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EWRL > SEC Filings for EWRL > Form 10-Q on 25-Nov-2013All Recent SEC Filings

Show all filings for CIRQUE ENERGY, INC.

Form 10-Q for CIRQUE ENERGY, INC.


25-Nov-2013

Quarterly Report


Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations

This statement may include projections of future results and "forward-looking statements" as that term is defined in Section 27A of the Securities Act of 1933 as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934 as amended (the "Exchange Act"). All statements that are included in this Quarterly Report, other than statements of historical fact, are forward looking statements. Although management believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct.

The key factors that are not within our control and that may have a direct bearing on operating results include, but are not limited to, acceptance of our services, our ability to expand our customer base, managements' ability to raise capital in the future, the retention of key employees and changes in the regulation of our industry.

There may be other risks and circumstances that management may be unable to predict. When used in this Quarterly Report, words such as, "believes," "expects," "intends," "plans," "anticipates," "estimates" and similar expressions are intended to identify forward-looking statements, although there may be certain forward-looking statements not accompanied by such expressions.

INTRODUCTION AND COMPANY UPDATE

INTRODUCTION

Cirque Energy, Inc. (F/K/A Green Energy Renewable Solutions, Inc.), referred to herein as the Company (OTC QB: EWRL), a Florida corporation, is a publicly traded company. Its headquarters are located at 243 W. Congress, Suite 350, Detroit, Michigan 48226.

On September 17, 2011, the Company entered into a letter of intent (the "LOI") with Green Renewable Energy Solutions, Inc. (at times referred to as "GRES"), the purpose of which was to serve as a basis for an asset purchase agreement (the "Asset Purchase Agreement") that would provide for the acquisition by the Company of the assets of GRES, which assets included certain contracts for the acceptance, processing and disposal of construction and demolition waste. In connection therewith the Company (i) changed its name to Green Energy Renewable Solutions, Inc. (at times referred to as "GERS"), effective December 12, 2011, and (ii) agreed to complete a 5 for 1 reverse split, spin-out its direct and indirect subsidiary companies E World Corp and Media and Technology and consummate the proposed Asset Purchase Agreement through the issuance of stock for the assets of GRES.

On January 26, 2012, the Company completed the 5 for 1 reverse split and on February 1, 2012, E World Corp and Media and Technology were spun out as separate private companies by way of share dividend with one E World Corp share issued for every share held on the date of the reverse split approval. FINRA approved the name change and reverse split on January 26, 2012.

On February 4, 2012 GRES and the Company executed the Asset Purchase Agreement. Under the terms of the Asset Purchase Agreement, the Company purchased all of the assets of GRES for 4,604,667 shares of its common stock of and a further 2,302,333 such shares in deferred consideration.

The Company's key area of business is focused on the securing of waste streams, including but not limited to; construction, demolition, and municipal solid waste streams and maximizing their values by recycling and waste to energy opportunities.

On August 15, 2013, the Company changed its name to Cirque Energy, Inc.

The Company's key area of business is focused on the development of waste conversion and waste to energy opportunities including landfill diversion, waste recycling and energy recovery from construction and demolition waste and municipal solid waste. The Company is currently in development on such opportunities in Michigan.

PLAN OF OPERATION
Company Purpose and Overview

The Company is a sustainable energy development company focused on distributed generation projects and waste stream optimization.

Our projects serve manufacturing, government, and other institutional clients. The Company operates with long-term supply agreements to process waste materials into valuable recyclables and reduce waste volume going into landfills by up to 85%. The Company (at times referred to as "Cirque") has developed a strategic plan to create sustainable, renewable energy with waste-to-energy power plants and the production of waste derived fuels. We primarily utilize a unique co-development business model to collaborate with clients to develop solutions to their long-term energy needs.

Cirque strives to be the acknowledged industry leader in the development of sustainable energy projects. Cirque is an integrator of renewable and clean energy processes specializing in the development, verification, and implementation of technologies dedicated to conserving our natural resources and minimizing the negative impact on the environment. In line with the company's vision statement, we will achieve our goals by challenging the mind-sets and principles of the traditional thought processes relating to waste, waste management, and creating energy from clean or alternative fuels. Management anticipates that our environmentally sustainable projects will deliver positive results now and for the foreseeable future.

Acquisition and Key Personnel

The Company is acquiring Cirque LLC and has changed its name to Cirque Energy, Inc. Management expects that this acquisition will provide the new entity with several benefits:

Strengthen Management Team to Execute Business Plan, includes plant operations, project development, construction, start-up, commissioning, fuel procurement and transportation.
Skill sets of the new team Mitigate Execution Risk.
New and Expanded Pipeline of projects and programs in various stages of development.
Expanded Client Relationships, large industrial clients, universities, hospitals, and utilities resulting in more opportunities.
Expanded network of project Finance Relationships and Contacts.
Our team has vast experience in development, design, financing, construction, and operations, which positions us to successfully take a potential energy project from a vision to completion.

o Joe DuRant, President and CEO - 30 years development and client interface
o Roger Silverthorn, CPA, Chief Financial Officer - 30 years energy development, plant operations, and finance
o Richard Fosgitt, PE, Chief Technology Officer - 20 years engineering and technology
o Thomas Cote', Chief Operating Officer - 25 years development and construction
o Mike Dempsey, Managing Director with Pebble Creek Partners LLC, a strategic consulting firm
o Dan Garman, Director and Marketing Advisor, Crossroads Consulting, Inc.

Cirque is in the process of securing ownership of the former Richfield Landfill in Genesee County, Michigan. Once the transaction is complete, the landfill will become Green Harvest Landfill, LLC (a wholly owned subsidiary of Cirque).

This landfill is the first acquisition in the Cirque strategy to secure long-term control of waste streams, either through landfill acquisitions or operating contracts. Once secured, the Cirque plan is to implement strategies to maximize beneficial reuse of materials in the waste stream:

Maintain/grow landfill tipping fee revenues and waste supplies
Introduce waste conversion strategies to maximize revenue from waste streams
Recycle waste to capture high value recycle commodities for resale such as all recyclable metals, wood, paper/cardboard and plastics.
Implement waste to energy (WTE) strategies for waste stream remaining after recycling based on location and market opportunities, including:

Anaerobic digestion for methane (natural gas) production
Gasification for electric generation
Solid waste to liquid fuels (diesel or sweet crude)

All of these strategies result in a net reduction in landfill operational costs while extending the life of landfill. In addition, new revenue streams will be created from recycling and WTE operations.

Business Concept Summary: Control a Waste Stream; Maximize its Value, Repeat

Recycling and Transfer Station - Detroit Market

Similar to the concept of the Green Harvest Landfill (above) Cirque is in the process of developing a Recycling and Transfer Station in the City of Detroit, Michigan market area. There exists a large opportunity to provide a location for independent waste haulers and construction and demolition (C&D) haulers to dispose of material in Detroit. By having a location in the City of Detroit, these haulers will have significant avoided costs by reduced trucking times to landfills located well beyond the City of Detroit and Wayne County, in many cases in northern Oakland, northern Macomb, or Washtenaw Counties. Also, we believe tipping fees at a Detroit Facility will be equal to or lower than those at the remote landfills.

The Cirque Detroit recycling and transfer station will first utilize a materials recovery facility (MRF). This MRF will process both MSW and C&D and will recover high value recyclable commodities for resale such as all recyclable metals, wood, paper/cardboard and plastics. The remaining volume can be processed using either anaerobic digestion to produce methane (pipeline natural gas) or used for fuel for a gasification power facility.

The final remaining volume of unusable materials (in-organics, dirt, and other deleterious materials) will be transferred in high volume trucks to either the Green Harvest Landfill or other suitable disposal sites.

Cirque - Performance Contracting

Cirque is keenly aware of the impact of current U.S. shale gas developments on natural gas markets and gas consumers. Because of the low prices of natural gas, ($3.00-4.00 Henry Hub, 2013) and high electric utility prices, the opportunities for onsite combined heat and power projects (CHP) have never been greater. Cirque sees countless opportunities at facilities in the municipal, university, schools and hospital market (MUSH market) and industry that burn natural gas. Typically, these facilities have natural gas boilers for heat and process. By replacing these facilities with CHP systems such as micro turbines, reciprocating engines, or gas turbines with heat recovery boilers these facilities can see dramatic energy cost savings.

Cirque plans to pursue projects as an Energy Services Company (ESCO) to design, build, own, operate, and finance CHP projects in the MUSH and industrial markets. Under this model, Cirque will provide an initial energy audit or feasibility study for the customer, to demonstrate the economic savings that can be realized by installing a CHP system. Further, using our strategic partners (Hannon Armstrong and Veolia Energy), Cirque can offer these customers an Energy Savings Performance Contract (ESPC), whereby Cirque will capitalize the project for the Customer, with payments from the Customer coming from their current utility bill budget. Therefore, the Customer can realize the energy savings without having to incur the expense of the project. Typically the ESPC with the Customer is expected to be over a term of 10-20 years.

Cirque - Small scale CHP Gasifier

In 2012, Cirque jointly developed with major defense contractor a conceptual Deployable Gasification Unit (DGU) for U.S. military and Federal government use. Our agreement with the defense contractor allows Cirque the rights to utilize this system in all private business, commercial, and industrial sectors outside of the Federal government.

The concept of the DGU is to take waste materials of up to 10 tons per day and use the material as fuel in a small gasifier to provide up to 1.0 MW of electricity and thermal heat. The DGU, as planned is small in size, taking up the space of approximately 2-3 standard 20' shipping containers. Power generation is accomplished by gasifying the waste (garbage) to generate a combustible syngas that is co-fired in a standard diesel or natural gas internal combustion engine. The engine runs constantly on the syngas, but the primary fuel can be utilized when no waste fuels are available.

In the commercial areas, Cirque envisions using the system for customers who are generating a waste material and have a constant electric demand. This could be industrial customers, wastewater treatment plants, big box stores, distribution centers, universities, schools, and large hospitals. These facilities can see substantial cost savings by avoiding paying for waste disposal, as well as by offset utility costs. Cirque plans on delivering these systems to customers using the ESCO business model.

RESULTS OF OPERATIONS

THREE MONTH PERIOD ENDED SEPTEMBER 30, 2013 COMPARED TO THREE MONTH PERIOD ENDED SEPTEMBER 30, 2012 AND APRIL 1, 2010 (DEVELOPMENT STAGE RE-ENTRY) THROUGH SEPTEMBER 30, 2013

Revenues for the three month period ended September 30, 2013 were $0 compared to $0 for the three month period ended September 30, 2012 and $219 from April 1, 2010 (Development Stage Re-Entry) through September 30, 2013.

Total operating expense for the three month period ended September 30, 2013 increased by $31,038 from $220,914 for the three months ended September 30, 2012 to $251,952 for the same period in 2013. Operating expenses are $7,086,682 from April 1, 2010 (Development Stage Re-Entry) through September 30, 2013.

The increase in operating expenses is primarily due to an increase in salaries and benefits of $88,835 and which was offset by a decrease in waste project expenses of $72,796. Salaries and benefits increased due to the Company having four full time positions compared to one and one-half full time positions in the prior period. Waste Project expenses decreased due to the Company ceasing the Highland Park Waste Project. Investor relations increased by $8,782 during the three months due to an increase in press releases and other investor related activity. Travel expenses increased by $10,458 during the three months due to more travel by Company executives for meetings to raise new capital.

Interest expense increased from $1,573 for the nine months ended September 30, 2012 to $173,550 for the same period in 2013. Interest expense increased due to the issuance of convertible notes. Interest expense is $490,365 from April 1, 2010 (Development Stage Re-Entry) through September 30, 2013.

Due to the factors described above, the Company's net loss increase by $203,013 from net loss of $222,487 the three months ended September 30, 2012 to a net loss of $425,500 for the same period in 2013. Net loss is $7,578,199 from April 1, 2010 (Development Stage Re-Entry) through September 30, 2013.

NINE MONTH PERIOD ENDED SEPTEMBER 30, 2013 COMPARED TO NINE MONTH PERIOD ENDED
SEPTEMBER 30, 2012

Revenues for the nine month period ended September 30, 2013 were $0 compared to $12 for the nine month period ended September 30, 2012.

Total operating expense for the nine month period ended September 30, 2013 decreased by $4,716,513 from $5,510,275 for the nine months ended September 30, 2012 to $793,762 for the same period in 2013. The decrease was primarily due to an impairment of intangible assets, a decrease in executive compensation, a decrease in loss of settlement of accounts payable, and the forfeiture of a deposit related to the purchase of a landfill.

Interest expense for the nine months ended September 30, 2013 increased from $13,087 for the nine months ended September 30, 2012 to $417,112 for the same period in 2013. Interest expense increased due to the issuance of convertible notes.

Due to the factors described above, the Company's net loss decreased by $4,716,613 from net loss of $5,523,362 for the nine months ended September 30, 2012 to a net loss of $1,210,872 for the same period in 2013.

LIQUIDITY AND CAPITAL RESOURCES

The Company's consolidated interim financial statements have been prepared, assuming that the Company will continue as a going concern. The Company incurred a net loss of $1,120,872 for the nine month period ended September 30, 2013, used cash flow used in operations of $381,523 for the nine months ended September 30, 2013, had a working capital deficiency of $1,220,851, an accumulated deficit of $4,514,336 along with an accumulated deficit of $7,578,197 during development stage for the period from April 1, 2010 to September 30, 2013. Cash totaled $15,931 on September 30, 2013 compared to $1,007 as of December 31, 2012. These conditions raise substantial doubt about the Company's ability to continue as a going concern.

During the nine months ended September 30, 2013, net cash used by operating activities totaled $381,523, compared to net cash used by operating activities of $263,503 for the comparable nine month period in 2012. Net cash used by investing activities for the nine months ended September 30, 2013 totaled $155,153 compared to $0 for the comparable nine month period in 2012. Net cash provided by financing activities for the nine months ended September 30, 2013 totaled $551,600 compared to $285,961 for the comparable nine month period in 2012.

The above cash flow activities yielded a net cash increase of $14,924 during the nine months ended September 30, 2013 compared to an increase of $22,458 during the comparable prior period.

GOING CONCERN

The consolidated interim financial statements have been prepared assuming that we will continue as a going concern. The Company had minimal operating revenue and our ability to continue as a going concern is dependent upon the company implementing its business plans resulting in profitable operations. The consolidated interim financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and classification of liabilities that might be necessary should we be unable to continue in existence.

The Company also intends to position itself so that it may be able to raise additional funds through the capital markets and to raise additional borrowings. However, there are no assurances that the Company will be successful in this or any of its endeavours or become financially viable and continue as a going concern.

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