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ELECTRIC TRACTOR CORP. - 10-Q - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

August 4, 2014

Forward-Looking Statements: No Assurances Intended

In addition to historical information, this Quarterly Statement contains forward-looking statements, which are generally identifiable by use of the words "believes," "expects," "intends," "anticipates," "plans to," "estimates," "projects," or similar expressions. These forward-looking statements represent Management's belief as to the future of Electric Tractor, Corp. (formerly Tabularasa, Inc.) Whether those beliefs become reality will depend on many factors that are not under Management's control. Many risks and uncertainties exist that could cause actual results to differ materially from those reflected in these forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements.

Overview

We are a Canadian company that designs, produces and markets electric tractors that are based on our patented electronic drive system. The original electric tractors using this patented technology, the Electric OX, were produced by Electric Tractor Corporation of Baden, Ontario (the "Baden Company"), between 1998 and 2005. In 2010, we acquired the patent to the electronic drive system along with some other assets that were originally owned by the Baden Company. We are currently developing a new generation of electric utility tractors called the Electric OX2 utility Tractor. It is expected that we will require $2.5 million in investment over the next two years to execute our business plan.

Critical Accounting Policies and Estimates

General

This management's discussion and analysis of financial condition and results of operations are based upon our unaudited consolidated financial statements, which have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

There have been no significant changes in our critical accounting policies as disclosed in the Notes to our Financial Statements contained in our Annual Report on Form 10-K for the year ended December 31, 2013 filed with the Securities and Exchange Commission on June 13, 2014.

Comparison of Three Months ended June 30, 2014 and 2013

Revenues

Due to our lack of funds, our operations are very limited. As a result, we realized no revenue from August 14, 2006 (inception) to June 30, 2014.

Gross Profit

During the period from August 14, 2006 (inception) to June 30, 2014, we realized an accumulated deficit of $413,653. This deficit is primarily comprised of continuous development expenses and maintenance of presentation materials and our web site.

Consulting Fees

Our largest expense for the quarter ended June 30, 2014 was consulting fees in the amount of $7,566 as compared with $45,317 for the same period in 2013. $5,292 of the Consulting fees consisted of fees owed to our President and Vice President of Marketing for their services. As of June 30, 2014, we had an accumulated balance owed to these officers in the amount of $97,941.

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Professional Fees

Our Professional Fees increased to $9,131 for the quarter ended June 30, 2014 as compared to $3,414 for the quarter ended June 30, 2013. Professional fees includes our Audit Fees, Legal Fees for patent registration and SEC registration and advisory work.

General Operating Expense

We incurred $763 and $105 for office supplies in the quarters ended June 30, 2014 and 2013, respectively.

Our rent was $3,300 for both the quarters ended June 30, 2014 and 2013.

Net Loss

We realized a net loss of $21,335 for the quarter ended June 30, 2014 as compared to a loss of $52,136 for the quarter ended June 30, 2013. The decrease is primarily related to the decrease of $37,751 in consulting expenses, which was partially offset by the increase in professional fees of $5,717.

Liquidity and Capital Resources

Since we initiated our business operations in 2010, our operations have been funded primarily by loans from RA Zirger Holdings, Inc., a company controlled by our director and officer, Richard Zirger. From inception through the period ended June 30, 2014, our operations were funded by loans from RA Zirger Holdings in the amount of $303,763. For the three month period-ended June 30, 2014 we were funded by loans in the amount of $15,994.

We currently have $0 of inventory and $0 cash on hand. Therefore, in order to carry on our business, we must obtain additional capital.

We continue to actively seek investment capital. At the present time, we continue to rely on funding from our majority shareholder RA Zirger Holdings, Inc.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition or results of operations.

Plan of Operation

We expect to need $2.5 million in investment over the next two years to execute our business plan. Absent such investment to fund our two-year plan, as more fully set forth below, we believe our majority shareholder intends to continue subsidizing our administrative expenses and that our director and officer will continue to provide his time without charge, during the next 12 months. While we do not have formal repayment terms for the funds advanced on our behalf, we expect that we will be required to pay back such funding in the future or to issue shares of common stock in lieu of cash.

The initial use of proceeds will be used to upgrade components in our current controller. We will also be updating the body design to provide improved curb appeal and driver ergonomics. Funds will also be used to finance the startup of the motor and gearbox manufacturing.

The following represents our expected use of proceeds should we succeed in securing capital:

Manufacturing and production ? Drive Motors to be purchased from a source that we have identified, $20,000 for the first month and $30,000 per month thereafter for as long as the tractors are being assembled. ? Frame tooling together with other metal components - $25,000. ? Most assembly tooling is available, therefore there is no immediate cost. Small tools have to be repurchased as required by the assembly line. Estimated total cost is $10,000. ? Body design update and tooling - over a 3 month period - $75,000 ? Cutting Motors and Gear Boxes - Estimated at $35,000. ? Office and Plant - $12,000 for first and last month's rent. Manpower costs for set up of equipment and production equipment - $6,000 per month, increasing after 4 months. ? Production Engineer and plant manager - $18,000 per month. 6



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Sales and Marketing

We expect that upon launch, sales will be directly handled by internal sales staff responding to orders placed on our website until a dealer network is in place. We are unable to initiate the launch of the products until we have obtained adequate funding for our business plan. Currently, we have one commissioned sales person who is receiving indications of interests through our website.


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Source: Edgar Glimpses


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