September 30, 2009 (Unaudited)				December 31, 2008
ASSETS
CURRENT ASSETS
Cash		$	67,526			$	5,980
Accounts Receivable			78,904				-
Related party receivable			3,356				3,356
Inventory			330,829				213,085
Prepaid inventory			-				193,010
Prepaid NRE tooling			-				21,734
Prepaid expenses and other expenses			21,490				51,592
			502,105				488,757
EQUIPMENT , net			453,968				187,517
PATENTS			57,247				18,928
Total assets		$	1,013,320			$	695,202
LIABILITIES AND SHAREHOLDERS’ DEFICIT
CURRENT LIABILITIES
Accounts payable		$	999,129			$	449,215
Accrued compensation			127,487				149,094
Accrued interest			271,764				142,844
Other accrued liabilities			53,093				11,936
Accrued taxes			9,658				10,156
Deferred revenue			150,205				373,598
Related party payable			-				22,433
Short term debt			605,529				-
Convertible notes payable to related party, net of discount			-				567,633
Convertible notes payable, net of discount			-				1,504,180
Derivative liability			42,731,694				-
			44,948,559				3,231,089
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ DEFICIT
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, no shares issued or outstanding			-				-
Common stock, $0.0001 par value, 1,750,000,000 shares authorized, 38,715,361 and 20,546,083 issued and outstanding as of September 30, 2009 and December 31, 2008, respectively			3,871				2,055
Additional paid in capital			19,303,099				273,045
Accumulated deficit			(63,242,209)				(2,810,987)
Total shareholders’ deficit			(43,935,239)				(2,535,887)
Total liabilities and shareholders’ deficit		$	1,013,320			$	695,202

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

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(formerly Clearview Acquisitions, Inc.)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

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		Nine Months Ended
		September 30, 2009				September 30, 2008
OPERATING ACTIVITIES
Net loss		$	(60,431,222	)		$	(1,323,067	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			107,222				12,391
Write off of debt discount on converted debt			700,232
Stock based compensation			13,821,694				-
Change in fair value of derivative warrant liability			8,762,165				-
Interest in connection with derivative liability			21,614,066				-
Loss on debt extinguishment			12,038,787				-
Note payable issued for Company expenses			28,164				64,000
Changes in operating assets and liabilities:
Accounts Receivable			(78,904	)			-
Inventory			75,266				(85,362	)
Prepaid NRE tooling			21,734				(21,734	)
Other current assets			30,102				3,108
Patents			(38,319	)
Accounts payable			805,190				21,731
Accrued compensation			(21,607	)			12,934
Accrued interest			116,447				83,716
Related party payable			(22,433	)			(52,776	)
Deferred revenue			(223,393	)			155,592
Accrued taxes			(498	)			9,659
Accrued liabilities			40,297				(32,568	)
Net cash used in operating activities			(2,655,010	)			(1,152,376	)
INVESTING ACTIVITIES
Purchase of equipment			(373,673	)			(134,333	)
Net cash used in investing activities			(373,673	)			(134,333	)
FINANCING ACTIVITIES
Cash received from reverse merger			270,229				-
Proceeds from convertible notes payable			2,430,000				1,620,814
Proceeds from short term notes payable			465,000				-
Principal payments on short term notes payable			(75,000	)			-
Net cash provided by financing activities			3,090,229				1,620,814
Net increase in cash			61,546				334,105
Cash – beginning of period			5,980				2,409
Cash – end of period		$	67,526			$	336,514
SUPPLEMENTAL DISCLOSURE OF NON CASH INVESTING AND FINANCING ACTIVITIES
Exchange of 12% notes to 9% notes		$	2,047,214			$	-
Conversion of convertible notes payable to non-convertible short term debt		$	187,365			$	-
Convertible notes payable in lieu of  payables		$	291,057			$	64,000
Derivative liability on warrants issued with convertible notes payable		$	4,893,033			$	-
Conversion of accrued interest to convertible notes payable		$	199,439			$	-
Common stock issued upon reverse merger		$	1,614			$	-
Net liabilities assumed in reverse merger		$	66,414			$	-
Common stock issued for note conversion and warrants exercised		$	202			$	-

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

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HELIX WIND, CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2009

(Unaudited)

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1.	ORGANIZATION

Helix Wind, Corp. (“Helix Wind”) (formerly Clearview Acquisitions, Inc.) was incorporated under the laws of the State of Nevada on January 10, 2006 (Inception) and has its headquarters located in San Diego, California.  Helix Wind was originally named Terrapin Enterprises, Inc. On December 6, 2006, Helix Wind merged its newly-formed wholly-owned subsidiary, Black Sea Oil, Inc., into itself and changed its corporate name to Black Sea Oil, Inc. pursuant to a Plan and Agreement of Merger dated December 6, 2006.  On November 14, 2008, Helix Wind changed its name from Black Sea Oil, Inc. to Clearview Acquisitions, Inc. pursuant to Amended and Restated Articles of Incorporation filed with the Secretary of State of Nevada.  On February 11, 2009, Helix Wind’s wholly-owned subsidiary, Helix Wind Acquisition Corp. was merged with and into Helix Wind, Inc. (“Subsidiary”), which survived and became Helix Wind’s wholly-owned subsidiary (the “Merger”).  On April 16, 2009, Helix Wind changed its name from Clearview Acquisitions, Inc. to Helix Wind, Corp., pursuant to an Amendment to its Articles of Incorporation filed with the Secretary of State of Nevada.  Unless the context specifies otherwise, as discussed in Note 2, references to the “Company” refers to Subsidiary prior to the Merger, and Helix Wind, Corp. and the Subsidiary combined thereafter.

Helix Wind was formed to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions. Helix Wind had no operations up until the Merger, other than issuing shares of its common stock to its original shareholders and conducting a private offering of shares of its common stock.  The Company is now engaged through the Subsidiary in the alternative energy business offering a distributed power technology platform designed to produce electric energy from the wind. Subsidiary was primarily engaged in the research and development of its proprietary products until the third quarter of the year ended December 31, 2008, when it began selling its products.  The Company has commenced the outsourcing process to manufacture its products and has begun to receive purchase orders from customers. The Company utilizes two distinct distribution channels to market and sell its products:( i) direct sales to end users and installers and( ii) indirect or channel sales with resellers domestically and internationally.

Helix Wind is authorized to issue up to 1,750,000,000 shares of common stock, par value $0.0001 per share, and 5,000,000 shares of preferred stock, par value $0.0001 per share. On November 3, 2008, Helix Wind (formerly Clearview Acquisitions, Inc.) effected a reverse stock split (the “Stock Split”), as a result of which each 1,000 shares of Helix Wind’s common stock then issued and outstanding was converted into one share of Helix Wind’s common stock.

 

Immediately prior to the Merger, Helix Wind had 5,135,011 shares of its common stock issued and outstanding. In connection with the Merger, Helix Wind issued 20,546,083 shares of its common stock in exchange for the issued and outstanding shares of common stock of the Subsidiary. Included in the Merger recapitalization of Helix Wind there were 11,000,000 shares of its common stock issued pursuant to the settlement of the dispute described in the Company’s Form 8-K filed December 22, 2008 with Securities and Exchange Commission (“SEC”). Helix Wind also reserved 5,753,917 shares of its common stock for issuance upon the conversion of certain convertible notes of Subsidiary that were converted into new convertible notes of Helix Wind in connection with the Merger.  In third quarter of 2009, Helix Wind issued 1,185,635 shares of its common stock upon conversion of certain convertible notes and warrants of Subsidiary.  The Company also granted 95,000 new shares of its common stock during the third quarter of 2009.  At September 30, 2009, there were 38,715,361 shares of Helix Wind’s common stock issued and outstanding.  

 

 

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HELIX WIND, CORP.

(formerly Clearview Acquisitions, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2009

(Unaudited)

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2.	BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Reverse Merger Accounting

 

Since former Subsidiary security holders owned, after the Merger, approximately 80% of Helix Wind’s shares of common stock, and as a result of certain other factors, including that all members of the Company’s executive management are from Subsidiary, Subsidiary is deemed to be the acquiring company for accounting purposes and the Merger was accounted for as a reverse merger and a recapitalization in accordance with generally accepted accounting principles in the United States (“GAAP”). These condensed consolidated financial statements reflect the historical results of Subsidiary prior to the Merger and that of the combined Company following the Merger, and do not include the historical financial results of Helix Wind (formerly Clearview Acquisitions, Inc.) prior to the completion of the Merger. Common stock and the corresponding capital amounts of the Company pre-Merger have been retroactively restated as capital stock shares reflecting the exchange ratio in the Merger. In conjunction with the Merger, the Company received cash of $270,229 and assumed net liabilities of $66,414.

Condensed Consolidated Financial Statements

The accompanying unaudited condensed consolidated financial statements primarily reflect the financial position, results of operations and cash flows of Subsidiary (as discussed above). The accompanying unaudited condensed consolidated financial statements of Subsidiary have been prepared in accordance with GAAP for interim financial information and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission. Accordingly, these interim financial statements do not include all of the information and footnotes required by GAAP for annual financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2009 are not necessarily indicative of the results that may be expected for the year ending December 31, 2009, or for any other period. Amounts related to disclosures of December 31, 2008, balances within these interim condensed consolidated financial statements were derived from the audited 2008 consolidated financial statements and notes thereto filed on Form 8-K on March 31, 2009.

Subsequent Events

Management has evaluated subsequent events through November 19, 2009, the date the interim financial statements were issued.

 

Use of Estimates

These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto for Subsidiary included in Helix Wind’s Current Report on Form 8-K filed on March 31, 2009 with the SEC. In preparing these condensed consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the condensed consolidated financial statements and the reported amount of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Significant estimates and assumptions included in the Company’s condensed consolidated financial statements relate to the recognition of revenues, the estimate of the allowance for doubtful accounts, the estimate of inventory reserves, estimates of loss contingencies, valuation of long-lived assets, deferred revenues, accrued other liabilities, and valuation assumptions related to share based payments and derivative liabilities.

 

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HELIX WIND, CORP.

(formerly Clearview Acquisitions, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2009

(Unaudited)

---

 

Going Concern

 

The accompanying condensed consolidated financial statements have been prepared under the assumption that the Company will continue as a going concern. Such assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has an accumulated deficit of approximately $63,000,000 at September 30, 2009, recurring losses from operations and negative cash flow from operating activities from inception to September 30, 2009. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

 

The Company’s continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations on a timely basis, to obtain additional financing as may be required, and ultimately to attain profitability. During 2008 and the first nine months of 2009, the Company raised funds through the issuance of convertible notes payable to investors and through a private placement of the Company’s securities to investors to provide additional working capital. The Company plans to obtain additional financing through the sale of debt or equity securities. There can be no assurance that such financings will be available on acceptable terms, or at all.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and wholly-owned Subsidiary. All intercompany transactions and balances have been eliminated in consolidation.

 

Trade Accounts Receivable

The Company records trade accounts receivable when its customers are invoiced for products delivered and/or services provided.  Management develops its estimate of this allowance based on the Company’s current economic circumstances and its own judgment as to the likelihood of ultimate payment. Management believes that they did not require an allowance for doubtful accounts, as there are no customer accounts with material collection risk at September 30, 2009 and December 31, 2008. Although the Company expects to collect amounts due, actual collections may differ from these estimated amounts. Actual receivables are written off against the allowance for doubtful accounts when the Company has determined the balance will not be collected.

The Company does not require collateral from its customers, but performs ongoing credit evaluations of its customers’ financial condition. Credit risk with respect to the accounts receivable is limited because of the large number of customers included in the Company’s customer base and the geographic dispersion of those customers.

 

Patents

Patents represent external legal costs incurred for filing patent applications and their maintenance, and purchased patents. Amortization for patents is recorded using the straight-line method over the lesser of the life of the patent or its estimated useful life. No amortization has been taken on these expenditures in accordance with Company policy not to depreciate patents until the patent has been approved and issued by the United States Patent Office.

 

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HELIX WIND, CORP.

(formerly Clearview Acquisitions, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2009

(Unaudited)

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Inventory

The Company contracts with East West Consulting, Ltd. (“East West”) in Thailand to manage the outsourcing of manufacturing for the Company’s wind turbines. East West directly places orders with suppliers based on a demand schedule provided by the Company. Each supplier holds various quantities in their finished goods inventory for a specified period before it is shipped on behalf of the Company. For finished goods, inventory title passes to the Company when payments have been made to East West for these items. Payments that the Company makes to East West for inventory that is still in process are recognized as prepaid inventory. The suppliers bear the risk of loss during manufacturing as they are fully insured for product within their warehouse. The Company records its finished goods inventory at the lower of cost (first in first out) or net realizable value. At September 30, 2009 and December 31, 2008, inventory at various suppliers or at the Company totaled $330,829 and $213,085, respectively. In addition, the Company makes progress payments to East West for inventory being manufactured but not yet completed in the form of prepaid inventory.  There was no prepaid inventory at September 30, 2009.

Impairment of Long-Lived Assets

Long-lived assets must be reviewed for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. If the cost basis of a long-lived asset is greater than the projected future undiscounted net cash flows from such asset, an impairment loss is recognized. Impairment losses are calculated as the difference between the cost basis of an asset and its estimated fair value. No impairment losses were recognized during the nine months ended September 30, 2009.

Equipment

Equipment is stated at cost, and is being depreciated using the straight-line method over the estimated useful lives of the related assets ranging from three to five years. Non Recurring Equipment (NRE) tooling that was placed in service and paid in full as of September 30, 2009 is recognized as fixed assets and being depreciated over 5 years. Tooling that has been partially paid for as of September 30, 2009 is recognized as a prepaid asset. Costs and expenses incurred during the planning and operating stages of the Company’s website are expensed as incurred. Costs incurred in the website application and infrastructure development stages are capitalized by the Company and amortized to expense over the website’s estimated useful life or period of benefit. Expenditures for repairs and maintenance are charged to expense in the period incurred. At the time of retirement or other disposition of equipment and website development, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recorded in results of operations.

 

 

Helix Wind expects significant capital expenditures during the next 12 months, contingent upon raising capital. We currently anticipate that we will need $4,000,000 for operations and $3,000,000 for acquisitions already contracted for the next 12 months. These anticipated expenditures are for manufacturing of systems, infrastructure, overhead, integration of acquisitions and working capital purposes.

 

Helix Wind presently does not have any available credit, bank financing or other external sources of liquidity. Due to its brief history and historical operating losses, Helix Wind’s operations have not been a source of liquidity. Helix Wind will need to obtain additional capital in order to expand operations and become profitable. In order to obtain capital, the Company may need to sell additional shares of its common stock or borrow funds from private lenders. There can be no assurance that Helix Wind will be successful in obtaining additional funding.

 

Helix Wind will need additional investments in order to continue operations. Additional investments are being sought, but Helix Wind cannot guarantee that it will be able to obtain such investments.  Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. However, the trading price of Helix Wind’s common stock and a downturn in the U.S. stock and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if Helix Wind is able to raise the funds required, it is possible that it could incur unexpected costs and expenses, fail to collect significant amounts owed to it, or experience unexpected cash requirements that would force it to seek alternative financing. Further, if Helix Wind issues additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of Helix Wind’s common stock. If additional financing is not available or is not available on acceptable terms, Helix Wind will have to curtail its operations.

 

On February 11, 2009, the Company exchanged existing convertible notes (12% notes) for 9% convertible notes. In addition to the stated interest rate, the exchange transaction also modified the conversion rate as well as the issuance of 5,753,918 warrants to the various convertible note holders.  The total amount of the 12% notes exchanged was $2,234,579.  This amount included principal plus accrued interest charges and other charges.   In addition, the Company issued new convertible 9% notes subsequent to February 11, 2009 for $2,870,365 as of September 30, 2009.

 

Off-balance sheet arrangements

We have no off-balance sheet arrangements.

Contractual Obligations

The Company exchanged 12% convertible notes of Helix Wind, Inc. for its own 9% convertible notes during the first quarter as a part of the merger transaction with Helix Wind, Inc.  The new notes are convertible into common shares of the Company’s stock at a conversion price $0.50 per share.  In addition, for each share of common stock into which such notes can convert, the noteholder received one warrant at an exercise price of $0.75.  In addition, subsequent to the reverse merger transaction on February 11, 2009, the Company issued new 9% convertible notes and warrants with the same terms and conditions described above.

 

 

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HELIX WIND, CORP.

(formerly Clearview Acquisitions, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2009

(Unaudited)

---

 

 

Critical Accounting Policies

Use of Estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Significant estimates include those related to the debt discount, valuation of derivative liabilities and stock based compensation, and those associated with the realization of long-lived assets.

 

Long-lived Assets

 

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For purposes of the impairment review, assets are reviewed on an asset-by-asset basis. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of each asset to future net cash flows expected to be generated by such asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount which the carrying amount of the assets exceeds the fair value of the assets. Through September 30, 2009, there have been no such losses.

Derivative Liabilities and Classification

We evaluate free-standing instruments (or embedded derivatives) indexed to the Company’s common stock to properly classify such instruments within equity or as liabilities in our financial statements. Accordingly, the classification of an instrument indexed to our stock, which is carried as a liability, must be reassessed at each balance sheet date. If the classification changes as a result of events during a reporting period, the instrument is reclassified as of the date of the event that caused the reclassification. There is no limit on the number of times a contract may be reclassified.

Stock Based Compensation

Stock-based compensation cost is measured at the date of grant, based on the calculated fair value of the stock-based award, and is recognized as expense over the employee’s requisite service period (generally the vesting period of the award).

 

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