BIOMASS SECURE POWER INC.
INTERIM FINANCIAL STATEMENTS
SEPTEMBER 30, 2010 AND 2009
(Unaudited)
(Amended and refiled – See Note 13)
Amended – see Note 13
BIOMASS SECURE POWER INC.
INTERIM FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2010
Responsibility for financial statements
The accompanying interim financial statements for Biomass Secure Power Inc. (the “Company”) have been prepared by management in accordance with accounting principles generally accepted in the United States consistently applied. The most significant of these accounting principles have been set out in the annual June 30, 2010 audited financial statement. Only changes in accounting information have been disclosed in these interim financial statements. These interim statements have been presented on the accrual basis of accounting. Therefore estimates and approximations have been made using careful judgment. Recognizing that the Company is responsible for both the integrity and objectivity of the interim financial statements, management is satisfied that these interim financial statements have been fairly presented.
Auditor involvement
The Company’s auditors, BDO Dunwoody LLP have not performed a review of the un-audited interim consolidated financial statements for the nine months period ended September 30, 2010.
(signed) James Carroll
Director
Amended – see Note 13
BIOMASS SECURE POWER INC.
(A development stage company)
INTERIM BALANCE SHEETS
| | | September 30, 2010 | | | June 30, 2010 | |
| | | | | | | |
| ASSETS | | | | | | |
| | | | | | | |
| Current | | | | | | |
| Cash | $ | 25,797 | | $ | - | |
| Amounts receivables | | 2,398 | | | - | |
| Prepaid expenses and deposit | | 63,000 | | | 63,000 | |
| | | 91,195 | | | 63,000 | |
| Property and equipment (Note 6) | | 569 | | | 644 | |
| | $ | 91,764 | | $ | 63,644 | |
| | | | | | | |
| LIABILITIES | | | | | | |
| | | | | | | |
| Current | | | | | | |
| Bank indebtedness | $ | - | | $ | 26 | |
| Accounts payable and accrued liabilities | | 76,321 | | | 110,955 | |
| Advances payable (Note 7) | | 55,807 | | | - | |
| Due to related parties (Notes 8, 10 and 11) | | 364,003 | | | 297,801 | |
| | | 496,131 | | | 408,782 | |
| | | | | | | |
| STOCKHOLDERS’ EQUITY | | | | | | |
| | | | | | | |
| Common stock (Note 9) | | | | | | |
| Authorized | | | | | | |
| Unlimited number of no par value common shares | | | | | | |
| Issued | | | | | | |
| 235,099,866 common shares (2009 – 235,099,866) | | 5,680,217 | | | 5,680,217 | |
| Contributed surplus | | 53,221 | | | 53,221 | |
| Accumulated deficit from prior operations | | (5,253,808 | ) | | (5,253,808 | ) |
| Accumulated deficit during development stage | | (883,997 | ) | | (824,768 | ) |
| | | (404,367 | ) | | (345,138 | ) |
| | $ | 91,764 | | $ | 63,644 | |
Commitments (Notes 10 and 12)
Approved by the Board of Directors:
| “Slawomir Kownacki” | | “James Carroll” |
| Slawomir Kownacki, Director | | James Carroll, Director |
The accompanying notes are an integral part of these consolidated financial statement
3
Amended – see Note 13
BIOMASS SECURE POWER INC.
(A development stage company)
INTERIM STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
For the Three Months Ended September 30
| | 2010 | | 2009 | | From July 1, 2007, the date of entering into development stage, to September 30, 2010 | |
| | | | | | | | | | |
| Expenses | | | | | | | | | |
| Amortization | $ | 75 | | $ | 20 | | $ | 325 | |
| Management fees (Note 11) | | 60,000 | | | 30,000 | | | 704,813 | |
| Office and general administrative | | 2,694 | | | 2,867 | | | 45,012 | |
| Professional fees (recovery) | | (5,902 | ) | | - | | | 51,878 | |
| Shareholder communication | | - | | | - | | | 27,000 | |
| Transfer agent and filing fees | | 1,532 | | | 3,543 | | | 36,884 | |
| Travel | | 2,537 | | | 1,493 | | | 19,792 | |
| Loss before other expenses | | (60,936 | ) | | (37,926 | ) | | (882,704 | ) |
| Foreign exchange gain | | 1,707 | | | | | | 1,707 | |
| Net loss and comprehensive loss for the Period | $ | (59,229 | ) | $ | (37,926 | ) | $ | (883,997 | ) |
| | | | | | | | | | |
| Basic and Diluted Loss Per Share | $ | (0.000 | ) | $ | (0.000 | ) | | | |
| | | | | | | | | | |
| Weighted Average Number of Shares Outstanding | | 235,099,866 | | | 235,099,866 | | | | |
The accompanying notes are an integral part of these consolidated financial statement
4
Amended – see Note 13
BIOMASS SECURE POWER INC.
(A development stage company)
INTERIM STATEMENT OF SHAREHOLDERS’ EQUITY (DEFICIT)
For the Years Ended June 30
| | | Share capital | | Contributed surplus | | Deficit from prior operations | | Deficit during develop stage | | Total | |
| | | Number | | Amount | | | | | |
| Balance, June 30, 2007 | | 96,502,717 | | $ | 5,090,086 | | $ | 53,221 | | $ | (5,253,808 | ) | $ | - | | $ | (110,501 | ) |
| Capital stock issued for debt on August 29, 2007 at $0.0075 per share | | 1,487,881 | | | 11,159 | | | - | | | - | | | - | | | 11,159 | |
| Capital stock issued for expenses incurred on behalf of the Company on August 29, 2007 at $0.0075 per share | | 1,356,444 | | | 10,173 | | | - | | | - | | | - | | | 10,173 | |
| Capital stock returned to treasury on October 23, 2007 | | (3,000,000 | ) | | - | | | - | | | - | | | - | | | - | |
| Capital stock issued for expenses incurred on behalf of the Company on February 5, 2008 at $0.0031 per share | | 5,780,463 | | | 17,919 | | | - | | | - | | | - | | | 17,919 | |
| Capital stock issued for debt on February 5, 2008 at $0.0031 per share | | 20,000,000 | | | 62,000 | | | - | | | - | | | - | | | 62,000 | |
| Capital stock issued for management fees on February 5, 2008 at $0.0031 per share | | 20,000,000 | | | 62,000 | | | - | | | - | | | - | | | 62,000 | |
| Capital stock issued for directors fees on June 30, 2008 at $0.0045 per share | | 3,750,000 | | | 16,875 | | | - | | | - | | | - | | | 16,875 | |
| Capital stock issued for management fees on June 30, 2008 at $0.0045 per share | | 30,000,000 | | | 135,000 | | | - | | | - | | | - | | | 135,000 | |
| Capital stock issued for expenses incurred on behalf of the Company on June 30, 2008 at $0.0045 per share | | 5,007,415 | | | 22,534 | | | - | | | - | | | - | | | 22,534 | |
| Net loss for the year ended June 30, 2008 | | - | | | - | | | - | | | - | | | (337,799 | ) | | (337,799 | ) |
| Balance, June 30, 2008 | | 180,884,920 | | $ | 5,427,746 | | $ | 53,221 | | $ | (5,253,808 | ) | $ | (337,799 | ) | $ | (110,640 | ) |
| Capital stock issued as deposit on agreement on November 15, 2008 at $0.0042 per share | | 15,000,000 | | | 63,000 | | | - | | | - | | | - | | | 63,000 | |
| Capital stock issued for expenses incurred on behalf of the Company on October 13, 2008 at $0.0041 per shares | | 666,667 | | | 2,733 | | | - | | | - | | | - | | | 2,733 | |
| Capital stock issued for expenses incurred on behalf of the Company on November 20, 2008 at $0.0041 per share | | 800,000 | | | 3,280 | | | - | | | - | | | - | | | 3,280 | |
| Capital stock issued for expenses on May 22, 2009 at $0.009 per share | | 3,000,000 | | | 27,000 | | | - | | | - | | | - | | | 27,000 | |
| Capital stock issued for expenses incurred on behalf of the Company on June 30, 2009 at $0.0045 per share | | 6,592,724 | | | 29,758 | | | - | | | - | | | - | | | 29,758 | |
| Capital stock issued for management fees on June 30, 2009 at $0.0045 per share | | 28,155,555 | | | 126,700 | | | - | | | - | | | - | | | 126,700 | |
| Net loss for the year ended June 30, 2009 | | - | | | - | | | - | | | - | | | (229,637 | ) | | (229,637 | ) |
| Balance, June 30, 2009 | | 235,099,866 | | $ | 5,680,217 | | $ | 53,221 | | $ | (5,253,808 | ) | $ | (567,436 | ) | $ | (87,806 | ) |
| Net loss for the year ended June 30, 2010 | | - | | | - | | | - | | | - | | | (257,332 | ) | | (257,332 | ) |
| Balance, June 30, 2010 | | 235,099,866 | | $ | 5,680,217 | | $ | 53,221 | | $ | (5,253,808 | ) | $ | (824,768 | ) | $ | (345,138 | ) |
| Net loss for the period ended September 30, 2010 | | - | | | - | | | - | | | - | | | (59,229 | ) | | (59,229 | ) |
| Balance, September 30, 2010 | | 235,099,866 | | $ | 5,680,217 | | $ | 53,221 | | $ | (5,253,808 | ) | $ | (883,997 | ) | $ | (404,367 | ) |
The accompanying notes are an integral part of these consolidated financial statement
5
Amended – see Note 13
BIOMASS SECURE POWER INC.
(A development stage company)
INTERIM STATEMENTS OF CASH FLOWS
For the Three Months Ended September 30
| | 2010 | | 2009 | | From July 1, 2007, the date of entering into development stage, to September 30, 2010 | |
| | | | | | | | | | |
| Cash Flows From (Used By) Operating Activities | | | | | | | | | |
| Net loss for the period | $ | (59,229 | ) | $ | (37,926 | ) | $ | (870,497 | ) |
| Items not involving cash: | | | | | | | | | |
| Amortization | | 75 | | | 20 | | | 325 | |
| Shares issued for management fees | | - | | | - | | | 340,575 | |
| Shares issued for services | | - | | | - | | | 113,397 | |
| Change in non-cash operating working capital items: | | | | | | | | | |
| Amounts recoverable | | (2,398 | ) | | | | | (2,398 | ) |
| Accounts payable and accrued liabilities | | (34,634 | ) | | 1,616 | | | 46,447 | |
| Accrual of expenses due to related parties | | 66,202 | | | - | | | 66,502 | |
| | | (29,984 | ) | | (36,290 | ) | | (319,449 | ) |
| | | | | | | | | | |
| Cash Flows From (Used By) Investing Activities | | | | | | | | | |
| Acquisition of capital assets | | - | | | (894 | ) | | (894 | ) |
| | | | | | | | | | |
| | | | | | | | | | |
| Cash Flows From (Used By) Financing Activities | | | | | | | | | |
| Loan proceeds | | 55,807 | | | | | | 55,807 | |
| Loan proceeds from related party | | - | | | 37,151 | | | 290,333 | |
| Repayment of bank overdraft | | (26 | ) | | - | | | - | |
| | | 55,781 | | | 37,151 | | | 346,140 | |
| Decrease in Cash | | 25,797 | | | (33 | ) | | 25,797 | |
| Cash, Beginning of Period | | - | | | 124 | | | - | |
| Cash, End of Period | $ | 25,767 | | $ | 91 | | $ | 25,797 | |
| | | | | | | | | | |
| Supplemental Cash Flow Information | | | | | | | | | |
| Common stock issued as deposit | $ | - | | $ | - | | $ | 63,000 | |
| Common stock issued in settlement of debt | $ | - | | $ | - | | $ | 73,159 | |
| Interest Paid | $ | - | | $ | - | | $ | - | |
| Income Taxes Paid | $ | - | | $ | - | | $ | - | |
The accompanying notes are an integral part of these consolidated financial statement
6
Amended – see Note 13
BIOMASS SECURE POWER INC.
(A development stage company)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
As At September 30, 2010
| 1. | NATURE OF BUSINESS AND OPERATIONS |
| | Biomass Secure Power Inc., formerly Virtual Media Holdings Inc., (“Biomass” or the “Company”), became a development stage enterprise July 1, 2007. Prior to July 1, 2007, the company was conducting internet sales of videos, CDs, DVDs and books as Virtual Media Holdings Inc, (formerly VMH VideoMovieHouse.com Inc.). As at June 30, 2007, the company ceased all operations in connection with internet sales, wrote-off all related assets and was seeking a new business. The Company plans to build, own and operates cellulose pelletizing plants that utilizes proprietary technology. The Company’s headquarters are located in Abbottsford, British Columbia. |
| | The Company is presently a delinquent filer with the Securities Exchange Commission and is filing for relief from filing audited financial statements for the years ended June 30, 2007 and 2006. At this time, it is not known if the relief will be granted. |
| 2. | ABILITY TO CONTINUE AS A GOING CONCERN |
| | The accompanying financial statements have been prepared in US dollars and in accordance with accounting principles generally accepted in the United States on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company only commenced its development of a cellulose pelletizing activities in the first quarter of 2008. Previously, the Company had been actively operating an internet sales company. On June 30, 2007, the Company disposed of all of its assets in connection with the internet sales activities. During the three months ended September 30, 2010, the Company incurred a net loss of $59,229 (2008 - $37,926). Since the Company had re-entered the development stage, it has an accumulated deficit of $883,997 at September 30, 2010. These conditions raise substantial doubt about the Company's ability to continue as a going concern. |
| | The Company's ability to continue as a going concern is dependent on its ability to develop its cellulose pelletizing plant and ultimately achieve profitable operations and to generate sufficient cash flow from financing and operations to meet its obligations as they become payable. The Company expects that it will need approximately $390,000 to fund its operations during the next twelve months. Management has plans to seek additional capital through a private placement, public offering of its common stock and joint arrangements. Although there are no assurances that management’s plans will be realized, management believes that the Company will be able to continue operations in the future. Accordingly, no adjustment relating to the recoverability and classification of recorded asset amounts and the classification of liabilities has been made to the accompanying financial statements in anticipation of the Company not being able to continue as a going concern. |
| 3. | SIGNIFICANT ACCOUNTING POLICIES |
| | The Company’s significant accounting policies are consistent with those reported in the annual financial statements as at June 30, 2010. |
7
Amended – see Note 13
BIOMASS SECURE POWER INC.
(A development stage company)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
As At September 30, 2011
| 4. | RECENT ACCOUNTING PRONOUNCEMENTS |
| | In January 2010, the FASB issued ASU, on codification, fair value measurement and disclosures (Topic 820-10). The amendment requires new disclosures related to transfers in and out of Levels 1 and 2 and activity in Level 3 fair value measurements. A reporting entity is required to disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers. Additionally, in the reconciliation for fair value measurements in Level 3, a reporting entity must present separately information about purchases, sales, issuances and settlements (on a gross basis rather than a net number). The new disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years. The Company does not anticipate the adoption of this amendment will have a material effect on its financial position, results of operations or cash flows. |
| | In April 2010, the FASB issued accounting guidance for the milestone method of revenue recognition. This guidance allows entities to make a policy election to use the milestone method of revenue recognition and provides guidance on defining a milestone and the criteria that should be met for applying the milestone method. The scope of this guidance is limited to transactions involving milestones relating to research and development deliverables. The guidance includes enhanced disclosure requirements about each arrangement, individual milestones and related contingent consideration, information about substantive milestones and factors considered in the determination. This guidance is effective prospectively to milestones achieved in fiscal years, and interim periods within those years, beginning after June 15, 2010. Early application and retrospective application are permitted. The Company is currently evaluating the impact, if any, that this new guidance will have on the determination or reporting of its financial results. |
| | The FASB issued new guidance relating to revenue recognition for contractual arrangements with multiple revenue-generating activities. The ASC Topic for revenue recognition includes identification of a unit of accounting and how arrangement consideration should be allocated to separate the units of accounting, when applicable. The new guidance, including expanded disclosures, is applied on a prospective basis beginning on or after June 15, 2010. |
| 5. | AMALGAMATION AGREEMENT. |
| | On October 29, 2008, the Company entered into an Amalgamation Agreement (the “Agreement”) with 0625920 BC Ltd. (“0625920”) whereby the Company will be acquiring certain intellectual property of 0625920 by way of merger of the two Companies. At the time of the Agreement the Company and 0625920 had a common director and officer, Mr. Jim Carroll, who is the President/CEO/CFO of the Company and was the President of 0625920, and had two common shareholders, Mr. Carroll and his spouse. Pursuant to the terms of the Agreement fifteen common shares of the Company will be issued in exchange for each 0625920 share outstanding at the Agreement date, resulting in the issuance of 225,269,250 common stock to 0625920 shareholders. |
| | On November 1, 2008 the Company issued 15,000,000 common stock, as a deposit on the Agreement, to Mr. George Pappas, a director of 0625920, who was unrelated to the Company at that time. The deposit forms part of the total share consideration to be issued pursuant to the Agreement. Therefore, a further 210,269,250 common stock are to be issued. |
| | As a result of a cease-trade order issued by the British Columbia Securities Commission on November 19, 2009 the remaining 210,269,250 common stock has not been issued and therefore, the transaction has not been completed nor reflected in the financial statements. The above agreement has been deferred until the cease-trade order is revoked. |
8
Amended – see Note 13
BIOMASS SECURE POWER INC.
(A development stage company)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
As At September 30, 2011
| 6. | PROPERTY AND EQUIPMENT |
| | | September 30, 2010 | | | June 30, 2010 | |
| | | Cost | | | Accumulated Amortization | | | Cost | | | Accumulated Amortization | |
| Computers | $ | 894 | | $ | 325 | | $ | 894 | | $ | 20 | |
| Net Book Value | | | | $ | 569 | | | | | $ | 874 | |
| 7. | DUE TO RELATED PARTIES |
| | The Company is indebted to directors and officers of the Company for operating expenses paid by those individuals on behalf of the company, cash advances and accrued management fees. The amounts are payable on demand, unsecured and without interest. |
| | September 30, 2010 | | | June 30, 2010 | |
| | | | | | | |
| Balance, beginning | $ | 297,801 | | $ | 65,235 | |
| Accrued management and director fees | | 60,000 | | | 170,000 | |
| Cash advances | | - | | | 4,000 | |
| Expenses paid on behalf of the company | | 6,202 | | | 58,566 | |
| Balance, ending | $ | 364,003 | | $ | 297,801 | |
| | Share issuances in 2010 and the period ended September 30 2010 There was no stock issued during the year ended June 30, 2010 and the period ended September 30, 2010 due to a cease trade order issued by the British Columbia Securities Commission on November 19, 2009. Share issuances in 2009 |
| | On November 15, 2008 the Company issued 15,000,000 common shares at $0.0042 per share for a total of $63,000 as a deposit in connection with the acquisition agreement with 0625920 BC Ltd. (Note 5). The stock was recorded based upon the quoted market price of the Company’s common stock on the date of director’s approval for the issuance. |
| | On October 13, 2008 the Company issued 666,667 common shares at $0.0041 per share for a total of $2,733 for expenses incurred on behalf of the Company by a director. The stock was recorded based upon the quoted market price of the Company’s common stock on the date of director’s approval for the issuance. |
| | On November 20, 2008 the Company issued 800,000 common shares at $0.0041 per share for a total of $3,280 for expenses incurred on behalf of the Company by a director. The stock was recorded based upon the quoted market price of the Company’s common stock on the date of director’s approval for the issuance. |
| | On May 22, 2009 the Company issued 3,000,000 common shares at $0.009 per share for a total of $27,000 for investor relations. The stock was recorded based upon the quoted market price of the Company’s common stock on the date of director’s approval for the issuance. |
9
Amended – see Note 13
BIOMASS SECURE POWER INC.
(A development stage company)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
As At September 30, 2010
| 8. | CAPITAL STOCK - Continued |
| | Share issuances in 2009 - Continued |
| | On June 30, 2008 the Company issued 6,592,724 common shares at $0.0045 per share for a total of $29,758 for expenses incurred on behalf of the Company by directors. The stock was recorded based upon the quoted market price of the Company’s common stock on the date of director’s approval for the issuance. |
| | On June 30, 2008 the Company issued 28,155,555 common shares at $0.0045 per share for a total of $126,700 for management fees paid to a director and officer of the Company for services provided in the current period. The stock was recorded based upon the quoted market price of the Company’s common stock on the date of director’s approval for the issuance. |
| | On August 29, 2007 the Company issued 2,844,325 common shares at $0.0075 per share for a total of $21,332 for expenses incurred on behalf of the Company by a director. Of those amounts 1,487,881 common shares for a total of $11,159 was for settlement of debt related to expenses incurred in a prior year and 1,356,444 common shares for a total of $10,173 was for expenses incurred in the current year. The stock was recorded based upon the quoted market price of the Company’s common stock on the date of director’s approval for the issuance. |
| | On October 23, 2007, 3,000,000 common shares were returned for cancellation. As the expense related to the issuance of these common shares was properly recorded, there is no accounting impact for the returned shares. |
| | On February 5, 2008 the Company issued 5,780,463 common shares at $0.0031 per share for a total of $17,919 for expenses incurred on behalf of the Company by directors. The stock was recorded based upon the quoted market price of the Company’s common stock on the date of director’s approval for the issuance. |
| | On February 5, 2008 the Company issued 40,000,000 common shares at $0.0031 per share for a total of $124,000 for management fees paid to a director and officer of the Company. Of those amounts 20,000,000 shares for a total of $62,000 was for settlement of debt related to management fees of a prior year and 20,000,000 for a total of $62,000 was for management fees incurred in the current year. The stock was recorded based upon the quoted market price of the Company’s common stock on the date of director’s approval for the issuance. |
| | On June 30, 2008 the Company issued 3,750,000 common shares at $0.0045 per share for a total of $16,875 for directors’ fees. The stock was recorded based upon the quoted market price of the Company’s common stock on the date of director’s approval for the issuance. |
| | On June 30, 2008 the Company issued 30,000,000 common shares at $0.0045 per share for a total of $135,000 for management fees paid to a director and officer of the Company for services in the current year. The stock was recorded based upon the quoted market price of the Company’s common stock on the date of director’s approval for the issuance. |
| | On June 30, 2008 the Company issued 5,007,415 common shares at $0.0045 per share for a total of $22,533 for expenses incurred on behalf of the Company by directors. The stock was recorded based upon the quoted market price of the Company’s common stock on the date of director’s approval for the issuance. |
10
Amended – see Note 13
BIOMASS SECURE POWER INC.
(A development stage company)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
As At September 30, 2010
| 8. | CAPITAL STOCK - Continued |
| | Stock Options On March 24, 2004, the Company’s Board of Directors approved a nonqualified stock option plan. This plan, subject to authorization of the Company’s Board of Directors, allows the Company to distribute up to 5,000,000 options on common stock to officers, directors, employees and consultants at an exercise price of up to $0.25 per share. On October 8, 2004, the Board of Directors approved an increase in S-8 stock to 15,000,000 options on common stock to officers, directors, employees and consultants at an exercise price of up to $0.03 per share. During the period ended September 30, 2010 and the year ended June 30, 2010, there were no common stock options granted. As of September 30, 2010 and June 30, 2010, there were no outstanding exercisable or un-exercisable common stock options. |
| 9. | COMMITMENT TO ISSUE SHARES |
| | The Company’s stock are traded on the OTC Bulletin Board in the United States and the Company is subject to the securities laws of the United States and Canada. On November 19, 2009, the British Columbia Securities Commission issued a cease trade order against the Company thereby preventing the Company from issuing or exchanging stock of the Company until the cease trade order is removed. |
| | Subsequent to the date of the cease trade order the Company entered into the following transactions approved by the directors requiring the issuance of stock upon the removal of the cease trade order. These transactions have not been recorded in the financial statements as the transactions have not been completed: |
| | a) | Amalgamation Agreement |
| | | On October 29, 2008 the Company entered into an Amalgamation Agreement with 0625920 BC Ltd whereby the Company will acquire certain intellectual property of 0625920 by way of merger of the two companies. Pursuant to the terms of the Agreement fifteen common stock of the Company will be issued to the share holders of 0625920 in exchange for each common share of 0625920 outstanding at the Agreement date, resulting in the issue of 225,269,250 common stock of the Company (See Note 5). |
| | | On November 1, 2008 the Company issued 15,000,000 common stock, as a deposit on the Agreement. The deposit forms part of the total share consideration to be issued pursuant to the Agreement. Therefore, a further 210,269,250 common stock remain to be issued. |
| | | On June 30, 2009 the Company was legally amalgamated with 0625920 under the laws of the Province of British Columbia. As a result of a cease-trade order issued by the British Columbia Securities Commission the common stock has not been issued and therefore, the transaction has not been completed nor reflected in the Company’s June 30, 2010 financial statements. The above agreement has been deferred until the cease-trade order is lifted and has not been recorded in the balance sheet of the Company. |
11
Amended – see Note 13
BIOMASS SECURE POWER INC.
(A development stage company)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
As At September 30, 2010
| 9. | COMMITMENT TO ISSUE STOCK - Continued |
| | | On February 24, 2010 the board of directors, subject to the revocation of the cease trade order, approved the issuance of 81,864,686 common stock in settlement of $125,253 due related parties. The amounts due to directors and officers arise from $15,253 advanced to or expended on behalf of the Company by directors and officers and $110,000 of unpaid management compensation. The price per share of the settlement is subject to the approval of the British Columbia Securities Commission and will be amended upon revocation of the cease trade order to reflect the trading price in effect after the cease trade is lifted. |
| | | On March 1, 2010 the board of directors, subject to the removal of the cease trade order, authorized the issuance of capital stock to raise a total of $100,000. Pursuant to that approval, between March 1, 2010 and June 30, 2010, the Company received the benefit of $23,005 expended by Mr. Jim Carroll, the Company’s President/CEO/CFO, on behalf of the Company. The funds expended were advanced to Mr. Carroll by family members and business associates of Mr. Carroll (the “Investors”) for the purpose of investing in stock of the Company. With respect to this transaction the Company acknowledges: |
| | | i. | No share subscriptions were received from Mr. Carroll. There was a verbal understanding between Mr. Carroll and the Company that stock would be issued; |
| | | ii. | There was a benefit to the Company in the amount of the $23,005 expended on its behalf; and |
| | | iii. | The expenditures have been recorded as operating expenses of the Company for the year ended June 30 2010 and have been credited to due to related parties. |
| | | Subsequent to June 30, 2010: |
| | | i. | The board of directors have agreed to advise Investors that they will have the opportunity to subscribe for Company stock, upon the revocation of the cease trade order, at a share price to be determined subsequent to the revocation, and |
| | | ii. | Mr. Carroll has expended a further $67,000 on behalf of the Company. The funds expended were advanced to Mr. Carroll by family member and business associates of directors of the Company. |
| 10. | RELATED PARTY TRANSACTIONS |
| | During the year three months ended September 30, 2010 the Company was charged management fees totaling $60,000 (2009 - $30,000) by directors and officers of the Company. |
| | The above-noted transactions were measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties. |
12
Amended – see Note 13
BIOMASS SECURE POWER INC.
(A development stage company)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
As At September 30, 2010
| 11. | COMMITMENTS AND CONTINGENCIES A statement of claim was issued against the Company for breach of employment contract. The Company has filed a statement of defense disputing the action. The claim is presently being disputed by the Company and the settlement is undeterminable at this time. Any legal costs relating to this claim have been recorded in the financial statements. The likelihood of loss is remote. A second statement of claim was issued against the Company to remove the trading restriction on the restricted stock. The Company has filed a statement of defense disputing the action. The claim is being disputed as management believes the performance commitment in connection with the issuance of the stock was not completed and has taken steps to cancel these stock. Any legal costs relating to this claim have been recorded in the financial statements. The likelihood of loss is remote. The Company establishes reserves for legal claims when payments associated with the claims become probable and the costs can be reasonably estimated. The actual costs of resolving legal claims may be higher or lower than any amounts reserved for the claims. On the basis of information currently available, advice of counsel, available insurance coverage, if applicable, and established reserves, it is the opinion of management that the eventual outcome of the actions against us are remote will not have a material adverse effect on our financial condition, results of operations, or cash flows. However, in the event of unexpected future developments, it is possible that the ultimate resolution of legal matters, if unfavorable, may be material to our financial condition, results of operations, or cash flow. |
| 12. | SUBSEQUENT EVENTS Subsequent to June 30, 2010 the Company made application to the British Columbia Securities Commission (“BCSC”) for revocation of the cease trade order issued against the Company on November 9, 2009. As a result of the application for revocation: |
| | a) | Revision to financial statements – The BCSC has required the Company to revise the financial statements to clarify and to provide additional disclosure in Notes 5 and 9 to the financial statements; and |
| | b) | Review of pending share transactions – The BCSC is currently reviewing pending share issuance transactions (Note 9 b) and c) and will require restructuring of those transactions to reflect the trading price in effect after the cease trade is lifted. Details of any restructuring are not know at this time. |
| 13. | REVISION TO FINANCIAL STATEMENTS The financial statements have been revised at the request of the British Columbia Securities Commission (“BCSC”) to correct and clarify information related to the Amalgamation Agreement (Notes 5 and 9a), indicate the terms are subject to approval of the BCSC and such terms will be amended (Note 9b), and correct and clarify information related to the proposed financing and to indicate the terms are subject to approval of the BCSC and such terms will be amended (Note 9c). As a result of the above noted revisions significant subsequent events occurring between the date of the original financial statements and the issue of the amended financial statements are reported in Note 12. |
