal course of
business.
Note
10. Segment Information
The
Company’s business is considered as operating in one segment based upon the
Company’s organizational structure, the way in which the operations are managed
and evaluated, the availability of separate financial results and materiality
considerations.
Note
11. Termination of Oil and Gas Joint Venture
On June
13, 2005, the Company entered into a Joint Venture Agreement with Reserve Oil
and Gas, Inc. for the purpose of purchasing oil and gas leases, drilling,
completing oil and gas wells and the resale of acquired leases. The Company paid
cash $112,000 to purchase four leases totaling 312.7 acres in Sevier County,
Utah. The Company abandoned the properties and wrote off the cost of $112,000 on
March 31, 2007. On June 11, 2007, the Company terminated the Joint Venture
Agreement with Reserve Oil and Gas, Inc.
Note
12. Subsequent Events
On
January 9, 2009, Mr. Frank Fabio resigned from the positions of Chief Financial
Officer and Secretary of the Company.
On
January 9, 2009, Mr. Charles Bell, the Company’s President, Chief Executive
Officer, and a Director of the Company was appointed to the positions of Chief
Financial Officer and Secretary of the Company to fill the vacancy created by
the resignation of Mr. Fabio.
Item
2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Forward-Looking
Statements
Except
for the historical information presented in this document, the matters discussed
in this Form 10-Q for the three months ended December 31, 2008, and specifically
in the items entitled "Management’s Discussion and Analysis of Financial
Condition and Results of Operations," or otherwise incorporated by reference
into this document, contain "forward-looking statements" (as such term is
defined in the Private Securities Litigation Reform Act of 1995). These
statements are identified by the use of forward-looking terminology such as
"believes," "plans," "intend," "scheduled," "potential," "continue,"
"estimates," "hopes," "goal," "objective," expects," "may," "will," "should," or
"anticipates" or the negative thereof or other variations thereon or comparable
terminology, or by discussions of strategy that involve risks and
uncertainties.
The safe
harbor provisions of Section 21E of the Securities Exchange Act of 1934, as
amended, and Section 27A of the Securities Act of 1933, as amended, apply to
forward-looking statements made by the Company. The reader is cautioned that no
statements contained in this Form 10-Q should be construed as a guarantee or
assurance of future performance or results. These forward-looking statements
involve risks and uncertainties, including those identified within this Form
10-Q. The actual results that the Company achieves may differ materially from
any forward-looking statements due to such risks and uncertainties. These
forward-looking statements are based on current expectations, and the Company
assumes no obligation to update this information. Readers are urged to carefully
review and consider the various disclosures made by the Company in this Form
10-Q and in the Company's other reports filed with the Securities and Exchange
Commission that attempt to advise interested parties of the risks and factors
that may affect the Company's business.
Overview
International
Energy, Inc. (the “Company”) was incorporated under the laws of the State of
Nevada on November 6, 1998, under the name “e.Deal.net, Inc.,” with an
authorized capital of 100,000,000 shares of common stock, par value of $0.001
per share, and 1,000,000 preferred stock, par value of $0.01. On June
20, 2005, the Company amended its Articles of Incorporation to effect a change
of name to International Energy, Inc.
International
Energy Corp., a wholly owned subsidiary of International Energy, Inc., through a
research agreement with The Regents of the University of California (“UOC”) is
developing leading edge technologies for the production of biofuels derived
directly from the photosynthesis of green microalgae, which can accumulate up to
30% of their biomass in the form of valuable biofuels. The Company
seeks to develop biofuels from the conversion of water and carbon dioxide into
useful long-chain liquid hydrocarbons from the photosynthesis of unicellular
microalgae.
Because
the Company is a smaller reporting company certain disclosures otherwise
required to be made in a Form 10-Q are not required to be made by the
Company.
UOC Research
Agreement
On
September 17, 2007, International Energy, Inc., through its wholly owned
subsidiary, International Energy Corp., entered into a Research Agreement with
The Regents of the University of California (“UOC”) (the “UOC Research
Agreement”) in the area of algal biochemistry and photosynthesis aiming to
develop protocols for the growth of microalgal cultures and for the generation
of long chain liquid hydrocarbons. The contract is for a period of two years
until September 16, 2009. The Company can negotiate with UOC for a license at
commercially reasonable royalty rates and license fees to commercialize the
related products. The Company has the right to apply for a patent on any
invention made through the research. There is no assurance that the
Company will be able to successfully negotiate any licenses or patents related
to technologies under development through its UOC Research
Agreement. The Company has agreed to pay a total of $238,680 to UOC
for the support of research, payable in equal installments of $29,835 each
on a quarterly basis.
As
of December 31, 2008, the Company has paid a total of $149,175 and accrued
an additional $29,835 related to the UOC Research Agreement. In
addition to contractual obligations pursuant to the UOC Research Agreement, the
Company reimbursed UOC $645 and $10,709 during the three and nine months ended
December 31, 2008 for other out-of-pocket costs that are included in research
and development expense.
Results of
Operations
A summary
of the Company’s operating expense for the three and nine months ended December
31, 2008 and 2007 was as follows:
|
|
Three
Months Ended
|
|
|
|
|
|
Nine
Months Ended
|
|
|
|
|
|
|
December 31,
|
|
|
Percentage
|
|
|
December 31,
|
|
|
Percentage
|
|
|
|
2008
|
|
|
2007
|
|
|
Change
|
|
|
2008
|
|
|
2007
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investor
relations
|
|
$ |
5,700 |
|
|
$ |
227,000 |
|
|
|
(97 |
)% |
|
$ |
547,200 |
|
|
$ |
227,000 |
|
|
|
141 |
% |
Director
fees - related party
|
|
|
15,726 |
|
|
|
2,500 |
|
|
|
529 |
|
|
|
20,926 |
|
|
|
4,700 |
|
|
|
345 |
|
Research
and development
|
|
|
35,480 |
|
|
|
29,835 |
|
|
|
19 |
|
|
|
105,214 |
|
|
|
29,835 |
|
|
|
253 |
|
Professional
fees
|
|
|
39,718 |
|
|
|
5,142 |
|
|
|
672 |
|
|
|
107,142 |
|
|
|
14,719 |
|
|
|
628 |
|
Salaries
and benefits
|
|
|
27,940 |
|
|
|
- |
|
|
|
* |
|
|
|
178,984 |
|
|
|
- |
|
|
|
* |
|
Website
fees - related party
|
|
|
- |
|
|
|
- |
|
|
|
* |
|
|
|
- |
|
|
|
- |
|
|
|
* |
|
Write
off of oil, gas and mineral leases
|
|
|
- |
|
|
|
- |
|
|
|
* |
|
|
|
- |
|
|
|
- |
|
|
|
* |
|
Other
operating expenses
|
|
|
21,833 |
|
|
|
5,799 |
|
|
|
276 |
|
|
|
145,099 |
|
|
|
12,178 |
|
|
|
1,091 |
|
Total
operating expenses
|
|
$ |
146,397 |
|
|
$ |
270,276 |
|
|
|
(46 |
)% |
|
$ |
1,104,565 |
|
|
$ |
288,432 |
|
|
|
283 |
% |
* Not
meaningful
Investor
relations
Investor
relations costs represent fees paid to publicize the Company’s technology
within the investor community with the purpose of increasing company recognition
and branding, and to facilitate the efforts to raise funds in equity or debt
financings.
The
decrease in investor relations during the three months ended December 31, 2008
compared to the same period in 2007 is due to the Company focusing on fund
raising efforts during the three months ended December 31, 2007 compared to the
three months ended December 31, 2008, which required increased analyst coverage,
company branding, and information distribution.
The
Company incurred $320,200 more in investor relations during the nine months
ended December 31, 2008 compared to the same period in 2007 because the Company
had just retained the services of an investor relations firm in November 2007
which resulted in the completion of raising proceeds of $2,400,000 under the
terms of the 2008 Private Offering, which closed in April 2008.
Director
fees – related party
Non-employee
directors receive $2,500 per quarter for their services as
directors.
The
increase in director fees during the three and nine months ended December 31,
2008 compared to the same periods in the prior year is due to the Company
appointing three new directors during the nine months ended December 31,
2008. The Company granted stock options to each of these directors
(see terms below). As a result, included in director fees for the
three and nine months ended December 31, 2008 is $9,476 and $10,884 of
stock-based compensation expense related to these options that vest over
time.
On
October 15, 2008, the Company granted a stock option to one of its directors
permitting the purchase, subject to applicable vesting provisions, 50,000 shares
of the Company’s common stock at an exercise price of $0.40 per share. Each
stock option vests in five equal annual installments of 10,000 options each,
commencing on October 15, 2009, and annually thereafter. The stock
option is further subject to the terms and conditions of a stock option
agreement between its director and the Company. Under the terms of the
stock option agreement, the stock option agreement will terminate and there will
be no further vesting of stock options effective as of the date that the
director ceases to be a director of the Company. Upon termination of such
service, the director will have a specified period of time to exercise vested
stock options, if any. The fair value of the 50,000 stock options
granted was estimated at $0.36 each, for a total of $18,000, using the
Black-Scholes Option Pricing Model with the following weighted average
assumptions: expected volatility of 128%, risk-free interest rate of 3.40%,
expected life of 6.5 years, and a 0% dividend yield.
On
September 12, 2008, the Company granted stock options to each of two of its
directors permitting each to purchase, subject to applicable vesting provisions,
50,000 shares of common stock at an exercise price of $0.83 per
share. Each stock option vests in five equal annual installments of
10,000 options each, commencing on September 12, 2009, and annually thereafter.
The stock option is further subject to the terms and conditions of a stock
option agreement between each director and the Company. Under the
terms of the stock option agreement, the stock option agreement will terminate
and there will be no further vesting of stock options effective as of the date
that the director ceases to be a director of the Company. Upon termination
of such service, the director will have a specified period of time to exercise
vested stock options, if any. The fair value of the aggregate 100,000
stock options granted was estimated at $0.74 each, for a total of $74,000, using
the Black-Scholes option pricing model with the following weighted average
assumptions: expected volatility of 123%, risk-free interest rate of
3.32%, expected lives of 6.5 years, and a 0% dividend yield.
Research
and development
Research
and development costs represent costs incurred to develop the Company’s
technology incurred pursuant to its research agreement with UOC. The agreement
includes salaries and benefits for research and development personnel, allocated
overhead and facility occupancy costs, supplies, equipment purchase and repair
and other costs. The Company charges all research and development expenses to
operations as they are incurred except for prepayments which are capitalized and
amortized over the applicable period.
Research
and development expense is comprised entirely of payments made pursuant to the
UOC Research Agreement. In addition to contractual obligations pursuant to the
UOC Research Agreement, the Company reimbursed UOC $645 and $10,709 during the
three and nine months ended December 31, 2008 for other out-of-pocket costs that
are included in research and development expense.
Professional
fees
Professional
fees substantially consist of accounting, audit, and legal fees.
Professional
fees increased $34,576 during the three months ended December 31, 2008 compared
to the same period in 2007 substantially due to an increase in legal fees
incurred as a result of the Company filing a Form S-1/A on December 31,
2008.
Professional
fees increased $92,423 during the nine months ended December 31, 2008 compared
to the same period in 2007 substantially due to increases in legal fees of
approximately $70,000 and accounting and audit fees of $21,000. The
increase in legal fees is the result of the Company filing a Form S-1/A on
December 31, 2008 as well as an increase in the utilization of legal counsel for
preparation and review of required filings with the Securities and Exchange
Commission. The increase in accounting and audit fees is primarily
the result of the Company closing its administrative office in Vancouver,
British Columbia, Canada, effective August 31, 2008, terminating all of the
employees in Vancouver, Canada. Due to this downsizing, as of
September 1, 2008, the Company began outsourcing its accounting function to
third parties resulting in an increase in accounting fees of approximately
$12,000. Audit fees increased by approximately $9,000 during the nine
months ended December 31, 2008 compared to the nine months ended December 31,
2007.
Salaries
and benefits
Effective
June 1, 2008, the Company needed additional back-office support. As a
result, the Company began paying salaries to administrative support employees in
the Vancouver, Canada office. Effective August 31, 2008, the
Company closed its administrative office in Vancouver, Canada, terminating all
of the employees in that office. During the three and
nine months ended December 31, 2008, the Company incurred none and approximately
$126,000 in salary expense related to the administrative support employees in
the Vancouver, Canada office.
During
the three and nine months ended December 31, 2008 the Company incurred
$5,823 and $26,781 in cash wages and benefits expense for services
rendered by Mr. Greg O’Reilly, the former President, Chief Executive Officer,
and Director of the Company. Mr. O’Reilly resigned from all executive
and Board positions effective October 15, 2008. Upon Mr. O’Reilly’s
resignation, the Company simultaneously appointed Mr. Charles Bell as the
President, Chief Executive Officer and Director of the
Company. During the three and nine months ended December 31, 2008,
the Company incurred $25,482 in cash wages and benefits expense for services
rendered by Mr. Bell.
On
October 15, 2008, pursuant to an Employment Agreement between the Company and
Mr. Bell, the Company agreed to grant a stock option to Mr. Bell within 60 days
of the Employment Agreement to purchase 750,000 shares of common
stock. As of December 31, 2008, the Company had not granted or
executed the stock option agreement and as such did not record any stock
compensation expense related to this stock option. When granted, the
stock option to purchase 750,000 shares of the Company’s common stock will have
an exercise price equal to the fair market value of the Company’s common stock
on the date of grant. See Note 7 Stock Options to the consolidated
financial statements for the vesting provisions of this stock
option.
Other
operating expenses
Other
operating expenses includes travel and entertainment, rent, utilities, office
supplies, information technology related fees and other administrative
costs.
Other
operating expenses increased $16,034 during the three months ended December 31,
2008 compared to the same period in 2007 substantially due to an increase in
travel and entertainment related expense of approximately $16,000 as a result of
the Company transitioning its accounting and administrative functions from
Vancouver, Canada to the United States.
Other
operating expenses increased $132,921 during the nine months ended December 31,
2008 compared to the same period in 2007 substantially due to an increase in
travel and entertainment related expense of approximately
$102,000. Travel and entertainment expense incurred during the nine
months ended December 31, 2008 consisted of costs incurred as a result of the
Company transitioning its accounting and administrative functions from
Vancouver, Canada to the United States as well as travel related activities
incurred by the Vancouver, Canada back-office support staff from June 1, 2008 to
August 31, 2008, at which time the Company closed its administrative office in
Vancouver, Canada, terminating all of the employees in that
office.
Other
income (expense)
A summary
of the Company’s other income (expense) for the three and nine months ended
December 31, 2008 and 2007 was as follows:
|
|
Three
Months Ended
|
|
|
|
|
|
Nine
Months Ended
|
|
|
|
|
|
|
December 31,
|
|
|
Percentage
|
|
|
December 31,
|
|
|
Percentage
|
|
|
|
2008
|
|
|
2007
|
|
|
Change
|
|
|
2008
|
|
|
2007
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
$ |
2,188 |
|
|
$ |
1,961 |
|
|
|
12 |
% |
|
$ |
17,769 |
|
|
$ |
2,337 |
|
|
|
660
|
% |
Interest
expense
|
|
|
- |
|
|
|
(8,813 |
) |
|
|
* |
|
|
|
(195 |
) |
|
|
(12,812 |
) |
|
|
(98 |
) |
Loss
on disposal of fixed assets
|
|
|
- |
|
|
|
- |
|
|
|
* |
|
|
|
(9,800 |
) |
|
|
- |
|
|
|
* |
|
Foreign
exchange gain (loss)
|
|
|
- |
|
|
|
(80 |
) |
|
|
* |
|
|
|
257 |
|
|
|
69 |
|
|
|
272 |
|
Total
other income (expense)
|
|
$ |
2,188 |
|
|
$ |
(6,932 |
) |
|
|
* |
% |
|
$ |
8,031 |
|
|
$ |
(10,406 |
) |
|
|
* |
% |
* Not
meaningful
Interest
income
Interest
income increased $15,432 during the nine months ended December 31, 2008 compared
to the same period in 2007 as a result of the higher average cash balance
maintained during the nine months ended December 31, 2008 compared to 2007 as a
result of the 2008 Private Placement completed by the Company in April 2008,
raising net proceeds of $2,400,000.
Interest
expense
Interest
expense during the three and nine months ended December 31, 2007 consists
entirely of interest on interest bearing short term notes to its former
President Herdev S. Rayat. On March 31, 2008, the Company repaid all
outstanding notes to Mr. Rayat.
Loss
on disposal of fixed assets
The
Company recorded a loss on disposal of fixed assets of $9,800 during the three
months ended September 30, 2008 as a result of the removal of the cost and
related accumulated depreciation from the Company’s financial statements for
equipment that was either no longer in service or deemed
obsolete. Substantially all of this equipment was located at the
Company’s administrative office in Vancouver, British Columbia, Canada, which
was closed, effective August 31, 2008.
Liquidity and Capital
Resources
The
accompanying financial statements have been prepared assuming the Company will
continue as a going concern. The Company incurred cumulative losses
of $3,195,033 through December 31, 2008. Due to the "start up" nature
of the Company's business, the Company expects to incur losses as it continues
development of its technologies and expands. These conditions raise
substantial doubt about the Company’s ability to continue as a going
concern. Management recognizes that in order to meet the Company’s
capital requirements, and continue to operate, additional financing will be
necessary. The Company expects to raise additional funds through
private or public equity investment in order to expand the range and scope of
its business operations. The Company will seek access to private or public
equity but there is no assurance that such additional funds will be available
for the Company to finance its operations on acceptable terms, if at
all. If the Company is unable to raise additional capital or generate
positive cash flow, it is unlikely that the Company will be able to continue as
a going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
The
Company's principal source of liquidity is cash in the bank, which the Company
anticipates will be sufficient to fund its operations for the next twelve
months. The Company's future funding requirements will depend on
numerous factors, including: the time and investment required to invest in the
Company’s research and development project; to recruit and train qualified
management personnel; and the Company's ability to compete against other, better
capitalized corporations in similar businesses.
At
December 31, 2008, the Company had a cash and cash equivalents balance of
$1,410,499. The Company has financed its operations primarily from funds
received pursuant to a private placement completed by the Company in April 2008,
raising net proceeds of $2,400,000 and cash received from the exercise of
warrants.
Net cash
used in operating activities was $1,087,909 for the nine months ended December
31, 2008, compared to net cash used of $285,099 for the same period in
2007. The increase in cash used was substantially due to increases in
investor relations costs of $320,200, salaries and benefits of $178,984, and
research and development of $75,379 in addition to an increase in other
operating expense of $132,921 substantially due to an increase in travel and
entertainment related expense.
Net cash
used in investing activities was $10,395 for the nine months ended December 31,
2008, compared to $0 during the same period in 2007. During the nine
months ended December 31, 2008, the Company purchased $10,395 of equipment all
of which was for use by the administrative office in Vancouver, B.C. and
subsequently disposed of on August 31, 2008.
Net cash
provided by financing activities was $1,708,055 for the nine months ended
December 31, 2008 compared to $300,000 for the same period in
2007. During the nine months ended December 31, 2008, the Company
received $1,141,000 pursuant to the 2008 Private Placement and $730,000 from the
exercise of warrants. These increases in cash provided by financing
activities were offset by the repayment of $162,945 for management services
provided by two directors in previous years.
2008
Private Placement
On April
17, 2008, the Company completed a $2,400,000 self directed private placement
(the “2008 Private Placement”). The 2008 Private Placement consisted of the sale
of 4,000,000 units (the "Units") at a price of $0.60 per
Unit. Each Unit consisted of one share
(collectively “Unit Shares”) of the Company’s common
stock and one Series B Warrant to purchase a share of common stock at $0.60 per
share for a period of two years from the date of issuance.
In
connection with the 2008 Private Placement, the Company paid a commission of
100,000 Units (the “Commission Units”) to one registered broker
dealer.
Related Party
Transactions
Salaries
and benefits
During
the three and nine months ended December 31, 2008 the Company incurred
$5,823 and $26,781 in cash wages and benefits expense for services
rendered by Mr. Greg O’Reilly, the former President, Chief Executive Officer,
and Director of the Company. Mr. O’Reilly resigned from all executive
and Board positions effective October 15, 2008. Upon Mr. O’Reilly’s
resignation, the Company simultaneously appointed Mr. Charles Bell as the
President, Chief Executive Officer and Director of the
Company. During the three and nine months ended December 31, 2008,
the Company incurred $25,482 in cash wages and benefits expense for services
rendered by Mr. Bell.
On
October 15, 2008, pursuant to an Employment Agreement between the Company and
Mr. Bell, the Company agreed to grant a stock option to Mr. Bell within 60 days
of the Employment Agreement to purchase 750,000 shares of common
stock. As of December 31, 2008, the Company had not granted or
executed the stock option agreement and as such did not record any stock
compensation expense related to this stock option. When granted the
stock option to purchase 750,000 shares of the Company’s common stock will have
an exercise price equal to the fair market value of the Company’s common stock
on the date of grant. See Note 7 Stock Options for the vesting
provisions of this stock option.
Director
fees
During
the three and nine months ended December 31, 2008, the Company incurred $15,726
and $20,926 in non-employee director fees. Included in these amounts
is $9,476 and $10,884 of stock-based compensation expense for the three and
nine months ended December 31, 2008 for options previously granted and vesting
over time (see Note 7 Stock Options).
Accrued
management fees
During
the nine months ended December 31, 2008, the Company repaid $162,945 accrued in
previous periods for management services provided by two directors in previous
years.
All
related party transactions are recorded at the exchange amount established and
agreed to between related parties and are in the normal course of
business.
Other Contractual
Obligations
The
Company’s contractual obligations consist of payments under its corporate office
operating lease and the UOC Research Agreement as discussed
above. The Company has future minimum lease payments of $7,700 and
$89,505 pursuant to the UOC Research Agreement.
Off Balance Sheet
Arrangements
The
Company has no off-balance sheet arrangements.
Recently Issued Accounting
Pronouncements
See Note
3. “Presentation of Interim Information” to the Consolidated Financial
Statements in this Form 10-Q.
(a)
Evaluation of Disclosure Controls and Procedures
The
Company’s management, with the participation of its Chief Executive Officer and
Chief Financial Officer, has evaluated the effectiveness of the Company’s
disclosure controls and procedures (as defined in 13a-15(e) and 15d-15(e) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end
of the period covered by this report. Based on that evaluation, the
Company’s Chief Executive Officer and Chief Financial Officer concluded that the
Company’s disclosure controls and procedures are effective to provide reasonable
assurance that information required to be disclosed in the Company’s periodic
filings under the Exchange Act is accumulated and communicated to the Company’s
management, including the Chief Executive Officer and Chief Financial Officer,
to allow timely decisions regarding required disclosure.
(b)
Changes in Internal Control over Financial Reporting
There
were no changes in the Company’s internal control over financial reporting (as
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred
during the period covered by this report that has materially affected, or is
reasonably likely to materially affect, the Company’s internal control over
financial reporting.
PART
II – Other Information
None
Item 2. Unregistered Sales of Equity Securities
and Use of Proceeds
None
Item 3. Defaults Upon Senior
Securities
None
Item 4. Submission of Matters to a Vote of
Security Holders
None
None
|
Certification
of the Chief Executive Officer and Chief Financial Officer pursuant to
Rule 13a-14(a)
|
|
Certification
by the Chief Executive Officer and Chief Financial Officer pursuant to 18
U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
|
Pursuant
to the requirements of Sections 13 or 15 (d) of the Securities and Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
|
International Energy,
Inc.
|
|
(Registrant)
|
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and
in capacities and on the dates indicated.
Signature
|
Title
|
Date
|
|
|
|
|
|
|
/s/
Charles
Bell
|
President,
Chief Executive Officer,
|
|
Charles
Bell
|
Chief
Financial Officer, Director
|
February
12,
2009
|
22