What changed in this filing

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Item 2. Management’s Discussion and Analysis

2010-09-21 compared with 2010-06-21 · 377 added, 141 removed, 12 unchanged (98% of the section changed)

Management's Discussion and Analysis of Financial Condition and

Results of Operations.

following discussion contains forward-looking statements that reflect our plans,

estimates and beliefs.

Our actual results could differ materially

from those discussed in the forward looking statements.

could cause or contribute to such differences include, but are not limited to,

those discussed below and elsewhere in this Quarterly Report on Form

For further information, see “Note Regarding Forward-Looking

Management’s Discussion and Analysis of Financial Condition and Results

of Operations.

months ended April 30, 2010 and 2009

results of operations for the subject three-month periods are summarized as

not recognize any revenues for the three months ended April 30, 2010 (our "2010

Second Quarter") and 2009 (our "2009 Second Quarter").

and Administrative expenses for the three months ended April 30, 2010, increased

by $15,530,048 as compared to the 2009 Second Quarter primarily as a result of

share-based compensation totaling $14,780,302, as compared to $0 incurred in the

2009 First Quarter.

remaining expenses reflect increases in travel, legal, and professional

months ended April 30, 2010 and 2009

results of operations for the subject six-month periods are summarized as

not recognize any revenues for the six months ended April 30, 2010 and

Subsequent to April 30, 2010, we migrated from a development

stage company to an operating company as a result of our acquisition of a

biomass energy plant in Salem, India on June 2, 2010.

generate revenues as a result of plant operations, commencing with our fiscal

quarter ending July 31, 2010.

We also are in negotiations to acquire

a turnkey 18 MW/e biomass power plant located near Chennai, India.

and Administrative expenses for the six months ended April 30, 2010, increased

by $16,952,157 as compared to the six months ending April 30, 2009 primarily as

a result of share-based compensation totaling approximately $15,281,151, as

compared to $0 incurred in the first six months of fiscal year

significant expenses incurred during the six month period include travel, legal,

and professional fees.

operating expenses to increase as we place on-line and expand the capacity of

power plants we acquire, as well as operating expenses relating to our

plantations as more acreage is devoted to growing biomass feedstock for our

power plants and for sale to third parties.

We do not anticipate compensating

consultants with our common stock during the next six months, although we do

intend to implement a stock option program so as to provide incentives to our

service providers.

We expect to commence generating revenue in the second half

of our current fiscal year, with growth in revenue as operations

We also expect that expenditures will increase due to our

further acquisition of and expansion of generating capacity at our power plants;

but anticipate that that such costs will be offset by the revenue generated from

such power plants.

of Operations

believe the following selected sales and expense data, the percentage

relationship between sales and major categories in our condensed consolidated

statements of operations and the percentage change in the dollar amounts of each

of the items presented is important in evaluating the performance of our

business operations.

Three Months Ended July 31,

and administrative expenses

and development

for income taxes

currency translation (loss)/income

Comprehensive

Nine Months Ended July 31,

and administrative expenses

and development

for income taxes

currency translation (loss)/income

Comprehensive

Months Ended July 31, 2010 and 2009

not recognize any sales for the three months ended July 31, 2010 (the “2010

Third Quarter”) and 2009 (the “2009 Third Quarter”).

We are in the

process of migrating from the advanced development stage to an operating company

that offers strategic clean energy generation and sustainable fuel supply

projects to address the requirement of renewable and sustainable source of

In December 2009, we entered into an agreement to acquire a biomass

power plant located in Salem, Tamilnadu, India (the “Salem Plant”) and, during

the 2010 Third Quarter, we entered into an agreement to acquire a second biomass

power plant located near Chennai, India (the “Chennai Plant”).

the process of tendering final purchase price payments to the sellers of the

Salem Plant, which we anticipate will be completed prior to the end of our

current fiscal year, which ends on October 31, 2010 (the “2010 Fiscal

Plant has a current capacity to generate 1.5 megawatts per hour (“MWe”) of

electrical power from the use of anaerobic digestive biomass (in the case of the

Salem Plant, chicken litter).

We have been refurbishing the Salem Plant in

anticipation of commencing power generation operations.

Such refurbishing

efforts are expected to be completed prior to the end of the 2010 Fiscal Year

and we anticipate commencing power generation operations at the Salem Plant also

prior to the end of the 2010 Fiscal Year.

We believe the Salem Plant will

generate gross revenues of approximately $150,000 per month when operating at

its current full capacity.

the process of completing the necessary steps in order to secure the bank

financing necessary to consummate the acquisition of the Chennai Plant.

The Chennai Plant has the capacity to generate 18 MWe of power utilizing biomass

as a feedstock (in the case of the Chennai Plant, dry agricultural wood

We anticipate consummating the acquisition prior to the end of the

2010 Fiscal Year, after which we anticipate the commencement of power generation

operations at the Chennai Plant.

We believe the Chennai Plant will generate

gross revenues of approximately $1.2 million per month when operating at its

anticipated initial power generation rate of 80% of plant capacity.

cost of sales during both the 2010 Third Quarter and 2009 Third Quarter, as we

had no operations during either of such fiscal periods.

We anticipate that

our cost of sales for our two anticipated plant operations will primarily relate

to the costs of purchasing feedstock chicken litter for the Salem Plant and dry

agricultural waste for the Chennai Plant.

We anticipate that cost of

[services] for the Salem Plant and Chennai Plant will be approximately 50% of

anticipated gross revenues, based on operations at current anticipated

capacities and typical cost of [sales] within the biomass power generation

General and Administrative

and administrative expenses for the 2010 Third Quarter increased by

approximately $6,265,000, or 56,945.5%, as compared to the 2009 Third Quarter,

primarily as a result of incurring increased commissions consulting fees,

finance costs and share-based compensation of $3,039,000 in the 2010 Third

There were no share-based compensation expenses incurred in the

2009 Third Fiscal Quarter.

The 2010 Third Quarter share-based compensation

was incurred in connection with our retention of three consultants to perform

business development and capital raising services.

We do not intend to

continue to rely upon compensating our directors, officers, consultants,

employees and other service providers with share-based compensation to the

extent we have done so over the prior twelve month period;

but do anticipate

increased compensation charges in future fiscal periods as we commence

operations at the Salem Plant and Chennai Plant.

We anticipate employment

costs and other operating expenses for each of the Salem Plant and Chennai

Plant, once operating at anticipated capacities, will be between 10% and 15% of

the sales generated by such plant.

incurred $29,408 in research and development expenses during our 2010 Third

Quarter and zero for the 2009 Third Quarter.

From inception on October

2005 through March 2009, we incurred a total of approximately $2,349,000 of

research and development expenses relating to the development of certain

genetically-engineered feedstocks which we intend to utilize at our biomass

power generating plants and for sale to third parties, including the Paulownia

species of tree which we license on an exclusive basis from Star Biotechnology

Limited and Arbour Technologies Pty Ltd.

to continue to conduct research on the genetical engineering of a species of

tree (Melia dubia) and bamboo (Beema Bamboo) in view of increasing its growth

rate by up to 40% per annum.

We further intend to allocate funds to the

cultivation of improved strains (clones) of Melia dubia as well as conducting

research into organic fertilizers and pesticides to complement the species of

tree and grass we have selected for use as biomass feedstocks.

addition, we also intend to conduct research into the conversion to liquid

fertilizer of the by-product that will be generated by the Salem Plant during

the processing of chicken litter as the feedstock for power generation at the

plant, with the view of increasing the value and application of such for use as

organic fertilizer for biomass feedstock plantations.

Interest Expense and Other

expense increased between the comparable three-month periods due to the costs of

servicing debt in the 2010 Third Quarter, which aggregated in principal amount

to $497,111 at July 31, 2010, while there was nominal or no debt serviced in the

2009 Third Quarter.

require further borrowings as we commence operations of the Salem Plant and

Chennai Plant.

These loans are anticipated to be approximately $1.5

million for the Salem Plant and $15 million for the Chennai Plant.

in discussions with banks on the terms of such loans, although no assurance can

be given that such borrowings will be consummated on terms favorable to us, or

at all, nor whether the borrowings will be sufficient for the commencement and

continued operations of the two plants.

further anticipate that we will incur additional debt as we continue to expand

by purchasing existing biomass power generating plants or build such type of

plants on our own.

Any increase in debt will result in our debt servicing

No assurance can be given that we will be able to obtain

additional debt financing (or equity financing) for our maintenance and

expansion needs on terms advantageous to us or at all.

Provision for Income

not make a provision for income taxes for either the 2010 Third Quarter nor the

2009 Third Quarter, as we had no tax liability for either of the comparative

above stated reasons, our net loss increased by approximately $6,656,000, or

58,609.1%, between the 2009 Third Quarter and 2010 Third Quarter.

expect to continue to incur quarterly net losses until such time as we are

operating a sufficient number of biomass power plants and feedstock plantations

that generate revenues in excess of the costs incurred in operating such

facilities and the administration of our Company.

We expect to achieve

such level of revenues by the end of our fiscal year ending October 31, 2011

(the “2011 Fiscal Year”).

Months Ended July 31, 2010 and 2009

not recognize any sales for the nine months ended July 31, 2010 (the “2010 Nine

Month Period”) and 2009 (the “2009 Nine Month Period”).

As we noted in the

three month comparison above, we are in the process of migrating 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.

2009, we entered into an agreement to acquire the Salem Plant and, during the

2009 Third Quarter, we entered into an agreement to acquire the Chennai

We are in the process of tendering final purchase price payments to

the sellers of the Salem Plant, which we anticipate will be completed prior to

the end of the 2010 Fiscal Year.

been refurbishing the Salem Plant in anticipation of commencing power generation

Such refurbishing efforts are expected to be completed prior

to the end of the 2010 Fiscal Year and we anticipate commencing power generation

operations at the Salem Plant also prior to the end of the 2010 Fiscal

We believe the Salem Plant will generate gross revenues of

approximately $150,000 per month when operating at its current full

the process of completing the necessary steps in order to obtain the financing

necessary to consummate the acquisition of the Chennai Plant.

anticipate consummating the acquisition prior to the end of September 2010,

after which we anticipate the commencement of power generation operations at the

Chennai Plant.

We believe the Chennai Plant will generate gross revenues

of approximately $1,200,000 per month when operating at its anticipated initial

power generation rate of 80% of plant capacity.

cost of sales during both the 2010 Nine Month Period and 2009 Nine Month Period,

as we had no operations during either of such fiscal periods.

anticipate that our cost of sales for our two anticipated plant operations will

primarily relate to the costs of purchasing feedstock chicken litter for the

Salem Plant and dry agricultural waste for the Chennai Plant.

anticipate that cost of sales for the Salem Plant and Chennai Plant will be

approximately 50% of anticipated gross revenues, based on operations at current

anticipated capacities and typical cost of sales within the biomass power

generation industry.

General and Administrative

and administrative expenses for the 2010 Nine Month Period increased by

approximately $14,100,000, or 20,436.2%, as compared to the 2009 Nine Month

Period, primarily as a result of incurring share-based compensation of

$9,265,000 and significant commission, consulting and financing costs in the

2010 Nine Month Period.

There were no share-based compensation expenses

incurred in the 2009 Nine Month Period.

The share-based compensation for

the 2010 Nine Month Period was incurred at a time when we had little cash

available to pay our service providers and we were attempting to build the

necessary corporate infrastructure necessary to put our business plan into

We do not intend to continue to rely upon compensating our

directors, officers, consultants, employees and other service providers with

share-based compensation to the extent we have done so over the prior twelve

month period;

but do anticipate increased compensation charges in future fiscal

periods as we commence operations at the Salem Plant and Chennai Plant, as well

as expand our operations through acquisitions or internal growth.

lower employment costs for operations in India, we anticipate employment costs

at each of the Salem Plant and Chennai Plant, once operating at anticipated

capacities, will be between 10% and 15%of the revenues generated by such

incurred approximately $74,000 in research and development expenses during our

2010 Nine Month Period primarily related to agronomy research.

incur any research and development expenses during our 2009 Nine Month

From inception on October 2005 through October 31, 2009, we

incurred a total of approximately $2,349,000 of research and development

expenses relating to the development of certain genetically-engineered

feedstocks which we intend to utilize at our biomass power generating plants and

for sale to third parties, including the Pavlownia species of tree which we

license on an exclusive basis from Star Biotechnology Limited and Arbour

Technologies Pty Ltd.

in our discussion of our results for the 2010 Third Quarter, we intend to

conduct research and development on additional species of trees and grasses and

on uses of byproducts resulting from our power generation

the nine months ended July 2010, the Company incurred approximately $497,111 in

interest expense relating to notes payable that were outstanding during the

period, none of which were outstanding during the nine months ended July

require further borrowings as we commence operations of the Salem Plant and

Chennai Plant.

These loans are anticipated to be approximately $1.5

million for the Salem Plant and $15 million for the Chennai Plant.

in discussions with banks on the terms of such loans, although no assurance can

be given that such borrowings will be consummated on terms favorable to us, or

at all, nor whether the borrowings will be sufficient for the commencement and

continued operations of the two plants.

further anticipate that we will incur additional debt as we continue to expand

by purchasing existing biomass power generating plants or build such type of

plants on our own.

Any increase in debt will result in our debt servicing

No assurance can be given that we will be able to obtain

additional debt financing (or equity financing) for our maintenance and

expansion needs on terms advantageous to us or at all.

Company realized approximately $580 in other income during the 2010 Nine Month

Period, relating to the forgiveness of debt incurred in a prior period of $300

and interest in the amount of $280 earned on cash balances in our bank

Provision for Income

not make a provision for income taxes for either the 2010 Nine Month Period or

the 2009 Nine Month Period, as we had no tax liability for either of the

comparative periods.

We have a loss carry-forward of approximately

$19,694,655 as of July 31, 2010.

The utilization of any loss carryforward

is dependent on our ability to generate taxable income against which any

resulting tax liability can be offset by such loss carryforward, to the extent

permissible under federal and applicable state tax laws.

above stated reasons, our net loss increased by approximately $14,662,000, or

21,249.3%, between the 2009 Nine Month Period and 2010 Nine Month Period.

We expect to continue to incur quarterly net losses until such time as we are

operating a sufficient number of biomass power plants and feedstock plantations

that generate revenues in excess of the costs incurred in operating such

facilities and the administration of our Company.

We expect to achieve

such level of revenues by the end of the 2011 Fiscal Year.

and Financial Condition

April 30 2010, we had working capital of $99,081, calculated as

April 30, 2010

October 31, 2009

July 31, 2010, we had a working capital deficit of approximately $1,943,000,

calculated as follows:

At July 31, 2010

At October 31,

Increase/Decrease

Company’s working capital has increased over the six month period ending April

30, 2010 by $633,827.

The Company’s current assets have increased by

$2,736,995 since October 31, 2009 while the current liabilities of the Company

have increased by $2,103,168 for the same period.

the six months, the Company has increased its current assets by virtue of

prepaid expenses, capital from stock subscriptions, and proceeds from short-term

notes payable.

Company retained Vastani Company SA (“Vastani”) as an advisor pursuant to a

Letter of Agreement dated March 15, 2010.

As of April 30, 2010, the

Company is reporting a balance of $699,643 in subscriptions

This represents the balance of monies held in escrow for

completed subscriptions.

This balance was received from the Company’s

escrow agent during May 2010.

working capital deficit has increased over the nine month period ending July 31,

2010 by approximately $3,070,000.

Such increase is primarily due to the

increase in business development activities, including the increase in staff and

consulting costs.

approximately $121,000 of subscriptions receivable at July 31, 2010.

amount represents funds held in escrow pending our acceptance of related

subscriptions.

Company has entered into various consulting agreements whereby consultants have

been issued shares as compensation for services.

The Company is

amortizing the value of the compensation over the terms of the individual

agreements and is carrying the unearned portion as prepaid

As of April 30, 2010, the value of prepaid consulting is

liabilities have increased primarily as a result of expenses payable including,

but not limited to, travel and legal and professional fees.

Company received approximately $220,000 from short term shareholder

past six month, we have been transitioning from an advanced development stage

entity to an operating company.

During the six month period, we have

primarily been financed through use of our common stock;

through sales to third

parties and others and by the issuance of stock as share-based

compensation.

We currently have 50 highly qualified individuals,

located in six different geographic areas, providing services to our company.

part by preserving cash flow through compensating, in whole or part, our

services providers, consisting of employees and consultants, through issuances

of stock rather than cash payments, we believe that we have acquired assets,

including what we hope to be valuable intellectual property rights, and have

begun to create the infrastructure required to generate revenues in the near

While such stock issuances have resulted in dilution to our

current shareholders, we note that there are no current liens on any of our

assets that could, in the long term, restrict our ability to manage operations

and the further implementation of our business model.

following summarizes our cash flows for the six months ending April 30,

cash provided by (used in) operating activities

cash provided by (used in) investing activities

Such amount was paid as of August 31, 2010.

30, 2010, we entered into an agreement with our chief executive officer whereby

the officer has irrevocably paid to us the sum of ₤175,000, which is to be

retained by us regardless of whether milestones are met.

entered into various consulting agreements pursuant to which we have issued our

common stock as share-based compensation for services rendered or to be

We are amortizing the value of the compensation over the terms

of the individual consulting agreements and are carrying the unearned portion as

prepaid expense.

As of July 31, 2010, the amount of prepaid consulting

services is approximately $817,000.

While the amortization of such

compensation value will impact our operating results, such amortization should

not affect cash flow or our financial position.

following summarizes our cash flows for the nine months ended July 31, 2010 and

Nine Months Ended July 31,

cash used in operating activities

cash used in investing activities

cash provided by financing activities

1 unchanged sentence

increase (decrease) in cash during the period

estimate our operating expenses and working capital requirements for the next

twelve month period to be as follows:

power plant new build (2.25MW/h)

power plant acqustions and upgrade (18MW/h)

power plant acqustions and upgrade(1.5MW/h)

and consulting

and administrative

used in operating activities was approximately $3,852,000 for the nine months

ended July 31, 2010, as compared to $59,000 for the nine months ended July 31,

The changes in cash flows from operating activities between the

corresponding nine month periods were primarily due to increases to prepaid

consulting and finance costs.

past nine months, we have been transitioning from an advanced development stage

entity towards being an operating company.

During the nine months ending

July 2010, we have primarily been financed through advances and notes payable

and use of our common stock;

through sales to third parties and others and by

the issuance of stock as share-based compensation.

We currently have 68

highly qualified individuals as consultants and employees, located in six

different geographic areas, providing services to our company.

preserving cash flow through compensating, in whole or part, our services

providers, consisting of employees and consultants, through issuances of stock

rather than cash payments, we believe that we have acquired assets, including

what we hope to be valuable intellectual property rights, and have begun to

create the infrastructure required to generate revenues in the near

used in investing activities was approximately $1,673,000 for the nine months

ended July 31, 2010, as compared to none for the nine months ended July 31,

The changes in cash flows from investing activities between the

corresponding nine month periods were primarily incurred in connection with

refurbishing and other costs relating to the Salem Plant that we are in the

process of acquiring.

provided by financing activities was approximately $5,357,000 for the nine

months ended July 31, 2010, as compared to none for the nine months ended July

The changes in cash flows from financing activities between the

corresponding nine month periods include $1,194,000 in cash from the sale of

stock, $2,383,000 in cash received from affiliates and shareholders and

$1,779,000 in cash received on notes payable.

received a loan (the “Rootchange Loan”) in the principal amount of $607,461 from

Rootchange Limited, an affiliate of two of our directors and executive officers,

Quinn and Jessica Hatfield, on August 5, 2010, subsequent to the end

of the 2010 Third Quarter.

The Rootchange Loan is evidenced by two

promissory notes, each in the principal amount equal to one-half of the loan

amount, $303,730.50.

The maturity date of each of the promissory notes is

November 1, 2011, with acceleration of such maturity date limited to non-payment

and bankruptcy events.

The promissory notes each provide for interest at

the below-market rate of 1.00% per annum (20.00% following an acceleration

event), payable semi-annually, commencing on February 1, 2011.

principal amount (but not accrued and unpaid interest) of one of such notes is

convertible into our common stock at the rate of one share for each $0.50 of

principal converted.

The closing market price of our common stock on the

date we received the proceeds of the Rootchange Loan was $0.50 per

to use the proceeds of the Rootchange Loan to fund our business and development

plan, including our planned acquisition, development, expansion and construction

of biomass power plants and biomass feedstock plantations, as well as to fund

the start-up costs operations of these plants until, if ever, the plants

generate sufficient cash flow from their operations to fund the plants’ ongoing

costs and expenses.

to seek additional capital, either through equity or debt funding, to further

fund our business and development plan.

Any equity financing could result

in substantial dilution to our then current stockholders.

equity or debt financing may not be on terms favorable to us, may be on terms

onerous to us or may not be obtainable on any terms whatsoever.

require additional capital to fund our business and development plan, including

our planned acquisition, development, expansion and/or construction of biomass

its planned acquisition, development, expansion and/or construction of biomass

power plants and biomass feedstock plantations.

In addition, once the

power plants have been constructed, we will need to fund the start-up costs

operations of these plants until, if ever, the plants generate sufficient cash

flow from their operations to fund the plants' ongoing costs and

We also may encounter unforeseen costs that could also

require us to seek additional capital.

As a result, our business plan

and growth strategy requires that we obtain significant additional financial

resources, including resources obtained through debt and/or equity

power plants have been acquired or constructed, we will need to fund the

start-up costs of operating these plants until such time, if ever, when the

plants generate sufficient cash flow from their operations to fund the plants’

ongoing costs and expenses.

We also may encounter unforeseen costs that

could also require us to seek additional capital.

Accordingly, our

business plan and growth strategy anticipates that we obtain significant

additional financial resources, including resources obtained through debt and/or

equity financing.

We may not be able to obtain the funding necessary to

implement our growth strategy on acceptable terms or at all.

inability to obtain such funding would prevent us from acquiring, developing,

expanding and/or constructing any plants or plantations.

our business development strategy may not result in significant revenues even if

successfully funded.

not yet identified all of the sources for the additional financing we require,

although we do have offers of debt financing from two banks and have, in the

past, been able to raise equity capital through the sale of equity interest in

Furthermore, we plan to make presentations to major

institutions and renewable energy investment funds in June and July 2010 with

the view of raising interest for our financing projects.

to obtain additional capital will depend on market conditions, national and

global economies, demand for electricity in countries in which we intend to

operate power plants, environmental and legal issues affecting power plant

operations, weather and other conditions affecting our biomass plantations and

other factors beyond our control.

The terms of any future debt or

equity funding that we may obtain may be unfavorable to us and to our

stockholders.

implement its growth strategy on favorable terms or at all.

to obtain such funding would prevent us from acquiring, developing, expanding

and/or constructing any plants or plantations.

Furthermore, our business

development strategy may not result in significant revenues even if successfully

not yet identified all of the sources for the additional financing it requires,

although we have discussed possible private equity financing by institutional

and other investors located in London, Frankfurt, Munich, Dubai and Abu Dhabi

over the past three months and have, in the past, been able to raise equity

capital through the sale of our stock.

Our ability to obtain additional

capital will depend on market conditions, national and global economies, demand

for electricity in countries in which we intend to operate power plants,

environmental and legal issues affecting power plant operations, weather and

other conditions affecting our biomass plantations and other factors beyond our

Accounting Policies

significant accounting policies are described in Note 2 of the Notes to

Consolidated Financial Statements included in our amended Annual Report on Form

10-K/A for the year ended October 31, 2009, filed with the Securities and

Exchange Commission on March 19, 2010.

A discussion of our critical

accounting policies and estimates is included in the Management’s Discussion and

Analysis of Financial Condition and Results of Operations section of such Form

There have no material changes to such critical accounting

policies or estimates as reported in such amended Annual Report

Company’s significant accounting policies are described in Note 2 of the Notes

to Consolidated Financial Statements included in the Company’s amended Annual

Report on Form 10-K/A for the year ended October 31, 2009, filed with the

Securities and Exchange Commission on March 19, 2010.

A discussion of the

Company’s critical accounting policies and estimates is included in the

Management’s Discussion and Analysis of Financial Condition and Results of

Operations section of such Form 10-K/A.

There have no material changes to

such critical accounting policies or estimates as reported in such amended

Annual Report section.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis