UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
10-Q/A
Amendment
No. 1
[X] |
Quarterly
Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
|
|
|
For
the quarterly period ended July 31, 2014 |
|
|
[ ] |
Transition
Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934 |
|
|
|
For
the transition period to
__________ |
|
|
|
Commission
File Number: 000-53985 |
Well
Power, Inc.
(Exact
name of Registrant as specified in its charter)
Nevada |
61-1728870 |
(State
or other jurisdiction of incorporation or organization) |
(IRS
Employer Identification No.) |
|
11111
Katy Freeway - Suite # 910
Houston,
Texas 77079 |
(Address
of principal executive offices) |
|
(713)
973-5738 |
(Registrant’s
telephone number) |
|
_______________________________________________________________ |
(Former name, former
address and former fiscal year, if changed since last report) |
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 issuer was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days [X] Yes [ ] No
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ ] No [X]
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company.
[
] Large accelerated filer
[
] Non-accelerated filer |
[
] Accelerated filer
[X]
Smaller reporting company |
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
[
] Yes [X] No
State
the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 111,455,070
common shares as of September 22, 2014.
EXPLANATORY
NOTE
This
Amendment No. 1 to Well Power Inc.’s (the “Company”) Quarterly Report on Form 10-Q/A (this "Amendment")
is being filed in response a discovery on November 12, 2014, the Company determined that the payable of $25,000 to MEC is still
valid. As a result, the intangible asset should have been recorded at the original agreed cash price of $400,000 as of July 31,
2014
Except
for the changes made in connection with this adjustment, no other changes have been made to the Original Quarterly Report. The
Original Quarterly Report continues to speak as of the date of the Original Quarterly Report, and we have not updated any other
disclosures contained therein to reflect any events which occurred at a date subsequent to the filing of the Original Quarterly
Report. Currently dated certifications from the Company’s Chief Executive Officer and Chief Financial Officer have been
included as exhibits to this Amendment.
PART
I - FINANCIAL INFORMATION
Item
1. Financial Statements
Our
financial statements included in this Form 10-Q are as follows:
F-1 |
Balance
Sheets as of July 31, 2014 (restated) and April 30, 2014 (unaudited); |
F-2 |
Statements
of Operations for the three months ended July 31, 2014 and 2013 (unaudited); |
F-3 |
Statements
of Cash Flows for the three months ended July 31, 2014 and 2013 (unaudited); and |
F-4 |
Notes
to Financial Statements. |
These
financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America
for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments considered
necessary for a fair presentation have been included. Operating results for the interim period ended July 31, 2014 are not necessarily
indicative of the results that can be expected for the full year.
Well
Power, Inc.
Balance
Sheets
(unaudited)
| |
July 31, | |
April 30, |
| |
2014 | |
2014 |
| |
| (restated) | | |
| | |
ASSETS | |
| | | |
| | |
Current Assets | |
| | | |
| | |
Cash | |
$ | 15,034 | | |
$ | 39,832 | |
Prepaid expenses | |
| 2,599 | | |
| — | |
Total Current Assets | |
| 17,633 | | |
| 39,832 | |
Intangible Assets | |
| 400,000 | | |
| 400,000 | |
Total Assets | |
$ | 417,633 | | |
$ | 439,832 | |
LIABILITIES AND
STOCKHOLDERS’ DEFICIT | |
| | | |
| | |
Current Liabilities | |
| | | |
| | |
Accounts payable
and accrued liabilities | |
$ | 189,754 | | |
$ | 323,136 | |
Short-term loan payable | |
| 35,000 | | |
| 35,000 | |
Due to related parties | |
| 173,559 | | |
| 102,759 | |
Stock payable | |
| 530,235 | | |
| 280,235 | |
Total Liabilities | |
| 928,548 | | |
| 741,130 | |
Contingencies and
Commitments | |
| | | |
| | |
Stockholders’
Deficit | |
| | | |
| | |
Common
stock, 4,500,000,000 shares authorized, $0.001 par value; 107,500,000 shares issued and outstanding | |
| 107,500 | | |
| 107,500 | |
Additional
paid-in capital | |
| 1,801,802 | | |
| 1,801,802 | |
Accumulated
deficit | |
| (2,420,217 | ) | |
| (2,210,600 | ) |
Total Stockholders’
Deficit | |
| (510,915 | ) | |
| (301,298 | ) |
Total Liabilities
and Stockholders’ Deficit | |
$ | 417,633 | | |
$ | 439,832 | |
The
accompanying notes are an integral part of these unaudited financial statements.
Well
Power, Inc.
Statements
of Operations
(unaudited)
| |
For the | |
For the |
| |
Three Months Ended | |
Three Months Ended |
| |
July
31, 2014 | |
July
31, 2013 |
Operating Expenses | |
| | | |
| | |
General
and administrative | |
$ | 208,647 | | |
$ | 2,000 | |
Total Operating Expenses | |
| (208,647 | ) | |
| (2,000 | ) |
Other Expense | |
| | | |
| | |
Interest
expense | |
| (970 | ) | |
| — | |
Net Loss | |
$ | (209,617 | ) | |
$ | (2,000 | ) |
Net Loss Per Common
Share - Basic And Diluted | |
$ | (0.00 | ) | |
$ | (0.00 | ) |
Weighted Average
Common Shares Outstanding - Basic And Diluted | |
| 107,500,000 | | |
| 107,500,000 | |
The
accompanying notes are an integral part of these unaudited financial statements.
Well
Power, Inc.
Statements
of Cash Flows
(unaudited)
| |
For the | |
For the |
| |
Three Months Ended | |
Three Months Ended |
| |
July
31, 2014 | |
July
31, 2013 |
Cash Flows From Operating Activities | |
| | | |
| | |
Net loss | |
$ | (209,617 | ) | |
$ | (2,000 | ) |
Adjustments to reconcile net loss to net
cash used in operating activities: | |
| | | |
| | |
Changes in operating assets and liabilities: | |
| | | |
| | |
Prepaid expense | |
| (2,599 | ) | |
| — | |
Accounts
payable and accrued liabilities | |
| (133,382 | ) | |
| — | |
Net Cash Used in
Operating Activities | |
| (345,598 | ) | |
| (2,000 | ) |
Cash Flows From Financing Activities | |
| | | |
| | |
Net advances from
related parties | |
| 70,800 | | |
| 2,000 | |
Proceeds
from issuances of stock payable | |
| 250,000 | | |
| — | |
Net Cash Provided
by Financing Activities | |
| 320,800 | | |
| 2,000 | |
Net Decrease In Cash | |
| (24,798 | ) | |
| — | |
Cash - Beginning of Period | |
| 39,832 | | |
| — | |
Cash - End of Period | |
$ | 15,034 | | |
$ | — | |
Supplementary Cash Flows
Information: | |
| | | |
| | |
Interest
paid | |
$ | — | | |
$ | — | |
Income
taxes paid | |
$ | — | | |
$ | — | |
The
accompanying notes are an integral part of these unaudited financial statements.
Well
Power, Inc.
Notes
to the Financial Statements
(unaudited)
1. Nature
of Business and Continuance of Operations
Well
Power, Inc. (the “Company”) was incorporated in Nevada on March 27, 2007. On December 10, 2013, the Company effected
a merger with its wholly-owned subsidiary, Well Power, Inc. As part of the merger, the Company authorized a name change from Vortec
Electronics, Inc. to Well Power, Inc. On January 22, 2014, the Company entered into an Exclusive License and Distribution Agreement
to distribute mobile and scalable Wellhead Micro-Refinery Units (MRU’s). Upon entering into the agreement, the Company is
a business whose planned principal operations are the sales and distribution of MRU’s in the state of Texas. As at April
30, 2014, the Company has had no operating revenues to date.
The
Company has incurred losses since inception, has negative working capital, and has not yet received revenues from sales of products
or services. These factors create substantial doubt about the Company’s ability to continue as a going concern. The financial
statements do not include any adjustment that might be necessary if the Company is unable to continue as a going concern. The
ability of the Company to continue as a going concern is dependent on the Company generating cash from the sale of its common
stock and/or obtaining debt financing and attaining future profitable operations. Management’s plans include selling its
equity securities and obtaining debt financing to fund its capital requirement and ongoing operations; however, there can be no
assurance the Company will be successful in these efforts
2. Summary
of Significant Accounting Policies
Basis
of Presentation
The
financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United
States of America and are presented in US dollars. The Company’s fiscal year end is April 30.
Interim
Financial Statements
The
accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles
generally accepted in the United States of America and the rules of the Securities and Exchange Commission ("SEC"),
and should be read in conjunction with the audited financial statements and notes thereto contained elsewhere in this prospectus.
In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of
financial position and the results of operations for the interim periods presented have been reflected herein. The results of
operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial
statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent
fiscal year end April 30, 2014 have been omitted.
Use
of Estimates
The
preparation of financial statements in conformity with United States generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting
period. The Company regularly evaluates estimates and assumptions related to intangible assets and deferred income tax asset valuation
allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors
that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the
carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources.
The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent
there are material differences between the estimates and the actual results, future results of operations will be affected.
Cash
and Cash Equivalents
The
Company considers all highly liquid investments with maturities of three months or less to be cash equivalents.
Financial
Instruments
The
Company’s financial instruments consist of cash and cash equivalents, accounts payable, accrued liabilities, short term
loan payable and an amount due to an officer. The carrying amount of these financial instruments approximates fair value due either
to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial
statements.
Intangible
Assets
Intangible
assets include all costs incurred to acquire a licensing and distribution agreement. Intangible assets are recorded at cost and
amortized on a straight-line basis over their estimated useful life of 5 years. Management conducts an annual assessment of the
residual balances, useful lives and depreciation methods used. Changes arising from the assessment are applied by the Company
prospectively.
Income
Taxes
The
Company accounts for income taxes using the asset and liability method in accordance with ASC 740, Income Taxes. The asset
and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences
of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax
credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will
be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets
to the amount that is believed more likely than not to be realized.
Foreign
Currency Translation
The
Company’s planned operations will be in the United States, which results in exposure to market risks from changes in foreign
currency exchange rates. The financial risk is the risk to the Company’s operations that arise from fluctuations in foreign
exchange rates and the degree of volatility of these rates. Currently, the Company does not use derivative instruments to reduce
its exposure to foreign currency risk. The Company's functional currency for all operations worldwide is the U.S. dollar. Nonmonetary
assets and liabilities are translated at historical rates and monetary assets and liabilities are translated at exchange rates
in effect at the end of the year. Revenues and expenses are translated at average rates for the year. Gains and losses from translation
of foreign currency financial statements into U.S. dollars are included in current results of operations.
Revenue
Recognition
The
Company recognizes revenue when products are fully delivered or services have been provided and collection is reasonably assured.
Stock-Based
Compensation
The
expense for equity awards vested during the reporting period is in accordance with ASC Topic 718 and based upon the grant date
fair value of the award. The expense is recognized over the applicable vesting period of the stock award using the straight-line
method.
Subsequent
Events
The
Company has evaluated all transactions through the date the consolidated financial statements were issued for subsequent event
disclosure consideration.
Earnings
(Loss) Per Common Share
Basic
EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares
outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during
the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted
EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise
of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive. At July 31,
2014, the Company has no potentially dilutive securities outstanding.
Recent
Accounting Pronouncements
The
Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and
does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact
on its financial position or results of operations.
3. Intangible
Asset
On
January 22, 2014, the Company entered into an Exclusive License and Distribution Agreement (the “License Agreement”)
with ME Resources Corp (“MEC”), a Canadian publicly listed company. The President of the Company is related to a director
of MEC. Under the License Agreement, MEC appointed the Company as its exclusive distributor of Wellhead Micro-Refinery Units (“MRUs”)
for the initial state of Texas. The License Agreement is for 5 years from the date of execution, but can be extended for two successive
periods of an additional 5 years each.
Pursuant
to the License Agreement, the Company agreed to pay consideration of $400,000, payable in two instalments. $100,000 is to be paid
within 30 days (paid) and the balance of $300,000 is to be paid within 90 days ($200,000 paid). At July 31, 2014, the Company
recorded the costs of acquiring the license as an intangible asset, and the remaining balance of $100,000 has not been paid and
is included in accounts payable and accrued liabilities. Subsequent to the quarter, the Company paid $79,000 of its remaining
cash obligation.
4. Short-Term
Loan
On
December 18, 2013, the Company entered into a loan agreement in which the note holder agreed to provide a loan to the Company
in the principal amount of up to $35,000. The loan is unsecured, bears interest at 11% per annum and is payable on September 30,
2014. As at July 31, 2014, the note holder has provided the full $35,000 to the Company, and interest of $2,275 has been accrued.
5. Due To
Related Parties
a)
The amount due to related parties of $173,559 and $102,759 at July 31, 2014 and April 30, 2014, respectively, consists of amounts
owed to officers and shareholders of the Company for amounts advanced to pay for professional services provided by the Company’s
outside service providers and for consulting services rendered for periods ending on and prior to July 31, 2014. The amount is
unsecured, non-interest bearing and due on demand.
b)
On January 22, 2014, the Company entered into a License Agreement with ME Resources Corp (Note 3). The President of the Company
is related to a director of MEC.
6. Common
Stock
The
Company’s authorized capital consisted of 4,500,000,000 shares of common stock with a par value of $0.001 per share.
There
were 107,500,000 shares of common stock issued and outstanding as of July 31, 2014.
On
March 10, 2014, the Company sold 431,034 units at $0.58 per unit for gross proceeds of $250,000. Each unit consisted of one common
share and one share purchase warrant. Each share purchase warrant is exercisable into one additional common share at an exercise
price of $0.90 per share for a period of 2 years from the date of issuance. The relative fair value of the shares and warrants
is $159,475 and $90,525, respectively. As of July 31, 2014, the Company is obligated to issue 431,034 common shares with a fair
value of $250,000, which has been recorded as stock payable.
On
June 5, 2014, the Company sold 5,000,000 units at $0.05 per unit for gross proceeds of $250,000. Each unit consisted of one common
share and one share purchase warrant. Each share purchase warrant is exercisable into one additional common share at an exercise
price of $0.90 per share for a period of 2 years from the date of issuance. The relative fair value of the shares and warrants
is $184,608 and $65,392, respectively. As of July 31, 2014, the Company is obligated to issue 5,000,000 common shares with a fair
value of $250,000, which has been recorded as stock payable.
As
July 31, 2014, pursuant to the consulting agreement described in Note 8(a), the Company is obligated to issue 93,719 common shares
with a fair value of $30,235, which has been recorded as stock payable.
7. Stock
Options
On
March 14, 2014, the Company entered into two consulting agreements (refer to Note 8) whereby the Company granted 4,000,000 options
to purchase shares of common stock exercisable for a period of two years at a price of $0.70 per share.
The
following table summarizes information about the stock options.
| |
Number
of Options | |
Weighted
Average Exercise Price $ | |
Weighted
Average Remaining Contractual Life (years) | |
Aggregate
Intrinsic Value $ |
| Outstanding
and exercisable, July 31, 2014 | | |
| 4,000,000 | | |
| 0.70 | | |
| 1.62 | | |
| — | |
8. Commitments
And Contingencies
The
Company neither owns nor leases any real or personal property. An officer has provided office services without charge. There is
no obligation for the officer to continue this arrangement. Such costs are immaterial to the financial statements and accordingly
are not reflected herein. The officers and directors are involved in other business activities and most likely will become involved
in other business activities in the future.
|
a) |
On January 10, 2014, the
Company entered into a consulting agreement with a consultant who provided consulting services in consideration for $6,000
per month for a 4 month term. The consulting fee is payable as follows: |
i. $3,000 per month settled in shares at the end of the term of the contract. The number of shares
issuable is equal to $3,000 divided by the average of the 3 lowest trading prices in the last 10 days of each month.
ii. $3,000 per month payable in cash at the end of each month.
As
of July 31, 2014, no shares had been issued. The company is obligated to issue 93,719 common shares.
|
b) |
On March 14, 2014, the Company entered
into a consulting agreement with the President of the Company for consulting services to be provided over a one-year term
in consideration for $1,000 per month for the first month, and $3,000 per month for the following eleven months. The Company
will also pay an initial signing bonus of $10,000. In addition, the President of the Company was granted 2,000,000 options
to purchase shares of common stock exercisable for a period of two years at a price of $0.70 per share. During the three months
ended July 31, 2014, the Company recognized $9,000 in consulting fees under the agreement, and $79,000 for additional consulting
fees incurred during the period. |
|
c) |
On March 14, 2014, the
Company entered into a consulting agreement with the CEO of the Company for consulting services to be provided over a one-year
term in consideration for $3,000 per month. The Company will also pay an initial signing bonus of $10,000. In addition, the
CEO of the Company was granted 2,000,000 options to purchase shares of common stock exercisable for a period of two years
at a price of $0.70 per share. During the three months ended July 31, 2014, the Company recognized $9,000 in consulting fees. |
|
d) |
On July 25, 2014, the Company
entered into a $10,000 8% Convertible Promissory Note with a non-related third party. Under the terms of the Convertible Promissory
Note, all principal and interest matures on July 25, 2015. The third party shall have the right to convert any unpaid sums
into common stock of the Company at the rate of the lesser of $.09 per share or 50% of the lowest trade reported in the 10
days prior to date of conversion, subject to adjustment as described in the note. As at July 31, 2014, the Company has not
received any proceeds under the convertible note. Refer to Note 9(d). |
9. Restatement
On
November 12, 2014, the Company determined that the payable of $25,000 to MEC is still valid. As a result, the intangible asset
should have been recorded at the original agreed cash price of $400,000 as of July 31, 2014. The impact of the restatement on
the balance sheet as of July 31, 2014 is as follows:
| |
As originally | |
| |
|
| |
Reported | |
Change | |
Restated |
Intangible assets | |
| 375,000 | | |
| 25,000 | | |
| 400,000 | |
Total assets | |
| 392,633 | | |
| 25,000 | | |
| 417,633 | |
Accounts payable and accrued liabilities | |
| 164,754 | | |
| 25,000 | | |
| 189,000 | |
Total liabilities | |
| 903,548 | | |
| 25,000 | | |
| 928,548 | |
Total Liabilities and Stockholders’
Deficit | |
| 392,633 | | |
| 25,000 | | |
| 417,633 | |
10. Subsequent
Events
|
a) |
On August 6, 2014, the
Company entered into a Note Purchase Agreement and $275,000 10% Convertible Promissory Note with a non-related third party.
Under the terms of the Convertible Promissory Note, the Company will receive principal in one or more installments with a
Maturity Date for the Note of July 29, 2015. The third party shall have the right to convert any unpaid sums into common stock
of the Company at the rate of the lesser of $0.08 per share or 55% of the lowest trade reported in the 15 days prior to date
of conversion, subject to adjustment as described in the note. |
|
b) |
On August 21, 2014, the Company entered
into a convertible debenture with a non-related third party pursuant to which the Company borrowed $133,000. The convertible
debenture bears interest at 2% per annum, and the principal and all unpaid interest is due on January 15, 2015. The convertible
debenture is convertible at any time at the third party’s option into shares of the Company’s common stock at
a variable conversion price of 45% of the lowest traded price during the 15 days prior to the notice of conversion, subject
to adjustment as described in the convertible debenture. |
|
c) |
On August 26, 2014, the
Company entered into an Equity Purchase Agreement and Registration Rights Agreement with Premier Venture Partners, LLC (“Premier”)
whereby Premier is obligated, providing the Company has met certain conditions including the filing of a Form S-1 Registration
Statement for the shares to be acquired, to purchase up to ten million dollars ($10,000,000) of the Company’s common
stock at the rates set forth in the Equity Purchase Agreement. On September 5, 2014, the Company issued 1,977,535 common shares
with a fair value of $134,670 to Premier. On September 11, 2014, the Company issued an additional 1,977,535 common shares
with a fair value of $105,205 to Premier. |
|
d) |
On September 16, 2014, a non-related
third party paid $10,000 of legal fees on behalf of the Company as proceeds from the $10,000 convertible note described in
Note 8(d). |
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking
Statements
Certain
statements, other than purely historical information, including estimates, projections, statements relating to our business plans,
objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking
statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified
by the words “believes,” “project,” “expects,” “anticipates,” “estimates,”
“intends,” “strategy,” “plan,” “may,” “will,” “would,”
“will be,” “will continue,” “will likely result,” and similar expressions. We intend such
forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions.
Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which
may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual
effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on our operations
and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory
changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties
should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.
We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information,
future events or otherwise. Further information concerning our business, including additional factors that could materially affect
our financial results, is included herein and in our other filings with the SEC.
Company
Overview
We
have acquired an exclusive license from ME Resource Corp. (“MEC”), a Canadian publicly listed company that is creating
mobile and scalable Wellhead Micro-Refinery Units (MRUs) deployable close to the wellhead to process raw natural gas into liquid
fuels and clean power. As a result of the license with MEC, we are now in the business of distributing MRUs in the State of Texas
and from there into other geographical areas.
The
product is still under development, which is ongoing, and the first MRU is expected to occur within a year. Discussions are ongoing
to raise capital to begin construction of a commercial unit. There is no assurance that we will be able to raise the capital needed
to develop the first MRU. Our expectation is that we will obtain financing, chose a site for the MRU, and begin construction of
the unit in the third quarter. As such, we will not be able to realize any revenue from the sale of MRUs until the development
has completed and a commercialized product is ready for launch.
Our
plan is to assist the development of the MRUs and distribute them in our licensed territory. We hope to provide oil and gas producers
and operators in the State of Texas a solution to process otherwise wasted natural gas, including stranded, shut-in, flared and
vented gas and produce valued end-products including engineered fuel (diesel, diluents, synthetic crude) and electrical power.
The MRU is a novel method and apparatus, for producing chemicals, heat, energy and water from a methane-containing gas. The innovative
method and apparatus makes use of heterogeneous catalysis in a single-vessel, beginning with the partial oxidation of methane
to produce synthesis gas followed by a Fischer-Tropsch reaction to produce chemicals and other end products with no excess hydrogen.
Under
our license agreement, we agreed to pay MEC $400,000 for our exclusive license, which money will go toward the unit cost of an
MRU at $800,000 or, alternatively, a revenue sharing arrangement where MEC leases the MRU at 50% unit cost and shares in 50% of
the net revenue generated. In either event, this money will be applied to the technical and engineering development of the first
demonstration MRU in the territory and may be used to develop catalyst for specific engineered fuels.
The payment
to MEC was due in two installments: i) $100,000 within thirty (30) days of January 29, 2014; and ii) balance of $300,000 within
ninety (90) days of January 29, 2014. We have made total cash payments of $379,000 subsequent to the quarter ended July 31, 2014.
Results
of Operations for the Three Months Ended July 31, 2014 and 2013
We
generated no revenue for the three months ended July 31, 2014 and 2013. We do not anticipate earnings revenues until we are able
to distribute the MRUs under our license with MEC.
Our
operating expenses during the three months ended July 31, 2014 were $208,647, compared with $2,000 for the same period ended July
31, 2013. Our operating expenses during the three months ended July 31, 2014 consisted mainly of consulting fees of $141,096,
general and administrative fees of $27,236, and professional fees of $23,129.
We
anticipate our operating expenses will increase as we undertake our plan of operations. The increase will be attributable to the
continued development of the MRUs, consulting fees to our management, general and administrative expenses and the professional
fees associated with our reporting obligations under the Securities Exchange Act of 1934.
We,
recorded a net loss of $209,617 for the three months ended July 31, 2014, compared with a net loss of $2,000 for the three months
ended July 31, 2013.
Liquidity
and Capital Resources
As
of July 31, 2014, we had total current assets of $17,633. We had $928,548 in current liabilities as of July 31, 2014. Thus, we
had a working capital deficit of $910,915 as of July 31, 2014.
Operating
activities used $345,598 in cash for three months ended July 31, 2014. Our net loss of $209,617 and $133,382 decrease in accounts
payable and accrued liabilities mainly accounted for our negative operating cash flow. Financing activities during the three months
ended July 31, 2014 generated $320,800 in cash, represented by $250,000 in proceeds from the sale of our stock and $70,800 in
net advances from related parties.
We
have entered into a number of loan agreements in an effort to provide needed financing. From July 25, 2014 to the present, those
loans and their terms are detailed in our Current Report on Form 8-K that we filed with the SEC on August 27, 2014.
Despite
the financing received, we have insufficient cash to operate our business at the current level for the next twelve months and
insufficient cash to achieve our business goals. The success of our business plan beyond the next 12 months is contingent upon
us obtaining additional financing. We intend to fund operations through debt and/or equity financing arrangements, which may be
insufficient to fund our capital expenditures, working capital, or other cash requirements. We do not have any formal commitments
or arrangements for the sales of stock or the advancement or loan of funds at this time. There can be no assurance that such additional
financing will be available to us on acceptable terms, or at all.
Off
Balance Sheet Arrangements
As
of July 31, 2014, there were no off balance sheet arrangements.
Going
Concern
We
have incurred losses since inception, have negative working capital, and have not yet received revenues from sales of products
or services. These factors create substantial doubt about our ability to continue as a going concern. The financial statements
do not include any adjustment that might be necessary if we are unable to continue as a going concern.
Our
ability to continue as a going concern is dependent on generating cash from the sale of our common stock and/or obtaining debt
financing and attaining future profitable operations. Management’s plans include selling our equity securities and obtaining
debt financing to fund our capital requirement and ongoing operations; however, there can be no assurance we will be successful
in these efforts.
Item
3. Quantitative and Qualitative Disclosures About Market Risk
A
smaller reporting company is not required to provide the information required by this Item.
Item
4. Controls and Procedures
Disclosure
Controls and Procedures
We
carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of July 31, 2014. This evaluation was carried out under the supervision and
with the participation of our Chief Executive Officer and our Chief Financial Officer. Based upon that evaluation, our Chief Executive
Officer and Chief Financial Officer concluded that, as of July 31, 2014, our disclosure controls and procedures were not effective
due to the presence of material weaknesses in internal control over financial reporting.
A
material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there
is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not
be prevented or detected on a timely basis. Management has identified the following material weaknesses which have caused management
to conclude that, as of July 31, 2014, our disclosure controls and procedures were not effective due to: (i) inadequate segregation
of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting
with respect to the requirements and application of both US GAAP and SEC guidelines.
Remediation
Plan to Address the Material Weaknesses in Internal Control over Financial Reporting
Our
company plans to take steps to enhance and improve the design of our internal controls over financial reporting. During the period
covered by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To
remediate such weaknesses, we plan to implement the following changes during our fiscal year ending April 30, 2015: (i) appoint
additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient
written policies and procedures for accounting and financial reporting. The remediation efforts set out are largely dependent
upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing
such funds, remediation efforts may be adversely affected in a material manner.
Changes
in Internal Control over Financial Reporting
There
were no changes in our internal control over financial reporting during the three months ended July 31, 2014 that have materially
affected, or are reasonable likely to materially affect, our internal control over financial reporting.
PART
II - OTHER INFORMATION
Item
1. Legal Proceedings
We
are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers,
directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse
to us.
Item
1A: Risk Factors
A
smaller reporting company is not required to provide the information required by this Item.
Item
2. Unregistered Sales of Equity Securities and Use of Proceeds
On
June 5, 2014, we sold 5,000,000 units at $0.05 per unit for gross proceeds of $250,000. Each unit consisted of one common share
and one share purchase warrant. Each share purchase warrant is exercisable into one additional common share at an exercise price
of $0.90 per share for a period of 2 years from the date of issuance. We are obligated to issue 5,000,000 common shares with a
fair value of $250,000, which has been recorded as stock payable.
As
July 31, 2014, pursuant to the consulting agreement, we are obligated to issue 93,719 common shares with a fair value of $30,325,
which has been recorded as stock payable.
On
August 26, 2014, we entered into an Equity Purchase Agreement and Registration Rights Agreement with Premier Venture Partners,
LLC (“Premier”) whereby Premier is obligated, providing we have met certain conditions including the filing of a Form
S-1 Registration Statement for the shares to be acquired, to purchase up to $10,000,000 of our common stock at the rates set forth
in the Equity Purchase Agreement. On September 5, 2014, we issued 1,977,535 common shares with a fair value of $134,670 to Premier.
On September 11, 2014, we issued an additional 1,977,535 common shares with a fair value of 105,205 to Premier.
These
securities were issued pursuant to Section 4(2) of the Securities Act and/or Rule 506 promulgated thereunder. The holders represented
their intention to acquire the securities for investment only and not with a view towards distribution. The investors were given
adequate information about us to make an informed investment decision. We did not engage in any general solicitation or advertising.
We directed our transfer agent to issue the stock certificates with the appropriate restrictive legend affixed to the restricted
stock.
Item
3. Defaults upon Senior Securities
None
Item
4. Mine Safety Disclosures
None
Item
5. Other Information
None
Item
6. Exhibits
SIGNATURES
In accordance
with the requirements 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.
|
Well
Power, Inc. |
|
|
Date: |
November
14, 2014 |
|
|
|
By:
/s/ Cristian Neagoe
Cristian
Neagoe
Title:
Chief Executive Officer and Director |
CERTIFICATIONS
I, Cristian Neagoe, certify that;
1. |
|
I have reviewed this quarterly report on Form 10-Q for the quarter ended July 31, 2014 of Well Power, Inc. (the “registrant”); |
2. |
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. |
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. |
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. |
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. |
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. |
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. |
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. |
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: November 14, 2014
/s/ Cristian Neagoe
By: Cristian Neagoe
Title: Chief Executive Officer
CERTIFICATIONS
I, Dan Patience, certify that;
1. |
|
I have reviewed this quarterly report on Form 10-Q for the quarter ended July 31, 2014 of Well Power, Inc. (the “registrant”); |
2. |
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. |
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. |
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. |
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. |
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. |
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. |
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. |
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: November 14, 2014
/s/ Dan Patience
By: Dan Patience
Title: Chief Financial Officer
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
AND
CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF
2002
In connection with the quarterly Report of
Well Power, Inc. (the “Company”) on Form 10-Q for the quarter ended July 31, 2014 filed with the Securities and Exchange
Commission (the “Report”), I, Cristian Neagoe, Chief Executive Officer of the Company, and I, Dan Patience, Chief Financial
Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, that:
|
1. |
The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and |
|
2. |
The information contained in the Report fairly presents, in all material respects, the consolidated financial condition of the Company as of the dates presented and the consolidated result of operations of the Company for the periods presented. |
By: |
/s/ Cristian Neagoe |
Name: |
Cristian Neagoe |
Title: |
Principal Executive Officer and Director |
Date: |
November 14, 2014 |
By: |
/s/ Dan Patience |
Name: |
Dan Patience |
Title: |
Principal Financial Officer and Director |
Date: |
November 14, 2014 |
This certification has been furnished solely pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.