Item 1. Financial Statements
Item
1. Financial Statements.
CLENERGEN
CORPORATION
(a
Development Stage Company)
CONSOLIDATED
BALANCE SHEETS
April 30, 2010
October 31, 2009
(Unaudited)
ASSETS
Current Assets :
Cash
$
167,134
$
1,472
Subscriptions
receivable
699,643
-
Prepaid
expenses and other
1,886,729
15,039
Total
Current Assets
2,753,506
16,511
Fixed Assets :
Property
and equipment, net
20,216
12,901
Total
Fixed Assets
20,216
12,901
Other Assets :
Deposits
48,698
33,487
Total
Other Assets
48,698
33,487
TOTAL
ASSETS
$
2,822,420
$
62,899
LIABILITIES
AND STOCKHOLDERS' EQUITY/DEFICIENCY
Current Liabilities :
Accounts
payable and accrued expenses
$
1,374,805
$
214,211
Payroll
liabilities
84,313
6,745
Due
to affiliates and shareholders
1,270,307
330,302
Total
Current Liabilities
2,729,425
551,257
Total
Liabilities
2,729,425
551,257
Stockholders'
Equity/(Deficiency) :
Preferred
stock, $0.001 par value; Authorized: 10,000,000 shares; Issued:
None
-
-
Common
stock, $0.001 par value; Authorized: 500,000,000 shares; Issued:
95,640,741 and 86,941,013 shares, respectively
95,641
86,941
Additional
paid in capital
11,869,306
3,998,562
Accumulated
other comprehensive income/(loss)
33,939
389,956
Accumulated
deficit during development stage
(11,905,891
)
(4,963,818
)
Total
Stockholders' Equity/Deficiency
92,995
(488,358
)
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY/DEFICIENCY
$
2,822,420
$
62,899
The
accompanying notes are an integral part of these financial
statements.
3
CLENERGEN
CORPORATION
(a
Development Stage Company)
STATEMENTS
OF OPERATION
For
the Three and Six Months Ending April 30, 2010 and 2009
and
From October 27, 2005 (inception) to April 30, 2010
Three
Months Ended
April
30,
Six
Months Ended
April
30,
From
Inception
To
2010
2009
2010
2009
April
30, 2010
Revenue
$
-
$
-
$
-
$
-
$
-
Cost
of services
-
-
-
-
-
Gross
profit or (loss)
-
-
-
-
-
General
and administrative expenses
5,419,513
53,965
6,846,225
58,568
9,535,000
Research
and development
-
-
-
-
2,275,043
Operating
loss
(5,419,513
)
(53,965
)
(6,846,225
)
(58,568
)
(11,810,043
)
Interest
expense
96,412
-
96,412
-
96,412
Other
income
564
-
564
-
564
Loss
before income taxes
(5,515,361
)
(53,965
)
(6,942,073
)
(58,568
)
(11,905,891
)
Provision
for income taxes
Federal
-
-
-
-
-
State
-
-
-
-
-
Net
loss
$
(5,515,361
)
$
(53,965
)
$
(6,942,073
)
$
(58,568
)
$
(11,905,891
)
Loss
per share, basic and diluted
$
(0.06
)
$
(7.20
)
$
(0.08
)
$
(7.81
)
$
(0.81
)
Weighted
average common shares outstanding
91,257,718
7,500
90,860,152
7,500
14,637,979
Comprehensive
loss:
Net
loss
$
(5,515,361
)
$
(53,965
)
$
(6,942,073
)
$
(58,568
)
$
(11,905,891
)
Foreign
currency translation (loss)/income
(321,304
)
(46,300
)
(356,017
)
-
33,938
Comprehensive
loss
$
(5,836,665
)
$
(100,265
)
$
(7,298,090
)
$
(58,568
)
$
(11,871,953
)
The
accompanying notes are an integral part of these financial
statements.
4
CLENERGEN
CORPORATION
(a
Development Stage Company)
STATEMENTS
OF CASH FLOWS
For
the Six Months Ending April 30, 2010 and 2009
and
From October 27, 2005 (inception) to April 30, 2010
Six Months Ended
April 30,
From Inception
2010
2009
to April 30, 2010
CASH FLOWS FROM OPERATING
ACTIVITIES
Net
income (loss)
$
(6,942,073
)
$
(58,568
)
$
(11,905,891
)
Adjustments
to reconcile net income to net cash used in operating
activities:
Adjustments
for charges not requiring outlay of cash:
Depreciation
and amortization
2,695
-
3,835
Common
stock issued for compensation
5,116,651
-
5,116,651
Changes
in operating assets and liabilities:
(Increase)/decrease
prepaid expenses and other current assets
(1,871,690
)
-
(1,886,729
)
Deposits
(15,211
)
-
(48,698
)
Increase/(decrease)
in accounts payable and accrued expenses
1,160,594
-
1,374,805
Increase/(decrease)
in accrued payroll liabilities
77,568
-
84,313
Total
adjustments to net income
4,470,607
-
4,644,177
Net
cash used in operating activities
(2,471,466
)
(58,568
)
(7,261,714
)
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase
of furniture and equipment
(10,010
)
-
(24,051
)
Net
cash used in investing activities
(10,010
)
-
(24,051
)
CASH FLOWS FROM FINANCING
ACTIVITIES
Cash
received from affiliates/shareholders
2,550,406
-
6,935,386
Cash
received on notes payable
452,749
-
469,331
Net
cash provided by financing activities
3,003,155
-
7,404,717
CASH RECONCILIATION
Effect
of exchange rate changes on cash
(356,017
)
-
33,938
Net
increase (decrease) in cash and cash equivalents
165,662
(58,568
)
152,890
Cash
and cash equivalents - beginning balance
1,472
59,230
14,244
CASH
AND CASH EQUIVALENTS BALANCE END OF PERIOD
$
167,134
$
662
$
167,134
Supplemental
Disclosures of Cash Flow Information:
Common
stock issued for debt cancellation
$
-
$
-
$
4,069,085
Common
stock issued in recapitalization
$
-
$
-
$
2,175
The accompanying notes are an integral
part of these financial statements.
5
CLENERGEN
CORPORATION
(a
Development Stage Company)
For
the Three and Six Months Ending April 30, 2010 and 2009
and
From October 27, 2005 (inception) to April 30, 2010
NOTES
TO FINANCIAL STATEMENTS
NOTE
1. ORGANIZATION AND DESCRIPTION OF BUSINESS
Clenergen
Corporation is a company that has, subsequent to the period covered by these
interim financial statements, migrated from the advanced development stage to an
operating company that offers strategic clean energy generation and sustainable
fuel supply projects to address the requirement for renewable and sustainable
source of power. The Company has developed a unique supply of biomass
for use with gasification, combustion steam, Pyrolysis oil and pelleting
technologies to generate electricity. The Company intends to use proprietary and
mixed biomass feedstock to implement sustainable supplies of clean
energy for regional, captive end users, mining companies and, through
government- or privately-owned power grid systems, other end users, including
private homes.
The
Company intends to address the needs of a cleaner, greener planet with an
environmentally sound and sustainable clean energy generation and integrated
fuel supply chain, which is in compliance with and in excess of international
standards for environmental protection, biodiversity, quality, safety and full
traceability; backed by a global management team providing a deep wealth of
experience in the science, technology, finance and business management, as well
as practical experiences of managing and investing in similar businesses in
emerging and developed markets.
NOTE
2. BASIS OF PRESENTATION
These
interim financial statements of Clenergen Corporation have been prepared in
accordance with accounting principles generally accepted in the United States of
America (“US GAAP”) for interim financial information and pursuant to the
requirements for reporting on Form 10-Q and Regulation S-X. In the
opinion of management, all adjustments, consisting solely of normal recurring
accruals, considered necessary for the fair presentation of financial statements
for the interim periods have been included. The results of operations
for the three months and six months ended April 30, 2010 are not necessarily
indicative of results that ultimately may be achieved for any other interim
period or for the year ending October 31, 2010. These interim
unaudited financial statements and notes thereto should be read in conjunction
with the audited consolidated financial statements and notes thereto contained
in the Company’s amended Annual Report on Form 10-K/A for the year ended October
31, 2009.
The
Company has evaluated all subsequent events through date of issuance of this
Form 10-Q for appropriate accounting and financial disclosure.
NOTE
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of
consolidation - The consolidated financial statements of the Company
include the accounts of Clenergen Corporation Limited and its 99.99% owned
subsidiary, Clenergen India Private Limited. All significant intercompany
balances and transactions have been eliminated.
Research and
development - Research and development costs are charged to operations as
incurred and include direct costs of research scientists and materials and an
allocation of other core scientific services.
Foreign currency
translation - The Company's assets and liabilities have been translated
using the exchange rate at the balance sheet date. The weighted average exchange
rate for the period has been used to translate expenses. Translation adjustments
are reported separately and accumulated in a separate component of equity
{comprehensive income (loss)}.
6
Comprehensive
income (loss) - Other comprehensive income refers to revenues, expenses,
gains and losses that under US GAAP are included in comprehensive income but are
excluded from net loss as these amounts are recorded directly as an adjustment
to stockholders' equity. The Company's other comprehensive income is comprised
of foreign currency translation adjustments. Comprehensive income is reported by
the Company in the consolidated statements of operations.
Basic earnings
per share - Basic net loss per share amounts are computed by dividing the
net loss by the weighted average number of common shares
outstanding. Diluted earnings per share amounts are the same as basic
earnings per share as the Company does not have any outstanding potentially
dilutive securities.
Cash
Equivalents - The
Company considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.
Use of Estimates
and Assumptions - The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period. All
adjustments are normal and recurring.
Income
Taxes - A
deferred tax asset or liability is recorded for all temporary differences
between financial and tax reporting and net operating loss carry-forwards.
Deferred tax expense (benefit) results from the net change during the year of
deferred tax assets and liabilities.
Deferred
tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all of the deferred
tax assets will not be realized. Deferred tax assets and liabilities are
adjusted for the effects of changes in tax laws and rates on the date of
enactment.
NOTE
4. GOING CONCERN
The
accompanying financial statements are presented on a going concern basis. For
the period of October 27, 2005 (date of inception) through April 30, 2010, the
Company had a comprehensive loss of $11,871,953, inclusive of a net loss of
$11,905,891, and had total stockholders' equity of $92,995 at April 30,
2010. These factors raise substantial doubt about the Company’s
ability to continue as a going concern. These interim financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
NOTE
5. STOCK TRANSACTIONS
All forms
of share-based payment awards, including shares issued under employee stock
purchase plans, stock options, restricted stock and stock appreciation rights,
as well as share grants and other awards issued to employees and
non-employees under free-standing arrangements, are recorded at fair
value on grant date, based on the estimated number of awards that are
expected to vest and will result in charges to operations.
Effective
March 15, 2010, the Company issued warrants to purchase 1 million shares, of
which 250,000 warrants are exercisable at $1.30, 250,000 warrants are
exercisable at $1.60, 250,000 warrants are exercisable at $2.00 and 250,000
warrants are exercisable at $2.50 per share. The Company valued such
warrants, for accounting purposes, at $ 43,513. Pursuant to FASC
260-10-45, options and warrants will have a dilutive effect
under the treasury stock method only when the average market price of the common
stock during the period exceeds the exercise price of the options or
warrants. The Company asserts that the purchase warrants are
anti-dilutive, and therefore not included in calculations of Basic or Diluted
Earnings per Share.
Effective
March 19, 2010, the Company purchased 62,500 shares of common stock from a
former shareholder. The Company accounted for such purchase by
debiting stockholder’s equity $25,966, the fair value of such shares on the
effective date of purchase.
7
Effective
March 26, 2010, the Company issued 1 million common shares to a
consultant. The Company valued such shares, for accounting purposes,
at $800,000, the fair value of such shares on the effective date of
issuance.
Effective
March 26, 2010, the Company issued 500,000 common shares to a
consultant. The Company valued such shares, for accounting purposes,
at $400,000, the fair value of such shares on the effective date of
issuance.
Effective
April 6, 2010, the Company issued 131,196 common shares to a third-party
investor for total gross consideration of $15,000.
Effective
April 9, 2010, the Company issued 250,000 common shares to a
consultant. The Company valued such shares, for accounting purposes,
at $220,000, the fair value of such shares on the effective date of
issuance.
Effective
April 11, 2010, the Company issued 400,000 common shares to a service
provider. The Company valued such shares, for accounting purposes, at
$352,000, the fair value of such shares on the effective date of
issuance.
Effective
April 26, 2010,
the Company issued 150,000 common shares to a consultant. The Company
valued such shares, for accounting purposes, at $178,500, the fair value of such
shares on the effective date of issuance.
Effective
April 28, 2010, the Company issued 60,000 common shares to a third-party
investor for total gross consideration of $25,000.
Effective
April 30, 2010, the Company issued 1.5 million common shares to a director of
the Company. The Company valued such shares, for accounting purposes,
at $1,695,000, the fair value of such shares on the effective date of
issuance.
During
April 2010 and through June 15, 2010, the Company sold an aggregate of 1,176,032
common shares to a total of 71 non-US Persons for aggregate gross proceeds of
$890,981 in offshore transactions pursuant to Regulation S promulgated under the
Securities Act of 1933. Pursuant to a subscription fee agreement, the
Company will pay as compensation for subscription services provided, a fee equal
to 40% of the gross subscription amounts received from
subscribers. As of April 30, 2010, the Company received $191,339 of
the expected 60% net proceeds of $534,589.
NOTE
6. SUBSEQUENT EVENTS
Subsequent
to April 30, 2010 and through June 15, 2010, the Company issued an aggregate of
500,000 common shares to a total of two consultants. The Company has
preliminarily valued such shares, for accounting purposes, at $460,000, the fair
values of such shares on the effective dates of such issuances.
Subsequent
to April 30, 2010, 1 million common shares that had been issued to a natural
person in connection with his agreement to become an executive officer of the
Company (a position which he never assumed), were surrendered for
cancellation. In connection with this surrender and cancellation, the
Company intends to credit shareholders' equity in an amount equal to the charge
incurred when such shares were originally issued.
Subsequent
to April 30, 2010 and through June 15, 2010, the Company agreed to purchase an
aggregate of 320,000 common shares from a total of three stockholders for the
aggregate consideration of $160,000. None of such agreed-upon
purchases have been consummated.
Effective
May 14, 2010, the Company issued a promissory note in the principal amount of
$250,000 and warrants to purchase 1 million common shares at $0.686 per
share. The Company valued such warrants, for accounting purposes, at
$390,000.
Effective
May 21, 2010, the Company issued 200,000 common shares as consideration for
the purchase of assets, which shares the Company has valued, for accounting
purposes, at $90,000, the fair value of such shares on the effective date of
such issuance.
8
On June
2, 2010, the Company acquired all of the outstanding capital stock of United Bio
Fuels Private Limited, an Indian corporation (“UBF”). UBF owns and
operates a 1.5 megawatt per hour (“MWe”) anaerobic digestive biomass power plant
located in Salem, Tamilnadu, India. Also included in the acquired
assets are ten acres of land and a power evacuation facilities
substation.
The
aggregate purchase price for the land, power plant and other facilities
constituting the acquired assets was 82.44 million Indian Rupees (approximately
$1.76 million at the closing currency exchange rate on June 4, 2010, as reported
by CNNMoney.com). Included in such total purchase price was the
satisfaction of debt to the India Renewable Energy Development Agency Limited, a
government of India enterprise (the “IREDA”), totaling 72.74 million Indian
Rupees ($1.56 million), inclusive of interest. The remaining purchase price is
to be paid to Enkem Engineers Private Limited (“Enkem”), the former principal
stockholder of UBF and operator of the power plant, in the aggregate amount of
2.2 million Indian Rupees ($47,000). The other former shareholders of
UBF will receive in the aggregate, 7.5 million Indian Rupees ($160,000) upon the
power plant becoming fully operational.
The
Company funded the purchase price through prior sales of our securities, a loan
of $150,000 provided by our current chief executive officer, Tim J.E. Bowen, in
the amount of $150,000 (the “Bowen Loan”) and a loan provided by a
non-affiliated party in the amount of $200,000 (the “Non-Affiliate Loan”), as
well as the assumption of the debt due IREDA. The Bowen Loan is a demand loan
bearing interest at the imputed interest rate and the Non-Affiliate Loan is due
July 31, 2010 and bears interest at the rate of 12% per annum. The
Non-Affiliate Loan was used to make the initial good faith deposit the Company
tendered to UBF in November 2009. The principal of the Non-Affiliate
Loan was repaid in March 2010 and accrued interest, totaling $75,000, is
included in accounts payable and accrued expenses at April 30,
2010.
The
Company intends to rely upon FASC 805-10-25 and account for the acquisition by
applying the acquisition method.
9
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