UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September
30, 2015
or
¨ TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______to______.
3Power Energy Group, Inc.
(Exact name of registrant as specified in
its charter)
| Nevada |
|
333-103647 |
|
98-0393197 |
| (State or other jurisdiction of incorporation or |
|
(Commission File Number) |
|
(I.R.S. Employee Identification No.) |
| organization) |
|
|
|
|
PO Box 50006
Sh. Rashid Building
Sh. Zayed Road
Dubai, United Arab Emirates
(Address of principal executive office,
Zip Code)
011 97 14 3210312
(Registrant’s telephone number, including
area code)
Not Applicable.
(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 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes ¨ No x
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 (§232.405 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 x No
¨
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the
definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company”
in Rule 12b-2 of the Exchange Act:
| Large accelerated filer ¨ |
Accelerated filer ¨ |
| Non-accelerated filer ¨ (Do not check if a smaller reporting company) |
Smaller reporting company x |
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No
x
Indicate the number of shares outstanding of each of the issuer’s
classes of common equity: As of November 14, 2015, 249,949,923 shares of Common Stock,
par value $0.0001 per share are issued and outstanding.
3POWER ENERGY GROUP, INC.
QUARTERLY REPORT ON FORM 10-Q
September 30, 2015
TABLE OF CONTENTS
SPECIAL NOTE REGARDING FORWARD-LOOKING
STATEMENTS
The following cautionary statements identify
important factors that could cause our actual results to differ materially from those projected in forward-looking statements made
in this Quarterly Report on Form 10-Q (this “Report”) and in other reports and documents published by us from time
to time. Any statements about our beliefs, plans, objectives, expectations, assumptions, future events or performance are not historical
facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as
“believes,” “will likely result,” “are expected to,” “will continue,” “is
anticipated,” “estimated,” “intend,” “plan,” “projection,” “outlook”
and the like, constitute “forward-looking statements” . Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance or achievements of our Company to be materially
different from any future results, performance or achievements expressed or implied by such forward-looking statements. Given these
uncertainties, readers are cautioned to carefully read all “Risk Factors” set forth under Item 1A under the Company’s
Annual Report on Form 10-K and not to place undue reliance on any forward-looking statements. We disclaim any obligation to update
any such factors or to announce publicly the results of any revisions of the forward-looking statements contained or incorporated
by reference herein to reflect future events or developments, except as required by the Exchange Act. New factors emerge from time
to time, and it is not possible for us to predict which will arise or to assess with any precision the impact of each factor on
our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those
contained in any forward-looking statements.
Unless otherwise provided in this Report,
references to the “Company,” the “Registrant,” the “Issuer,” “we,” “us,”
and “our” refer to 3Power Energy Group Inc. and its subsidiaries.
PART I: FINANCIAL INFORMATION
Item 1. Financial
Statements
3POWER ENERGY GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| | |
September 30, | | |
March 31, | |
| | |
2015 | | |
2015 | |
| | |
(unaudited) | | |
| |
| ASSETS | |
| | | |
| | |
| Current assets: | |
| | | |
| | |
| Cash and cash equivalents | |
$ | 2,779 | | |
$ | 1,585 | |
| Prepaid and other current assets | |
| 42,797 | | |
| 8,172 | |
| Total current assets | |
| 45,576 | | |
| 9,757 | |
| | |
| | | |
| | |
| Property and equipment, net | |
| 39,101 | | |
| - | |
| | |
| | | |
| | |
| Total assets | |
$ | 84,677 | | |
$ | 9,757 | |
| | |
| | | |
| | |
| LIABILITIES AND DEFICIT | |
| | | |
| | |
| Current liabilities: | |
| | | |
| | |
| Accounts payable and accrued expenses | |
$ | 5,391,653 | | |
$ | 5,165,759 | |
| Accrued interest | |
| 683,095 | | |
| 602,747 | |
| Notes payable | |
| 527,152 | | |
| 509,950 | |
| Due to related parties | |
| 559,909 | | |
| 168,404 | |
| Total current liabilities | |
| 7,161,809 | | |
| 6,446,860 | |
| | |
| | | |
| | |
| Commitments and contingencies | |
| - | | |
| - | |
| | |
| | | |
| | |
| Deficit | |
| | | |
| | |
| Common stock,$0.0001 par value, 300,000,000 shares authorized, 249,949,923 shares issued and outstanding as of September 30, 2015 and March 31, 2015 | |
| 24,995 | | |
| 24,995 | |
| Additional paid in capital | |
| 11,468,714 | | |
| 11,468,714 | |
| Other comprehensive income | |
| 5,656 | | |
| 45,878 | |
| Accumulated deficit | |
| (18,333,451 | ) | |
| (17,774,305 | ) |
| Total deficit attributable to 3Power Energy Group, Inc. | |
| (6,834,086 | ) | |
| (6,234,718 | ) |
| Non-controlling interest | |
| (243,046 | ) | |
| (202,385 | ) |
| Total deficit | |
| (7,077,132 | ) | |
| (6,437,103 | ) |
| | |
| | | |
| | |
| Total liabilities and deficit | |
$ | 84,677 | | |
$ | 9,757 | |
See the accompanying notes to these unaudited condensed consolidated financial statements
3POWER ENERGY GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
| | |
Three months ended September 30, | | |
Six months ended September 30, | |
| | |
2015 | | |
2014 | | |
2015 | | |
2014 | |
| Operating expenses: | |
| | | |
| | | |
| | | |
| | |
| Selling, general and administrative | |
$ | 223,926 | | |
$ | 289,757 | | |
$ | 500,223 | | |
$ | 493,836 | |
| Depreciation | |
| 1,018 | | |
| - | | |
| 1,758 | | |
| - | |
| Total operating expenses | |
| 224,944 | | |
| 289,757 | | |
| 501,981 | | |
| 493,836 | |
| | |
| | | |
| | | |
| | | |
| | |
| Loss from operations | |
| (224,944 | ) | |
| (289,757 | ) | |
| (501,981 | ) | |
| (493,836 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Other income (expense): | |
| | | |
| | | |
| | | |
| | |
| Interest expense | |
| (42,015 | ) | |
| (39,389 | ) | |
| (80,624 | ) | |
| (77,354 | ) |
| Foreign currency transaction loss | |
| (5,734 | ) | |
| - | | |
| (17,202 | ) | |
| - | |
| Total other expenses | |
| (47,749 | ) | |
| (39,389 | ) | |
| (97,826 | ) | |
| (77,354 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Net loss before income taxes | |
| (272,693 | ) | |
| (329,146 | ) | |
| (599,807 | ) | |
| (571,190 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Provision for income taxes | |
| - | | |
| - | | |
| - | | |
| - | |
| | |
| | | |
| | | |
| | | |
| | |
| Net loss | |
| (272,693 | ) | |
| (329,146 | ) | |
| (599,807 | ) | |
| (571,190 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Net loss attributable to Non-controlling interest | |
| 9,726 | | |
| - | | |
| 40,661 | | |
| - | |
| | |
| | | |
| | | |
| | | |
| | |
| NET LOSS ATTRIBUTABLE TO 3POWER ENERGY GROUP, INC. | |
$ | (262,967 | ) | |
$ | (329,146 | ) | |
$ | (559,146 | ) | |
$ | (571,190 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Loss per common share (basic and diluted): | |
$ | (0.00 | ) | |
$ | (0.00 | ) | |
$ | (0.00 | ) | |
$ | (0.00 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Weighted average number of shares outstanding (basic and diluted) | |
| 249,949,923 | | |
| 223,892,947 | | |
| 249,949,923 | | |
| 214,338,490 | |
| | |
| | | |
| | | |
| | | |
| | |
| Comprehensive loss: | |
| | | |
| | | |
| | | |
| | |
| Net loss | |
$ | (272,693 | ) | |
$ | (329,146 | ) | |
$ | (599,807 | ) | |
$ | (571,190 | ) |
| Foreign currency translation (loss) income | |
| 67,402 | | |
| 96,167 | | |
| (40,222 | ) | |
| 48,510 | |
| | |
| | | |
| | | |
| | | |
| | |
| Comprehensive loss: | |
| (205,291 | ) | |
| (232,979 | ) | |
| (640,029 | ) | |
| (522,680 | ) |
| Comprehensive loss attributable to non-controlling interest | |
| 9,726 | | |
| - | | |
| 40,661 | | |
| - | |
| | |
| | | |
| | | |
| | | |
| | |
| Comprehensive loss attributable to 3Power Energy Group, Inc. | |
$ | (195,565 | ) | |
$ | (232,979 | ) | |
$ | (599,368 | ) | |
$ | (522,680 | ) |
See the accompanying notes to these unaudited condensed consolidated financial statements
3POWER ENERGY GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
| | |
Six months ended September 30, | |
| | |
2015 | | |
2014 | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | |
| | | |
| | |
| Net loss | |
$ | (599,807 | ) | |
$ | (571,190 | ) |
| Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | |
| | | |
| | |
| Depreciation | |
| 1,758 | | |
| - | |
| Foreign currency transaction loss | |
| 17,202 | | |
| - | |
| Changes in operating assets and liabilities: | |
| | | |
| | |
| Advances from related party | |
| 391,505 | | |
| 622,083 | |
| Prepaid and other current assets | |
| (34,625 | ) | |
| 884 | |
| Accounts payable and accrued expenses | |
| 185,672 | | |
| (129,131 | ) |
| Accrued interest | |
| 80,348 | | |
| 77,354 | |
| Net cash provided by operating activities: | |
| 42,053 | | |
| - | |
| | |
| | | |
| | |
| CASH FLOWS FROM INVESTING ACTIVITIES: | |
| | | |
| | |
| Purchase of equipment | |
| (40,859 | ) | |
| - | |
| Net cash used in investing activities | |
| (40,859 | ) | |
| - | |
| | |
| | | |
| | |
| CASH FLOWS FROM FINANCING ACTIVITIES: | |
| - | | |
| - | |
| | |
| | | |
| | |
| Effect of foreign currency rate change on cash | |
| - | | |
| - | |
| | |
| | | |
| | |
| Net increase in cash and cash equivalents | |
| 1,194 | | |
| - | |
| | |
| | | |
| | |
| Cash and cash equivalents-beginning of period | |
| 1,585 | | |
| 1,725 | |
| Cash and cash equivalents-end of period | |
$ | 2,779 | | |
$ | 1,725 | |
| | |
| | | |
| | |
| Supplemental disclosures of cash flow information: | |
| | | |
| | |
| Cash paid during the period for: | |
| | | |
| | |
| Interest | |
$ | - | | |
$ | - | |
| Income taxes | |
$ | - | | |
$ | - | |
| | |
| | | |
| | |
| Non cash investing and financing activities: | |
| | | |
| | |
| Common stock issued in settlement of related party payable | |
$ | - | | |
$ | 742,053 | |
See the accompanying notes to these unaudited condensed consolidated financial statements
3POWER ENERGY GROUP, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
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
is in the business of producing renewable generated electrical power and other alternative energies.
The Company's primary effort 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 was 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
SEPTEMBER 30, 2015
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 six months ended September 30,
2015, Shala began operations, acquiring assets and incurring costs. As such, its activity is including in the unaudited condensed
consolidated balance sheet and statement of operations for the current period.
Liquidation/winding up of international
subsidiaries:
On October 8, 2012, the High Court of Justice
in the United Kingdom issued a winding-up order for the liquidation and winding up of the affairs of 3Power Project Services Limited,
a wholly owned subsidiary of the Company’s Subsidiary, 3Power Energy Limited.
By the letter of The Insolvency Service
dated October 12, 2012, the Company was required to provide information relating to 3Power Project Services Limited to the Official
Receiver’s Office (a government body of Plymouth, the United Kingdom) and attend an interview with staff of the Official
Receiver’s Office to review the prospect of recovering the assets of 3Power Project Services Limited for the benefit of creditors.
The Company was also required to deliver
to the Official Receiver’s Office certain assets (cash or cheque) and accounting records that are still in its possession
or control. The Company has attended the interview and delivered all the available accounting records to the Officer Receiver’s
Office. No order confirming a plan of reorganization, arrangement or liquidation has been entered as of this filing.
The major classes of liabilities of 3Power
Project Services Limited as of September 30, 2015 are as follows:
| Current liabilities | |
$ | 1,671,713 | |
On January 17, 2013, the Company filed
a Strike off application with the Registrar of Companies in the United Kingdom to dissolve 3Power Energy Limited, a wholly owned
subsidiary of the Company. Such strike-off application has yet to be approved as of the date of this report. 3Power Energy Limited
had liabilities as of September 30, 2015 as below:
| Current liabilities | |
$ | 176,547 | |
NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES
Interim Financial Statements
The following (a) condensed consolidated
balance sheet as of March 31, 2015, 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.
3POWER ENERGY GROUP, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
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 and six months ended September 30, 2015 are not necessarily indicative of results that may be expected for the year ending
March 31, 2016. 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, 2015 included in the Company’s Annual Report on Form
10-K, filed with the Securities and Exchange Commission (“SEC”) on July 14, 2015.
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
Revenue Recognition
The Company recognizes revenue in accordance
with Accounting Standards Codification subtopic 605-10, Revenue Recognition (“ASC 605-10”) which requires that four
basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has
occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria
(3) and (4) are based on management's judgments regarding the fixed nature of the selling prices of the products delivered and
the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other
adjustments are provided for in the same period the related sales are recorded.
ASC 605-10 incorporates Accounting Standards
Codification subtopic 605-25, Multiple-Element Arraignments (“ASC 605-25”). ASC 605-25 addresses accounting for arrangements
that may involve the delivery or performance of multiple products, services and/or rights to use assets. The effect of implementing
605-25 on the Company's financial position and results of operations was not significant.
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 Statement of 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. ASC 220-10 requires other
comprehensive income (loss) to include foreign currency translation adjustments and unrealized gains and losses on available for
sale securities.
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.
3POWER ENERGY GROUP, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
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 the
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, Comprehensive
Income.
Translation gains and losses that arise
from exchange rate fluctuations from transactions denominated in a currency other than the functional currency are translated into
GBP at the rate on the date of the transaction and included in the results of operations as incurred. There were no material transaction
gains or losses in the periods presented.
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:
| | |
September 30, | | |
March 31, | |
| | |
2015 | | |
2015 | |
| Period-end GBP: USD exchange rate | |
$ | 1.5164 | | |
$ | 1.4834 | |
| Period-end LEK: USD exchange rate | |
$ | 0.0079 | | |
$ | NA | |
Income statement:
| | |
September 30, | | |
September 30, | |
| | |
2015 | | |
2014 | |
| Average Six Month GBP: USD exchange rate | |
$ | 1.5407 | | |
$ | 1.6765 | |
| Average Six Month LEK: USD exchange rate | |
$ | 0.0078 | | |
$ | NA | |
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 and diluted 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 Merger in May 2011 (see Note 1), which was accounted for as recapitalization of the Company. The Company
had no common stock equivalents as of September 30, 2015 and 2014.
Income taxes
Deferred income tax assets and liabilities
are determined based on the estimated future tax effects of net operating loss and credit carry forwards and temporary differences
between the tax basis of assets and liabilities and their respective financial reporting amounts measured at the current enacted
tax rates. The Company records an estimated valuation allowance on its deferred income tax assets if it is not more likely than
not that these deferred income tax assets will be realized.
3POWER ENERGY GROUP, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
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 September 30, 2015 and March 31, 2015, 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 accounts for stock, stock options
and warrants using the fair value method promulgated by Accounting Standards Codification subtopic 480-10, Distinguishing Liabilities
from Equity (“ASC 480-10”) which addresses the accounting for transactions in which an entity exchanges its equity
instruments for goods or services. Therefore, results include non-cash compensation expense as a result of the issuance of stock,
stock options and warrants and we expect to record additional non-cash compensation expense in the future.
The Company follows Accounting Standards
Codification subtopic 718-10, Compensation (“ASC 718-10”) which requires that all share-based payments to both employees
and non-employees be recognized in the income statement based on their fair values.
Recent Accounting Pronouncements
In April 2015, the Financial Accounting
Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-03, “Interest -Imputation
of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs” (“ASU 2015-03”). ASU 2015-03
amends the existing guidance to require that debt issuance costs be presented in the balance sheet as a deduction from the carrying
amount of the related debt liability instead of as a deferred charge. ASU 2015-03 is effective on a retrospective basis for annual
and interim reporting periods beginning after December 15, 2015, but early adoption is permitted. The Company does not anticipate
that the adoption of this standard will have a material impact on its condensed consolidated financial statements.
There were other various updates recently
issued by the Financial Accounting Standards Board, 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 consolidated financial
position, results of operations or cash flows.
3POWER ENERGY GROUP, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 3 — GOING CONCERN MATTERS
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
September 30, 2015, the Company has a deficit of $18,333,451 applicable to controlling interest compared with a deficit of
$17,774,305 applicable to controlling interest as of March 31, 2015, and has incurred significant operating losses and
negative cash flows. For the six months ended September 30, 2015, the Company sustained a net loss of $559,146 compared to a net
loss of $571,190 for the six months ended September 30, 2014. The Company will need additional financing which may take the
form of equity or debt and the Company has converted certain liabilities into equity. In the event the Company are not able to
increase its working capital, the Company will not be able to implement or may be required to delay all or part of its business
plan, and their ability to attain profitable operations, generate positive cash flows from operating and investing activities and
materially expand the business will be materially adversely affected. The accompanying unaudited condensed consolidated financial
statements do not include any adjustments relating to the classification of recorded asset amounts or amounts and classification
of liabilities that might be necessary should the company be unable to continue in existence.
NOTE 4 — PROPERTY AND EQUIPMENT
Property and equipment as of September 30, 2015 and March 31,
2015 summarized as follows:
| | |
September 30, 2015 | | |
March 31, 2015 | |
| Furniture and equipment | |
$ | 14,143 | | |
$ | - | |
| IT and other equipment | |
| 26,716 | | |
| - | |
| | |
| 40,859 | | |
| - | |
| Less accumulated depreciation | |
| (1,758 | ) | |
| - | |
| | |
$ | 39,101 | | |
$ | - | |
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 and six months ended September
30, 2015, the Company charged to operations depreciation expense of $1,018 and $1,758, respectively. During the three and six months
ended September 30, 2014, the Company charged to operations depreciation expense of $-0-.
NOTE 5 — NOTES PAYABLE
On March 2, 2010, the Company issued an
unsecured Senior Promissory Note ("Note") for 470,000 Euros ($527,152 at September 30, 2015) 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 September 30, 2015, accrued interest on this note was $598,973.
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.
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 an AAA arbitration.
3POWER ENERGY GROUP, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
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 ($816,795). 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 September 30, 2015 and March 31, 2015, 249,949,923 shares were issued and outstanding.
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 September 30, 2015 and
March 31, 2015, there were $559,909 and $168,404 advances outstanding, respectively.
As of September 30, 2015 and March 31,
2015, the Company owed approximately £117,918 ($178,811) and £117,918 ($174,920), respectively, to Seawind Marine Limited,
a company controlled by the former directors, Mr. T P G Adams and Mr. J R Wilson, included in accounts payable and accrued expenses
in balance sheet.
As of September 30, 2015 and March 31,
2015, the Company owed approximately £177,548 ($269,234) and £177,548 ($263,375), respectively to Seawind International
Limited, a company controlled by the former directors, Mr. T P G Adams and Mr. J R Wilson, included in accounts payable and accrued
expenses in balance sheet.
As of September 30, 2015 and March 31,
2015, the Company owed approximately £88,753 ($134,585) and £88,753 ($131,656), 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,
included in accounts payable and accrued expenses in balance sheet.
As of September 30, 2015 and March 31,
2015, the company owed Mr. J R Wilson (ex-Director) £1,144 ($1,735) and £1,144 ($1,697), respectively, included in
accounts payable and accrued expenses in balance sheet.
During the six months ended September
30, 2015 and 2014, the Company charged to operation $90,000 and $90,000 as salary to Board members, respectively.
During the three months ended September
30, 2015 and 2014, the Company charged to operation $45,000 and $45,000 as salary to Board members, respectively.
During the six months ended September 30,
2015 and 2014, the Company charged to operation $90,000 and $90,000 as consulting fees to a significant shareholder for services
provided, respectively.
During the three months ended September
30, 2015 and 2014, the Company charged to operation $45,000 and $45,000 as consulting fees to a significant shareholder for services
provided, respectively.
3POWER ENERGY GROUP, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
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 September 30, 2015, 75% interest
in Shala Energy sh.pk, a Company registered in the Republic of Albania. American Seawind Energy LLC was inactive as of September
30, 2015.
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 September 30, 2015:
| | |
American | | |
Shala | |
| | |
Seawind | | |
Energy | |
| | |
Energy LLC | | |
sh pk | |
| Net loss | |
$ | - | | |
$ | 38,904 | |
| Average Non-controlling interest percentage | |
| 50.0 | % | |
| 25.0 | % |
| Net loss attributable to the non-controlling interest | |
$ | - | | |
$ | 9,726 | |
Net loss Attributable to the Company and
transfers (to) from non-controlling interest for the six months ended September 30, 2015:
| | |
American | | |
Shala | |
| | |
Seawind | | |
Energy | |
| | |
Energy LLC | | |
sh pk | |
| Net loss | |
$ | - | | |
$ | 162,642 | |
| Average Non-controlling interest percentage | |
| 50.0 | % | |
| 25.0 | % |
| Net loss attributable to the non-controlling interest | |
$ | - | | |
$ | 40,661 | |
Net loss Attributable to the Company and
transfers (to) from non-controlling interest for the three and six months ended September 30, 2014:
| | |
American | | |
Shala | |
| | |
Seawind | | |
Energy | |
| | |
Energy LLC | | |
sh pk | |
| Net loss | |
$ | - | | |
$ | - | |
| Average Non-controlling interest percentage | |
| 50.0 | % | |
| 25.0 | % |
| Net loss attributable to the non-controlling interest | |
$ | - | | |
$ | - | |
The following table summarizes the changes
in Non-controlling Interest from April 1, 2014 through September 30, 2015:
| | |
American | | |
| | |
| |
| | |
Seawind | | |
Shala | | |
| |
| | |
Energy LLC | | |
Energy sh pk | | |
Total | |
| Balance, April 1, 2014 | |
$ | 608 | | |
$ | (202,993 | ) | |
$ | (202,385 | ) |
| Net loss attributable to the non-controlling interest | |
| - | | |
| - | | |
| - | |
| Balance, March 31, 2015 | |
| 608 | | |
| (202,993 | ) | |
| (202,385 | ) |
| Net loss attributable to the non-controlling interest | |
| - | | |
| (40,661 | ) | |
| (40,661 | ) |
| Balance, September 30, 2015 | |
$ | 608 | | |
$ | (243,654 | ) | |
$ | (243,046 | ) |
3POWER ENERGY GROUP, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
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 September 30, 2015 and March
31, 2015 is $504,518, included in accounts payable and accrued expenses in balance sheet.
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 September 30, 2015 and March 31, 2015 is $28,000, included in accounts payable and
accrued expenses in balance sheet.
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 the unaudited condensed consolidated financial statements are available to be issued. There are no subsequent
events.
Item 2. Management’s
Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion provides information
which management believes is relevant to an assessment and understanding of our results of operations and financial condition.
The discussion should be read along with our financial statements and notes thereto contained elsewhere in this Report. The
following discussion and analysis contains forward-looking statements, which involve risks and uncertainties. Our actual results
may differ significantly from the results, expectations and plans discussed in these forward-looking statements.
Overview
We were incorporated in the State of Nevada
on December 18, 2002, as ATM Financial Corp.
On May 13, 2011 the Company entered into
a Stock Purchase Agreement (the “Stock Purchase Agreement”) with Seawind Energy Limited (“Seawind Energy”)
and its subsidiary Seawind Services Limited (“Seawind services”), pursuant to which the Company acquired 100% of the
issued and outstanding common stock of Seawind Energy, in exchange for the issuance of 40,000,000 restricted shares of the Company’s
common stock (such transaction as “Seawind Acquisition”). The acquisition was accounted for as a reverse
merger and, accordingly, the Company is the legal survivor and Seawind Energy is the accounting survivor.
For accounting purposes, Seawind Energy
was the surviving entity. The transaction was accounted for as a recapitalization of Seawind Energy pursuant to which Seawind Energy
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
Energy immediately following the consummation of the reverse merger.
In anticipation of the closing of the Stock
Purchase Agreement, on March 30, 2011 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, Seawind Energy and Seawind Service changed their name to 3Power Energy
Limited (“3Power Energy”) and 3Power Project Service Limited (“3Power Service”), respectively. Both 3Power
Energy and 3Power Service are inactive as of September 30, 2015.
The Business
The principle planned business of the Company
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 planned 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
backed financial support for the development of renewable energy. The strategic plan of the Company is to develop power plants
and sell electricity in mature and emerging international energy markets at secure rates with the highest potential margins for
return on investment.
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”) whereby 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 was 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.
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 six months ended September 30,
2015, Shala began operations, acquiring assets and incurring costs. As such, this activity is including in our unaudited condensed
consolidated balance sheet and statement of operations for the current period.
Current Focus
We currently have only one project, a hydro-electrical
project of a total installed power of 127.6 MW of Shala River in Albania, and the commercialization of this project is in its infancy.
Our intended markets may not utilize our producible products, and it may not be commercially successful.
We intend to develop additional projects
but to date, none have proven to be commercially viable or successful.
Results of
Operations For The Three Months Ended September 30, 2015 And 2014
We had revenues from operations in the amount of $Nil for
the three months ended September 30, 2015 and 2014.
We incurred operating expenses of $224,944
for the three months ended September 30, 2015 compared to $289,757 for the three months ended September 30, 2014. The decrease
is due to less travel and other cost in the current period as compared to prior year, offset by depreciation expense of $1,018
incurred with our majority owned subsidiary Shala Energy.
Our interest expense was $42,015 for the
three months ended September 30, 2015 as compared to $39,389 for the same period in 2014. The increase of $2,626 or 7% was due
primarily to compounding of interest associated with note obligations. Additionally, we recognized a foreign currency transaction
loss of $5,734 during the three months ended September 30, 2015 as compared to $-0- last year.
Results of
Operations For The Six Months Ended September 30, 2015 And 2014
We had revenues from operations in the amount of $Nil for
the six months ended September 30, 2015 and 2014.
We incurred operating expenses of $501,981
for the six months ended September 30, 2015 compared to $493,836 for the six months ended September 30, 2014. This increase was
primarily attributable to start up and other costs incurred with our majority owned subsidiary, Shala Energy.
Our interest expense was $80,624 for the
six months ended September 30, 2015 as compared to $77,354 for the same period in 2014. The increase of $3,270 or 4% was due primarily
to compounding of interest associated with note obligations. Additionally, we recognized a foreign currency transaction loss of
$17,202 during the six months ended September 30, 2015 as compared to $-0- last year.
Liquidity and Capital Resources
Our total cash and cash equivalents as
of September 30, 2015 was $2,779 compared to the total cash and cash equivalents of $1,585 as of March 31, 2015.
As of September 30, 2015, our total current
assets were $45,576 compared to total current assets $9,757 as of March 31, 2015 and the total current liabilities were $7,161,809
as of September 30, 2015 compared to $6,446,860 as of March 31, 2015. The increase in current liabilities was primarily due increase
in accounts payable and accrued expenses of $225,894 and $391,505 related party debt.
Net cash provided by operating activities
was $42,053 for the six months ended September 30, 2015 compared to net cash used in operating activities of $-0- for the six months
ended September 30, 2014. The cash flow from operating activities consists of $599,807 net loss, with payments on the Company’s
behalf by related party of $391,505 and deprecation of $1,758, foreign currency transaction loss of $17,202, an increase in prepaid
and other assets of $(34,625), increase in accounts payable and accrued expenses of $185,672 and an increase in accrued interest
of $80,348.
Net cash used in investing activities was
$40,859 for the six months ended September 30, 2015 reflecting purchases of equipment by our majority owned subsidiary, Shala Energy;
as compared to $Nil for the same period last year.
Net cash provided by financing activities
was $Nil for the six months ended September 30, 2015 and 2014.
Our pre-operational activities to date
have consumed substantial amounts of cash. Our negative cash flow from operations is expected to continue and accelerate in the
foreseeable future as the Company invests in capital expenditures to commence operations.
We will need to raise additional capital
to implement our business plan and continue operations for any length of time. We are seeking alternative sources of financing,
through private placement of securities and loans from our shareholders in order for us to maintain our operations. We cannot guarantee
that we will be successful in raising additional cash resources for our operations.
The independent registered public accounting
firm’s report on our March 31, 2015 consolidated financial statements included in our Form 10-K states that our difficulty
in generating sufficient cash flow to meet our obligations and sustain operations raise substantial doubts about our ability to
continue as a going concern. The unaudited condensed consolidated financial statements do not include any adjustments that might
result should the Company be unable to continue as a going concern.
Critical Accounting Policies
Our discussion and analysis of our financial
condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting
principles generally accepted in the United States of America. The preparation of these financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. In consultation with our
Board of Directors, we have identified several accounting principles that we believe are key to the understanding of our financial
statements. These important accounting policies require management’s most difficult, subjective judgments.
Revenue Recognition
The Company recognizes revenue in accordance
with Accounting Standards Codification subtopic 605-10, Revenue Recognition (“ASC 605-10”) which requires that four
basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has
occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria
(3) and (4) are based on management's judgments regarding the fixed nature of the selling prices of the products delivered and
the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other
adjustments are provided for in the same period the related sales are recorded.
ASC 605-10 incorporates Accounting Standards
Codification subtopic 605-25, Multiple-Element Arraignments (“ASC 605-25”). ASC 605-25 addresses accounting for arrangements
that may involve the delivery or performance of multiple products, services and/or rights to use assets. The effect of implementing
605-25 on the Company's financial position and results of operations was not significant.
Comprehensive Income (Loss)
The Company applies Statement of 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. ASC 220-10 requires other
comprehensive income (loss) to include foreign currency translation adjustments and unrealized gains and losses on available for
sale securities.
Foreign Currency Translation and
Transactions
The accompanying unaudited condensed consolidated
financial statements are presented in U.S. dollars (“USD”). The functional currency of our subsidiaries is British
pounds (“GBP”) and Albania Lek (“LEK”). The financial statements of subsidiaries are translated into USD
in accordance with the 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 the average exchange rate for the reporting periods. The
resulting translation adjustments are reported as other comprehensive income and accumulated other comprehensive income in shareholders’
equity in accordance with the Codification ASC 220, “Comprehensive Income.”
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 at the rate on the date of the transaction and included in the results of operations as incurred. There were no
material transaction gains or losses in the periods presented.
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 September 30, 2015 and March 31, 2015 would be fully offset by a valuation allowance,
there is no federal or state income tax benefit for the six months ended September 30, 2015 and 2014 related to losses incurred
during such periods.
Off Balance Sheet Transactions
We do not have any off-balance sheet transactions.
Recently Issued Accounting Pronouncements
There were various 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 our consolidated financial position, results of operations or cash flows.
Inflation
We do not believe that inflation has had
a material effect on our business, financial condition or results of operations. If our costs were to become subject to significant
inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure
to do so could adversely affect our business, financial condition and results of operations.
Disclosure of Contractual Obligations
The Company does not have any significant
contractual obligations which could negatively impact our results of operations and financial condition.
Item 3. Quantitative
and Qualitative Disclosures About Market Risk.
Smaller reporting companies are not required
to provide the information required by this item.
Item 4. Controls
and Procedures.
Evaluation of Disclosure Controls and
Procedures
As of the end of the period covered by
this Report, an evaluation was carried out under the supervision and with the participation of our management, including our Chief
Executive Officer/Chief Financial Officer, of the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e)
promulgated under the Securities and Exchange Act of 1934 (the “Exchange Act”). In carrying out that evaluation, management
identified a material weakness (as defined in Public Company Accounting Oversight Board Standard No. 2) in our disclosure controls
and procedures regarding a lack of adequate personnel and adequate segregation of duties. Based on management’s
evaluation of our disclosure controls and procedures as of September 30, 2015, our Chief Executive Officer/Chief Financial Officer
has concluded that, as of that date, our disclosure controls and procedures were not effective.
Our size has prevented us from being able
to employ sufficient resources to enable us to have an adequate level of supervision and segregation of duties within our internal
control system. Therefore while there are some compensating controls in place, it is difficult to ensure effective segregation
of accounting and financial reporting duties. Management reported a material weakness resulting from the combination of the following
significant deficiencies:
| |
• |
Lack of segregation of duties in certain accounting and financial reporting processes including the approval and execution of disbursements; |
| |
|
|
| |
• |
The Company’s corporate governance responsibilities are performed by the Board of Directors; we do not have independent Board of Directors, we do not have an audit committee or compensation committee. Because our Board of Directors only meets periodically throughout the year, several of our corporate governance functions are not performed concurrent (or timely) with the underlying transaction, evaluation, or recordation of the transaction. |
While we strive to segregate duties as
much as practicable, there is an insufficient volume of transactions at this point in time to justify additional full time staff.
We may not be able to fully remediate the material weakness until we increase operations at which time we would expect to hire
more staff.
Plan for Remediation of Material Weaknesses
To mitigate the current limited resources
and limited employees, we rely heavily on direct management oversight of transactions, along with the use of legal and accounting
professionals. As we grow, we expect to increase our number of employees and engage outsourced accounting professionals, which
will enable us to implement adequate segregation of duties within the internal control framework. We will continue to monitor and
assess the costs and benefits of additional staffing.
Changes in Internal Control over Financial
Reporting
No changes were made to our internal control
over financial reporting during our most recently completed fiscal quarter that have materially affected, or are reasonably likely
to materially affect, our internal control over financial reporting.
PART II: OTHER INFORMATION
Item 1. Legal Proceedings
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 (See Note 5 above).
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 an AAA arbitration.
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.
Item 1A. Risk Factors
Smaller reporting companies are not required to provide the
information required by this item.
Item 2. Unregistered Sales of Equity Securities And Use Of
Proceeds
None
Item 3. Defaults Upon Senior Securities
The information regarding CRG Finance contained
under Item 1 of Part II above is incorporated herein by reference in response to this item.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
None.
Item 6. Exhibits.
(a) Exhibits
Exhibit
Number |
|
Description |
| |
|
|
| 31.1* |
|
Certification of the Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 32.1+ |
|
Certification of Principal Executive officer and Principal Financial Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| 101.INS |
|
XBRL Instance Document |
| 101.SCH |
|
XBRL Taxonomy Extension Schema Document |
| 101.CAL |
|
XBRL Taxonomy Extension Calculation Linkbase Document. |
| 101.LAB |
|
XBRL Taxonomy Extension Label Linkbase Document. |
| 101.PRE |
|
XBRL Taxonomy Extension Presentation Linkbase Document. |
| 101.DEF |
|
XBRL Taxonomy Extension Definition Linkbase Document. |
* Filed herewith.
+ In accordance with the SEC Release 33-8238, deemed being furnished
and not filed.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| |
3POWER ENERGY GROUP, INC. |
| |
|
| Dated: November 18, 2015 |
By: |
/s/ Sharif Rahman |
| |
|
Name: |
Sharif Rahman |
| |
|
Title: |
Chief Executive Officer and Chief Financial Officer |
| |
|
|
(Principal Executive Officer, Principal Financial and Chief Accounting Officer) |
Exhibit 31.1
CERTIFICATION
OF PRINCIPAL EXECUTIVE OFFICER,
AND PRINCIPAL FINANCIAL AND CHIEF ACCOUNTING
OFFICER
PURSUANT TO EXCHANGE ACT RULE 13a-14(a)
OR 15d-14(a)
AS ADOPTED PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
I, Sharif Rahman, certify
that:
1. I have reviewed
this quarterly report on Form 10-Q of 3POWER ENERGY GROUP, INC.;
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 present in this report;
4. The registrant’s
other certifying officer(s) 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
13-a- 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 liability 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 financing reporting that occurred during the registrant’s
most recent fiscal quarter 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 18, 2015
| /s/ Sharif Rahman |
|
| Sharif Rahman |
|
| Chief Executive Officer and Chief Financial Officer |
|
| (Principal Executive Officer, Principal Financial and Accounting Officer) |
|
Exhibit 32.1
CERTIFICATION
PRINCIPAL EXECUTIVE OFFICER,
AND PRINCIPAL FINANCIAL AND CHIEF ACCOUNTING OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, I, Sharif Rahman, Chief Executive Officer and Chief Financial Officer of 3POWER ENERGY GROUP,
INC. (the Company”) hereby certify, that, to my knowledge:
1. The Form 10-Q for the quarter ended September 30, 2015 (the
“Report”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange
Act of 1934; and
2. The information contained in the Report fairly presents,
in all material respects, the financial condition and results of operations of the Company.
Date: November 18, 2015
| /s/ Sharif Rahman |
|
| Sharif Rahman |
|
| Chief Executive Officer and Chief Financial Officer |
|
| (Principal Executive Officer, Principal Financial and Accounting Officer) |
|
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