What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2011-09-21 compared with 2010-07-30 · 80 added, 163 removed, 2 unchanged (99% of the section changed)

Management's Discussion and Analysis of Financial Condition and

Management's Discussion and Analysis of Financial Condition and Results of Operations.

As a result of the divesture of Clenergen India and the joint venture and licensing arrangements now in place in Guyana, Ghana Trinidad and Philippines, the Company’s primary income streams will be through the supply of saplings for energy crops, development fees, licensing fees, distributions from the Company’s joint ventures, sales of biomass feedstock from the Company’s plantations and distributions from other projects in which the Company participates.

We are exposed to exchange rate fluctuations due to the fact that we are and are planning on operating in multiple foreign jurisdictions, including India, Ghana and Philippines.

Since most of the company’s revenues and costs are paid in the local currency of the subject country of operation, variations in the currency exchange rate between the country of operation and the United States impacts both positively and negatively the reporting results.

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

of Operations

months ended April 30, 2010 and 2009

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

Three Months Ended July 31, 2011 and 2010

Our result of operations for the subject three month periods are summarized below:

Three Months Ended

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

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

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

by $5,365,548 as compared to the 2009 Second Quarter, primarily as a result of

share-based compensation totaling $4,615,802, as compared to $0 incurred in the

2009 Second Quarter.

The remaining general and administrative

expenses reflect increases in travel, legal, and professional fees, incurred, in

part, in connection with our efforts to migrate from the advanced development

stage to an operating company.

months ended April 30, 2010 and 2009

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

Six Months Ended

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

Six Month Period") and 2009 (the "2009 Six Month Period").

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.

We expect to generate revenues as a result of plant

operations, commencing with our fiscal quarter ending October

We also entered into an agreement in July 2010 to acquire a

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

expect to consummate the Chennai acquisition in our current fiscal

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

by $6,787,657 as compared to the six months ending April 30, 2009, primarily as

a result of the establishment of field offices in Chennai and the Philippines in

the 2010 Six Month Period totaling $1,129,786, development of project sites near

Salem and Chennai in the 2010 Six Month Period in anticipation of our acquiring

biomass power plants associated such sites totaling $391,332 and share-based

compensation totaling $5,116,651.

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

and professional fees, reflecting, in part, our efforts to migrate from the

advanced development stage to an operating company.

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

our officers, directors, employees and consultants with shares of our common

stock during the next six months at the same or similar rate as incurred in the

2010 Six Month Period, although we do intend to grant warrants at exercise

prices equal to or greater than the market price of our common stock on the

dates of such warrant grants, as well as implementing a stock option program, so

as to provide incentives to our officers, directors, employees and consultants.

We expect to commence generating revenue in the second half of our current

fiscal year, with growth in revenue as operations expand.

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

and Financial Condition

April 30 2010, we had working capital of $24,081, calculated as

At October 31,

Increase/Decrease

working capital has increased over the six month period ending April 30, 2010 by

Our current assets have increased by $2,736,995 since

October 31, 2009 while our current liabilities have increased by $2,178,168 for

the same period.

the six months, we increased our current assets by virtue of prepaid expenses,

capital from stock subscriptions, and proceeds from short-term notes

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

Agreement, dated March 15, 2010.

As of April 30, 2010, we are

reporting a balance of $699,643 in subscriptions receivable.

represents the balance of monies held in escrow for completed

subscriptions.

This balance was received from our escrow agent during

Subscriptions

entered into various consulting agreements whereby consultants have been issued

shares as compensation for services.

We are amortizing the value of

the compensation over the terms of the individual agreements and is carrying the

unearned portion as prepaid expense.

As of April 30, 2010, the value

of prepaid consulting is $1,544,105.

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

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

received approximately $220,000 from short term shareholder notes.

past six months, 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,

Six Months Ended

cash used in operating activities

cash used in investing activities

cash provided by financing activities

of exchange rate changes on cash

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 acquisitions and upgrade (18MW/h)

power plant acquisitions and upgrade(1.5MW/h)

and consulting

and administrative

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

our 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

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.

Critical Accounting

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

Cost of Services

Operating expenses

Net loss from continuing operations

Net profit / (loss) from discontinued operations

Overall net loss

We did not recognize any revenues for the three months ended July 31, 2011 (the “2011 Third Fiscal Quarter”) and 2010 (the “2010 Third Fiscal Quarter”).

We generated $1,276,514 in revenues for the three months ended July 31, 2011 from operating an 18.0 MW/h biomass power plant in Tamilnadu, India, which revenues are being accounted for as part of the discontinued operations of the Company.

During the three months ended July 31, 2011, we incurred cost of services for our discontinued operations totaling $302,031 relating to various direct expenses incurred in connection with the generation of power at the 18 MW/h plant.

Such expenses include supply costs of biomass and other fuels, electricity charges paid to the state electricity board as open access charges for using the state’s power grid to supply power to third party customers and water charges, as well as maintenance costs relating to the plant.

Operating expenses relating to our continuing operations for the three months ended July 31, 2011 decreased by $5,376,581 as compared to the comparative period in 2010.

The decrease is primarily due to the lack of stock-based compensation charges during our 2011 Third Fiscal Quarter as compared to significant consulting fees, finance costs and stock-based compensation charges of $3,039,000 incurred in our 2010 Third Fiscal Quarter.

These expenses were incurred last year in connection with our retention of three consultants to perform business development and capital raising charges.

During our 2011 Third Fiscal Quarter, we incurred interest charges relating to our continuing operations in the amount of $81,590 as compared to interest expense of $61,538 in the 2010 Third Fiscal Quarter.

However, the Company also incurred interest charges on its discontinued operations, primarily being the interest charges on the IDBI bank loan for the 18 MW/h plant, in the amount of $470,224 and $ 339,434 for the three months period ended July 31, 2011 and 2010, respectively.

Nine Months Ended July 31, 2011 and 2010

Our result of operations for the subject nine month periods are summarized below:

Nine Months Ended

Cost of Services

Operating expenses

Net loss from continuing operations

Net loss from discontinued operations

Overall net loss

We did not recognize any revenues for the nine months ended July 31, 2011 (the “2011 Nine Month Period”) and 2010 (the “2011 Nine Month Period”).

We generated $5,717,705 in revenues for the nine months ended July 31, 2011 from operating the 18.0 MW/h plant, which is accounted for as part of the discontinued operations of the Company.

During the nine months ended July 31, 2011, we incurred cost of servicing our discontinued operations totaling $4,059,100 relating to various direct expenses incurred in connection with the generation of power at the 18 MW/h plant.

Such expenses include supply costs for biomass and other fuels, open access charges for using the state’s power grid and water charges, as well as maintenance costs relating to the plant.

Operating expenses relating to our continuing operations for the nine months ended July 31, 2011 decreased by $11,229,964 as compared to the 2010 Nine Month Period.

The decrease is primarily a result of incurring share-based compensation of $9,265,000 and significant commission, consulting and financing costs in the 2010 Nine Month Period.

Share-based compensation for the 2011 Nine Month Period was $249,000.

During the nine month period ended July 31, 2011, we incurred interest charges relating to our continuing operations in the amount of $520,937, compared to an interest expense of $68,403 compared to the 2010 Nine Month Period.

The interest charges have increased due to the increase in the loans from shareholders and affiliates which were used to fund the working capital requirement of the Company and its subsidiaries.

Also, for the 2011 Nine Month Period, we incurred discontinued operations interest charges on the IDBI bank loan for the 18 MW/h plant in the amount of $1,419,587.

As of July 31, 2011, we had loans outstanding totaling $4,587,670 in principal amount with an aggregate weighted interest rate of 8.00% per annum.

Such loans primarily are due affiliates and stockholders.

We do not anticipate generating operating revenues during our Fiscal Year 2011.

In April 2010, we retained four consultants in Ghana to develop projects with the mining companies and local, state and countrywide governments.

In November 2009, we retained three consultants in the Philippines to conduct feasibility studies for supplying off-grid electricity on certain islands to a number of mining companies.

Additional office staff was retained in the Philippines in April 2010.

Significant legal costs and professional fees have been incurred during the nine month ending July 31, 2011 fiscal year as a result of the SEC reporting requirements and public filings.

We also incurred significant marketing costs and commission fees in connection with our sales of securities in Germany during the nine month period ending July 31, 2011.

We are exposed to exchange rate fluctuations due to the fact that we are operating in and have invested in the Joint Venture Entities that are operating in multiple foreign jurisdictions, including Guyana, Ghana and the Philippines.

Since most of our revenues and costs are paid in the local currency of the subject country of operation, variations in the currency exchange rate between the country of operation and the United States can positively or negatively impact the Company’s reporting results.

Liquidity and Financial Condition

Net cash used in operating activities decreased by $3,163,804 in the nine months period ended July 31, 2011 when compared with the same period in 2010.

We incurred a higher net loss in the 2010 Nine Month Period of $14,730,837 as compared to a net loss of $2,805,738 for the 2011 Nine Month Period.

For the 2010 Nine Month Period, we incurred significant non-cash expenses, such as share-based compensation of $10,214,632, which has been reduced in the current year.

Net cash used in operating activities of discontinued operations has increased by $1,847,467 primarily due to an increase in inventory and accounts receivable during the third fiscal quarter in 2011.

Net cash used in investing activities decreased by $1,395,397 for the nine months ended July 31, 2011 as compared to the 2010 Nine Month Period.

In the 2010 Nine Month Period, net cash used in investing activities included an advance of $1,661,520 towards the purchase of a 1.5 MW/h biomass power plant in Tamilnadu, India.

The decrease in financing activities between the comparable nine month periods is mainly due to the Company borrowing less funds from its affiliates and shareholders in 2011 as compared 2010 for working capital purposes.

Cash flows from financing activities for the nine months period ended July 31, 2011 was $2,441,262 as compared to $5,356,738 for the similar period in 2010.

The effect of the exchange rate adjustment was a gain of $20,105 for the nine months period ended July 31, 2011.

The exchange rate adjustment is caused by the differences in the exchange rates from period to period between our functional currency(s) versus our reporting currency and the translation of various items of the financials at different rates depending on their nature.

For a comparative period in 2010 , the gain was $187,514.

We expect to benefit from or incur charges for exchange rate adjustments in all future periods as we will be operating in various countries and exchange rates between the currencies of such countries and the US dollar will continue to fluctuate due to factors beyond our control.

We have no current intentions to hedge against currency fluctuations.

As of July 31, 2011, our company we had a working capital deficit of approximately $ 4,279,000.

We estimate our operating expenses and working capital requirements for the next twelve month period to be as follows:

Operating expenses

Management and consulting

General and administrative

We anticipate that we will be required to raise funds through private sales of debt and equity securities to fund our operations and execute our business plan.

We may also encounter unforeseen costs that could also require us to seek additional capital.

Our ability to obtain additional capital will depend on market conditions, national and global economies 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.

If we are not successful in raising additional funding on favorable terms, we may be forced to curtail or cease some of all of our operations and/or curtail or elect not to proceed with certain aspects of our business plan.

There also are substantial risks regarding to our investment in the Joint Venture Entities, including, but not limited to, those relating to available capital to operate, lack of management control and reliance on Futenco to provide on a timely basis, accurate financial information in order for us to prepare and report our quarterly and annual financial statements and results as required by applicable federal securities laws.

Readers should carefully consider such risks, uncertainties and of information with regards to our joint venture and licensing arrangements with Futenco.

Critical Accounting Policies

Our significant accounting policies are described in Note 2 of the Notes to Consolidated Financial Statements included in our Annual Report in form 10K, for our fiscal year ended October 31, 2010, filed with the Securities and Exchange Commission on Febuary 15, 2011.

A discussion of our critical accounting policies and estimates is included in Management’s Discussion and Analysis of Financial Condition and Results of Operations (the “MD&A”) in such Annual Report.

There have been no material changes to the critical accounting policies or estimates reported in the MD&A section of our audited financial statements for the year ended October 31, 2010 as filed with the SEC.

Quantitative and Qualitative Disclosures about Market Risk.

This item is not applicable to smaller reporting companies.

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/A

Item 2. Management’s Discussion and Analysis