Sunday, September 04, 2011 3:32:53 PM
Some comments on the 10Q
http://www.otcmarkets.com/edgar/GetFilingHtml?FilingID=8132671
The share count is pretty well document prior to June 30, 2011:
Before the Seawind merger there were 40,114,900 shares outstanding.
As a result of the Seawind merger 40,000,000 shares were issued to the Seawind shareholders in exchange for 100% of their outstanding shares (constituting the merger) and on May 13, 2011, 19,607,843 shares were issued to Viewpoint Investment Group as a payment for their role in helping to set up the merger.
That puts the share count as of June 30, 2011 at 99,722,743 (40,144,900 + 40,000,000 + 19,607,843 = 99,722,743 - as is confirmed by the 10Q).
The 19,607,843 shares issued to Viewpoint Investment Group is supposed to represent a $1,000,000 fee for their role in helping to set up the merger.
The Company has arranged with Viewpoint Investments Corp. (“Viewpoint”) to pay a $1,000,000 fee, to be paid in Company Common Stock, payable upon the closing of the acquisition of the Seawind Companies (the “Facilitation Agreement”) which occurred on May 13, 2011. Pursuant to the Facilitation Agreement, the Company has issued 19,607,843 restricted shares of the Company’s common stock to Viewpoint in consideration for services rendered to the Company. Viewpoint assisted and advised the Company with respect to identifying, negotiating and closing the transaction with the Seawind Group of Companies. The consideration paid to Viewpoint by the Company was deemed to be fair and reasonable by our Board of Directors with respect to the creation and enhancement of share value for all shareholders responsive to the acquisition of Seawind Energy and Seawind Services due to the efforts of Viewpoint. The number of shares issued to Viewpoint was calculated by reference to 85% of the publicly quoted closing price of the Company’s Common Stock on January 25, 2011.
The $1,000,000 fee was based off of the $2,400,000 valuation that PSPW and Seawind put on Seawind. I think that $2,400,000 valuation is a bit high personally (as details further down this post will testify)
----------------------
PSPW took the absolutely lowest closing price in the history of PSPW then took that closing price and fudged the numbers making it even lower then took 85% of that closing price to determine the $1,000,000 fee.
Post about the Viewpoint fee from May 21, 2011:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=63411319
On May 13, 2011, the day when Viewpoint Investments Corp received those shares, PSPW closed at $1.97/share. That makes those 19,607,843 shares worth $38,627,450.71 on the day they were issued.
Even at the current price of $.41/share those 19,607,843 shares are worth $8,039,215,63. Seawind isn't even worth close to $8 million. It may not even be worth the $1,000,000 fee. The 10Q filed for the period ending June 30, 2011 shows that the merger with Seawind only improved the PSPW assets by $2,521,000 from its pre-merger levels, but it also increased the liabilities by $2,204,000. So all total the balance sheet only improved by $317,000.
Don't believe me compare the latest 10Q to the 10Q for the period ending March 31, 2011:
http://www.otcmarkets.com/edgar/GetFilingHtml?FilingID=7954396
Here is a post from May 21, 2011 about the crooked math used to determine the Viewpoint fee:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=63411319
I would absolutely love to know who Viewpoint Investments Corp is (I made an attempt to find out in my post, but the true owner of those shares seems to have set up the Panamanian entity putting other people down as the officers of the entity as a front to hide their identity)
I wonder what those shares will be worth on May 13, 2012 when they become unrestricted and can be sold.
--------------------------
Back to the issue at hand - the outstanding share count.
Since June 30, 2011 the share count has continued to rise. As of the date of the 10Q filing on August 30, 2011 the share count had grown from 99,722,743 to 107,127,408 (see page 1 of the 10Q last line before the table of contents)
What were those 7,404,735 shares issued for?
Since June 30, 2011 the share price for PSPW has dropped from $.72/share to $.41/share. No doubt those 7,404,735 shares had something to do with the declining price.
Even at the low end of that scale ($.41/share) those 7,404,735 shares are worth $3,035,941. That's a lot of money.
Unfortunately the 10Q for the period ending June 30, 2011 does not disclose to the share holders what those shares were issued for as is required. Even though the issuing of those shares happened after June 30, 2011 they still should have shown up in the subsequent events section. The 10Q filed by PSPW for the period ending June 30, 2011 has no subsequent events section. This is a major concern.
-------------------
I dug deep into the 10Q looking for clues and I found a couple of sections that if they do not explain who got those 7,404,735 shares and why do explain who will be getting shares in the future.
There are two sections I think are key:
Demand from CRG Finance AG
On March 2, 2010, the Company entered into a Financing Agreement (the “Financing Agreement”) with CRG Finance AG (“CRG Finance”). Pursuant to the Financing Agreement, CRG Finance loaned the Company a total of 470,000 Euros ($660,073 as of June 30, 2011). In further consideration for the making of this loan, the Company agreed to transfer 20% of the Company’s rights to its net profits to be made in the sale of PSP Italian S.r.l (the “Net Profit Rights”). CRG Finance has agreed that upon receipt of its Net Profit Rights, CRG Finance will reinvest at least 50% of such Net Profit Rights into either new projects of the Company or shares of the Company, at a purchase price to be mutually agreed upon. The Company has issued a senior promissory note to CRG Finance in the amount of 470,000 Euros ($660,073) as of June 30, 2011. The principal of the note, along with interest at an annual rate of seven and one half percent, is due within thirty days of demand. CRG has made a demand for payment of the Note which has not been paid by the Company.
CRG Finance AG let PSPW borrow $660,073 on March 2, 2010. They turned that loan into a convertible Note on June 30, 2011 with a life of 30 days. On July 30, 2011 the Note matured and at that point the owner of the Note (CRG Finance AG) could then demand payment on the Note. If the company (PSPW) does not repay the Note in cash it can be converted into shares (probably at a steep discount). It is possible that some if not all of those 7,404,735 shares could have gone to CRG Finance AG to pay off that debt Note between the date it matured (July 30, 2011) and August 30, 2011.
The other interesting section is this one:
To date, 3Power Energy Group has received loans from Rudana (the “Shareholder Loans”). The Shareholder Loans include amounts loaned by Rudana and invoices paid by Rudana. 3Power Energy Group has used the proceeds from the Shareholder Loans for general corporate purposes. The Shareholder Loans have an interest rate of seven and a half percent (7.5%) per annum, which together with the principal amount shall be repayable thirty (30) days after demand by Rudana. In connection with the Shareholder Loans, 3Power Energy Group intends to execute notes setting forth the terms thereof. In addition, the Company’s accrued fees owed for management services received from Prime Asset Finance Limited, a subsidiary of Rudana, from inception through June 30, 2011 total $937,500.
It looks like Rudana Investment Group which is a private company connected to the former CEO, Olivier de Vergnies, let PSPW borrow $937,500 total in the past. Currently that $937,500 is in the form of a loan collecting interest at a rate of 7.5% per annum. According to that section PSPW and de Vergnies plan to change that loan into a debt Note so it can be converted into shares for repayment. No doubt steeply discounted shares.
----------------------------------------
Overall I think the Seawind merger was a big let down for the following reasons:
1) It only improved the PSPW balance sheet by $317,000.
2) It cost the PSPW shareholders over 59,000,000 shares.
3) It sets up the shell for a dilution threat that did not exist before the merger. Olivier de Vergnies can now convert his $937,500 into free trading discounted shares.
4) The most important element of the merger has been lost - the $50 million financing commitment from CR&P Holding S.p.A.
---------------------
What potential does PSPW have to improve its current situation?
1) They are owed the final payment for the sale of its project in Texas to Sany, a Chinese company. The payment is expected during the final quarter of 2011.
The don't tell us how much is due, but it would be listed under Assets on the balance sheet so it may be the $953,754 number.
Other than that all other business operations are forward looking with no guarantees for success:
The Company’s subsidiary Seawind Services Limited changed its name to 3Power Project Services Limited. 3Power Project Services Limited continued to make progress on its engineering and supply contracts with its two Chinese customers as those projects approached completion. The first shipment of prototype components for the new 2MW wind turbine were despatched from Germany, and the close out of the detailed design phase continued. 3Power Project Services Limited also commenced work under the Project Management engagement with 3Power Energy Inc. on the ongoing development of the first 18MW of wind projects in Chile. Activities have included finalising interconnection options to grid, contractor prequalification and negotiation of power purchase agreements. Additionally, minor works were undertaken in relation to the ongoing operating and maintenance engagement for Barrick Gold in Argentina. No new work was approached or contracted, the emphasis for the company now being the successful close out of the Chinese venture and consolidation of the work being undertaken on development of the 3Power project portfolio.
The Company has entered into an acquisition agreement with Enerserve Ltd. (“Enerserve”), to acquire a wind energy project in Chile consisting of thirty two turbine locations (the “Enerserve Project”). Enerserve has already obtained and/or is in the process of finalizing the necessary agreements, permits, wind measurement data, and all other requisites necessary for the Enerserve Project. Enerserve has agreed to complete the development of the Enerserve Project through the stage where all required construction permits are obtained and in order. Enerserve shall then provide support services to the Company throughout the construction stage in all matters related to permits and consents. The Enerserve Project and all ancillary rights, agreements, permits, data and other requisites for the construction and connection to the electrical grid shall be vested in the Company by transferring the Enerserve Project to 3Power Energia S.A.
The Company has entered into an option agreement with Power Andina Limited (“PAL”), to acquire a wind energy project in Chile consisting of six turbine locations (the “PAL Project”). PAL has already obtained and/or is in the process of finalizing the necessary agreements, permits, wind measurement data, and all other requisites necessary for the PAL Project. PAL has agreed to complete the development of the PAL Project through the stage where all required construction permits are obtained and in order. PAL shall then provide support services to the Company throughout the construction stage in all matters related to permits and consents. Upon exercise of the option by the Company under the PAL agreement, the PAL Project and all ancillary rights, agreements, permits, data and other requisites for the construction and connection to the electrical grid shall be vested in the Company by transferring the PAL Project to a new Company wholly-owned subsidiary, 3Power Energia S.A., which shall be a Chilean registered company.
The main reason why there is no guarantee of any of those forward looking business operations happening is because of this statement made by PSPW in the 10Q:
The Company will require no less than $2,000,000 in additional funding in order to conduct proposed operations for the next year. Should the Company fail to raise such funds, the Company will not be able to commence construction of the solar power plants. In order to commence construction on all of the Company’s currently contemplated projects, the Company would be required to raise 15,000,000 Euros (approximately $19,220,000) to acquire definitive licenses to own and operate solar parks, and then organize construction bridge loans to pay for the construction of the solar parks.
------------------------------
The company did do $476,701 in sales for the 2nd quarter of 2011 for a net profit of $269,288, but the cost of operations were $1,442,927 meaning that PSPW lost $1,191,707 for the quarter. Not exactly a thriving business when they are losing that much money over a 3 month period.
In fact the 10Q shows that business for Seawind has declined significantly since the year before:
During the three month periods ended June 30, 2011, the Company’s sales totaled $476,701, which was a decline from total sales of $2,615,204 as of June 30, 2010.
The good news it that with the declining sales came declining expenses:
The Company’s cost of sales for the three months ended June 30, 2011 were $207,413, as opposed to $2,376,768 for the period ended June 30, 2010
-----------------------
Big money was made on this stock in the past by the smart investors. Judging by the direction that PSPW is headed (based on the information offered in the 10Q), I personally think that making money off of PSPW in the future will prove much more difficult.
http://www.otcmarkets.com/edgar/GetFilingHtml?FilingID=8132671
The share count is pretty well document prior to June 30, 2011:
Before the Seawind merger there were 40,114,900 shares outstanding.
As a result of the Seawind merger 40,000,000 shares were issued to the Seawind shareholders in exchange for 100% of their outstanding shares (constituting the merger) and on May 13, 2011, 19,607,843 shares were issued to Viewpoint Investment Group as a payment for their role in helping to set up the merger.
That puts the share count as of June 30, 2011 at 99,722,743 (40,144,900 + 40,000,000 + 19,607,843 = 99,722,743 - as is confirmed by the 10Q).
The 19,607,843 shares issued to Viewpoint Investment Group is supposed to represent a $1,000,000 fee for their role in helping to set up the merger.
The Company has arranged with Viewpoint Investments Corp. (“Viewpoint”) to pay a $1,000,000 fee, to be paid in Company Common Stock, payable upon the closing of the acquisition of the Seawind Companies (the “Facilitation Agreement”) which occurred on May 13, 2011. Pursuant to the Facilitation Agreement, the Company has issued 19,607,843 restricted shares of the Company’s common stock to Viewpoint in consideration for services rendered to the Company. Viewpoint assisted and advised the Company with respect to identifying, negotiating and closing the transaction with the Seawind Group of Companies. The consideration paid to Viewpoint by the Company was deemed to be fair and reasonable by our Board of Directors with respect to the creation and enhancement of share value for all shareholders responsive to the acquisition of Seawind Energy and Seawind Services due to the efforts of Viewpoint. The number of shares issued to Viewpoint was calculated by reference to 85% of the publicly quoted closing price of the Company’s Common Stock on January 25, 2011.
The $1,000,000 fee was based off of the $2,400,000 valuation that PSPW and Seawind put on Seawind. I think that $2,400,000 valuation is a bit high personally (as details further down this post will testify)
----------------------
PSPW took the absolutely lowest closing price in the history of PSPW then took that closing price and fudged the numbers making it even lower then took 85% of that closing price to determine the $1,000,000 fee.
Post about the Viewpoint fee from May 21, 2011:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=63411319
On May 13, 2011, the day when Viewpoint Investments Corp received those shares, PSPW closed at $1.97/share. That makes those 19,607,843 shares worth $38,627,450.71 on the day they were issued.
Even at the current price of $.41/share those 19,607,843 shares are worth $8,039,215,63. Seawind isn't even worth close to $8 million. It may not even be worth the $1,000,000 fee. The 10Q filed for the period ending June 30, 2011 shows that the merger with Seawind only improved the PSPW assets by $2,521,000 from its pre-merger levels, but it also increased the liabilities by $2,204,000. So all total the balance sheet only improved by $317,000.
Don't believe me compare the latest 10Q to the 10Q for the period ending March 31, 2011:
http://www.otcmarkets.com/edgar/GetFilingHtml?FilingID=7954396
Here is a post from May 21, 2011 about the crooked math used to determine the Viewpoint fee:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=63411319
I would absolutely love to know who Viewpoint Investments Corp is (I made an attempt to find out in my post, but the true owner of those shares seems to have set up the Panamanian entity putting other people down as the officers of the entity as a front to hide their identity)
I wonder what those shares will be worth on May 13, 2012 when they become unrestricted and can be sold.
--------------------------
Back to the issue at hand - the outstanding share count.
Since June 30, 2011 the share count has continued to rise. As of the date of the 10Q filing on August 30, 2011 the share count had grown from 99,722,743 to 107,127,408 (see page 1 of the 10Q last line before the table of contents)
What were those 7,404,735 shares issued for?
Since June 30, 2011 the share price for PSPW has dropped from $.72/share to $.41/share. No doubt those 7,404,735 shares had something to do with the declining price.
Even at the low end of that scale ($.41/share) those 7,404,735 shares are worth $3,035,941. That's a lot of money.
Unfortunately the 10Q for the period ending June 30, 2011 does not disclose to the share holders what those shares were issued for as is required. Even though the issuing of those shares happened after June 30, 2011 they still should have shown up in the subsequent events section. The 10Q filed by PSPW for the period ending June 30, 2011 has no subsequent events section. This is a major concern.
-------------------
I dug deep into the 10Q looking for clues and I found a couple of sections that if they do not explain who got those 7,404,735 shares and why do explain who will be getting shares in the future.
There are two sections I think are key:
Demand from CRG Finance AG
On March 2, 2010, the Company entered into a Financing Agreement (the “Financing Agreement”) with CRG Finance AG (“CRG Finance”). Pursuant to the Financing Agreement, CRG Finance loaned the Company a total of 470,000 Euros ($660,073 as of June 30, 2011). In further consideration for the making of this loan, the Company agreed to transfer 20% of the Company’s rights to its net profits to be made in the sale of PSP Italian S.r.l (the “Net Profit Rights”). CRG Finance has agreed that upon receipt of its Net Profit Rights, CRG Finance will reinvest at least 50% of such Net Profit Rights into either new projects of the Company or shares of the Company, at a purchase price to be mutually agreed upon. The Company has issued a senior promissory note to CRG Finance in the amount of 470,000 Euros ($660,073) as of June 30, 2011. The principal of the note, along with interest at an annual rate of seven and one half percent, is due within thirty days of demand. CRG has made a demand for payment of the Note which has not been paid by the Company.
CRG Finance AG let PSPW borrow $660,073 on March 2, 2010. They turned that loan into a convertible Note on June 30, 2011 with a life of 30 days. On July 30, 2011 the Note matured and at that point the owner of the Note (CRG Finance AG) could then demand payment on the Note. If the company (PSPW) does not repay the Note in cash it can be converted into shares (probably at a steep discount). It is possible that some if not all of those 7,404,735 shares could have gone to CRG Finance AG to pay off that debt Note between the date it matured (July 30, 2011) and August 30, 2011.
The other interesting section is this one:
To date, 3Power Energy Group has received loans from Rudana (the “Shareholder Loans”). The Shareholder Loans include amounts loaned by Rudana and invoices paid by Rudana. 3Power Energy Group has used the proceeds from the Shareholder Loans for general corporate purposes. The Shareholder Loans have an interest rate of seven and a half percent (7.5%) per annum, which together with the principal amount shall be repayable thirty (30) days after demand by Rudana. In connection with the Shareholder Loans, 3Power Energy Group intends to execute notes setting forth the terms thereof. In addition, the Company’s accrued fees owed for management services received from Prime Asset Finance Limited, a subsidiary of Rudana, from inception through June 30, 2011 total $937,500.
It looks like Rudana Investment Group which is a private company connected to the former CEO, Olivier de Vergnies, let PSPW borrow $937,500 total in the past. Currently that $937,500 is in the form of a loan collecting interest at a rate of 7.5% per annum. According to that section PSPW and de Vergnies plan to change that loan into a debt Note so it can be converted into shares for repayment. No doubt steeply discounted shares.
----------------------------------------
Overall I think the Seawind merger was a big let down for the following reasons:
1) It only improved the PSPW balance sheet by $317,000.
2) It cost the PSPW shareholders over 59,000,000 shares.
3) It sets up the shell for a dilution threat that did not exist before the merger. Olivier de Vergnies can now convert his $937,500 into free trading discounted shares.
4) The most important element of the merger has been lost - the $50 million financing commitment from CR&P Holding S.p.A.
---------------------
What potential does PSPW have to improve its current situation?
1) They are owed the final payment for the sale of its project in Texas to Sany, a Chinese company. The payment is expected during the final quarter of 2011.
The don't tell us how much is due, but it would be listed under Assets on the balance sheet so it may be the $953,754 number.
Other than that all other business operations are forward looking with no guarantees for success:
The Company’s subsidiary Seawind Services Limited changed its name to 3Power Project Services Limited. 3Power Project Services Limited continued to make progress on its engineering and supply contracts with its two Chinese customers as those projects approached completion. The first shipment of prototype components for the new 2MW wind turbine were despatched from Germany, and the close out of the detailed design phase continued. 3Power Project Services Limited also commenced work under the Project Management engagement with 3Power Energy Inc. on the ongoing development of the first 18MW of wind projects in Chile. Activities have included finalising interconnection options to grid, contractor prequalification and negotiation of power purchase agreements. Additionally, minor works were undertaken in relation to the ongoing operating and maintenance engagement for Barrick Gold in Argentina. No new work was approached or contracted, the emphasis for the company now being the successful close out of the Chinese venture and consolidation of the work being undertaken on development of the 3Power project portfolio.
The Company has entered into an acquisition agreement with Enerserve Ltd. (“Enerserve”), to acquire a wind energy project in Chile consisting of thirty two turbine locations (the “Enerserve Project”). Enerserve has already obtained and/or is in the process of finalizing the necessary agreements, permits, wind measurement data, and all other requisites necessary for the Enerserve Project. Enerserve has agreed to complete the development of the Enerserve Project through the stage where all required construction permits are obtained and in order. Enerserve shall then provide support services to the Company throughout the construction stage in all matters related to permits and consents. The Enerserve Project and all ancillary rights, agreements, permits, data and other requisites for the construction and connection to the electrical grid shall be vested in the Company by transferring the Enerserve Project to 3Power Energia S.A.
The Company has entered into an option agreement with Power Andina Limited (“PAL”), to acquire a wind energy project in Chile consisting of six turbine locations (the “PAL Project”). PAL has already obtained and/or is in the process of finalizing the necessary agreements, permits, wind measurement data, and all other requisites necessary for the PAL Project. PAL has agreed to complete the development of the PAL Project through the stage where all required construction permits are obtained and in order. PAL shall then provide support services to the Company throughout the construction stage in all matters related to permits and consents. Upon exercise of the option by the Company under the PAL agreement, the PAL Project and all ancillary rights, agreements, permits, data and other requisites for the construction and connection to the electrical grid shall be vested in the Company by transferring the PAL Project to a new Company wholly-owned subsidiary, 3Power Energia S.A., which shall be a Chilean registered company.
The main reason why there is no guarantee of any of those forward looking business operations happening is because of this statement made by PSPW in the 10Q:
The Company will require no less than $2,000,000 in additional funding in order to conduct proposed operations for the next year. Should the Company fail to raise such funds, the Company will not be able to commence construction of the solar power plants. In order to commence construction on all of the Company’s currently contemplated projects, the Company would be required to raise 15,000,000 Euros (approximately $19,220,000) to acquire definitive licenses to own and operate solar parks, and then organize construction bridge loans to pay for the construction of the solar parks.
------------------------------
The company did do $476,701 in sales for the 2nd quarter of 2011 for a net profit of $269,288, but the cost of operations were $1,442,927 meaning that PSPW lost $1,191,707 for the quarter. Not exactly a thriving business when they are losing that much money over a 3 month period.
In fact the 10Q shows that business for Seawind has declined significantly since the year before:
During the three month periods ended June 30, 2011, the Company’s sales totaled $476,701, which was a decline from total sales of $2,615,204 as of June 30, 2010.
The good news it that with the declining sales came declining expenses:
The Company’s cost of sales for the three months ended June 30, 2011 were $207,413, as opposed to $2,376,768 for the period ended June 30, 2010
-----------------------
Big money was made on this stock in the past by the smart investors. Judging by the direction that PSPW is headed (based on the information offered in the 10Q), I personally think that making money off of PSPW in the future will prove much more difficult.
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