See the accompanying notes to these unaudited
condensed consolidated financial statements
See the accompanying notes to these unaudited
condensed consolidated financial statements
See the accompanying notes to these unaudited
condensed consolidated financial statements
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
JUNE 30, 2017
NOTE 1 – ORGANIZATION AND BUSINESS
3Power Energy Group, Inc. (the “Company”)
was incorporated in the State of Nevada on December 18, 2002 under the name ATM Financial Corp. On April 1, 2008, the Company changed
its name from ATM Financial Corp. to Prime Sun Power Inc. On March 30, 2011, the Company changed its name from Prime
Sun Power Inc. to 3Power Energy Group, Inc. and increased its authorized share capital to 300,000,000 shares. The Company
plans to pursue a business model producing renewable generated electrical power and other alternative energies.
The Company's primary efforts is to sell
electricity generated by solar, wind, hydro, biomass and other renewable energy resources and to develop, build and operate power
plants based on these technologies. The core approach of the Company's business is to deliver energy in markets where there is
an inherent energy gap between supply and demand or where there exists long term, stable, government back by financial support
for development of renewable energy.
On May 13, 2011, pursuant to a Stock Purchase
Agreement (the “Stock Purchase Agreement”), the Company consummated a reverse merger (“Merger”) with Seawind
Energy Limited (“Seawind Energy”), Seawind Services Limited (“Seawind Services”, and together with Seawind
Energy, the “Seawind”) and the shareholders of Seawind Energy (the “Seawind Group Shareholders” and together
with the Company, and the Seawind Companies, the “Parties”). The Seawind Companies were formed under the laws of the
United Kingdom.
In connection with the Merger, the Company
issued 40,000,000 restricted shares of the Company’s common stock to the Seawind Group Shareholders (such acquisition
is referred to herein as the “Seawind Acquisition”).
Upon completion of the Stock Purchase Agreement,
Seawind became 3Power Group, Inc.'s wholly-owned subsidiary. For accounting purposes, the acquisition has been treated as a recapitalization
of Seawind with Seawind as the acquirer (reverse acquisition). The historical financial statements prior to May 13, 2011 are those
of Seawind Energy. The Merger was accounted for as a “reverse merger”, since the stockholders of Seawind owned a majority
of the Company’s common stock immediately following the transaction and their management has assumed operational, management
and governance control.
The transaction was accounted for as a
recapitalization of Seawind pursuant to which Seawind was treated as the surviving and continuing entity. The Company
did not recognize goodwill or any intangible assets in connection with this transaction. Accordingly, the Company’s
historical financial statements are those of Seawind immediately following the consummation of the reverse merger. The accompanying
consolidated financial statements give retroactive effect to the recapitalization.
In anticipation of the closing of the Stock
Purchase Agreement, the Company changed its name to 3Power Energy Group Inc. and increased its authorized share capital to 300,000,000
shares.
On July 4, 2011, the Seawind Energy Limited
and Seawind Service Limited changed their name to 3Power Energy Limited and 3Power Project Service Limited, respectively.
Acquisition of Shala Energy sh .p .k:
On June 5, 2012, the Company and Shala
Energy sh.p.k ("Shala") executed a master acquisition agreement (the “Acquisition Agreement”) where Shala
agreed to transfer and the Company agreed to acquire 75% of the equity of Shala. Under the Acquisition Agreement (the “Acquisition”),
the closing of the acquisition is subject to the Company’s completion and satisfaction of the due diligence on Shala and
Shala’s partners with respect to their shares in Shala and upon the Company’s payment of the first year premium for
the insurance bond premium issued in favor of the Ministry of Economy, Trade and Energy of Republic of Albania in replacement of
the then existing bank guarantee issued in favor of Ministry of Economy, Trade and Energy of Republic of Albania for the Shala
River Concession Agreement, in the amount of 7,230,315 Euro (the “Required Insurance Bond Premium”). Shala is a firm
specializing in developing hydro-electric projects, owning and operating sustainable energy projects in the hydro, wind and solar
power sectors in Albania.
3POWER ENERGY GROUP, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
JUNE 30, 2017
On August 10, 2012, after the conclusion
of the due diligence efforts, the Company made the first year payment of required Insurance Bond Premium in the amount of 164,851
Euro ($211,972), and as such the Acquisition closed. The acquisition resulted in the Company acquiring 75% of the interest in a
hydro-electrical project of a total installed power of 127.6 MW of Shala River in Albania. The Shala River project finalization
is in process with the Ministry of Albania.
In connection the acquisition of Shala,
the Company is obligated for an aggregate of 4% of the total project costs as facilitator fees in either cash or the Company's
common stock to Capital Trust Holding AG, as advisor for the Shala acquisition transaction. During the year ended March 31, 2013,
the Company accrued $600,000 due to the facilitator fees for feasibility studies in process and recorded as expenses. In December
2013, the Company issued to Capital Trust Holding AG and its affiliates, 15,000,000 shares of its common stock, valued at
$0.04 per share in settlement of the facilitator fees for feasibility studies.
During the year ended March 31, 2016, Shala
began operations, acquiring assets and incurring costs. As such, its activity is including in the consolidated balance sheet and
statement of operations for the current period.
NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES
Interim Financial Statements
The following (a) condensed consolidated
balance sheet as of March 31, 2017, which has been derived from audited consolidated financial statements, and (b) the unaudited
condensed consolidated interim financial statements of the Company have been prepared in accordance with accounting principles
generally accepted in the United States (“GAAP”) for interim financial information and the instructions to Form 10-Q
and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete
financial statements.
In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for
the three months ended June 30, 2017 are not necessarily indicative of results that may be expected for the year ending March 31,
2018. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial
statements and notes thereto for the year ended March 31, 2017 included in the Company’s Annual Report on Form 10-K, filed
with the Securities and Exchange Commission (“SEC”) on July 14, 2017.
Basis of presentation:
The unaudited condensed consolidated financial
statements include the accounts of the Company and it’s wholly and majority owned subsidiaries. All significant intercompany
balances and transactions have been eliminated in consolidation.
Use of estimates
The preparation of financial statements
in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ
from those estimates.
Comprehensive Income (Loss)
The Company applies Accounting Standards
Codification subtopic 220-10, Comprehensive Income (“ASC 220-10”). ASC 220-10 establishes standards for the reporting
and displaying of comprehensive income and its components. Comprehensive income is defined as the change in equity of a business
during a period from transactions and other events and circumstances from non-owners sources. It includes all changes in equity
during a period except those resulting from investments by owners and distributions to owners.
3POWER ENERGY GROUP, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
JUNE 30, 2017
Cash and Cash Equivalents
For purposes of the Statements of Cash
Flows, the Company considers all highly liquid debt instruments purchased with a maturity date of three months or less to be cash
equivalents.
Functional currency
The accompanying unaudited condensed consolidated
financial statements are presented in U.S. dollars ("USD"). The Company's functional currencies are British pounds ("GBP")
and Albania Lek (“LEK”). The consolidated financial statements are translated into USD in accordance with Codification
ASC 830,
Foreign Currency Matters
. All assets and liabilities were translated at the current exchange rate, at respective
balance sheet dates, shareholders' equity is translated at the historical rates and income statement items are translated at an
average exchange rate for the reporting periods. The resulting translation adjustments are reported as other comprehensive income
and accumulated other comprehensive income in the shareholders' equity in accordance with Codification ASC 220,
Transaction gains and
losses that arise from exchange rate fluctuations from transactions denominated in a currency other than the functional currency
are translated into GBP or LEK, as applicable at the rate on the date of the transaction and included in the results of operations
as incurred.
The exchange rates used to translate amounts
in GBP and LEK into USD for the purposes of preparing the consolidated financial statements were as follows:
Balance sheet:
|
|
June 30,
|
|
|
March 31,
|
|
|
|
2017
|
|
|
2017
|
|
Period-end GBP: USD exchange rate
|
|
$
|
1.30017
|
|
|
$
|
1.24866
|
|
Period-end LEK: USD exchange rate
|
|
$
|
0.008527
|
|
|
$
|
0.00779
|
|
Income statement:
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2017
|
|
|
2016
|
|
Average Quarterly GBP: USD exchange rate
|
|
$
|
N/A
|
|
|
$
|
1.331
|
|
Average Quarterly LEK: USD exchange rate
|
|
$
|
0.008095
|
|
|
$
|
0.008
|
|
Per share data
The Company accounts for net loss per share
in accordance with Accounting Standards Codification subtopic 260-10, Earnings Per Share (“ASC 260-10”), which requires
presentation of basic and diluted earnings per share (“EPS”) on the face of the statement of operations for all entities
with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to
the numerator and denominator of the diluted EPS.
Basic net loss per common share is calculated
by dividing net loss, by the weighted average number of outstanding shares of common stock, adjusted to give effect to the exchange
ratio in the Share Exchange in May 2011 (see Note 1), which was accounted for as recapitalization of the Company. Diluted loss
per share is calculated by dividing the net loss attributable to Common shareholders by the sum of the weighted average number
of Common shares outstanding plus potential dilutive common shares outstanding during the period. The Company had no common stock
equivalents as of June 30, 2017 and 2016.
3POWER ENERGY GROUP, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
JUNE 30, 2017
Income taxes
Income tax provisions or benefits for interim
periods are computed based on the Company’s estimated annual effective tax rate. Based on the Company's historical losses
and its expectation of continuation of losses for the foreseeable future, the Company has determined that it is not more likely
than not that deferred tax assets will be realized and, accordingly, has provided a full valuation allowance. As the Company anticipates
or anticipated that its net deferred tax assets at June 30, 2017 and March 31, 2017 would be fully offset by a valuation allowance,
there is no federal or state income tax benefit for the three months ended June 30, 2017 and 2016 related to losses incurred during
such periods.
The Company recognizes a tax benefit from
an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities,
based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a
position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.
As of June 30, 2017 and March 31, 2017, the Company has not recorded any unrecognized tax benefits.
Segment Information
Accounting Standards Codification subtopic
Segment Reporting 280-10 (“ASC 280-10”) establishes standards for reporting information regarding operating segments
in annual financial statements and requires selected information for those segments to be presented in interim financial reports
issued to stockholders. ASC 280-10 also establishes standards for related disclosures about products and services and geographic
areas. Operating segments are identified as components of an enterprise about which separate discrete financial information is
available for evaluation by the chief operating decision maker, or decision-making group, in making decisions how to allocate resources
and assess performance. The information disclosed herein materially represents all of the financial information related to the
Company’s principal operating segment.
Accounting for Stock-Based Compensation
The Company measures the cost of services
received in exchange for an award of equity instruments based on the fair value of the award. For employees and directors, the
fair value of the award is measured on the grant date and for non-employees, the fair value of the award is generally re-measured
on vesting dates and interim financial reporting dates until the service period is complete. The fair value amount is then recognized
over the period during which services are required to be provided in exchange for the award, usually the vesting period. Stock-based
compensation expense is recorded by the Company in the same expense classifications in the statement of operations, as if such
amounts were paid in cash.
Recent Accounting Pronouncements
In July 2017, the Financial Accounting
Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-11, Earnings Per Share (Topic
260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815). The amendments in Part I of this
Update change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round
features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down
round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own
stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. As a result, a freestanding
equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at
fair value as a result of the existence of a down round feature. For freestanding equity classified financial instruments, the
amendments require entities that present earnings per share (EPS) in accordance with Topic 260 to recognize the effect of the down
round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders
in basic EPS.
3POWER ENERGY GROUP, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
JUNE 30, 2017
Convertible instruments with embedded conversion
options that have down round features are now subject to the specialized guidance for contingent beneficial conversion features
(in Subtopic 470-20, Debt—Debt with Conversion and Other Options), including related EPS guidance (in Topic 260). The amendments
in Part II of this Update recharacterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending
content in the Codification, to a scope exception.
Those amendments do not have an accounting
effect. For public business entities, the amendments in Part I of this Update are effective for fiscal years, and interim periods
within those fiscal years, beginning after December 15, 2018. Early adoption is permitted for all entities, including adoption
in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of
the beginning of the fiscal year that includes that interim period. The Company is currently reviewing the impact of adoption of
ASU 2017-11on its unaudited condensed consolidated financial statements.
There are various other updates recently
issued, most of which represented technical corrections to the accounting literature or application to specific industries and
are not expected to a have a material impact on the Company's financial position, results of operations or cash flows.
NOTE 3 - GOING CONCERN AND MANAGEMENT’S
LIQUIDITY PLANS
The accompanying unaudited condensed consolidated
financial statements have been prepared on a basis that assumes the Company will continue as a going concern. As of
June 30, 2017, the Company has a deficit of $19,561,236 applicable to controlling interest compared with deficit of $19,337,016
applicable to controlling interest for the year ended March 31, 2017, and has incurred significant operating losses and
negative cash flows. For the three months ended June 30, 2017, the Company sustained a net loss attributable to the Company of
$224,220 compared to a net loss of $171,499 for the three months ended June 30, 2016.
The Company's
primary source of operating funds has been cash proceeds from related party loans. The Company intends to raise additional
capital through private placements of debt and equity securities, but there can be no assurance that these funds will be available
on terms acceptable to the Company, or will be sufficient to enable the Company to fully complete its development activities or
sustain operations. If the Company is unable to raise sufficient additional funds, it will have to develop and implement a plan
to further extend payables, reduce overhead, or scale back its current business plan until sufficient additional capital is raised
to support further operations. There can be no assurance that such a plan will be successful.
Accordingly, the
accompanying unaudited consolidated financial statements have been prepared in conformity with accounting principles generally
accepted in the United States of America (“GAAP”), which contemplate continuation of the Company as a going concern
and the realization of assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets
and liabilities presented in the financial statements do not necessarily purport to represent realizable or settlement values.
The unaudited condensed consolidated financial statements do not include any adjustment that might result from the outcome of this
uncertainty.
NOTE 4 — PROPERTY AND EQUIPMENT
Property and equipment as of June 30, 2017 and March 31, 2017
summarized as follows:
|
|
June 30,
2017
|
|
|
March 31,
2017
|
|
Furniture and equipment
|
|
$
|
15,471
|
|
|
$
|
14,125
|
|
IT and other equipment
|
|
|
28,880
|
|
|
|
26,367
|
|
|
|
|
44,351
|
|
|
|
40,492
|
|
Less accumulated depreciation
|
|
|
(9,185
|
)
|
|
|
(7,556
|
)
|
|
|
$
|
35,166
|
|
|
$
|
32,936
|
|
3POWER ENERGY GROUP, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
JUNE 30, 2017
Property and equipment are recorded on
the basis of cost. For financial statement purposes, property, plant and equipment are depreciated using the straight-line method
over their estimated useful lives.
Expenditures for repair and maintenance
which do not materially extend the useful lives of property and equipment are charged to operations. When property or equipment
is sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the respective accounts with the
resulting gain or loss reflected in operations. Management periodically reviews the carrying value of its property and equipment
for impairment in accordance with the guidance for impairment of long lived assets.
During the three months ended June 30,
2017 and 2016, the Company charged to operations depreciation expense of $864 and $987, respectively.
NOTE 5 - NOTES PAYABLE
On March 2, 2010, the Company issued an
unsecured Senior Promissory Note ("Note") for 470,000 Euros ($536,867 at June 30, 2017) initially due on December 31,
2010 including interest at 7.5% per annum. Upon default by the Company on January 1, 2011, the interest rate of 15% per annum applies.
The Note has not been paid by the Company. As of June 30, 2017 and March 31, 2017, accrued interest on this note was $928,721 and
$875,748 respectively. During three months ended June 30, 2017 and 2016, the Company recognized a loss of $34,832 and gain of $11,821
respectively, on foreign currency translation due to the change in exchange rates between the Euro and the USD.
On November 14, 2012, CRG Finance AG (“CRG”)
filed a complaint in the District Court for Southern District of New York for allegedly beaching a promissory note. However, the
Company’s contention is that the promissory note was satisfied by a third party, Rudana Investment Group AG.
On January 17, 2013, the Company filed
a motion to compel arbitration and on May 23, 2013, the Court granted the Company’s Motion to Compel and ordered that CRG
file its claims as a AAA arbitration. On June 5, 2013, CRG filed its statement of claim with the AAA in the International Center
for Disputed Resolution division. The Company filed its statement answer on July 8, 2013. The Company denies the allegations in
the complaint and claims it is without merit. In defense of the action, the Company’s counsel vigorously sought documents
from Rudana in an effort to establish the Company’s defense. However, due to the fact that Rudana was in the midst of a bankruptcy
action in the Swiss Bankruptcy Court, the Company’s counsel sought an order from the AAA Arbitrator authorizing the Swiss
Bankruptcy Court to provide documents establishing Rudana’s satisfaction of the debt. On or about December 13, 2013, the
AAA Arbitrator entered such an order and the Company’s counsel requested the documents. However, after the Company’s
counsel made several requests to postpone the arbitration to allow time to receive the requested documents, the Company was not
able to obtain the necessary documents from the Swiss Bankruptcy Court.
The Final Hearing in the AAA arbitration
took place on February 27, 2014, wherein the Company was not able to establish its defense due to the lack of evidence from Rudana.
The AAA Arbitrator entered an award of Euro 470,000 plus interest at the annual rate of 7.5% against the Company. As of March 31,
2014, the total award against the Company is Euro 728,241 ($1,012,401). On or about April 4, 2014, in an effort to perfect this
award against the Company, CRG filed a petition with the Southern District of New York seeking to confirm the award. In addition,
the Company accrued total of $56,835 as reimbursement of attorney fees and cost incurred by CRG and $15,500 as administrative fees
and compensation to the Arbitrator. On July 8, 2014, a judgment has been entered against 3Power in the Southern District of New
York in the amount of $1,086,186. That judgment remains unpaid.
NOTE 6 - COMMON STOCK
The Company is authorized to issue 300,000,000
shares of $0.0001 par value common stock. As of June 30, 2017 and March 31, 2017, 274,295,110 shares were issued and outstanding.
3POWER ENERGY GROUP, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
JUNE 30, 2017
NOTE 7 - RELATED PARTY TRANSACTIONS
The Company’s current and former
officers and stockholders have advanced funds on a non-interest bearing basis to the Company for travel related and working capital
purposes. The Company has not entered into any agreement on the repayment terms for these advances. As of June 30, 2017 and March
31, 2017, there were $767,177 and $605,989 advances outstanding, respectively.
As of June 30, 2017 and March 31, 2017,
the Company owed approximately £117,918 ($153,313) and £117,918 ($147,239), respectively, to Seawind Marine Limited,
a company controlled by the former directors, Mr. T P G Adams and Mr. J R Wilson.
As of June 30, 2017 and March 31, 2017,
the Company owed approximately £177,548 ($230,843) and £177,548 ($221,697), respectively to Seawind International Limited,
a company controlled by the former directors, Mr. T P G Adams and Mr. J R Wilson.
As of June 30, 2017 and March 31, 2017,
the Company owed approximately £88,753 ($115,394) and £88,753 ($110,822), respectively to Power Products Ltd (Enerserve
Limited f/k/a), a company under the control of Mr. T P G Adams and Mr. J R Wilson, former directors of the Company.
As of June 30, 2017 and March 31, 2017,
the company owed Mr. J R Wilson (ex-Director) £1,144 ($1,487) and £1,144 ($1,428), respectively.
During the three months ended June 30,
2017 and 2016, the Company charged to operation $45,000 and $45,000 as salary to Board members, respectively.
NOTE 8 — NON CONTROLLING INTEREST
The Company has a 50% interest in American
Seawind Energy LLC, a company registered in the State of Texas, United States of America and as of June 30, 2017, 75% interest
in Shala Energy sh.pk, a Company registered in the Republic of Albania. American Seawind Energy LLC was inactive as of June 30,
2017.
A reconciliation of the non-controlling
loss attributable to the Company:
Net loss Attributable to the Company and
transfers (to) from non-controlling interest for the three months ended June 30, 2017:
|
|
American
|
|
|
Shala
|
|
|
|
Seawind
|
|
|
Energy
|
|
|
|
Energy LLC
|
|
|
sh pk
|
|
Net loss
|
|
$
|
-
|
|
|
$
|
45,113
|
|
Average Non-controlling interest percentage
|
|
|
50.0
|
%
|
|
|
25.0
|
%
|
Net loss attributable to the non-controlling interest
|
|
$
|
-
|
|
|
$
|
11,278
|
|
Net loss Attributable to the Company and
transfers (to) from non-controlling interest for the three months ended June 30, 2016:
|
|
American
|
|
|
Shala
|
|
|
|
Seawind
|
|
|
Energy
|
|
|
|
Energy LLC
|
|
|
sh pk
|
|
Net loss
|
|
$
|
-
|
|
|
$
|
52,404
|
|
Average Non-controlling interest percentage
|
|
|
50.0
|
%
|
|
|
25.0
|
%
|
Net loss attributable to the non-controlling interest
|
|
$
|
-
|
|
|
$
|
13,101
|
|
3POWER ENERGY GROUP, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
JUNE 30, 2017
The following table summarizes the changes
in Non-controlling Interest from April 1, 2016 through June 30, 2017:
|
|
American
|
|
|
|
|
|
|
|
|
|
Seawind
|
|
|
Shala
|
|
|
|
|
|
|
Energy LLC
|
|
|
Energy sh pk
|
|
|
Total
|
|
Balance, April 1, 2016
|
|
$
|
608
|
|
|
$
|
(284,416
|
)
|
|
$
|
(283,808
|
)
|
Net loss attributable to the non-controlling interest
|
|
|
-
|
|
|
|
(49,036
|
)
|
|
|
(49,036
|
)
|
Balance, March 31, 2017
|
|
|
608
|
|
|
|
(333,452
|
)
|
|
|
(332,844
|
)
|
Net loss attributable to the non-controlling interest
|
|
|
-
|
|
|
|
(11,278
|
)
|
|
|
(11,278
|
)
|
Balance, June 30, 2017
|
|
$
|
608
|
|
|
$
|
(344,730
|
)
|
|
$
|
(344,122
|
)
|
NOTE 9 — COMMITMENTS AND CONTINGENCIES
Wuersch Settlement
In November 2011, the Company entered into
a Settlement Agreement (the “Wuersch Agreement”) with Wuersch & Gering LLP (“Wuersch”). The Wuersch
Agreement provided that Wuersch will accept a cash payment of $50,000, payable in five equal installments, and 2,000,000 options
to purchase shares of our common stock at $0.54 per share as full satisfaction of debt obligations to Wuersch of $518,359. The
five cash payment installments of $10,000 were due on the 15th calendar day of each month beginning November 15, 2011 and ending
on March 15, 2012. Two installment payments were made to Wuersch. The total outstanding balance as of June 30, 2017 and March 31,
2017 is $504,518.
Hellenic Settlement
On November 15, 2011, the Company entered
into a Settlement Agreement (the “Hellenic Agreement”) with Hellenic Technologies (“Hellenic”). The Hellenic
Agreement provided that Hellenic will accept cash payments of $70,000, payable in five equal installments, and 1,260,000 shares
of common stock as full satisfaction of debt obligations to Hellenic of $700,000. The five cash payment installments of $14,000
were due beginning November 14, 2011 and continuing on the 15th calendar day of each month thereafter until paid in full. Two installments
were paid as of March 31, 2012. The Company has also issued 1,260,000 of Common stock valued at $630,000 during the year ended
March 31, 2012. The outstanding balance as of June 30, 2017 and March 31, 2017 is $28,000.
Litigation
The Company is subject to certain legal
proceedings and claims, which arise in the ordinary course of its business. Although occasional adverse decisions or settlements
may occur, the Company believes that the final disposition of such matters should not have a material adverse effect on its financial
position, results of operations or liquidity.
NOTE 10 — SUBSEQUENT EVENTS
The Company has evaluated subsequent events
through, the date of unaudited condensed consolidated financial statements are available to be issued. There are no subsequent
events.