Commission File No. 333-145967
PAX CLEAN ENERGY, INC.
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
The number of shares outstanding of the registrant’s common stock, $0.001 par value, outstanding on March 13, 2009 was 211,640,000.
PAX CLEAN ENERGY, INC.
PART I. FINANCIAL INFORMATION
Note 1. Basis of Presentation
Nature of Operation
On October 16, 2008, Pax Clean Energy, Inc. (formerly, Pax Biofuels Inc., and referred to herein as the “Company”) amended its Articles of Incorporation to change its name from "Pax Biofuels Inc." to "Pax Clean Energy, Inc." to reflect its new business direction. Subsequent to January 31, 2009 the Company entered into a stock purchase agreement with Mobile Video Development, Inc. (“MVDI”) to acquire all of the issued and outstanding share capital of MVDI (See Note 3). MVDI is an early stage technology company targeting applications in the mobile social multi-media market.
Unaudited Interim Financial Statements
The accompanying unaudited interim financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial statements and in accordance with the rules and regulations of the Securities and Exchange Commission. They may not include all information and footnotes required by generally accepted accounting principles for complete financial statements. However, except as disclosed herein, there has been no material changes in the information disclosed in the notes to the financial statements for the year ended April 30, 2008 included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission. The unaudited interim financial statements should be read in conjunction with those financial statements included in the Form 10-K. In the opinion of Management, all adjustments considered necessary for a fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the nine months ended January 31 2009 are not necessarily indicative of the results that may be expected for the year ending April 30, 2009.
Note 2. Common Stock
| a) | In August 2008, the Company cancelled 2,620,000 common shares due to non-payments from a subscriber. |
| b) | On October 16, 2008, the Company completed a 20 for 1 (20:1) forward stock split of its common shares. All shares and per share information in these financial statements have been retroactively restated for all periods presented to give effect to this stock split. The Company also increased the number of authorized shares of common stock from 100,000,000 to 300,000,000, with par value of $0.001 per share. |
Note 3. Subsequent Event
On March 6, 2009, the Company entered into a stock purchase agreement (the “Agreement”) with MVDI. MVDI entered into the Agreement on its own behalf and on behalf of MVDI’s shareholders. Pursuant to the Agreement, the Company will acquire 100% of the issued and outstanding shares of common stock of MVDI, in exchange for the issuance of approximately 16,000,000 shares of to-be-designated Series A Convertible Preferred Stock of the Company to the shareholders of MVDI. In connection therewith, the Company agreed, among other things:
| (i) | to change its corporate name from “Pax Clean Energy, Inc.” to “Thwapr, Inc.”; |
| (ii) | to authorize twenty million (20,000,000) shares of blank check preferred stock, par value $0.0001 per share, the voting powers, designations, preferences and other special rights, and qualifications, limitations and restrictions of which may be established from time to time by the Board of Directors of the Company without approval of the holders of the Company’s Common Stock and which may be issued in one or more series (the “Blank Check Preferred Stock”); |
| (iii) | that the Company’s authorized preferred stock would have the right to vote on an “as-converted basis” together with the holders of the Company’s Common Stock (not as a separate class) on all matters on which the holders of the Company’s Common Stock are entitled to vote, including, but not limited to, amendments to the Company’s Certificate of Incorporation affecting the rights of the holders of the Company’s Common Stock; |
| (iv) | that the Company will designate a class of Series A preferred stock that will have 5:1 voting rights to the Company’s common shares and have a conversion rate of 36:1 into common shares of the Company; and |
| (v) | as part of this transaction 194,000,000 common shares, currently outstanding, will be cancelled for no consideration. |
This transaction is subject to all customary closing conditions for transactions of its type.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of the financial condition and results of our operations should be read in conjunction with our financial statements and the notes thereto. The results shown herein are not necessarily indicative of the results to be expected for any future periods.
You should read the following discussion and analysis in conjunction with the Financial Statements filed with Pax Clean Energy, Inc.’s (“we,” “us,” or “our”) Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission (the “SEC”) on August 7, 2008, and amended on September 11, 2008, and the notes thereto, and the other financial data appearing elsewhere in this quarterly report on Form 10-Q. The information set forth in Management’s Discussion and Analysis or Plan of Operations contains certain “forward-looking statements,” including, among others (i) expected changes in our revenues and profitability, (ii) prospective business opportunities, and (iii) our strategy for financing our business. Forward-looking statements are statements other than historical information or statements of current condition. Some forward-looking statements may be identified by use of terms such as “believes,” “anticipates,” “intends” or “expects.” These forward-looking statements relate to our plans, objectives and expectations for future operations. Although we believe that our expectations with respect to the forward-looking statements are based upon reasonable assumptions within the bounds of our knowledge of our business and operations, in light of the risks and uncertainties inherent in all future projections, the inclusion of forward-looking statements in this report should not be regarded as a representation by us or any other person that our objectives or plans will be achieved.
Overview
We were incorporated on February 5, 2007, in the state of Delaware. We originally intended to be in the business of producing and distributing biodiesel fuel. We had intended to construct and operate a 30,000 metric ton per year biodiesel processing plant to be fed with a rapeseed oil crushing plant which we also intended to construct and operate. Our plant was to be located in Serbia, formerly part of Yugoslavia.
We had anticipated that our primary source of revenue would be the sale of biodiesel, both in blended and unblended forms with petroleum-based diesel fuel. Our sales would have been dependent on the volume and price of the biodiesel fuel we would sell in the future.
To date, we have been unable to locate transactions in the biodiesel industry that were on terms favorable to us. We became aware of alternate opportunities in the clean energy market and were pursuing those alternate opportunities, which management believed would be beneficial to our shareholders. Considering the shift in the focus of our business direction, our Board of Directors unanimously adopted a resolution declaring it advisable to amend our Articles of Incorporation to, among other things, change our name to “Pax Clean Energy, Inc.” On August 19, 2008, the holders of a majority of our voting stock approved the amendment to our Articles of Incorporation.
On March 6, 2009, we entered into a stock purchase agreement (the “Agreement”) with Mobile Video Development, Inc., a Delaware corporation (“MVDI”). MVDI entered into the Agreement on its own behalf and on behalf of MVDI’s shareholders. Pursuant to the Agreement, we will acquire 100% of the issued and outstanding shares of common stock of MVDI, in exchange for the issuance of approximately 16,000,000 shares of our to-be-designated Series A Convertible Preferred Stock to the shareholders of MVDI. In connection therewith, we agreed, among other things:
| (i) | to change our corporate name from “Pax Clean Energy, Inc.” to “Thwapr, Inc.”; |
| (ii) | to authorize twenty million (20,000,000) shares of blank check preferred stock, par value $0.0001 per share, the voting powers, designations, preferences and other special rights, and qualifications, limitations and restrictions of which may be established from time to time by our Board of Directors without approval of the holders of our Common Stock and which may be issued in one or more series (the “Blank Check Preferred Stock”); |
| (iii) | that our authorized preferred stock would have the right to vote on an “as-converted basis” together with the holders of our Common Stock (not as a separate class) on all matters on which the holders of our Common Stock are entitled to vote, including, but not limited to, amendments to our Certificate of Incorporation affecting the rights of the holders of our Common Stock; |
| (iv) | that the Company will designate a class of Series A preferred stock that will have 5:1 voting rights to the Company’s common shares and have a conversion rate of 36:1 into our common shares; and |
| (v) | 194,000,000 shares of our Common Stock, currently outstanding, will be cancelled for no consideration. |
This transaction is subject to all customary closing conditions for transactions of its type.
Liquidity and Capital Resources
We have limited capital resources, as, among other things, we are a development stage company with no operating history. We have not generated any revenues to date. We may not be able to generate sufficient revenues to become profitable. In addition, we may never secure the funding necessary to pursue transactions in the clean energy market. We have no agreements, commitments or understandings to secure this funding.
Our cash reserves are not sufficient to meet our obligations for the next 12-month period. As a result, we are seeking additional funding. We currently do not have a specific plan of how we intend to obtain such funding; however, we anticipate that additional funding will be in the form of equity or debt financings. At this time, we cannot provide any assurances that we will be able to raise sufficient funding to meet our obligations over the next 12 months. We do not have any arrangements in place for future equity or debt financing.
At January 31, 2009, we had total assets of $1,389 (consisting of cash of $200 and equipment of $1,189), a decrease of $328 from $1,717 at April 30, 2008 (consisting of a cash increase of $158 and equipment amortization of $468).
At January 31, 2009, we had liabilities of $234,438 consisting of accounts payable and accrued liabilities of $79,216 and amounts due to related parties of $155,222. At April 30, 2008, we had liabilities of $128,466, consisting of accounts payable and accrued liabilities of $30,825, and amounts due to related parties of $97,641. The increase in our liabilities from April 30, 2008 to January 31, 2009 of $105,972 is a result of an increase in amounts due to Hammond Management Corporation of $55,016, a decrease in amounts due to Scientific Biofuel Solutions Ltd. of $2,565, and an increase in our professional fees payable of $48,391 attributable to legal and accounting fees associated with the review of our SEC filings, including for our name change and forward stock split.
Results of Operations for the Three-Month Periods Ended January 31, 2009 and 2007
We did not earn any revenues during the three-month periods ended January 31, 2009 and January 31, 2008.
We incurred operating expenses in the amount of $29,209 for the three-month period ended January 31, 2009, a $17,204 decrease from $46,412 for the three month period ended January 31, 2008. Our operating expenses are comprised of general and administrative expenses, management fees, professional fees and travel expenses. Operating expenses decreased primarily as a result of decreases in professional fees; management fees; and travel expenses. Management fees decreased by $4,072 to $15,819 for the three-month period ended January 31, 2009, as compared to $19,891 for the three-month period ended January 31, 2008. Management fees decreased as a result of foreign exchange fluctuations. Professional fees decreased by $7,808 to $12,063 for the three-month period ended January 31, 2009, as compared to $19,871 for the three-month period ending January 31, 2008. Travel expenses decreased by $5,242 to $234 for the three months ended January 31, 2009, as compared to $5,476 for the three months ended January 31, 2008.
Results of Operations for the Nine Months Ended January 31, 2009 and 2008
We did not earn any revenues during the nine-month periods ended January 31, 2009 and January 31, 2008.
We incurred operating expenses in the amount of $118,461 for the nine-month period ended January 31, 2009, a $3,500 decrease from $121,961 for the nine month period ended January 31, 2008. Professional fees were $61,798 for the nine months ended January 31, 2009, an increase of $5,847 from $55,951 for the nine months ended January 31, 2008. Professional fees increased as a result of increases in legal and accounting fees associated with the review of our SEC filings, including for our name change and forward stock split.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Tabular Disclosure of Contractual Obligations
We have no contractual obligations as required by Item 303(a)(5) under Regulation S-K.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we have conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the General Rules and Regulations promulgated under the Securities and Exchange Act of 1934, as amended, as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer concluded as of the evaluation date that our disclosure controls and procedures were effective such that the material information required to be included in our SEC reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms relating to our company, particularly during the period when this report was being prepared.
(b) Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during our fiscal quarter ended January 31, 2009 that have materially affected, or are reasonably likely to materially effect, our internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
No unregistered sales of equity securities were made during the three-month period ended January 31, 2009.
ITEM 3. DEFAULT UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
| Exhibit No. | | Description |
| 31.1 | | Sec. 302 Certification of Principal Executive Officer, Financial Officer & Accounting Officer |
| | | |
| 32.1 | | Sec. 906 Certification of Principal Executive Officer, Financial Officer & Accounting Officer |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | | PAX CLEAN ENERGY, INC. |
| | | |
| | | |
| Date: March 17, 2009 | By: | /s/ Paul Leslie Hammond |
| | | Paul Leslie Hammond |
| | | Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer, President and Director |
EXHIBIT INDEX
| Exhibit No. | | Description |
| 31.1 | | Sec. 302 Certification of Principal Executive Officer, Financial Officer & Accounting Officer |
| | | |
| 32.1 | | Sec. 906 Certification of Principal Executive Officer, Financial Officer & Accounting Officer |
