Attached files
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EX-32 - NYXIO TECHNOLOGIES Corp | v168118_ex32.htm |
EX-31.2 - NYXIO TECHNOLOGIES Corp | v168118_ex31-2.htm |
EX-31.1 - NYXIO TECHNOLOGIES Corp | v168118_ex31-1.htm |
U.S.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-Q/A
¨
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
quarterly period ended: September 30, 2009
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
transition period from ______ to ______
Commission
file number: 333-137160
LED
POWER GROUP, INC.
(Exact
name of registrant as specified in its charter)
NEVADA
|
98-0501477
|
|
(State
of incorporation)
|
(IRS
Employer ID No.)
|
1694
Falmouth Road, Suite 150 Centerville, Massachusetts USA,
02632-2933
(Address
of principal executive offices) (Zip Code)
Registrant's
telephone number, including area code: (508) 362-4420
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.
x
Yes ¨ No
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required o submit and post such
files).
¨Yes ¨No
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.
¨
|
Large accelerated filer
|
¨
|
Accelerated filer
|
¨
|
Non-accelerated filer
(Do not check if smaller reporting company)
|
x
|
Smaller Reporting company
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
¨Yes x No
Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date.
Class
|
Outstanding as
of December 3, 2009
|
|
Common
stock, $.001 par value
|
1,725,001
|
EXPLANATORY
NOTE
LED Power
Group, Inc. (the “Company”) is filing this Amendment No. 1 to Form 10-Q
(the "Amended Form 10-Q/A"), which amends the Quarterly
Report on Form 10-Q for the period ended September 30, 2009, that the Company
filed with the Securities and Exchange Commission on November 13, 2009, to
include in the “Other Information” section of this Amended Form 10-Q/A a
complete list of all Notes and Convertible outstanding at the time of this
report in this Amended Form 10-Q/A. The Company is also filing this
Amended Form 10-Q/A to amend the Financial Statements and Notes as reported in
the Form 10-Q as originally filed to accurately classify and describe the Notes
and Convertible Notes outstanding at the time of this report in this Amended
Form 10-Q/A. Except as so amended, this Amended Form 10-Q/A does not
modify or update any other disclosures set forth in the Form 10-Q as originally
filed, and the contents of the Form 10-Q as originally filed have not otherwise
been modified or changed.
2
LED POWER
GROUP, INC.
FORM
10-Q/A
September
30, 2009
INDEX
|
PAGE
|
|
Part
I. FINANCIAL INFORMATION
|
5
|
|
Item
1. Financial Statements
|
5
|
|
Condensed
Balance Sheets as of September 30, 2009 (Unaudited) and December 31, 2008
(Audited)
|
5
|
|
Condensed
Statements of Operations for the three and nine month periods ended
September 30, 2009 and 2008 and for the period from June 8, 2006
(inception) to September 30, 2009 (Unaudited).
|
6
|
|
Condensed
Statements of Cash Flows for the three and nine month periods ended
September 30, 2009 and 2008 and for the period from June 8, 2006
(inception) to September 30, 2009 (Unaudited).
|
7
|
|
Notes
to Condensed Financial Statements
|
8
|
|
Item
2. Management's Discussion and Analysis of Financial Conditions and
Results of Operations
|
13
|
|
Item
3. Qualitative and Quantitative Disclosures About Market
Risk
|
15
|
|
Item
4. Controls and Procedures
|
15
|
|
Part
II. OTHER INFORMATION
|
16
|
|
Item
1. Legal Proceedings
|
16
|
|
Item
1A. Risk Factors
|
16
|
|
Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds
|
18
|
|
Item
3. Defaults Upon Senior Securities
|
18
|
|
Item
4. Submission of Matters to a Vote of Security Holders
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19
|
|
Item
5. Other Information
|
19
|
|
Item
6. Exhibits
|
20
|
|
Signature
Page
|
21
|
Certifications
|
||
Exhibit
31.1
|
||
Exhibit
31.2
|
||
Exhibit
32
|
3
FORWARD-LOOKING
STATEMENTS
This
Report on Form 10-Q/A contains forward-looking statements within the meaning of
the “safe harbor” provisions of the Private Securities Litigation Reform Act of
1995. Reference is made in particular to the description of our plans and
objectives for future operations, assumptions underlying such plans and
objectives, and other forward-looking statements included in this report. Such
statements may be identified by the use of forward-looking terminology such as
“may,” “will,” “expect,” “believe,” “estimate,” “anticipate,” “intend,”
“continue,” or similar terms, variations of such terms or the negative of such
terms. Such statements are based on management's current expectations and are
subject to a number of factors and uncertainties, which could cause actual
results to differ materially from those described in the forward-looking
statements. Such statements address future events and conditions concerning,
among others, capital expenditures, earnings, litigation, regulatory matters,
liquidity and capital resources and accounting matters. Actual results in each
case could differ materially from those anticipated in such statements by reason
of factors such as future economic conditions, changes in consumer demand,
legislative, regulatory and competitive developments in markets in which we
operate, results of litigation and other circumstances affecting anticipated
revenues and costs, and the risk factors set forth below under the heading “Risk
Factors” and set forth in our Annual report on Form 10-K for the fiscal year
ended December 31, 2008, filed on March 31, 2009.
As used
in this Form 10-Q/A, “we,” “us” and “our” refer to LED Power Group, Inc., which
is also sometimes referred to as the “Company.”
YOU
SHOULD NOT PLACE UNDUE RELIANCE ON THESE FORWARD LOOKING
STATEMENTS
The
forward-looking statements made in this report on Form 10-Q/A relate only to
events or information as of the date on which the statements are made in this
report on Form 10-Q/A. Except as required by law, we undertake no obligation to
update or revise publicly any forward-looking statements, whether as a result of
new information, future events or otherwise, after the date on which the
statements are made or to reflect the occurrence of unanticipated events. You
should read this report and the documents that we reference in this report,
including documents referenced by incorporation, completely and with the
understanding that our actual future results may be materially different from
what we expect or hope.
4
PART
I. FINANCIAL INFORMATION
Item
1. Financial Statements
LED
Power Group, Inc.
|
(A
Development Stage Company)
|
Condensed
Balance Sheets
|
September
30, 2009
|
December
31, 2008
|
|||||||
(Unaudited)
|
(Audited)
|
|||||||
ASSETS
|
||||||||
Current
assets
|
||||||||
Cash
|
$ | 10,206 | $ | 10 | ||||
Prepaid
expenses
|
431 | 10,000 | ||||||
Total
current assets
|
10,637 | 10,010 | ||||||
Total
assets
|
$ | 10,637 | $ | 10,010 | ||||
LIABILITIES
and STOCKHOLDERS' DEFICIT
|
||||||||
Current
liabilities
|
||||||||
Accounts
payable and accrued liabilities
|
$ | 62,095 | $ | 39,576 | ||||
Notes
payable to related parties
|
17,007 | 17,007 | ||||||
Demand
notes payable
|
220,707 | 41,258 | ||||||
Advances
|
5,620 | 10 | ||||||
Total
current liabilities
|
305,429 | 97,851 | ||||||
Total
liabilities
|
305,429 | 97,851 | ||||||
STOCKHOLDERS'
DEFICIT
|
||||||||
Capital
stock
|
||||||||
Common
- 6,000,000 shares authorized at $0.001 par value,
|
||||||||
1,725,001
and 500,000 shares issued and outstanding at September 30, 2009 and
December 31, 2008, respectively.
|
1,725 | 500 | ||||||
Additional
paid in capital
|
8,303,275 | 14,500 | ||||||
Deficit
accumulated during exploration stage
|
(8,599,792 | ) | (102,841 | ) | ||||
Total
stockholders' deficit
|
(294,792 | ) | (87,841 | ) | ||||
Total
liabilities and stockholders' deficit
|
$ | 10,637 | $ | 10,010 |
The
accompanying notes are an integral part of these condensed financial
statements.
|
5
(A
Development Stage Company)
Condensed
Statements of Operations
For
the Three and Nine Months Ended September 30, 2009 and 2008
And
for the period from June 8, 2006 [Inception] to September 30, 2009
(Unaudited)
Three
months ended
September
30,
|
Nine
months ended
September
30,
|
Period
from June
8,
2006
[Inception] to
|
||||||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
September
30, 2009
|
|||||||||||||||
Revenues
|
$ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
Operating
expenses
|
||||||||||||||||||||
Corporate
fees
|
770 | - | 14,585 | - | 15,890 | |||||||||||||||
Executive
compensation
|
7,500 | - | 22,500 | - | 25,000 | |||||||||||||||
Professional
fees
|
11,988 | 9,809 | 78,212 | 23,083 | 139,497 | |||||||||||||||
Investor
relations and marketing
|
22,930 | - | 93,406 | - | 115,906 | |||||||||||||||
Loss
from operations
|
43,188 | 9,809 | 208,703 | 23,083 | 296,293 | |||||||||||||||
Other
income and expenses
|
||||||||||||||||||||
Impairment
of mineral rights
|
- | - | - | - | (15,000 | ) | ||||||||||||||
Impairment
of license
|
- | - | (8,280,000 | ) | - | (8,280,000 | ) | |||||||||||||
Interest
expense
|
(4,158 | ) | - | (8,248 | ) | - | (8,499 | ) | ||||||||||||
(4,158 | ) | - | (8,288,248 | ) | - | (8,303,499 | ) | |||||||||||||
Net
loss
|
$ | (47,346 | ) | $ | (9,809 | ) | $ | (8,496,951 | ) | $ | (23,083 | ) | $ | (8,599,792 | ) | |||||
Net
loss per share - basic and diluted
|
$ | (0.06 | ) | $ | (0.02 | ) | $ | (11.51 | ) | $ | (0.05 | ) | ||||||||
Weighted
average shares outstanding
|
790,935 | 500,000 | 737,960 | 500,000 |
The
accompanying notes are an integral part of these condensed financial
statements.
6
LED
Power Group, Inc.
|
||||||||||||
Condensed
Statements of Cash Flows
|
||||||||||||
For
the nine Months Ended September 30, 2009 and 2008
|
||||||||||||
And
for the period from June 8, 2006 [Inception] to September 30,
2009
|
||||||||||||
(Unaudited)
|
||||||||||||
Nine
months ended
September
30,
|
Period
from June 8,
2006
[Inception] to
|
|||||||||||
2009
|
2008
|
September
30, 2009
|
||||||||||
Operating
activities
|
||||||||||||
Net
loss
|
$ | (8,496,951 | ) | $ | (23,083 | ) | $ | (8,599,792 | ) | |||
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
||||||||||||
Item
not affecting cash:
|
||||||||||||
Impairment
of license
|
8,280,000 | - | 8,280,000 | |||||||||
Impairment
of mineral rights
|
- | - | 15,000 | |||||||||
Changes
in:
|
||||||||||||
Accrued
interest
|
8,248 | - | 8,248 | |||||||||
Prepaid
expenses
|
9,569 | - | (431 | ) | ||||||||
Accounts
payable and accrued liabilities
|
22,519 | 23,083 | 62,095 | |||||||||
Cash
used in operating activities
|
(176,615 | ) | - | (234,880 | ) | |||||||
Investing
Activities
|
||||||||||||
Acquisition
of mineral rights
|
- | - | (15,000 | ) | ||||||||
Cash
flows used in investing activities
|
- | - | (15,000 | ) | ||||||||
Financing
activities
|
||||||||||||
Proceeds
from issue of common stock
|
10,000 | - | 17,500 | |||||||||
Proceeds
from demand notes
|
171,201 | - | 212,469 | |||||||||
Proceeds
from notes payable to related parties
|
- | - | 17,007 | |||||||||
Proceeds
from advances
|
5,610 | - | 5,610 | |||||||||
Additional
paid in capital
|
- | - | 10,000 | |||||||||
Retirement
of founders' common stock
|
- | - | (2,500 | ) | ||||||||
Cash
flows provided by financing activities
|
186,811 | - | 260,086 | |||||||||
Net
increase (decrease) in cash
|
10,196 | - | 10,206 | |||||||||
Cash,
beginning of period
|
10 | - | - | |||||||||
Cash,
end of period
|
$ | 10,206 | $ | - | $ | 10,206 | ||||||
SUPPLEMENTAL
CASH DISCLOSURES
|
||||||||||||
Cash
paid for:
|
||||||||||||
Income
taxes
|
$ | - | $ | - | $ | - | ||||||
Interest
|
$ | - | $ | - | $ | - | ||||||
SUPPLEMENTAL
NON-CASH DISCLOSURES
|
||||||||||||
Common
stock issued for license
|
$ | 8,280,000 | $ | - | $ | 8,280,000 |
The
accompanying notes are an integral part of these condensed financial
statements.
7
LED
Power Group, Inc.
(A
Development Stage Company)
Notes
to Condensed Financial
Statements
September
30, 2009
1. Basis
of presentation
The
accompanying unaudited condensed financial statements of LED Power Group, Inc.
(the “Company”) have been prepared in accordance with accounting principles
generally accepted in the United States of America and the rules of the
Securities and Exchange Commission (“SEC”). Because a precise
determination of many assets and liabilities is dependent upon future events,
the preparation of financial statements for a period necessarily involves the
use of estimates, which have been made using careful judgment. Actual
results may vary from these estimates.
These
unaudited condensed financial statements should be read in conjunction with the
audited financial statements and notes thereto. In the opinion of management,
all adjustments, consisting of normal recurring adjustments, necessary for a
fair presentation of financial position and the results of operations for the
interim periods presented have been reflected herein. The results of operations
for interim periods are not necessarily indicative of the results to be expected
for the full year.
2.
|
Nature
of operations and going concern
|
LED Power
Group, Inc. (the “Company”) was incorporated in the State of Nevada, United
States of America, on June 8, 2006, under the name Drayton Harbor Resources,
Inc.
The
Company had limited operations acquiring and exploring mineral interests and,
during the fiscal year ended December 31, 2008, relinquished its rights to the
mineral interest and changed its business focus to the research, development,
manufacturing and sales of light-emitting diode (LED) products. In furtherance
of its business objectives, on January 12, 2009, the Company entered into a
definitive Agreement and Plan of Merger with LED Power Group, Inc. f.k.a. LED
Power, Inc., a Nevada corporation ("LPG") and Drayton Acquisition Sub, Inc.,
wholly-owned subsidiary of the Company, incorporated on December 3, 2008,
whereby Drayton Acquisition Sub, Inc. merged with and into LPG, with LPG
remaining as the surviving entity and becoming its wholly-owned
subsidiary. LPG has limited operations and owns the rights to an
assignment agreement with Jumbo Power Technology Ltd., Liao Pheng-Piao and Liu
Chih-Chun (“Licensors”) dated December 2008 (the “Assignment
Agreement”). Under the terms of the Assignment Agreement, LPG was
licensed the exclusive rights to certain intellectual property owned by
Licensors in relation to the production of LED products.
The
Company is listed on the Over-the-Counter Bulletin Board under the symbol
LPWR.
These
financial statements have been prepared in accordance with generally accepted
accounting principles applicable to a going concern, which assumes that the
Company will be able to meet its obligations and continue its operations for its
next fiscal year. Realization values may be substantially different
from carrying values as shown and these financial statements do not give effect
to adjustments that would be necessary to the carrying values and classification
of assets and liabilities should the Company be unable to continue as a going
concern. At September 30, 2009, the Company had not yet achieved
profitable operations, has accumulated losses of $8,599,792 since its inception,
has a working capital deficiency of $294,792 and expects to incur further losses
in the development of its business, all of which raises 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 upon its ability to generate
future profitable operations and/or to obtain the necessary financing to meet
its obligations and repay its liabilities arising from normal business
operations when they come due.
The
Company expects to continue to incur substantial losses as it executes its
business plan and does not expect to attain profitability in the near
future. Since its inception, the Company has funded operations
through short-term borrowings and equity investments in order to meet its
strategic objectives. The Company's future operations are dependent upon
external funding and its ability to execute its business plan, realize sales and
control expenses. Management believes that sufficient funding will be
available from additional borrowings and private placements to meet its business
objectives including anticipated cash needs for working capital, for a
reasonable period of time. However, there can be no assurance that
the Company will be able to obtain sufficient funds to continue the development
of its business operation, or if obtained, upon terms favorable to the
Company.
8
3.
|
Notes
payable to related parties
|
During
the fiscal year ended December 31, 2007, the Company received $17,006 pursuant
to promissory notes with two of its former directors. The notes are
unsecured, bear no interest and don’t have any specific terms of
repayment. At September 30, 2009 and December 31, 2008, these
notes are included on the balance sheets.
4.
|
Demand
notes payable
|
On
February 4, 2008, the Company received $636 pursuant to a convertible promissory
note. The note is unsecured, bears no interest and is due on
demand. The note can be converted, at the option of the lender,
into shares of common stock of the Company, at such price and in such terms as
being offered to investors at the time of conversion.
On June
25, 2008, the Company received $6,432 pursuant to a convertible promissory
note. The note is unsecured, bears no interest and is due on
demand. The note can be converted, at the option of the lender,
into shares of common stock of the Company, at such price and in such terms as
being offered to investors at the time of conversion.
On
October 17, 2008, the Company received $632 pursuant to a convertible promissory
note. The note is unsecured, bears interest at 10% per annum
calculated annually, and is due on demand. Any payments of
principal or interest in arrears bear interest at 30% per annum calculated
annually. Default in payment shall, at the option of the holder,
render the entire balance payable. The note and accrued can be
converted, at the option of the lender, into shares of common stock of the
Company, at such price and in such terms as being offered to investors at the
time of conversion. At September 30, 2009, $60 in interest has been
accrued pursuant to this note.
On
November 7, 2008, the Company received $990 pursuant to a convertible promissory
note. The note is unsecured, bears interest at 10% per annum
calculated annually, and is due on demand. Any payments of
principal or interest in arrears bear interest at 30% per annum calculated
annually. Default in payment shall, at the option of the holder,
render the entire balance payable. The note and accrued can be
converted, at the option of the lender, into shares of common stock of the
Company, at such price and in such terms as being offered to investors at the
time of conversion. At September 30, 2009, $89 in interest has been
accrued pursuant to this note.
On
November 24, 2008, the Company received $7,265 pursuant to a convertible
promissory note. The note is unsecured, bears interest at 10% per
annum calculated annually, and is due on demand. Any payments
of principal or interest in arrears bear interest at 30% per annum calculated
annually. Default in payment shall, at the option of the holder,
render the entire balance payable. The note and accrued can be
converted, at the option of the lender, into shares of common stock of the
Company, at such price and in such terms as being offered to investors at the
time of conversion. At September 30, 2009, $617 in interest has been
accrued pursuant to this note.
On
December 4, 2008, the Company received $15,053 pursuant to a convertible
promissory note. The note is unsecured, bears interest at 10% per
annum calculated annually, and is due on demand. Any payments
of principal or interest in arrears bear interest at 30% per annum calculated
annually. Default in payment shall, at the option of the holder,
render the entire balance payable. The note and accrued can be
converted, at the option of the lender, into shares of common stock of the
Company, at such price and in such terms as being offered to investors at the
time of conversion. At September 30, 2009, $1,237 in interest has
been accrued pursuant to this note.
On
December 17, 2008, the Company received $10,000 pursuant to a convertible
promissory note. The note is unsecured, bears interest at 10% per
annum calculated annually, and is due on demand. Any payments
of principal or interest in arrears bear interest at 30% per annum calculated
annually. Default in payment shall, at the option of the holder,
render the entire balance payable. The note and accrued can be
converted, at the option of the lender, into shares of common stock of the
Company, at such price and in such terms as being offered to investors at the
time of conversion. At September 30, 2009, $786 in interest has been
accrued pursuant to this note.
On
January 15, 2009, the Company received $3,701 pursuant to a convertible
promissory note. The note is unsecured, bears interest at 10% per
annum calculated annually, and is due on demand. Any payments
of principal or interest in arrears bear interest at 30% per annum calculated
annually. Default in payment shall, at the option of the holder,
render the entire balance payable. The note and accrued can be
converted, at the option of the lender, into shares of common stock of the
Company, at such price and in such terms as being offered to investors at the
time of conversion. At September 30, 2009, $262 in interest has been
accrued pursuant to this note.
On
January 20, 2009, the Company received $20,000 pursuant to a convertible
promissory note. The note is unsecured, bears interest at 10% per
annum calculated annually, and is due on demand. Any payments
of principal or interest in arrears bear interest at 30% per annum calculated
annually. Default in payment shall, at the option of the holder,
render the entire balance payable. The note and accrued can be
converted, at the option of the lender, into shares of common stock of the
Company, at such price and in such terms as being offered to investors at the
time of conversion. At September 30, 2009, $1,386 in interest has
been accrued pursuant to this note.
On
January 22, 2009, the Company received $10,000 pursuant to a convertible
promissory note. The note is unsecured, bears interest at 10% per
annum calculated annually, and is due on demand. Any payments
of principal or interest in arrears bear interest at 30% per annum calculated
annually. Default in payment shall, at the option of the holder,
render the entire balance payable. The note and accrued can be
converted, at the option of the lender, into shares of common stock of the
Company, at such price and in such terms as being offered to investors at the
time of conversion. At September 30, 2009, $688 in interest has been
accrued pursuant to this note.
9
On April
6, 2009, the Company received $37,500 pursuant to a convertible promissory
note. The note is unsecured, bears interest at 10% per annum
calculated annually, and is due on demand. Any payments of
principal or interest in arrears bear interest at 30% per annum calculated
annually. Default in payment shall, at the option of the holder,
render the entire balance payable. The note and accrued can be
converted, at the option of the lender, into shares of common stock of the
Company, at such price and in such terms as being offered to investors at the
time of conversion. At September 30, 2009, $1,818 in interest has
been accrued pursuant to this note.
On May
26, 2009, the Company received $5,000 pursuant to a convertible promissory
note. The note is unsecured, bears interest at 10% per annum
calculated annually, and is due on demand. Any payments of
principal or interest in arrears bear interest at 30% per annum calculated
annually. Default in payment shall, at the option of the holder,
render the entire balance payable. The note and accrued can be
converted, at the option of the lender, into shares of common stock of the
Company, at such price and in such terms as being offered to investors at the
time of conversion. At September 30, 2009, $174 in interest has been
accrued pursuant to this note.
On May
28, 2009, the Company received $5,000 pursuant to a convertible promissory
note. The note is unsecured, bears interest at 10% per annum
calculated annually, and is due on demand. Any payments of
principal or interest in arrears bear interest at 30% per annum calculated
annually. Default in payment shall, at the option of the holder,
render the entire balance payable. The note and accrued can be
converted, at the option of the lender, into shares of common stock of the
Company, at such price and in such terms as being offered to investors at the
time of conversion. At September 30, 2009, $171 in interest has been
accrued pursuant to this note.
On July
15, 2009, the Company received $35,000 pursuant to a convertible promissory
note. The note is unsecured, bears interest at 6% per annum
calculated annually, and is due on demand. Any payments of
principal or interest in arrears bear interest at 30% per annum calculated
annually. Default in payment shall, at the option of the holder,
render the entire balance payable. The note and accrued can be
converted, at the option of the lender, into shares of common stock of the
Company, at such price and in such terms as being offered to investors at the
time of conversion. At September 30, 2009, $443 in interest has been
accrued pursuant to this note.
On July
17, 2009, the Company received $10,000 pursuant to a convertible promissory
note. The note is unsecured, bears interest at 10% per annum
calculated annually, and is due on demand. Any payments of
principal or interest in arrears bear interest at 30% per annum calculated
annually. Default in payment shall, at the option of the holder,
render the entire balance payable. The note and accrued can be
converted, at the option of the lender, into shares of common stock of the
Company, at such price and in such terms as being offered to investors at the
time of conversion. At September 30, 2009, $205 in interest has been
accrued pursuant to this note.
On July
27, 2009, the Company received $778.91 pursuant to a convertible promissory
note. The note is unsecured, bears interest at 10% per annum
calculated annually, and is due on demand. Any payments of
principal or interest in arrears bear interest at 30% per annum calculated
annually. Default in payment shall, at the option of the holder,
render the entire balance payable. The note and accrued can be
converted, at the option of the lender, into shares of common stock of the
Company, at such price and in such terms as being offered to investors at the
time of conversion. At September 30, 2009, $14 in interest has been
accrued pursuant to this note.
On July
31, 2009, the Company received $4,985 pursuant to a convertible promissory
note. The note is unsecured, bears interest at 10% per annum
calculated annually, and is due on demand. Any payments of
principal or interest in arrears bear interest at 30% per annum calculated
annually. Default in payment shall, at the option of the holder,
render the entire balance payable. The note and accrued can be
converted, at the option of the lender, into shares of common stock of the
Company, at such price and in such terms as being offered to investors at the
time of conversion. At September 30, 2009, $83 in interest has been
accrued pursuant to this note.
On August
1, 2009, the Company received $14,084.28 pursuant to a convertible promissory
note. The note is unsecured, bears interest at 10% per annum
calculated annually, and is due on demand. Any payments of
principal or interest in arrears bear interest at 30% per annum calculated
annually. Default in payment shall, at the option of the holder,
render the entire balance payable. The note and accrued can be
converted, at the option of the lender, into shares of common stock of the
Company, at such price and in such terms as being offered to investors at the
time of conversion. At September 30, 2009, $232 in interest has been
accrued pursuant to this note.
On August
17, 2009, the Company received $7,500 pursuant to a convertible promissory
note. The note is unsecured, bears interest at 10% per annum
calculated annually, and is due on demand. Any payments of
principal or interest in arrears bear interest at 30% per annum calculated
annually. Default in payment shall, at the option of the holder,
render the entire balance payable. The note and accrued can be
converted, at the option of the lender, into shares of common stock of the
Company, at such price and in such terms as being offered to investors at the
time of conversion. At September 30, 2009, $90 in interest has been
accrued pursuant to this note.
On August
31, 2009, the Company received $10,000 pursuant to a convertible promissory
note. The note is unsecured, bears interest at 10% per annum
calculated annually, and is due on demand. Any payments of
principal or interest in arrears bear interest at 30% per annum calculated
annually. Default in payment shall, at the option of the holder,
render the entire balance payable. The note and accrued can be
converted, at the option of the lender, into shares of common stock of the
Company, at such price and in such terms as being offered to investors at the
time of conversion. At September 30, 2009, $82 in interest has been
accrued pursuant to this note.
On
September 1, 2009, the Company received $7,652.47 pursuant to a convertible
promissory note. The note is unsecured, bears interest at 10% per
annum calculated annually, and is due on demand. Any payments
of principal or interest in arrears bear interest at 30% per annum calculated
annually. Default in payment shall, at the option of the holder,
render the entire balance payable. The note and accrued can be
converted, at the option of the lender, into shares of common stock of the
Company, at such price and in such terms as being offered to investors at the
time of conversion. At September 30, 2009, $61 in interest has been
accrued pursuant to this note.
10
Subsequent
to September 30, 2009, on October 15, 2009, the Company received $15,307
pursuant to a convertible promissory note. The note is unsecured,
bears interest at 10% per annum calculated annually, and is due on
demand. Any payments of principal or interest in arrears bear
interest at 30% per annum calculated annually. Default in payment
shall, at the option of the holder, render the entire balance
payable. The note and accrued can be converted, at the option of the
lender, into shares of common stock of the Company, at such price and in such
terms as being offered to investors at the time of conversion.
5.
|
Capital
stock
|
On
January 4, 2008, the Company forward split its issued common shares on the basis
of four new shares for one old share. The Company increased its
authorized share capital from 150 million to 600 million shares.
On
January 12, 2009, the Company issued 9,000,000 (pre-split) shares of its common
stock to Trussnet Capital Partners (Cayman) Ltd. for all of the issued and
outstanding shares of LED Power Group, Inc. pursuant to a merger agreement and
underlying assignment agreement. Under the terms of the agreements,
the Company has acquired the license to exclusive rights of certain intellectual
property in relation to the production of LED products. The shares
were valued at fair market on the day of the agreements, being $0.92 per share
(refer to note 8).
On
January 16, 2009, the Company forward split its issued common shares on the
basis of 2 and one half new shares for one old share.
On July
27, 2009, the Company reverse split its issued common shares on the basis of one
new share for one hundred old shares, and reduced its authorized capital form
600,000,000 to 6,000,000 shares of common stock.
On
September 24, 2009, the Company issued 1,000,000 shares of common stock at $0.01
per share, for gross proceeds of $10,000.
Subsequent
to September 30, 2009, effective November 2, 2009, the Company amended its
articles of incorporation to increase its authorized capital to 200,000,000
shares of common stock.
The
number of shares referred to in these financial statements has been restated to
give retroactive effect on the stock splits.
6.
|
Related
party transactions
|
a.
|
During
the fiscal year ended December 31, 2007, the Company received $17,006
pursuant to promissory notes with two of its former
directors. The notes are unsecured, bear no interest and don’t
have any specific terms of
repayment;
|
b.
|
In
December 2008, the Company entered into a contract for management services
with a company controlled by the President and a director of the Company,
requiring the payment of $2,500 per month plus applicable expenses for a
period of one year, expiring on November 30, 2009. This
commitment can be terminated by either party with 30 days
notice. During the nine month period ended September 30, 2009,
$22,500 was paid or accrued pursuant to this
agreement.
|
7.
|
Commitments
|
a.
|
On
November 1, 2008, the Company entered into a contract for investor
relations services requiring the payment of $7,500 per month expiring on
October 31, 2010. This commitment can be terminated by either
party with 90 days written notice;
|
b.
|
On
November 15, 2008, the Company entered into a contract for communication
support services requiring the payment of $3,750 per month expiring on
November 14, 2010. This commitment can be terminated by either
party with 60 days written notice;
|
c.
|
On
December 1, 2008, the Company entered into a contract for management
consulting services with a company controlled by the President and a
director of the Company requiring the payment of $2,500 per month expiring
on November 30, 2009. This commitment can be terminated by
either party with 30 days written
notice.
|
11
8.
|
Merger
|
On
January 12, 2009, the Company entered into a definitive Agreement and Plan of
Merger with LED Power Group, Inc. f.k.a. LED Power, Inc., a Nevada corporation
("LPG") and Drayton Acquisition Sub, Inc., our wholly-owned subsidiary, whereby
Drayton Acquisition Sub, Inc. merged with and into LPG, with LPG remaining as
the surviving entity and becoming the Company’s wholly-owned
subsidiary. Under the terms of the Agreement and Plan of Merger, the
Company issued 9,000,000 pre-split shares of its common stock to Trussnet
Capital Partners (Cayman) Ltd. for all of the issued and outstanding shares of
LPG. LPG has limited operations and owns the rights to an assignment
agreement with Jumbo Power Technology Ltd., Liao Pheng-Piao and Liu Chih-Chun
(“Licensors”) dated December 2008 (the “Assignment Agreement”). Under
the terms of the Assignment Agreement, LPG was licensed the exclusive rights to
certain intellectual property owned by Licensors in relation to the production
of LED products. Additionally, on February 2, 2009, the Company
merged with our wholly-owned subsidiary LPG for the purposes of effective a name
change to “LED Power Group, Inc.”
The
9,000,000 shares were valued at fair market on the day of the agreements, being
$0.92 per share. At September 30, 2009, $8,280,000 was recorded for
impairment of the license as it does not have marketable value at this
time.
9.
|
Subsequent
events
|
Subsequent
to September 30, 2009, effective November 2, 2009, the Company amended its
articles of incorporation to increase its authorized capital to 200,000,000
shares of common stock.
Subsequent
to September 30, 2009, on October 15, 2009, the Company received $15,307
pursuant to a convertible promissory note. The note is unsecured,
bears interest at 10% per annum calculated annually, and is due on
demand. Any payments of principal or interest in arrears bear
interest at 30% per annum calculated annually. Default in payment
shall, at the option of the holder, render the entire balance
payable. The note and accrued can be converted, at the option of the
lender, into shares of common stock of the Company, at such price and in such
terms as being offered to investors at the time of conversion.
12
Item 2. Management’s Discussion and Analysis
of Financial Condition and Results of Operations.
The
following discussion should be read in conjunction with our financial statements
and notes thereto included elsewhere in this quarterly report. Forward-looking
statements are statements not based on historical information and which relate
to future operations, strategies, financial results or other developments.
Forward-looking statements are based upon estimates, forecasts, and assumptions
that are inherently subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond our control and many
of which, with respect to future business decisions, are subject to change.
These uncertainties and contingencies can affect actual results and could cause
actual results to differ materially from those expressed in any forward-looking
statements made by us, or on our behalf. We disclaim any obligation to update
forward-looking statements.
Background
We were
organized under the laws of the State of Nevada on June 8, 2006 under the name
“Drayton Harbor Resources, Inc.” and were engaged in the exploration of mineral
interest located in British Columbia, Canada. We have relinquished our rights to
this mineral interest and changed our focus to the research, development,
manufacturing and sales of light-emitting diode (LED) products towards the end
of 2008.
In
furtherance of our business objectives, on January 12, 2009, we entered into a
definitive Agreement and Plan of Merger with LED Power Group, Inc. f.k.a. LED
Power, Inc., a Nevada corporation ("LPG") and Drayton Acquisition Sub, Inc., our
wholly-owned subsidiary, whereby Drayton Acquisition Sub, Inc. merged with and
into LPG, with LPG remaining as the surviving entity and becoming our
wholly-owned subsidiary. Under the terms of the Agreement and Plan of
Merger, we issued 9,000,000 pre-split shares of our common stock to Trussnet
Capital Partners (Cayman) Ltd. for all of the issued and outstanding shares of
LPG. LPG has limited operations and owns the rights to an assignment
agreement with Jumbo Power Technology Ltd., Liao Pheng-Piao and Liu Chih-Chun
(“Licensors”) dated December 2008 (the “Assignment Agreement”). Under
the terms of the Assignment Agreement, LPG was licensed the exclusive rights to
certain intellectual property owned by Licensors in relation to the production
of LED products.
To
further facilitate our shift in business focus, on January 16, 2009, we effected
a 2.5 for 1 forward stock split of all of our issued and outstanding shares of
common stock. Additionally, on February 2, 2009, we merged with our wholly-owned
subsidiary LPG for the purposes of effecting a name change to “LED Power Group,
Inc.” Effective August 10, 2009, we effected a 1 for 100 reverse
split of all our issued and outstanding shares of common stock to better
position the company for growth for the rest of 2009 and to facilitate
investment and broaden ownership, and to ultimately enhance overall shareholder
value, resulting in a decrease of the outstanding shares of common stock from
72,500,000 to 725,001 and a decrease of our authorized capital to
6,000,000. Effective November 2, 2009, the Company amended its
articles of incorporation to increase its authorized capital to 200,000,000
shares of common stock.
On
September 24, 2009 we issued an aggregate of 1,000,000 shares of our common
stock for a purchase price of $10,000 to John J. Lennon, our President,
resulting in a change of control and Mr. Lennon owning 57.14% of our issued and
outstanding shares.
We
currently have no revenue from operations. In order to meet our business
objectives, we will need to raise additional funds through equity or convertible
debt financing. There can be no assurance that we will be successful in raising
additional funds and, if unsuccessful, our plans for expanding operations and
business activities may have to be curtailed. Any attempt to raise funds,
through debt or equity financing, would likely result in dilution to existing
shareholders.
Development
Our
future operations are dependent upon the identification and successful
completion of additional long-term or permanent equity financings, the support
of creditors and shareholders, and, ultimately, the achievement of profitable
operations. There can be no assurances that we will be successful, which would
in turn significantly affect our ability to roll out our business plan. If not,
we will likely be required to reduce operations or liquidate assets. We will
continue to evaluate our projected expenditures relative to our available cash
and to seek additional means of financing in order to satisfy our working
capital and other cash requirements.
We
continue to operate with very limited administrative support, and our current
officers and directors continue to be responsible for many duties to preserve
our working capital. We expect no significant changes in the number
of employees over the next 12 months.
We
believe that, with our current efforts to raise capital, we will have sufficient
cash resources to satisfy our needs over the next 12 months. Our ability to
satisfy cash requirements thereafter will determine whether we achieve our
business objectives. Should we require additional cash in the future, there can
be no assurance that we will be successful in raising additional debt or equity
financing on terms acceptable to our company, if at all.
Critical
Accounting Policies
The
preparation of financial statements in conformity with United States generally
accepted accounting principles requires management of our company to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, the 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.
13
Our
management routinely makes judgments and estimates about the effects of matters
that are inherently uncertain. As the number of variables and assumptions
affecting the probable future resolution of the uncertainties increase, these
judgments become even more subjective and complex. Our significant accounting
policies are discussed in Note 2 to our financial statements for the fiscal year
ended December 31, 2008 included in the Form 10-K.
Results
of Operations
The
following discussion of the financial condition, results of operations, cash
flows and changes in our financial position should be read in conjunction with
our audited consolidated financial statements and notes included in our Annual
Report on Form 10-K for the fiscal year ended December 31, 2008 filed on March
31, 2009.
The
financial statements mentioned above have been prepared in conformity with
accounting principles generally accepted in the United States of
America.
Comparison
of Three and Nine month periods ended September 30, 2009 and September 30,
2008
September
30,
|
September
30,
|
|||||||
Results
of Operations, Nine Months Ended
|
2009
|
2008
|
||||||
Corporate
fees
|
$ | 14,585 | $ | - | ||||
Executive
compensation
|
22,500 | - | ||||||
Professional
fees
|
78,212 | 23,083 | ||||||
Impairement
of license
|
8,280,000 | - | ||||||
Investor
relations and marketing
|
93,406 | - | ||||||
Interest
expense
|
8,248 | - | ||||||
$ | 8,496,951 | $ | 23,083 |
September
30,
|
September 30,
|
|||||||
Results
of Operations, Three Months Ended
|
2009
|
2008
|
||||||
Corporate
fees
|
$ | 770 | $ | - | ||||
Executive
compensation
|
7,500 | - | ||||||
Professional
fees
|
11,988 | 9,809 | ||||||
Impairement
of license
|
- | - | ||||||
Investor
relations and marketing
|
22,930 | - | ||||||
Interest
expense
|
4,158 | - | ||||||
$ | 47,346 | $ | 9,809 |
General
and administrative expenses
During
the three month periods ended September 30, 2009 and 2008, we incurred total
expenses of $47,346 and $9,809, respectively and during the nine month
periods ended September 30, 2009 and 2008, we incurred total expenses of
$8,496,951 and $23,083. These expenses were related mainly to maintaining a
public listing, such as legal and accounting fees, investor relations and
marketing as well as filing and registration fees. During the
three month period ended June 30, 2009, the company recorded an impairment of
$8,280,000 on its license as it does not have marketable value at this
time.
Liquidity
and Capital Resources
As of
September 30, 2009, we had cash of $10,206, and working capital deficiency of
$294,792. During the three month period ended September 30, 2009, we
funded our operations from the proceeds of convertible notes and the
issuance of common stock. We are currently seeking further financing
and we believe that will provide sufficient working capital to fund our
operations for at least the next 6 months. Changes in our operating plans,
increased expenses, acquisitions, or other events, may cause us to seek
additional equity or debt financing in the future.
For the
nine month period ended September 30, 2009, we used net cash of $176,615 in
operations. Net cash from operating activities reflected an increase in accounts
payable and accrued liabilities of $22,519 and a decrease in prepaids of
$9,569.
We raised
$171,201 during the nine month period ended September 30, 2009 from convertible
notes, $10,000 from the issuance of common stock and $5,610 from cash
advances.
14
Our
current cash requirements are limited as we seek viable assets. We expect to
continue to use debt and equity financing to fund operations for at least the
remaining of our fiscal year ended December 31, 2009, as we look to expand our
asset base and execute on our business objectives.
We expect
no significant change in the number of our employees.
Off-Balance
Sheet Transactions
There are
no off-balance sheet items.
Item
3. Quantitative and Qualitative Disclosures About Market Risk
None.
Item
4. Controls and Procedures
Our
management with the participation and under the supervision of our Principal
Executive Officer and Principal Financial Officer reviewed and evaluated the
effectiveness of the design and operation of our disclosure controls and
procedures (as defined by Rule 13a-15(e) or 15d-15(e)) of the Exchange Act Rule
13a-15 as of the end of the period covered by this report. Based upon their
evaluation, our Principal Executive Officer and Principal Financial Officer
concluded that, as of the end of such period, our disclosure controls and
procedures are effective and sufficient to ensure that we record, process,
summarize, and report information required to be disclosed in the reports we
filed under the Exchange Act within the time periods specified in the Securities
and Exchange Commission's rules and regulations, and that such information is
accumulated and communicated to our management, including our Principal
Executive Officer and Principal Financial Officer, as appropriate, to allow
timely decisions regarding required disclosure.
There
were no changes in our internal controls over financial reporting that occurred
during the three months ended September 30, 2009 that have materially affected,
or are reasonably likely to materially affect, our internal controls over
financial reporting. We believe that a control system, no matter how well
designed and operated, cannot provide absolute assurance that the objectives of
the control system are met, and no evaluation of controls can provide absolute
assurance that all control issues and instances of fraud, if any, within any
company have been detected.
15
PART
II. OTHER INFORMATION
Item
1. Legal Proceedings
None.
Item
1A. Risk Factors
Factors
That May Affect Our Business, Future Operating Results and Financial
Condition
The risks
described below are the ones we believe are the most important for you to
consider, these risks are not the only ones that we face. If events anticipated
by any of the following risks actually occur, our business, operating results or
financial condition could suffer and the trading price of our common stock could
decline.
RISKS
RELATED TO OUR BUSINESS
Investors
should carefully consider the risks described below before deciding whether to
invest in our common stock. The risks described below are not the only ones we
face. Additional risks not presently known to us or that we currently believe
are immaterial may also impair our business operations and financial results. If
any of the following risks actually occurs, our business, financial condition or
results of operations could be adversely affected. In such case, the trading
price of our common stock could decline and you could lose all or part of your
investment. Our filings with the Securities and Exchange Commission also contain
forward-looking statements that involve risks and uncertainties. Our actual
results could differ materially from those anticipated in these forward-looking
statements as a result of certain factors, including the risks we face described
below.
Our
limited operating history may not serve as an adequate basis to judge our future
prospects and results of operations.
We have a
limited operating history. As such, our historical operating results may not
provide a meaningful basis for evaluating our business, financial performance
and prospects. Accordingly, you should not rely on our results of operations for
any prior periods as an indication of our future performance. Our operations
will be subject to all the risks inherent in the establishment of a developing
enterprise and the uncertainties arising from the absence of a significant
operating history. We are in the development stage and potential
investors should be aware of the difficulties normally encountered by
enterprises in the development stage. If our business plan is not successful,
and we are not able to operate profitably, investors may lose some or all of
their investment in our company.
We
have incurred losses in prior periods and may incur losses in the
future.
We
incurred net losses of $8,599,792 for the period from June 8, 2006 (inception)
to September 30, 2009. We cannot be assured that we can achieve or sustain
profitability on a quarterly or annual basis in the future. Our operations are
subject to the risks and competition inherent in the establishment of a business
enterprise. There can be no assurance that future operations will be profitable.
We may not achieve our business objectives and the failure to achieve such goals
would have an adverse impact on us.
If we are unable to obtain additional
funding our business operations will be harmed and if we do obtain additional
financing our then existing shareholders may suffer substantial
dilution.
We will
require additional funds to meet our business objectives, and to take advantage
of any available business opportunities. In order to meet our
obligations, we will have to raise additional funds. Obtaining additional
financing will be subject to market conditions, industry trends, investor
sentiment and investor acceptance of our business plan and management. These
factors may make the timing, amount, terms and conditions of additional
financing unattractive or unavailable to us. If we are not successful in
achieving financing in the amount necessary to further our operations,
implementation of our business plan may fail or be delayed.
If we are unable
to successfully recruit qualified managerial and experienced personnel, we may
not be able to execute on our business plan.
In order
to successfully implement and manage our business plan, we will be dependent
upon, among other things, successfully recruiting qualified managerial and
experienced personnel. Competition for qualified individuals is intense. There
can be no assurance that we will be able to find, attract and retain existing
employees or that we will be able to find, attract and retain qualified
personnel on acceptable terms.
16
We
are subject to new corporate governance and internal control reporting
requirements, and our costs related to compliance with, or our failure to comply
with existing and future requirements, could adversely affect our
business.
We may
face new corporate governance requirements under the Sarbanes-Oxley Act of 2002,
as well as new rules and regulations subsequently adopted by the SEC and the
Public Company Accounting Oversight Board. These laws, rules and regulations
continue to evolve and may become increasingly stringent in the future. In
particular, under rules proposed by the SEC on August 6, 2006 we are required to
include management's report on internal controls as part of our annual report
for the fiscal year ending December 31, 2008 pursuant to Section 404 of the
Sarbanes-Oxley Act. Furthermore, under the proposed rules, an attestation report
on our internal controls from our independent registered public accounting firm
will be required as part of our annual report for the fiscal year ending
December 31, 2010. The financial cost of compliance with these laws, rules and
regulations is expected to be substantial. We cannot assure you that we will be
able to fully comply with these laws, rules and regulations that address
corporate governance, internal control reporting and similar matters. Failure to
comply with these laws, rules and regulations could materially adversely affect
our reputation, financial condition and the value of our
securities.
If
LED lighting does not achieve greater market acceptance, or if alternative
technologies are developed and gain market traction, prospects for our growth
and profitability would be limited.
Our
future success depends on increased market acceptance of LED
lighting. Potential customers for LED lighting systems may be
reluctant to adopt LED lighting as an alternative to traditional lighting
technology because of its higher initial cost and relatively low light output
per unit in comparison with the most powerful traditional lighting devices. In
addition, our potential customers may have substantial investments and know-how
related to their existing lighting technologies, and may perceive risks relating
to the novelty, complexity, reliability, quality, usefulness and
cost-effectiveness of LED products when compared to other lighting sources
available in the market. If acceptance of LED lighting does not increase
significantly, then opportunities to grow our revenues and operate profitably
would be limited. Moreover, if effective new sources of light other than LED
devices are developed, our prospective products and current technologies could
become less competitive or obsolete. Any of these factors could have a material
and adverse impact on our growth and profitability.
The
technology used in the LED industry continues to change rapidly and if we are
unable to modify our products to adapt to future changes in the LED industry, we
will be unable to attract or retain customers.
The LED
industry has been characterized by a rapid rate of development of new
technologies and manufacturing processes, rapid changes in customer
requirements, frequent product introductions and ongoing demands for greater
functionality. Our future success will likely depend on our ability to develop
new products for use in LED applications and to adjust our product
specifications in response to these developments in a timely manner. If our
development efforts are not successful or are delayed, or if our newly developed
products do not achieve market acceptance, we may be unable to attract or retain
customers and our operating results could be harmed.
Our
efforts to develop new products involve several risks, including:
|
•
|
our
ability to anticipate and respond in a timely manner to changes in
customer requirements;
|
|
•
|
the
significant research and development investment that we may be required to
make before market acceptance of a particular new or enhanced
product;
|
|
•
|
the
possibility that the LED industry may not accept our products after we
have invested a significant amount of resources in development;
and
|
|
•
|
competition
from new technologies, processes and products introduced by our current or
future competitors.
|
The markets in
which we operate are very competitive, and many of our competitors and potential
competitors are larger, more established and better capitalized than we
are.
The
markets in which we operate are very competitive and have been characterized by
rapid technological change. This competition could result in increased pricing
pressure, reduced profit margins, increased sales and marketing expenses, and
failure to increase, or the loss of, market share or expected market share, any
of which would likely seriously harm our business, operating results and
financial condition.
Some
of our competitors and potential competitors are substantially larger and have
greater financial, technical, marketing and other resources than we do. Given
their capital resources, the large companies with whom we compete or may compete
in the future, are in a better position to substantially increase their
manufacturing capacity, research and development efforts or to withstand any
significant reduction in orders by customers in our markets. Such larger
companies typically have broader and diverse product lines and market focus and
thus are not as susceptible to downturns in a particular market. In addition,
some of our competitors have been in operation much longer than we have and
therefore may have more long-standing and established relationships with
potential domestic and foreign customers.
We would
be at a competitive disadvantage if our competitors bring their products to
market earlier, if their products are more technologically capable than ours, or
if any of our competitors’ products or technologies were to become preferred in
the industry. Moreover, we cannot be assured that potential customers will not
develop their own products, or acquire companies with products, that are
competitive with our future products. Any of these competitive threats could
have a material adverse effect on our business, operating results or financial
condition.
17
We
may be subject to numerous environmental laws and regulations, which could
expose us to environmental liabilities, increase our manufacturing and related
compliance costs or otherwise adversely affect our business and operating
results.
We may be
subject to a variety of foreign, federal, state and local laws and regulations
governing the protection of the environment. These environmental laws and
regulations include those relating to the use, storage, handling, discharge,
emission, disposal and reporting of toxic, volatile or otherwise hazardous
materials used in our planned manufacturing processes. These materials may have
been or could be released into the environment at properties operated by us, at
other locations during the transport of the materials, or at properties to which
we send substances for treatment or disposal. If we were to violate or become
liable under environmental laws and regulations or become non-compliant with
permits required at some of our planned facilities, we could be held financially
responsible and incur substantial costs, including investigation and cleanup
costs, fines and civil or criminal sanctions, third-party property damage or
personal injury claims. In addition, new laws and regulations or stricter
enforcement of existing laws and regulations could give rise to additional
compliance costs and liabilities.
Our
board of directors does not intend to declare or pay any dividends to our
stockholders in the foreseeable future.
The
declaration, payment and amount of any future dividends will be made at the
discretion of our board of directors, and will depend upon, among other things,
the results of our operations, cash flows and financial condition, operating and
capital requirements, and other factors the board of directors considers
relevant. There is no plan to pay dividends in the foreseeable future, and if
dividends are paid, there can be no assurance with respect to the amount of any
such dividend.
Nevada
law and our articles of incorporation authorize us to issue shares of stock,
which shares may cause substantial dilution to our existing shareholders and/or
have rights and preferences greater than our common stock.
Pursuant
to our Articles of Incorporation, we have, as of the date of this Report,
200,000,000 shares of common stock authorized. As of the date of this Report, we
have 1,725,001 shares of common stock issued and outstanding. As a result, our
Board of Directors has the ability to issue a large number of additional shares
of common stock without shareholder approval, which if issued could cause
substantial dilution to our then shareholders.
A
limited public trading market exists for our common stock, which makes it more
difficult for our stockholders to sell their common stock in the public
markets.
Although
our common stock is quoted on the OTCBB under the symbol “LPWR” there is a
limited public market for our common stock. No assurance can be given that an
active market will develop or that a stockholder will ever be able to liquidate
its shares of common stock without considerable delay, if at all. Many brokerage
firms may not be willing to effect transactions in the securities. Even if a
purchaser finds a broker willing to effect a transaction in these securities,
the combination of brokerage commissions, state transfer taxes, if any, and any
other selling costs may exceed the selling price. Furthermore, our stock price
may be impacted by factors that are unrelated or disproportionate to our
operating performance. These market fluctuations, as well as general economic,
political and market conditions, such as recessions, lack of available credit,
interest rates or international currency fluctuations may adversely affect the
market price and liquidity of our common stock.
Our common stock may be subject to
the penny stock rules which may make it more difficult to sell our common
stock.
The
Securities and Exchange Commission has adopted regulations which generally
define a “penny stock” to be any equity security that has a market price, as
defined, less than $5.00 per share or an exercise price of less than $5.00 per
share, subject to certain exceptions. Our securities may be covered by the penny
stock rules, which impose additional sales practice requirements on
broker-dealers who sell to persons other than established customers and
accredited investors such as, institutions with assets in excess of $5,000,000
or an individual with net worth in excess of $1,000,000 or annual income
exceeding $200,000 or $300,000 jointly with his or her spouse. For transactions
covered by this rule, the broker-dealers must make a special suitability
determination for the purchase and receive the purchaser’s written agreement of
the transaction prior to the sale. Consequently, the rule may affect the ability
of broker-dealers to sell our securities and also affect the ability of our
stockholders to sell their shares in the secondary market.
Item
2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3.
Defaults Upon Senior Securities.
None.
18
Item
4. Submission of Matters to a Vote of Security Holders.
None.
Item
5. Other Information
The
Company has issued the following Convertible Notes, which are outstanding at the
time of this report on Form 10-Q/A:
On October
15, 2009 we issued a convertible promissory note to a foreign accredited
investor for proceeds of $15,307.00. The amount is unsecured and is
due on demand. The principal amount bears interest at 10% per annum
calculated and payable annually. At any time that the principal
and interest shall remain outstanding, the lender has the right to convert such
principal and interest to shares of our common stock at such price and on such
terms as being offered to investors at the time of conversion. We
offered and sold the convertible note in reliance on Section 506 of Regulation D
and/or Regulation S of the Securities Act, and comparable exemptions for sales
to "accredited" investors under state securities laws.
On September
1, 2009 we issued a convertible promissory note to a foreign accredited investor
for proceeds of $7,652.47. The amount is unsecured and is due on
demand. The principal amount bears interest at 10% per annum
calculated and payable annually. At any time that the principal
and interest shall remain outstanding, the lender has the right to convert such
principal and interest to shares of our common stock at such price and on such
terms as being offered to investors at the time of conversion. We
offered and sold the convertible note in reliance on Section 506 of Regulation D
and/or Regulation S of the Securities Act, and comparable exemptions for sales
to "accredited" investors under state securities laws.
On August
31, 2009 we issued a convertible promissory note to a foreign accredited
investor for proceeds of $10,000.00. The amount is unsecured and is
due on demand. The principal amount bears interest at 10% per annum
calculated and payable annually. At any time that the principal
and interest shall remain outstanding, the lender has the right to convert such
principal and interest to shares of our common stock at such price and on such
terms as being offered to investors at the time of conversion. We
offered and sold the convertible note in reliance on Section 506 of Regulation D
and/or Regulation S of the Securities Act, and comparable exemptions for sales
to "accredited" investors under state securities laws.
On August
17, 2009 we issued a convertible promissory note to a foreign accredited
investor for proceeds of $7,500.00. The amount is unsecured and is
due on demand. The principal amount bears interest at 10% per annum
calculated and payable annually. At any time that the principal
and interest shall remain outstanding, the lender has the right to convert such
principal and interest to shares of our common stock at such price and on such
terms as being offered to investors at the time of conversion. We
offered and sold the convertible note in reliance on Section 506 of Regulation D
and/or Regulation S of the Securities Act, and comparable exemptions for sales
to "accredited" investors under state securities laws.
On August
1, 2009 we issued a convertible promissory note to a foreign accredited investor
for proceeds of $14,084.28. The amount is unsecured and is due on
demand. The principal amount bears interest at 10% per annum
calculated and payable annually. At any time that the principal
and interest shall remain outstanding, the lender has the right to convert such
principal and interest to shares of our common stock at such price and on such
terms as being offered to investors at the time of conversion. We
offered and sold the convertible note in reliance on Section 506 of Regulation D
and/or Regulation S of the Securities Act, and comparable exemptions for sales
to "accredited" investors under state securities laws.
On July
31, 2009 we issued a convertible promissory note to a foreign accredited
investor for proceeds of $4,985.00. The amount is unsecured and is
due on demand. The principal amount bears interest at 10% per annum
calculated and payable annually. At any time that the principal
and interest shall remain outstanding, the lender has the right to convert such
principal and interest to shares of our common stock at such price and on such
terms as being offered to investors at the time of conversion. We
offered and sold the convertible note in reliance on Section 506 of Regulation D
and/or Regulation S of the Securities Act, and comparable exemptions for sales
to "accredited" investors under state securities laws.
On July
27, 2009 we issued a convertible promissory note to a foreign accredited
investor for proceeds of $778.91. The amount is unsecured and is due
on demand. The principal amount bears interest at 10% per annum
calculated and payable annually. At any time that the principal
and interest shall remain outstanding, the lender has the right to convert such
principal and interest to shares of our common stock at such price and on such
terms as being offered to investors at the time of conversion. We
offered and sold the convertible note in reliance on Section 506 of Regulation D
and/or Regulation S of the Securities Act, and comparable exemptions for sales
to "accredited" investors under state securities laws.
On July
17, 2009 we issued a convertible promissory note to a foreign accredited
investor for proceeds of $10,000.00. The amount is unsecured and is
due on demand. The principal amount bears interest at 10% per annum
calculated and payable annually. At any time that the principal
and interest shall remain outstanding, the lender has the right to convert such
principal and interest to shares of our common stock at such price and on such
terms as being offered to investors at the time of conversion. We
offered and sold the convertible note in reliance on Section 506 of Regulation D
and/or Regulation S of the Securities Act, and comparable exemptions for sales
to "accredited" investors under state securities laws.
19
Item
6. Exhibits.
Exhibit Number
|
Name
|
|
3.1(1)
|
Articles
of Incorporation of Company, as amended, as filed with the Secretary of
State of Nevada on June 8, 2006.
|
|
3.1.1(2)
|
Certificate
of Amendment of Articles of Incorporation as filed with the Secretary of
State of Nevada on February 2, 2008.
|
|
3.2(3)
|
Amended
Bylaws of Company
|
|
31.1
|
Rule
13(a) — 14(a)/15(d) — 14(a) Certification (Principal Executive
Officer)
|
|
31.2
|
Rule
13(a) — 14(a)/15(d) — 14(a) Certification (Principal Financial
Officer)
|
|
32
|
Section
1350 Certifications
|
(1)
|
incorporated
herein by reference to exhibits previously filed on Registrant’s
Registration Statement on Form SB-1, filed on September 7,
2006.
|
(2)
|
incorporated
herein by reference to exhibits previously filed on Registrant’s Current
Report on Form 8-K, filed on February 5,
2009.
|
(3)
|
incorporated
herein by reference to exhibits previously filed on Registrant’s Quarterly
Report on Form 10-Q, filed on May 14,
2009.
|
20
SIGNATURES
In
accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”) the Registrant caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
LED
POWER GROUP, INC.
Dated:
December 3, 2009
|
/s/
John J. Lennon
|
By:
John J. Lennon
|
|
Its:
President, Secretary, Treasurer and Director
|
|
(Principal
Executive Officer)
|
|
Dated:
December 3, 2009
|
/s/
John J. Lennon
|
By:
John J. Lennon
|
|
Its:
President, Secretary, Treasurer and Director
|
|
(Principal
Financial Officer and Principal Accounting
Officer)
|
21