ITEM 1. BUSINESS
We were incorporated under the laws of the State of Nevada on August 29, 2012, at which time it acquired the business plan and other industry materials from our founder, President, and Chief Executive Officer. As of November 30, 2015, we had one employee, our founder, President, and Chief Executive Officer, Mr. McGoldrick. For fiscal year 2015, Mr. McGoldrick will devote at least twenty (20) hours a week to us but may increase the number of hours as necessary.
The Company issued 3,500,000 shares of its common stock to Mr. McGoldrick at inception in exchange for organizational services incurred upon incorporation. Following our formation, we issued an additional 1,000,000 shares of our common stock to Mr. McGoldrick, in exchange for a business plan and other related industry materials that he developed over a period of five (5) years. See also “Certain Relationships and Related Transactions.”
We are a development stage company and have no specific financial resources. We have not established or attempted to establish a source of equity or debt financing. Our independent registered public accounting firm has included an explanatory paragraph in their report emphasizing the uncertainty of our ability to remain a going concern. We are in the early stages of executing our business plan. We still have a significant amount of work that needs to be completed and funds that need to be raised in order to compete within this sophisticated marketplace. To date, we have not developed any finished products or services and cannot predict when a finished product or services will be developed or externally acquired. We believe that we have an advantage with our founder, President, and Chief Executive Officer and his industry relationships and the solicitation of their help with growing the business model.
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At August 31, 2015, we had limited assets which consisted of; cash of $4,410, prepaid assets of $14,338 and intangible assets relating to our business plan valued at $1,000, net of amortization expense of $1,000. In order to fund the development of our business and working capital needs for the next 12 months, we intend to attempt to secure funding from the sale of common stock, from stockholder or non-related party loans, or from funding provided by strategic joint ventures or partners. Furthermore in order to be able to implement the foregoing plan of operations, we anticipate that we will need to secure financing between $100,000 and $200,000 during the first half of calendar year 2016. If we are not successful in raising additional financing, we will not be able to proceed with execution of our business plan.
Based on the nature of our business, we anticipate incurring operating losses into the foreseeable future. Because we currently do not have any finished software products or services and our resources are limited, we cannot predict if and when we will generate revenues and whether we will become a viable business. Accordingly, due to our lack of assets, operations and present inability to generate revenues, our auditors have stated in their opinion that there currently exists substantial doubt about our ability to continue as a going concern.
Business
There is no way of accurately predicting when product development will progress to the point of generating any revenue. The timing of development is a function of having sufficient working capital. There is no way of knowing when or if we will be able to raise the funds necessary. If we do, services could be ready within three to six months following when the necessary funds have been secured. If we do not raise sufficient financing, revenue producing activities of any kind will most likely not commence for at least 18 months, if ever.
We are building an energy intelligence company that we believe will provide comprehensive energy efficiency solutions that will be made available to the commercial market. We are developing a proprietary energy management software and control platform that we believe will provide real-time energy usage analytics for both enterprise level and local managers. Our intended product platform we believe should enable the efficient management of electricity, natural gas, water and carbon emissions throughout the business. We believe our intended product platform will be scalable, enabling our potential customers to measure energy behavior at equipment level and diagnose cost savings opportunities. In order to capture these saving opportunities, we will need to first identify specific savings opportunities and then define the economic return associated with our recommendations. Our intended software package we believe will become a building block in assisting others in the design, engineering, development of arranging finance for energy efficiency projects and clean energy generation projects.
Our intended software and services will outline a three-step method for providing customers with what we believe to be a comprehensive approach to energy management, spanning information-driven project design, sophisticated analysis, project implementation, ongoing operations of implemented projects and continuous tracking of performance against client and industry benchmarks. We believe this approach is required for commercial energy decisions to be made, and will help us in creating long-lasting customer relationships.
Our business operations is comprised of two segments; a) software for Internet and/or Intranet applications and b) software integration services for the commercial energy market. The software division has initially worked through the assistance of an established software development firm (since early 2013). The Company developed the initial design and framework of its intended energy management software package through the combined efforts of its founder, President, and Chief Executive Officer, and the software development firm with which we have been working with on an as “needed basis.” We have not had any meaningful or material discussions regarding acquisition of software for services products, nor do we have any agreements (written or oral) in place in order to do so. Initial framework for our intended software package was developed, with a substantial and robust requirements analysis, leading to the design phase of our development. To date no distribution or reseller relationships have been discussed let alone formalized; the Company intends to seek the help of various outside sales reps and marketing consultants to develop a professional sales and marketing strategy to capitalize on these technologies. We intend to with further financing create and staff an in-house software development group, which we believe may develop new generations of applications and/or services of a similar nature to our business development in energy intelligence solutions. The Company continues to work on the development of its intended energy intelligence solutions services through the management and industry knowledge skills of its founder, President, and Chief Executive Officer, as well as through the software development firm which has been working with us on an as needed basis and budget allows.
To date no saleable product or service has been developed through these efforts. Our services segment will seek to staff a management team with the necessary and appropriate technical skills in technology and energy management software. While we cannot estimate the size of the contracts, availability of contracts are solely based on the industry observations of our founder, President, and Chief Executive Officer as well as our outside software developer. None of these observations are based on any formal study conducted by the Company or that may be currently available from the industry. Initially clients we believe will come primarily from referrals of business associates of our founder, President, and Chief Executive Officer and/or other energy management providers which we may develop professional relationships with. However, we cannot predict when those referrals will occur, or if at all through Mr. McGoldrick or others.
Our plan to continue as a going concern is to reach the point where we begin generating sufficient revenues from our energy intelligence management product(s) or services to meet our obligations on a timely basis. The Company has not yet acquired or internally fully developed any services. We may not be able to acquire or internally develop any services in the future because of a lack of available funds or financing to do so. In order for us to develop or acquire any services, we must be able to secure the necessary financing, beyond just the proceeds of this Offering. In the early stages of our operations, we will continue to keep costs to a minimum. The cost to develop our business plan as currently outlined will be in excess of $200,000. We have no established current sources of funds to undertake the business plan as outlined. Until we obtain funding, if ever, we will keep our operating costs as low as possible with our founder, President, and Chief Executive Officer providing substantially all of the work on his own without any cash compensation. This methodology would result in our development stage extending for at least two to three years. We however believe that our services division (once developed, if at all) may begin to generate revenues earlier than the software division (once developed, if at all). If we are unable to obtain adequate funding or financing, the Company faces the ultimate likelihood of business failure. There are no assurances that we will be able to raise any funds or establish any financing program for the Company’s growth.
Industry Overview
Based on industry reports, by 2020, the addressable energy efficiency market (of which energy intelligence management systems are expected to be a big part of) in the United States may exceed $1 trillion in gross energy savings. Over the next five years it is believed by some in the industry the addressable energy efficiency market represents a 2X average annual savings from potential capital investment of $25 billion per year. This would represent a significant increase to energy efficiency spending. The commercial segment of the market we believe has been historically underserved by geographically fragmented providers. The US market being the largest and a focus of our efforts and energies.
We believe the confluence of a large addressable energy efficiency market, geographically fragmented service provider landscape, and positioning of business that seek to utilize sophisticated energy intelligence management systems to solve market barriers, comprised of poor plant-to-control coordination, weak information interpretation, present an opportunity for our Company.
Competitive Focus
We believe the following will assist us in properly capitalizing on growth in the commercial energy efficiency market: (1) Scalability. Based on industry reports, our founders direct experience in the marketplace, we believe our intended energy intelligence management system, when fully developed, will be a scalable, commercialized solution designed to serve what we believe to be an underserved, fragmented industrial segment of the energy efficiency market. (2) Comprehensive Solution to create a “Sticky” Customer Relationship. Our business model we believe will provide a comprehensive solution to energy intelligence management that will be designed to act as a competitive barrier. (3) Analytical Expertise in Energy Efficiency. Our founder has extensive utility and energy efficiency experience which we will seek to capitalize on that expertise. (4) Speed of Implementation. We believe that a fully-developed energy intelligence management system could be quickly implemented, providing immediate insight into the energy usage (and energy behavior) of our intended customers’ assets.
Growth Strategy
Key elements of our growth strategy shall include: (1) Enhancement of Core Products. We plan to enhance core product user interface and functionality with new features and offerings as soon as reasonably practicable. (2) Focus on Market Segments. We intend to organically grow our market penetration by: (a) securing enterprise-wide contracts in market segments of focus, (b) entering new commercial segments, (c) leveraging project development opportunities, and (d) adding clean energy management solutions opportunities to our service portfolio. (3) Acquire Complementary Businesses. We plan to acquire businesses that complement and expand our intended end-to-end energy management services, technology, customer base and geographic coverage. (4) Project Finance. We intend to align ourselves with other businesses that provide project financing for commercial energy operators and shared energy savings projects. (5) Align with Grid Operators and Electric Utilities. We believe establishing relationships with grid operators and utilities may enable us to ultimately reach and attract a broader customer base. (6) Strategic Alliances. We plan to team with other businesses that have complementary features to our proprietary energy intelligence management system, when fully developed, thereby reducing our development cost and introducing us to new customers and end-users. (7) International Expansion. We intend to expand internationally through partnerships and alliances.
Business Objective
The Company's business objective is to become the preferred provider of energy intelligence management solutions and related services for small to medium-sized business entities throughout the United States. The Company is pursuing the following strategies to achieve this objective: (1) Maintain and Enhance Technical Expertise. We will seek to maintain our technical expertise by the hiring of and training of proficient information technology personnel. The Company will create a training program to assist in maintaining its technical proficiency. (2) Create a National Presence. We will seek to create and enhance a national reputation and aggressively market our energy intelligence management services. (3) Quality, Service and Customer Support. The Company's employees and IT professionals will follow documented and standardized methodologies to ensure a consistent approach to projects, thereby fostering uniform quality and more cost-efficient solutions for our prospective clients.(4) Client Base. Our intended range of products and services will most likely permit interaction with diverse points of contact and decision makers within a client's organization. The Company will seek to utilize these multiple points of contact in order to expand its relationships with clients to obtain additional projects or sales, as well as generate recurring revenues by providing services for energy management. (5) Alliances with Industry Leaders. We expect to create alliances and relationships with energy industry product vendors, and industry service providers. The Company will pursue these alliances and relationships in order to expand our service offerings and remain current with the advances in computing and energy management technology. (6) Multiple Sales Channels. We believe that we will create or attract a direct sales force that will focus exclusively on the sale of our intended energy intelligence management product and services.
Competition
The energy intelligence and solutions sector is highly competitive, rapidly changing and fragmented. We will face competition from companies that focus on various aspects of the energy intelligence and solutions market, particularly those that are similar and data driven and provide a fully integrated solution that we intend to provide. (i) Energy Consultancies. Many competitors in the commercial market are local and regional consultants that are geographically concentrated and service a limited base of regular customers. These consultants may have specific energy auditing, and project design expertise, but lack the full range of services that we intend offer, including real-time energy monitoring functions that we believe to be core to achieving ongoing energy savings. These contractors may have difficulty in scaling their services across an enterprise, focusing instead on plant-level engagements. (ii) Controls and Automation Companies. Many large and mid-size controls hardware and software companies provide technically similar components to what we intend to provide. These companies generally sell proprietary systems, whereas we intend to design energy intelligence management solutions with off-the-shelf components. Using off-the-shelf components we believe will allows us to design solutions to best fit a specific facility’s technical needs with the most suitable technology available and allows us to negotiate pricing terms for such components with vendors. For many customers, we believe lack the knowledge about what to do with the information obtained and renders much of the intended control value of the equipment unutilized.
Our more significant competitors in this area include Rockwell Automation, Schneider Electric and Honeywell. (iii) Energy Monitoring Software Companies. There are three groups of companies that focus specifically on monitoring software, which may be considered competitors to us: The first group consists of companies whose primary focus is on DR programs. They offer monitoring software and in at least one case, some analyst support, primarily to enable customers to participate in DR programs, which they help administer for utilities. The second group includes companies focused primarily on enterprise carbon accounting software, but in several cases, their products offer some sort of energy management and monitoring capabilities. The third group includes companies focused primarily or exclusively on providing energy management and monitoring software. We believe there are close to 50 companies that fit into this category.
Intellectual Property
We have no patents or trademarks.
Government Regulation and Industry Standards
There are an increasing number of laws and regulations in the United States and abroad pertaining to communications and commerce on the Internet. In addition, a number of legislative and regulatory proposals are under consideration by federal, state, local and foreign governments. Laws or regulations may be adopted with respect to the Internet relating to liability for information retrieved from or transmitted over the Internet, user privacy, taxation and the quality of services and services. Moreover, the application to the Internet of existing laws governing issues such as intellectual property ownership and infringement, pornography, obscenity, libel, gaming, employment and personal privacy is uncertain and developing. Any such legislation or regulation, or the application or interpretation of existing laws, may decrease the growth in the use of the Internet in general, prevent us from delivering our content in different parts of the world and increase our costs of selling services or otherwise operating our business.
Furthermore, legislation regulating online content could limit the growth in use of the Internet generally and decrease the overwhelming acceptance of the Internet as an advertising and e-commerce medium.
Websites typically place identifying data, or cookies, on a user's hard drive without the user's knowledge or consent. We and many other Internet companies will use cookies for a variety of different reasons, including the collection of data derived from the user's Internet activity. Any reduction or limitation in the use of cookies could limit the effectiveness of our sales and marketing efforts. Most currently available Web browsers allow users to remove cookies at any time or to prevent cookies from being stored on their hard drive.
Some privacy advocates and governmental bodies have suggested limiting or eliminating the use of cookies. In addition, the European Union and many countries within the EU have adopted privacy directives or laws that strictly regulate the collection and use of information regarding Internet users that is identifiable to particular individuals. Privacy legislation has been proposed in the US as well, and the US Federal Trade Commission has taken action against website operators that do not comply with state privacy policies. These and other governmental efforts may limit our ability to target advertising or collect and use information regarding the use of our websites. Fears relating to a lack of privacy could also result in a reduction in the number of our users and subscribers which could harm our business and financial results.
Employees
As of November 30, 2015, we had one employee, our founder, President, and Chief Executive Officer, Mr. McGoldrick. During calendar year 2015 (dependent on our financing and available working capital), Mr. McGoldrick will devote at least twenty hours a week to us and may increase the number of hours as necessary. Mr. McGoldrick is allowed to devote this time to our Company as he is not limited or restricted from being involved with us by his current employer. Mr. McGoldrick has a management services agreement (mutually extended by both parties) in place with the Company which provides for the deferred payment of his compensation. If we are unable to pay Mr. McGoldrick his compensation at some future date we may be limited in seeking the employment of others to assist in the execution and furtherance of the business plan. Our founder, President, and Chief Executive Officer’s current plan is to provide all administrative and planning work as well as perform the basic coding for software and initial marketing efforts on his own without any cash compensation while he seeks other sources of funding for the Company and its business plan.
Mr. McGoldrick was initially compensated through the issuance of common stock or equity in the Company, and for the foreseeable future will continue to forego any cash payments for his services. It is his belief that the deferral of any compensation is in the best interest of the Company and any prospective investor who may invest in the Offering. Beyond Mr. McGoldrick’s services, we currently work with an independent software development firm, which has been utilized on an “as needed” basis, and we may in the future use other independent contractors and consultants to assist in many aspects of our business on an “as needed” or per project basis pending adequate financial resources being available or their ability to defer payment for their services.
Our office and mailing address is 34 Randall Avenue, Suite 100, Lynbrook, New York 11563. The space is provided to us by Mr. McGoldrick. Mr. McGoldrick incurs no incremental costs as a result of our using the space. Therefore, he does not charge us for its use. There is no written lease agreement.
Litigation
We are not party to any pending, or to our knowledge, threatened litigation of any type.
WHERE YOU CAN GET ADDITIONAL INFORMATION
We are required to file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy our reports or other filings made with the SEC at the SEC’s Public Reference Room, located at 100 F Street, N.E., Washington, DC 20549. You can obtain information on the operations of the Public Reference Room by calling the SEC at 1-800-SEC-0330. You can also access these reports and other filings electronically on the SEC’s web site, www.sec.gov.
We are not currently required to deliver an annual report to our security holders and do not expect to do so for the foreseeable future.
ITEM 1A. RISK FACTORS
The following risk factors should be considered in connection with an evaluation of our business:
In addition to other information in this Report, the following risk factors should be carefully considered in evaluating our business because such factors may have a significant impact on our business, operating results, liquidity and financial condition. As a result of the risk factors set forth below, actual results could differ materially from those projected in any forward-looking statements. Additional risks and uncertainties not presently known to us, or that we currently consider to be immaterial, may also impact our business, operating results, liquidity and financial condition. If any such risks occur, our business, operating results, liquidity and financial condition could be materially affected in an adverse manner. Under such circumstances, if and when a trading market for our securities is established, the trading price of our securities could decline, and you may lose all or part of your investment.
THE SECURITIES BEING OFFERED INVOLVE A HIGH DEGREE OF RISK AND, THEREFORE, SHOULD BE CONSIDERED EXTREMELY SPECULATIVE. THEY SHOULD NOT BE PURCHASED BY PERSONS WHO CANNOT AFFORD THE POSSIBILITY OF THE LOSS OF THE ENTIRE INVESTMENT. PROSPECTIVE INVESTORS SHOULD READ THE ENTIRE PROSPECTUS, INCLUDING ALL EXHIBITS, AND CAREFULLY CONSIDER, AMONG OTHER FACTORS THE FOLLOWING RISK FACTORS.
Risks Related to the Business
MSI has virtually no financial resources. Our independent registered auditors’ report includes an explanatory paragraph stating that there is substantial doubt about our ability to continue as a going concern.
MSI is an early stage company and has virtually no financial resources. We have negative working capital of $243,574 and $170,561 and a stockholders’ deficit of $243,574 and $170,561 at August 31, 2015 and August 31, 2014, respectively. Our independent registered auditors included an explanatory paragraph in their opinion on our financial statements as of and for the period ended August 31, 2015 that states that Company’s losses from operations raise substantial doubt about our ability to continue as a going concern. We will be required to seek additional financing beyond the amount received from our recently completed Offering. Financing sought may be in the form of equity or debt from sources yet to be identified. Now that we have completed our Offering most of the efforts of our founder, President and Chief Executive Officer will now be spent on the further development and execution of our business plan. We will now begin to seek the necessary additional financing to further pursue and execute on our business plan. No assurances can be given that we will generate sufficient revenue (or any at all) or obtain the necessary financing to continue as a going concern.
Our current resources and source of working capital funds, primarily consists of loans from unaffiliated third parties who are business associates of our founder, President and Chief Executive Officer. These sources we believe are sufficient to keep our business operations functioning for the next three to six months. We do not have a formal agreement with our founder, President, and Chief Executive Officer, nor the unaffiliated third parties to fund the Company’s working capital needs; however our founder, President, and Chief Executive Officer’s current plan is to perform most of the work on his own without any cash compensation while he seeks other sources of funding, as well as seek delay or deferral on payment to third party vendors and unaffiliated third parties which have helped with our working capital needs. The Company developed much of its initial design of its energy intelligence solutions system through Mr. McGoldrick’s efforts, as well as through the efforts of a software development firm with which the Company has been contracting with since January 2013. We currently spend between $10,000 and $15,000 per month in operational expenses not related to the recently completed Offering. We have not generated any revenues from our business, and our expenses will continue to be accrued or deferred until sufficient financing is obtained. Financing may be obtained from our founder or others who are familiar with our founder and loan us the necessary funds to pay for these expenses. To date we have received several interest free short term loans or the deferral of payment of services from third party vendors to fund our operations. No assurances can be given that we will be able to continue to receive funds from these sources or continue our operations beyond a month-to-month basis.
MSI is and will continue to be completely dependent on the services of our founder, president, and chief executive officer, Peter McGoldrick, the loss of whose services may cause our business operations to cease, and we will need to engage and retain qualified employees and consultants to further implement our strategy.