U.
S. SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
[X] QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the quarterly period ended February 28, 2015
[ ] TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the transition period from ________________ to __________________
Commission
File Number: 333-172139
BioPower
Operations Corporation
(Exact
name of registrant as specified in its charter)
| Nevada |
|
27-4460232 |
| (State
or other jurisdiction of |
|
(IRS
Employer |
| incorporation
or organization) |
|
Identification
No.) |
1000
Corporate Drive, Suite 200, Fort Lauderdale, Florida 33334
(Address
of principal executive offices)
Issuer’s
telephone number, including area code: (954) 202-6660
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§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 registrant’s classes of common stock, as of the latest practicable date.
As
of May 13, 2015, the registrant had 41,607,680 shares of common stock, par value $0.0001 per share, outstanding.
BIOPOWER
OPERATIONS CORPORATION
CONTENTS
CONTENTS
PART
I – FINANCIAL INFORMATION
Item
1. Financial Statements
BioPower
Operations Corporation and Subsidiaries
Consolidated
Balance Sheets
| | |
February
28, 2015 | | |
November
30, 2014 | |
| | |
(Unaudited) | | |
| |
| | |
| | |
| |
| Assets | |
| | | |
| | |
| Current Assets | |
| | | |
| | |
| Cash | |
$ | 22,963 | | |
$ | 15,118 | |
| Prepaid expenses | |
| 204 | | |
| 818 | |
| Total Current
Assets | |
| 23,167 | | |
| 15,936 | |
| | |
| | | |
| | |
| Equipment - net | |
| 18,149 | | |
| 21,234 | |
| Security deposit | |
| 11,193 | | |
| 11,193 | |
| | |
| 29,342 | | |
| 32,427 | |
| | |
| | | |
| | |
| Total Assets | |
$ | 52,509 | | |
$ | 48,363 | |
| | |
| | | |
| | |
| Liabilities
and Stockholders’ Deficit | |
| | | |
| | |
| | |
| | | |
| | |
| Current Liabilities | |
| | | |
| | |
| Accounts payable and accrued expenses | |
$ | 417,816 | | |
$ | 419,090 | |
| Accounts payable and accrued expenses - related parties | |
| 1,647,037 | | |
| 1,455,540 | |
| Notes payable | |
| 217,500 | | |
| 155,000 | |
| Notes payable - related parties | |
| 43,025 | | |
| 51,375 | |
| Convertible debt, net of discount | |
| 3,333 | | |
| 62,500 | |
| Convertible debt - related parties, net of discount | |
| 3,333 | | |
| | |
| Total Current
Liabilities | |
| 2,332,044 | | |
| 2,143,505 | |
| | |
| | | |
| | |
| Total Liabilities | |
| 2,332,044 | | |
| 2,143,505 | |
| | |
| | | |
| | |
| Stockholders’ Deficit | |
| | | |
| | |
| Preferred stock, $1 par value; 10,000 shares authorized; 1 share issued and
outstanding | |
| 1 | | |
| 1 | |
| Common stock, $0.0001 par value, 100,000,000 shares authorized; 41,607,676
and 41,107,676 shares issued and outstanding | |
| 4,162 | | |
| 4,112 | |
| Additional paid-in capital | |
| 3,650,881 | | |
| 3,580,931 | |
| Deficit accumulated | |
| (5,934,579 | ) | |
| (5,680,186 | ) |
| Total Stockholders’
Deficit | |
| (2,279,535 | ) | |
| (2,095,142 | ) |
| | |
| | | |
| | |
| Total Liabilities
and Stockholders’ Deficit | |
$ | 52,509 | | |
$ | 48,363 | |
See
accompanying notes to unaudited consolidated financial statements
BioPower
Operations Corporation and Subsidiaries
Consolidated
Statements of Operations and Comprehensive Loss
Unaudited
| | |
Three Months Ended | |
| | |
February 28, | |
| | |
2015 | | |
2014 | |
| General
and administrative expenses | |
$ | 248,385 | | |
$ | 360,453 | |
| | |
| | | |
| | |
| Other income (expense) | |
| | | |
| | |
| Interest expense | |
| (3,926 | ) | |
| (5,895 | ) |
| Interest expense -
related party | |
| (2,082 | ) | |
| - | |
| Consulting
revenue, net of expense | |
| - | | |
| 76,533 | |
| Total other
income (expense) - net | |
| (6,008 | ) | |
| 70,638 | |
| | |
| | | |
| | |
| Net loss | |
$ | (254,393 | ) | |
$ | (289,815 | ) |
| | |
| | | |
| | |
| Net loss per
common share - basic and diluted | |
$ | (0.01 | ) | |
$ | (0.01 | ) |
| |
| | | |
| | |
| Weighted average
number of common shares outstanding during the period - basic and diluted | |
| 41,371,465 | | |
| 30,281,180 | |
| | |
| | | |
| | |
| Comprehensive loss | |
| | | |
| | |
| Net loss | |
$ | (254,393 | ) | |
$ | (289,815 | ) |
| Unrealized loss on available-for-sale
marketable securities | |
| - | | |
| - | |
| Reclassification
adjustment due to impairment on available-for-sale securities | |
| - | | |
| - | |
| Comprehensive
loss | |
$ | (254,393 | ) | |
$ | (289,815 | ) |
See
accompanying notes to unaudited consolidated financial statements
BioPower
Operations Corporation and Subsidiaries
Consolidated
Statements of Cash Flows
(Unaudited)
| | |
Three Months Ended February,
| |
| | |
2015 | | |
2014 | |
| | |
| | |
| |
| CASH FLOWS FROM OPERATING ACTIVITIES: | |
| | | |
| | |
| Net loss | |
| (254,393 | ) | |
$ | (289,815 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: | |
| | | |
| | |
| Stock-based compensation expense | |
| - | | |
| 103,750 | |
| Depreciation | |
| 3,085 | | |
| 3,085 | |
| Amortization of debt discount | |
| 1,667 | | |
| | |
| Changes in operating assets and liabilities: | |
| | | |
| | |
| Accounts receivable | |
| - | | |
| 5,265 | |
| Prepaid expenses | |
| 614 | | |
| 9,894 | |
| Accounts payable and accrued expenses | |
| (1,274 | ) | |
| (72,415 | ) |
| Accounts payable and accrued expenses - related parties | |
| 191,496 | | |
| 114,953 | |
| Net
Cash Provided by (Used In) Operating Activities | |
| (58,805 | ) | |
| (125,284 | ) |
| | |
| | | |
| | |
| CASH FLOWS FROM INVESTING ACTIVITIES: | |
| | | |
| | |
| Purchase of equipment | |
| - | | |
| (4,754 | ) |
| Net
Cash Provided By (Used In) Investing Activities | |
| - | | |
| (4,754 | ) |
| | |
| | | |
| | |
| CASH FLOWS FROM FINANCING ACTIVITIES: | |
| | | |
| | |
| Proceeds from convertible debt | |
| 7,500 | | |
| 125,000 | |
| Repayment notes payable - related parties | |
| (850 | ) | |
| - | |
| Proceeds from issuance of common stock | |
| 60,000 | | |
| | |
| Net
Cash Provided By Financing Activities | |
| 66,650 | | |
| 125,000 | |
| | |
| | | |
| | |
| Net Increase in Cash | |
| 7,845 | | |
| (5,038 | ) |
| | |
| | | |
| | |
| Cash - Beginning of Period | |
| 15,118 | | |
| 109,172 | |
| | |
| | | |
| | |
| Cash - End of Period | |
| 22,963 | | |
$ | 104,134 | |
| | |
| | | |
| | |
| SUPPLEMENTARY CASH FLOW INFORMATION: | |
| | | |
| | |
| Cash Paid During the Period for: | |
| | | |
| | |
| Income
Taxes | |
| | | |
$ | - | |
| Interest | |
| | | |
$ | - | |
| | |
| | | |
| | |
| SUPPLEMENTARY DISCLOSURE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES: | |
| | | |
| | |
| Common stock issued for conversion of notes payable | |
$ | - | | |
$ | 209,620 | |
| Debt discount recorded on convertible debt | |
$ | 5,000 | | |
$ | 81,250 | |
| Debt discount recorded on convertible debt - related party | |
$ | 5,000 | | |
$ | - | |
| Reclassification-Jeffrey Kaliner | |
| 62,500 | | |
| | |
| Reclassification-Bonnie Nelson | |
| 7,500 | | |
| | |
See
accompanying notes to unaudited consolidated financial statements
BioPower
Operations Corporation and Subsidiaries
Notes
to Consolidated Financial Statements
February
28, 2015 and 2014
Note
1 Basis of Presentation
The
accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally
accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the instructions
to Form 10-Q and Article 8 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Certain
information or footnote disclosures normally included in financial statements prepared in accordance with accounting principles
generally accepted in the United States of America have been condensed or omitted, pursuant to the rules and regulations of the
SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a comprehensive
presentation of financial position, results of operations, or cash flows. It is our opinion, however, that the accompanying unaudited
interim consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary
for a fair presentation of the financial position, operating results and cash flows for the periods presented.
In
the quarter ending May 31, 2014, the Company has elected to early adopt Accounting Standards Update No. 2014-10, Development Stage
Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. The adoption of this ASU allows the Company to
remove the inception to date information and all references to development stage.
The
accompanying unaudited interim consolidated financial statements should be read in conjunction with our Annual Report on Form
10-K for the year ended November 30, 2014 as filed with the SEC, which contains the audited financial statements and notes thereto,
together with Management’s Discussion and Analysis, for the years ended November 30, 2014 and 2013. The financial information
as of February 28, 2015 is derived from the audited financial statements presented in our Annual Report on Form 10-K for the year
ended November 30, 2014. The interim results for the three months ended February 28, 2015 are not necessarily indicative of the
results to be expected for the year ending November 30, 2015 or for any future interim periods.
Note
2 Going Concern
As
reflected in the accompanying consolidated financial statements, the Company had a net loss of $254,393 and $289,815, for the
three months ended February 28, 2015 and 2014, respectively, and net cash used in operations of $58,805 and $125,284 for the three
months ended February 28, 2015 and 2014, respectively. Additionally, the Company had a working capital deficit of $2,308,877,
for the three months ended February 28, 2015 and a stockholders’ deficit of $2,279,535 at February 28, 2015. These factors
raise substantial doubt about the Company’s ability to continue as a going concern.
The
ability of the Company to continue as a going concern is dependent on Management’s plans, which include potential asset
acquisitions, mergers or business combinations with other entities, further implementation of its business plan and continuing
to raise funds through debt and/or equity financings. The Company will likely rely upon related party debt and/or equity financing
in order to ensure the continuing existence of the business.
BioPower
Operations Corporation and Subsidiaries
Notes
to Consolidated Financial Statements
February
28, 2015 and 2014
The
accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization
of assets and the satisfaction of liabilities in the normal course of business. These financial statements do not include any
adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should
the Company be unable to continue as a going concern.
Note
3 Equipment
At
February 28, 2015 and November 30, 2014, equipment consists of the following:
| | |
2015 | | |
2014 | | |
Estimated Useful Life |
| Computer Equipment | |
$ | 27,760 | | |
$ | 27,760 | | |
5 years |
| Testing Equipment | |
| 20,366 | | |
| 20,366 | | |
3 years |
| Less: Accumulated depreciation | |
| (29,977 | ) | |
| (26,892 | ) | |
|
| Equipment, net | |
$ | 18,149 | | |
$ | 21,234 | | |
|
Depreciation
expense was $3,085 and $3,085 for the three months ended February 28, 2015 and 2014, respectively.
Note
4 Notes Payable and Convertible Debt
Notes
payable consists of the following:
| | |
| Balance
| | |
| Interest
Rate | | |
Maturity |
| Balance – November 30, 2014 | |
$ | 155,000 | | |
| 8 | % | |
June 30, 2015 |
| Reclassification of convertible debt to notes payable | |
| 62,500 | | |
| 8 | % | |
Due on Demand |
| Balance – February 28, 2015 | |
$ | 217,500 | | |
| | | |
|
In
December, 2013, a third party investor purchased $125,000 of convertible debt, bearing interest, at 8% interest, and due February,
2015. In November, 2014, the Company converted $62,500 according to the terms of the Convertible Note Purchase Agreement. The
remaining balance of $62,500 is not convertible to common shares of the Company’s stock. The $62,500 note payable bears
interest at 8% and is due on May 25, 2015.
In
December, 2014, a third party investor advanced $7,500, at 8% interest, which is due on December 30, 2015.
In
December, 2014 a third party investor combined two previous loans dated July 2, 2013 and September 11, 2014 for $18,000 and $5,000,
respectively, into a new loan of $23,000, at 8% interest. The new loan is payable on May 5, 2015.
Convertible
debt consists of the following:
| | |
Balance | | |
Interest
Rate | | |
Maturity | |
Conversion
Price | |
| | |
| | |
| | |
| |
| |
| Balance – November 30, 2014 | |
$ | 62,500 | | |
| 8 | % | |
| |
$ | 0.10 | |
| Reclassification to notes payable | |
| (62,500 | ) | |
| | | |
| |
| | |
| Borrowings | |
| 7,500 | | |
| 8 | % | |
Dec. 30. 2015 | |
$ | 0.12 | |
| Balance - February 28, 2015 | |
$ | 7,500 | | |
| 8 | % | |
| |
| | |
BioPower
Operations Corporation and Subsidiaries
Notes
to Consolidated Financial Statements
February
28, 2015 and 2014
On
December 30, 2014 a third party investor advanced $7,500 due on or before December 30, 2015. Pursuant to the agreement, the investor
is allowed to convert 100% of the debt at a share price of $0.12. The company accounted for the conversion of loan in accordance
with ASC 470, “Debt with Conversion and Other Options”. The loan was deemed to have a beneficial conversion feature
because the fair value of the stock exceeded the effective conversion price embedded in the loan on the commitment date. Accordingly,
the Company recorded the value of the beneficial conversion feature, which was determined to be $5,000 as a discount to the loan
and a corresponding increase to additional paid in capital.
Accrued
interest on notes payable and convertible debt at February 28, 2015 and February 28, 2014 amounted to $12,375 and $11,436, respectively,
which is included as a component of accounts payable and accrued expenses.
Interest
expense on notes payable and convertible debt with third parties amounted to $3,925 and $4,850 for the three months ended February
28, 2015 and 2014, respectively.
Note
5 Related Party Transactions
Notes
payable to related parties at February 28, 2015 and November 30, 2014 is $43,025 and $51,375, respectively. Convertible notes
payable to related parties is $7,500 at February 28, 2015.
Accrued
interest at February 28, 2015 and November 30, 2014, amounted to $1,439 and $190, respectively and is a component of accounts
payable and accrued expenses – related parties.
On
November 5, 2014, the Director of Business Strategy made a loan of $50,000, bearing interest at 8% which is due on May 5, 2015.
The $50,000 non-convertible loan included a provision for matching, future conversion rights with any new loans made by the company
with the exception of a Right of First Refusal. On December 30, 2014, a third party investor loaned the Company $7,500 with conversion
rights at $0.12 per share. Therefore, effective December 30, 2014, $7,500 of the director’s $50,000 note payable was reclassified
to convertible debt with conversion rights of $0.12 per share. The company accounted for the conversion of loan in accordance
with ASC 470, “Debt with Conversion and Other Options”. The loan was deemed to have a beneficial conversion feature
because the fair value of the stock exceeded the effective conversion price embedded in the loan on the commitment date. Accordingly,
the Company recorded the value of the beneficial conversion feature, which was determined to be $5,000 as a discount to the loan
and a corresponding increase to additional paid in capital.
The
Company has separated accounts payable and accrued expenses on the balance sheet to reflect amounts due to related parties primarily
consisting of officer compensation, health insurance, interest on notes and reimbursable expenses to officers for travel, meals
and entertainment, vehicle and other related business expenses.
BioPower
Operations Corporation and Subsidiaries
Notes
to Consolidated Financial Statements
February
28, 2015 and 2014
Note
6 Stockholders’ Deficit
Common
Stock
For
the three months ended February 28, 2015:
The
Company issued 500,000 shares of stock to unrelated third parties for cash totaling $60,000, at a price of $0.12 per share. There
are 41,607,676 and 41,107,676 shares issued and outstanding at February 28, 2015 and November 30, 2014, respectively.
Note
7 Commitments and Contingencies
Commitments
Employment
Agreements – Officers and Directors
As
of November 30, 2014, the Company had employment agreements with certain officers and directors (two individuals) containing the
following provisions:
| Term
of contract |
|
4
years, expiring on November 30, 2018 |
| Salary |
|
$275,000 commencing
December 1, 2014 |
| Salary deferral |
|
All salaries will
be accrued but may be paid from the Company’s available cash flow funds. |
Annual
Salaries:
| Name | |
Starting
Dec. 1, 2014 | | |
2014-15
| | |
2015-2016
| | |
2016-2017
| |
| Robert Kohn | |
| | | |
$ | 275,000 | | |
$ | 325,000 | | |
$ | 375,000 | |
| | |
| | | |
| | | |
| | | |
| | |
| Bonnie Nelson | |
| | | |
$ | 275,000 | | |
$ | 325,000 | | |
$ | 375,000 | |
Lease
Agreement
On
June 3, 2013, the Company entered into a new lease agreement with its current landlord. The lease is for a 24 month period, expiring
on May 31, 2015 , and requires monthly base rental payments of $ 4,000 for the period from June 1, 2013 through May 31, 2014 and
$ 4,080 for the period from June 1, 2014 through May 31, 2015 plus adjustments for Common Area Expenses.
Rent
expense was $12,821 and $16,606 for the three months ended February 28, 2015 and 2014, respectively.
Contingencies
From
time to time, the Company may be involved in legal matters arising in the ordinary course of business. While the Company believes
that such matters are currently not material, there can be no assurance that matters arising in the ordinary course of business
for which the Company is, or could be, involved in litigation, will not have a material adverse effect on its business, financial
condition or results of operations.
Note
8. Subsequent Events
None
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
FORWARD
LOOKING STATEMENTS AND ASSOCIATED RISK
The
information contained in this Quarterly Report on Form 10-Q (this “Quarterly Report”) is intended to update the information
contained in our Annual Report on Form 10-K for the year ended November 30, 2014 (our “2014 Annual Report”) and presumes
that readers have access to, and will have read, the “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” and other information contained in our 2014 Annual Report. The following discussion and analysis
also should be read together with our consolidated financial statements and the notes to the consolidated financial statements
included elsewhere in this Quarterly Report.
This
discussion summarizes the significant factors affecting the consolidated operating results, financial condition and liquidity
and cash flows of BioPower Operations Corp. for the three months ended February 28, 2015 and 2014. Except for historical information,
the matters discussed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations are
forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements
generally are identified by the words “believe,” “project,” “expect,” “anticipate,”
“estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,”
“may,” “should,” “will,” “would,” “will be,” “will continue,”
“will likely result” and similar expressions. Forward-looking statements involve risks and uncertainties and are based
upon judgments concerning various factors that are beyond our control. Forward-looking statements are based on current expectations
and assumptions and actual results could differ materially from those projected in the forward-looking statements as a result
of, among other things, those factors set forth in “Risk Factors” contained in Item 1A of our 2014 Annual Report.
Throughout
this Quarterly Report, the terms “we,” “us” and “our” refers to BioPower Operations Corporation
and, Unless the context otherwise requires, The “Company”, “we,” “us,” and “our,”
refer to (i) BioPower Operations Corporation.; (ii) BioPower Corporation (“BC”), Green3Power
Holdings Company and its subsidiaries (“G3P”), Green Oil Plantations Americas Inc. (“Green Oil”),
Green Energy Crops Corporation (“GECC”), Agribopo, Inc., FTZ Exchange LLC and FTZ Energy Corporation. Unless otherwise
indicated, all monetary amounts are reflected in United States Dollars.
Overview
From
inception (September 13, 2010) to November 30, 2014, the Company focused on growing biomass crops coupled with the project development
of processing and/or conversion facilities to produce oils, biofuels, electricity and other biomass products. We also intended
to utilize licensed patented technology to convert biomass wastes into products and reduce the amount of waste going to landfills.
Today,
BioPower and its subsidiaries intend to focus on developing waste to energy projects globally by designing, engineering, permitting,
procuring equipment, construction management and operating and maintaining facilities for the conversion of wastes into electricity
and synthetic fuels through licensed gasification technology. The Company intends to also provide waste remediation services.
Our
corporate headquarters are located at 1000 Corporate Drive, Suite 200, Fort Lauderdale, Florida 33334 and our phone number is
(954) 202-6660. Our website can be found at www.biopowercorp.com. The information on our website is not incorporated in this report.
Our Business
Typical
Gasification Electricity or Synthetic Fuel Production Facility
G3P
designs, permits, procures equipment, manages construction, intends to partially own and intends to operate and maintain Gasification
Waste-to-Energy power plants, using our unique licensed thermal licensed gasification technology, an upgrade to present licensed
gasification technology in use around the world for the last 30 years. These innovative gasifier designs enable the company to
enhance the thermal output which could provide an increase in revenues and bottom lines. We intend to produce energy through the
gasification of non-hazardous municipal solid waste (“MSW”) or other wastes including used tires, tree cuttings, construction
and demolition (C&D) wastes and biomass in our specially designed refuse-derived fuel facilities which process waste prior
to combustion and gasification, in which waste is heated to create gases (syngas) which are then combusted into steam which can
be turned into electricity through traditional steam turbines or create fuel through a Fisher-Tropsch process that has been used
for almost the last one hundred years to create fuels. There can be no assurance we will ever build our first WtE facility.
To
our knowledge this is the cleanest and most cost effective technology for the conversion of wastes to produce electricity or synthetic
fuels. Utilizing a Sorting Facility and an advanced dryer system on the front-end, enables solid wastes, construction & demolition
wastes, medical, biological, and pharmaceutical wastes, and used tires as feedstock to produce electricity and synthetic fuels.
The front-end drying system is especially helpful in developing countries where there is high organic content and high moisture
content waste. G3P also intends to provide waste remediation services.
On
November 13, 2013 we entered into a joint venture agreement and formed MicrobeSynergy, LLC, a 50-50 joint venture for the exclusive
distribution of a cellulosic advanced biofuels technology. We have to meet certain Milestones to maintain exclusivity otherwise
we would have a non-exclusive license. The Company believes that we met Milestone I but we have received notification from our
joint venture partner that we did not meet Milestone 1. As part of our October 24, 2014 transaction below, we have agreed to sell
our interest in this joint venture.
On
October 24, 2014, BioPower Operations Corporation (the “Company” or “BOPO”) executed a Share Exchange
Agreement (“SEA”) with Green3Power Holdings Company (“G3P”) to acquire G3P
and its wholly-owned subsidiaries Green3Power Operations Inc., a Delaware corporation (“G3P OPS”)
and Green3Power International Company, a Nevis Corporation (“G3PI”). Pursuant to the terms thereof,
at Closing (as defined in the Share Exchange Agreement), and following the Closing, G3P, G3P OPS and G3PI
will be wholly-owned subsidiaries of the Company. G3P is an engineering firm developing waste-to-energy projects using
licensed gasification technology, which can convert wastes to energy including electricity, diesel fuels and advanced biofuels.
G3P designs, procures, constructs, intends to partially own, operate and maintain Gasification Waste-to-Energy power
plants, using their unique thermal licensed gasification technology, an upgrade to present licensed gasification technology in
use around the world for the last 30 years. G3P also provides waste remediation services.
We
have not yet generated or realized any revenues from business operations. Our auditors have issued a going concern opinion. This
means there is substantial doubt that we can continue as an on-going business for the next twelve (12) months unless we obtain
additional capital to pay our bills. This is because we have not generated any revenues and no revenues are anticipated until
we begin marketing our products to customers. Accordingly, we must raise cash from sources other than revenues generated such
as from the proceeds of loans, sale of common shares and advances from related parties.
Licensed
Technologies
Green3Power
Holdings Company – Licensed gasification technology for Waste-to-Energy Conversion
G3P
has an exclusive global License for the use of the technologies and processes for building gasification facilities to convert
wastes into electricity and synthetic fuels. Once the royalties paid for the use of these technologies equal $10,000,000, G3P
will then own 100% of the technologies and processes without any further license fees. The initial license fees are paid based
upon gross revenues of the facilities and their waste conversion operations using the gasification technologies and processes.
Enzyme
Technology
We
have a non-exclusive global License for a patented one-step enzyme technology which converts wastes from poultry, hogs, humans
and sugar to products such as fertilizer, cellulosic ethanol and other products. The patent expires in June 2029. Under the terms
of the agreement, we pay our Licensor 50% of any sub-license fees that we receive. We also pay our Licensor 12% of all royalties
on all revenues we earn from utilizing the technology. This 12% is calculated on the basis of net gross revenues which equal gross
revenues less all direct costs associated with the production of the revenues. As part of our October 24, 2014 transaction above,
we have agreed to sell our interest in this license.
Critical
Accounting Policies
In
response to financial reporting release FR-60, Cautionary Advice Regarding Disclosure About Critical Accounting Policies, from
the SEC, we have selected our more subjective accounting estimation processes for purposes of explaining the methodology used
in calculating the estimate, in addition to the inherent uncertainties pertaining to the estimate and the possible effects on
the our financial condition. The accounting estimates involve certain assumptions that, if incorrect, could have a material adverse
impact on our results of operations and financial condition. Our more significant accounting policies can be found in Note 3 of
our unaudited interim consolidated financial statements found elsewhere in this report and in our Annual Report on Form 10-K for
the year ended November 30, 2014, as filed with the SEC. There have been no material changes to our critical accounting policies
during the period covered by this report.
Results
of Operations
Our
financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments
relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be
unable to continue in operation. We expect that we will require additional capital to meet our operating requirements. We expect
to raise additional capital through, among other things, the sale of equity and/or debt securities.
Three
Months Ended February, 2015 Compared to the Three Months Ended February 28, 2014
The
following tables set forth, for the periods indicated, results of operations information from our unaudited interim consolidated
financial statements:
| | |
Three
Months Ended
February 28, | | |
Change
| | |
Change
| |
| | |
2015
| | |
2014
| | |
(Dollars)
| | |
(Percentage)
| |
| | |
| | |
| | |
| | |
| |
| Expenses | |
| | | |
| | | |
| | | |
| | |
| General and administrative expenses | |
$ | 248,385 | | |
$ | 360,453 | | |
$ | (112,068 | ) | |
| -31.
09 % | |
| | |
| | | |
| | | |
| | | |
| | |
| Other Income (Expense) | |
| | | |
| | | |
| | | |
| | |
| Interest expense | |
| 3,926 | | |
| 5,895 | | |
| (1,969 | ) | |
| -33.49 | % |
| Interest expense - related party | |
| 2,082 | | |
| - | | |
| 2,082 | | |
| 100.0 | % |
| | |
| - | | |
| - | | |
| | | |
| | |
| Consulting revenue, net | |
| - | | |
| 76,533 | | |
| (76,533 | ) | |
| -100.0 | % |
| | |
| | | |
| | | |
| | | |
| | |
| Total Other
Income - net | |
| (6,008 | ) | |
| 70,638 | | |
| (76,646 | ) | |
| (108.5 | )% |
| | |
| | | |
| | | |
| | | |
| | |
| Net loss | |
$ | (254,393 | ) | |
$ | (289,815 | ) | |
$ | (35,422 | ) | |
| (12.2 | )% |
General
and Administrative Expenses. Our general and administrative expenses are mainly comprised of compensation expense, corporate
overhead, development costs, and financial and administrative contracted services for professional services including legal and
accounting, SEC filing fees, and insurance. The decrease in our general and administrative expenses is primarily attributable
to lower compensation expense because there were no outside consultants in the three months ended February 28, 2015, and there
was no stock based compensation for the period ending February 28, 2105.
Interest
Expense. Interest expense for the three months ended February 28, 2015 and 2014 primarily represents the accretion of
debt discount to interest expense on our outstanding debt, as well as contractual interest expense on our notes payable and convertible
debt.
Consulting
Revenue. During the three months ended February 28, 2015 and 2014, the Company recognized $0 and $76,533, respectively;
in net consulting revenue related to the consulting agreement entered into with a third party in February 2013. The consulting
agreement was terminated during the year ended November 30, 2014.
Liquidity
and Financial Condition
| | |
Three Months Ended February 28, | |
| Category | |
2015 | | |
2014 | |
| | |
| | |
| |
| Net cash used in operating activities | |
$ | (58,805 | ) | |
$ | (125,284 | ) |
| Net cash provided by financing activities | |
| 66,650 | | |
| 125,000 | |
| | |
| | | |
| | |
| Net increase (decrease) in cash | |
$ | 7,845 | | |
$ | (5,038 | ) |
Cash
Flows from Operating Activities
Net
cash used in operating activities was $58,805 for the three months ended February 28, 2015, compared with 125,284 for the comparable
period in 2014. Net cash used in operating activities for the three months ended February 28, 2015 is mainly attributable to our
net loss of $254,393, offset by an increase in accounts payable and accrued expenses. Net cash used in operating activities for
the three months ended February 28, 2014 is mainly attributable to our net loss of $289,815, offset by the loss on impairment
of securities, an increase in accounts payable and accrued expenses due to related parties and an increase inconvertible debt
and notes payable
Cash
Flows from Financing Activities
We
have financed our operations primarily from either advancements or the issuance of equity and debt instruments. For the three
months ended February 28, 2015 cash flows provided by financing activities was $66,650, compared to $125,000 for the comparable
period in 2014. We received $7,500 in proceeds from convertible debt and notes payable with third parties and related parties
during the three months ended February 28, 2015, compared to $125,000 in proceeds from convertible debt during the three months
ended February 28, 2014. Management is seeking, and expects to continue to seek to raise additional capital through equity and/or
debt financings, including through one or more equity or debt financings to fund its operations, and pay amounts due to its creditors
and employees. However, there can be no assurance that the Company will be able to raise such additional equity or debt financing
or obtain such bank borrowings on terms satisfactory to the Company or at all.
The
Company does not currently have sufficient resources to cover on-going expenses and expansion. As of February 28, 2015, the Company
had cash of $22,963 and current liabilities of $2,332,044. Our current liabilities include accounts payable and accrued expenses
to related parties of $1,647,037. We have historically financed our operations primarily through private placements of common
stock, loans from third parties and loans from our Officer. We plan on raising additional funds from investors to implement our
business model. In the event we are unsuccessful, this will have a negative impact on our operations.
As
reflected in the accompanying unaudited interim consolidated financial statements, the Company has a net loss of $254,393 and
net cash used in operations of $58,805 for the three months ended February 28, 2015; and a working capital deficit of $2,308,877
at February 28, 2015. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
The
ability of the Company to continue as a going concern is dependent on Management’s plans, which include potential asset
acquisitions, mergers or business combinations with other entities, further implementation of its business plan and continuing
to raise funds through debt and/or equity financings. The Company will likely rely upon related party debt and/or equity financing
in order to ensure the continuing existence of the business. The financial statements have been prepared assuming that we will
continue as a going concern, which contemplates that we will realize our assets and satisfy our liabilities and commitments in
the ordinary course of business.
Recent
Accounting Pronouncements
See
Note 3 to our unaudited interim consolidated financial statements regarding recent accounting pronouncements.
Off-Balance
Sheet Arrangements
As
of the date of this Quarterly Report, we do not have any off-balance sheet arrangements that have or are reasonably likely to
have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that are material to investors.
ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
This
item is not applicable to smaller reporting companies.
ITEM
4. CONTROLS AND PROCEDURES.
Evaluation
of Disclosure Controls and Procedures
Our
management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated
the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of February 28, 2015, the end of the period
covered by this report. Based on, and as of the date of such evaluation, the Chief Executive Officer and Chief Financial Officer
have concluded that our disclosure controls and procedures were effective as of February 28, 2015 such that the information required
to be disclosed in our SEC reports is recorded, processed, summarized and reported within the time periods specified in SEC rules
and forms, and is accumulated and communicated to our management, including our principal executive officer and principal financial
officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes
in Internal Control Over Financial Reporting
There
have not been any significant changes in our internal control over financial reporting during the fiscal quarter ended February
28, 2015 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.
From
time to time, we are a party to, or otherwise involved in, legal proceedings arising in the normal and ordinary course of business.
As of the date of this report, we are not aware of any proceeding, threatened or pending, against us which, if determined adversely,
would have a material effect on our business, results of operations, cash flows or financial position.
ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None.
ITEM
3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM
4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM
5. OTHER INFORMATION.
None.
ITEM
6. EXHIBITS.
The following
exhibits are being filed as part of this Quarterly Report on Form 10-Q.
| Exhibit |
|
|
| Number |
|
Exhibit
Description |
| |
|
|
| 31.1 |
|
Certification
of Chief Executive Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a) or 15d- 14(a) |
| |
|
|
| 32.1 |
|
Certification
of Chief Executive Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(b) or 15d- 14(b) and 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.DEF |
|
XBRL
Taxonomy Extension Definition Linkbase Document |
| |
|
|
| 101.LAB |
|
XBRL
Taxonomy Extension Label Linkbase Document |
| |
|
|
| 101.PRE |
|
XBRL
Taxonomy Extension Presentation Linkbase Document |
Copies
of this report (including the financial statements) and any of the exhibits referred to above will be furnished at no cost to
our shareholders who make a written request to BioPower Operations Corp., 1000 Corporate Drive, Suite 200, Fort Lauderdale, Florida
33334 Attention: Mr. Robert Kohn.
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.
| Dated:
May 13, 2015 |
BioPower
Operations Corporation |
| |
|
| |
By:
|
/s/
Robert D. Kohn |
| |
|
Robert
D. Kohn, Chairman and Chief Executive |
| |
|
Officer and Chief Financial Officer |
EXHIBIT
31.1
CERTIFICATION
OF
PRINCIPAL
EXECUTIVE OFFICER
PURSUANT
TO SECTION 302(a) OF THE SARBANES-OXLEY ACT OF 2002
I,
Robert D. Kohn, certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q of the Registrant;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect
to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4.
As the Registrant’s certifying officer, I am responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange
Act Rules 13a-15(f) and 15(d)-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 my supervision, to ensure that material information relating
to the Registrant, including its consolidated subsidiaries, is made known to me 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 my supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles; |
| |
|
|
| |
(c) |
Evaluated the effectiveness of the Registrant’s
disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such evaluation; and |
| |
|
|
| |
(d) |
Disclosed in this report any change in the Registrant’s
internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s
fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect,
the registrant’s internal control over financial reporting; and |
5.
As the Registrant’s certifying officer, I have disclosed, based on my 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:
May 13, 2015 |
BioPower Operations Corporation |
| |
|
|
| |
By: |
/s/
ROBERT D. KOHN |
| |
|
Robert
D. Kohn, |
| |
|
Chief
Executive Officer, Chief Financial Officer, |
| |
|
Principal
Executive Officer and Director |
EXHIBIT
32.1
CERTIFICATION
PURSUANT TO
18
U.S.C. SECTION 1350,
AS
ADOPTED PURSUANT TO
SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
In connection
with the quarterly report of BioPower Operations Corporation (the “Company”) on Form 10-Q for the quarter ending February
28, 2015, as filed with the Securities and Exchange Commission on the date hereof, I, Robert Kohn, Principal Accounting and Financial
Officer, Chief executive Officer, Chief Financial Officer, Secretary and Director of the Company, certify, pursuant to 18 U.S.C.
§1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
| |
1. |
The
quarterly report 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 quarterly report fairly presents, in all material respects, the financial condition and results
of operations of the Company. |
| Date:
May 13, 2015 |
BioPower Operations Corporation |
| |
|
|
| |
By: |
/s/
ROBERT D. KOHN |
| |
|
Robert
D. Kohn, |
| |
|
Chief
Executive Officer, Chief Financial Officer, |
| |
|
Principal
Accounting and Financial Officer and Director |
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