3Power Energy Group Inc. - FORM 10-Q

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EX-32.1 - 3Power Energy Group Inc.	v186345_ex32-1.htm
EX-31.1 - 3Power Energy Group Inc.	v186345_ex31-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2010

¨	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: 333-103647

Prime Sun Power Inc.

(Exact Name of Registrant as Specified in its Charter)

Nevada		98-0393197
(State or other jurisdiction of		(IRS Employer
incorporation or organization)		Identification No.)

100 Wall Street, 21st Floor

New York, NY 10005

(Address of principal executive offices)

(866) 523-5551

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former Name, Former Address and Former Fiscal Year,

if Changed Since Last Report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes o No x

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 (Sec.323.405 of this chapter) during the preceding 12 months (or shorter period that the registrant was required to submit and post such files). Yes o No o

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. (Check one):

Large Accelerated Filer	¨	Accelerated Filer	¨
Non-Accelerated Filer	¨	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes x No ¨

As of May 21, 2010, the Issuer had 40,114,900 shares of its Common Stock outstanding.

TABLE OF CONTENTS

PART I: FINANCIAL INFORMATION

Item 1: Financial Statements			3
Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operation			11
Item 3: Quantitative and Qualitative Disclosures about Market Risk			15
Item 4: Controls and Procedures			15

PART II: OTHER INFORMATION

Item 1: Legal Proceedings			16
Item 1A: Risk Factors			16
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds			16
Item 3: Defaults Upon Senior Securities			16
Item 4: Reserved			16
Item 5: Other Information			16
Item 6: Exhibits			17

SIGNATURES			18

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

The following cautionary statements identify important factors that could cause our actual results to differ materially from those projected in forward-looking statements made in this Quarterly Report on Form 10-Q (this “Report”) and in other reports and documents published by us from time to time. Any statements about our beliefs, plans, objectives, expectations, assumptions, future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as “believes,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimated,” “intend,” “plan,” “projection,” “outlook” and the like, constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). However, as we issue “penny stock,” as such term is defined in Rule 3a51-1 promulgated under the Exchange Act, we are ineligible to rely on these safe harbor provisions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of our Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned to carefully read all “Risk Factors” set forth under Item 1A and not to place undue reliance on any forward-looking statements. We disclaim any obligation to update any such factors or to announce publicly the results of any revisions of the forward-looking statements contained or incorporated by reference herein to reflect future events or developments, except as required by the Exchange Act. New factors emerge from time to time, and it is not possible for us to predict which will arise or to assess with any precision the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

Unless otherwise provided in this Report, references to the “Company,” the “Registrant,” the “Issuer,” “we,” “us,” and “our” refer to Prime Sun Power Inc. (formerly known as ATM Financial Corp.).

PART I

FINANCIAL INFORMATION

Prime Sun Power Inc.
(A development stage company)
Balance Sheets
(Unaudited)


	March, 31			December 31,
	2010			2009

ASSETS

Current Assets

Cash	$	10,983		$	14,051


Total Current Assets and Total Assets	$	10,983		$	14,051



LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current Liabilities
Accounts payable and accrued liabilities	$	1,024,033		$	994,573
Advanced deposit		242,921			-
Note payable - finance company		660,073			414,626
Accrued management services - related party		520,833			416,667
Accrued interest - related party		66,528			57,550
Accrued interest - bank note		9,312			-
Loan from shareholder		193,574			591,001

Total Current Liabilities and Total Liabilities		2,717,274			2,474,417

Stockholders' Deficiency:
Common Stock, par value $.0001 per share
100,000,000 shares authorized,
40,114,900 shares issues and outstanding at		4,011			4,011
March 31, 2010 and December 31, 2009

Additional paid in capital		377,157			376,526
Deficit accumulated during development stage		(3,087,459	)		(2,840,903	)

Total Stockholders' Deficiency		(2,706,291	)		(2,460,366	)

Total Liabilities and Stockholders' Deficiency	$	10,983		$	14,051

See Notes to Financial Statements

Prime Sun Power Inc.
(A development stage company)
(Unaudited) Statement of Operations

	Three						Accumulated from
	Months Ended						December 18, 2002
	March 31,						(Date of Inception)
							to March 31,
	2010			2009			2010

Revenue		-			-			-

EXPENSES (INCOME)


Consulting and director fees		34,627			18,000			280,426
Professional fees		50,000			191,268			767,821
Management services - related party		104,167			104,167			520,833
Personnel costs		19,843			123,476			607,053
General & administrative		18,998			20,219			211,958
Land licensing and development fees		-			-			428,980
Interest expense		18,290			5,517			76,866
Gain on debt settlement		-			-			(14,176	)
Non-cash compensation		631			50,582			207,698

Total Expenses (Income)		246,556			513,229			3,087,459

Net Loss	$	(246,556	)	$	(513,229	)	$	(3,087,459	)

Basic and Diluted Loss Per Share	$	(0.01	)	$	(0.01	)

Weighted Average Shares Outstanding		40,114,900			40,114,900

Share data has been adjusted to reflect the stock dividend effective February 4, 2008

See Notes to Financial Statements

Prime Sun Power Inc.
(A development stage company)
Statement of Stockholders' Deficiency
For the Period from December 18, 2002 (Date of Inception) to March 31, 2010								Deficit
(Unaudited)								Accumulated
								During the
	Common Stock				Additional			Development
	Shares		Par		Paid-in Capital			Stage			Total
Balance - December 18, 2002		#	Value ($)		($)			($)			($)
(Unaudited)
Common stock issued for cash at
$0.0001 per share		28,000,000		2,800		(2,400	)					400
Net loss for the period									(21,990	)		(21,990	)
Balance - December 31, 2002		28,000,000		2,800		(2,400	)		(21,990	)		(21,590	)
Net loss for the Year									(24,216	)		(24,216	)
Balance - December 31, 2003		28,000,000		2,800		(2,400	)		(46,206	)		(45,806	)
Net loss for the Year									(13,398	)		(13,398	)
Balance - December 31, 2004		28,000,000		2,800		(2,400	)		(59,604	)		(59,204	)
February 14, 2005 - shares
issued for cash at $0.10 per share		12,114,900		1,211		171,859						173,070
Net loss for the Year									(18,609	)		(18,609	)
Balance - December 31, 2005		40,114,900		4,011		169,459			(78,213	)		95,257
Net loss for the Year									(16,167	)		(16,167	)
Balance - December 31, 2006		40,114,900		4,011		169,459			(94,380	)		79,090
Net loss for the Year									(56,129	)		(56,129	)
Balance - December 31, 2007		40,114,900		4,011		169,459			(150,509	)		22,961
Non-cash compensation						52,959						52,959
Net loss for the Year									(697,924	)		(697,924	)
Balance - December 31, 2008		40,114,900		4,011		222,418			(848,433	)		(622,004	)
Non-cash compensation						154,108						154,108
Net loss for the year									(1,992,470	)		(1,992,470	)
Balance - December 31, 2009		40,114,900		4,011		376,526			(2,840,903	)		(2,460,366	)
Non-cash compensation						631						631
Net loss for the period									(246,556	)		(246,556	)
Balance - March 31, 2010		40,114,900	$	4,011	$	377,157		$	(3,087,459	)	$	(2,706,291	)

See Notes to Financial Statements

Prime Sun Power Inc.
(A development stage company)
Statement of Cash Flow
(Unaudited)
							Accumulated from
	For the Three Months Ended						December 18, 2002
	March 31,						(Date of Inception)
	2010			2009			to March 31, 2010


Operating Activities
Net loss	$	(246,556	)	$	(513,229	)	$	(3,087,459	)
Adjustments to reconcile net loss to net cash
provided by (used in) operations:
Non-cash compensation		631			50,582			207,698
Interest accrued to related party		8,978			5,517			66,528
Interest accrued on bank note		9,312						9,312
Gain in debt settlement		-			-			14,176
Accrued management services - related party		104,167			104,167			520,833
Land licensing and development fees		-			-			428,980
Change in operating assets and liabilities					-
Prepaid expense					-
Advanced deposits		242,921						242,921
Accounts payable and accrued liabilities		29,460			346,559			1,024,033
Net cash provided by (used) in operating activities		148,913			(6,404	)		(572,978	)

Investing Activities
Land licensing & development fees		-			-			(428,980	)
Net cash used in investing activities		-			-			(428,980	)


Financing Activities
Proceeds of loans from Shareholder		(397,427	)		-			193,574
Proceeds of bank loan		245,446						660,073
Gain in debt settlement		-			-			(14,176	)
Common stock issued					-			173,470

Net cash provided by (used in) financing activities		(151,981	)		-			1,012,941


Increase (decrease) in Cash		(3,068	)		(6,404	)		10,983
Cash - beginning of period		14,051			6,629			-

Cash - end of period	$	10,983		$	225		$	10,983

See Notes to Financial Statements

PRIME SUN POWER INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2010

1. BUSINESS DESCRIPTION

Organization and Business Description

On January 10, 2008, a change of control of the Company occurred and Rudana Investment Group AG, (“Rudana”) a corporation formed under the laws of Switzerland, became the new majority shareholder of the Company, controlling approximately 70% of the issued and outstanding shares of the Company’s common stock. The Company plans to pursue a business model producing solar generated electrical power and other alternative renewable energies.

Going Concern

The Company has been in the development stage since its inception and has not yet realized any revenues from its planned operations. As shown in the accompanying financial statements, the Company has incurred a net loss of $3,087,459 for the period from inception (December 18, 2002) to March 31, 2010, has a working capital deficiency of $2,706,291. The ability of the Company to continue as a going concern and to emerge from the development stage is dependent upon, among other things, its successful execution of its plan of operations and ability to raise additional financing or capital. There is no guarantee that the Company will be able to raise additional financing capital or sell any of services or products at a profit. These factors, among others, raise substantial doubt regarding the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

2. NOTE PAYABLE – FINANCE COMPANY

In December 2009, the Company borrowed Euro 290,000 (approximately $415,000) from a finance company. In March 2010 the Company borrowed an additional Euro 180,000 (approximately $245,000) from the finance company and executed a senior promissory note which bears interest at 7.5% per annum and is due on demand. In addition, the Company conveyed 20% of the Net Profit Rights, as defined, of the sale of the Italian subsidiary referred to below.

3. DEVELOPMENT FEES

Project Acquisition by GPR Global Power Resources Ltd.

On March 2, 2010, the Company entered into a project acquisition agreement (the “Acquisition Agreement”) with GPR Global Power Resources Ltd., a Company formed in Switzerland (“GPR,” and together with the Company, the “Parties”). Pursuant to the Acquisition Agreement, the Company has agreed to sell to GPR all of the shares of a wholly-owned Italian subsidiary of the Company called PSP Italia S.r.l. This subsidiary will develop a turnkey alternative energy power plant, utilizing solar power. The purchase price for the shares of PSP Italia S.r.l. shall be a minimum of 4.05 million Euros per mega watt of power produced by the solar power plant.

The purchase price for this transaction shall be released by GPR to the Company incrementally on the achievement of certain milestones, with respect to connection of the solar power plant to the Italian National Grid as enumerated in the Acquisition Agreement. Payment shall be due to the Company in five equal tranches. GPR shall make each tranche of payments within ninety days of that date when the Company shall accomplish its milestones under the Acquisition Agreement, including such time as when the solar power plant connects five mega watts of power to the regional electrical grid. GPR shall have the right to withhold 10% of the purchase price due to the Company for up to six months as a security for the fulfillment of the Company’s obligations. The purchase price that GPR shall be required to pay may be reduced by the amount of certain cost savings that GPR may assist the Company in making or as a result of certain taxes GPR may be required to pay, in each case as set forth in the Acquisition Agreement. Furthermore, the Parties have agreed that certain specifications concerning this project to be included in the annexes to the Acquisition Agreement have not yet been set, and will be mutually agreed upon by the Parties in the immediate future.

The Acquisition Agreement requires the Company to facilitate and arrange for long-term debt financing of at least 80% of the purchase price to be paid by GPR. The terms of the Acquisition Agreement are subject to review and approval by the relevant third party financing institution. The Acquisition Agreement requires GPR to finance the remainder of the purchase price, and to deliver a Bank Standby Letter of Credit in an amount equal to 20% of the first payment tranche that will be due.

The Company shall be responsible for all construction costs for the solar power plant, including costs for sub contractors. At the present time, the Company is in discussions with the EPC contractors and module suppliers to obtain the final binding offers. The Company intends to commence construction of the solar power plant in June 2010.

Sale of Project Rights

During the first quarter 2010, the Company sold rights of ownership in a one-megawatt photovoltaic power plant from the Company's photovoltaic projects planned for development in Italy. Under the terms for the transfer of such ownership, the Company will establish a special purpose company in Italy under which the holders of such rights will obtain ownership in the one-megawatt power plant. The Company has granted the right of ownership in the one-megawatt power plant in consideration for an aggregate purchase price of 350,000 Euros (approximately $486,000), of which the Company has received 175,000 Euros (approximately $243,000) during the three months ended March 31, 2010. The amount received is classified as an advanced deposit in the accompanying balance sheet as of March 31, 2010. The Company expects the balance of such payments to be received during the second quarter 2010. At the time of transfer of ownership of the one-megawatt power plant to the special purpose company, no additional payment or consideration will be due or payable.

4. LAND LICENSING

Project San Paolo and Project Puglia

Pursuant to the Transfer Agreements for the Projects, the Company planned to acquire option contracts from another party (referred to herein as the Transferor), as acquired from various landlords. The Company intended to acquire or lease certain land at specified prices for the purpose of constructing and installing photovoltaic plants. The Transferor was expected to assist the Company to apply for certain key licenses. The Company agreed to pay the Transferor certain transaction fees upon the performance of certain conditions by the Transferor.

Project San Paolo and Project Puglia have terminated as the Company was unable to obtain the necessary licenses to proceed with the Projects. All of the applicable agreements pertaining to the Projects have terminated in accordance with their terms. Prior to the cancellation of the Projects, that Company’s largest shareholder, Rudana Investment Group AG, advanced 150,000 Euros towards each of the two payments required under the Transfer Agreements related to Project San Paolo and Project Puglia, for a total of 300,000 Euros ($428,980). The advance of these payments on behalf of the Company by Rudana Investment Group AG has been recorded as loan. The aggregate amounts of 300,000 Euros ($428,980) paid in respect of the Transfer Agreement have been charged to expense during the year ended December 31, 2009.

The Project San Paolo and Project Puglia which previously were deemed to have been terminated as of the end of 2009 were provided with possibility of revival in respect of proceedings by the Italian Constitutional Court. On the basis of the decision of the Constitutional Court the Company believes the Projects can be revived if the Italian regional licensing and authorization procedures are revised to comport with newly stated requirements constitutional applicable Italian federal laws or if the applications for the Projects are resubmitted under the long form procedures of Italian federal law. The period in which the Projects could possibly be revived is uncertain as of the date of this Report. The Company was not a party to the federal or regional Italian Constitutional Court lawsuit.

5. STOCKHOLDERS’ DEFICIENCY

On January 22, 2008, the Board of Directors declared the payment of a stock dividend to the stockholders of record of the Company as of February 4, 2008. The stock dividend was paid on February 4, 2008. Each stockholder received six additional shares of the Company’s common stock for each one share of the Company’s common stock which they held on the record date. Following the payment of the stock dividend, the issued and outstanding share ownership of the Company increased from 5,730,700 shares of Company common stock to 40,114,900 shares of common stock. The Statement of Stockholders’ Deficiency and per share amounts has been retroactively adjusted to reflect the historical impact of the stock dividend.

6. LEGAL PROCEEDINGS

On February 25, 2010, the Company received notification from Sunpower Corporation, a Delaware corporation (“SunCorp”), demanding that Prime Sun Power, Inc. cease and desist from using the words “Sun Power” in its name. SunCorp identified several U.S. and International trademark registrations of its “Sunpower” mark. The Company subsequently received a cease and desist letter from SunCorp legal counsel on April 1, 2010 threatening litigation against the Company for continued use of the words “Sun Power” in its name. The Company has determined that it will be economically more rational to change the Company’s name rather than engage in protracted litigation with SunCorp. The Company plans to accomplish the name change during the course of the second and third quarter of 2010.

7. INCOME TAXES

The Company has available approximately $2,991,000 of net operating loss carry forwards to offset future taxable income, if any. The carry forwards expire as follows:

2022	$	22,000
2023	$	24,000
2024	$	13,000
2025	$	19,000
2026	$	16,000
2027	$	56,000
2028	$	695,000
2029 and after	$	2,146,000

The Company has a deferred tax asset of approximately $1,047,000 relating to available net operating loss carry forwards for which 100% valuation allowance has been provided.

ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The Company's Operations

The following discussion of the financial condition and results of operations of Prime Sun Power Inc. should be read in conjunction with the financial statements and the related notes thereto included elsewhere in this Report. This Report contains certain forward-looking statements and the Company's future operating results could differ materially from those discussed herein. Certain statements contained in this Report, including, without limitation, statements containing the words “believes”, “anticipates,” “expects” and the like, constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). However, as the Company intends to issue “penny stock,” as such term is defined in Rule 3a51-1 promulgated under the Exchange Act, the Company is ineligible to rely on these safe harbor provisions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligation to update any such factors or to announce publicly the results of any revisions of the forward-looking statements contained or incorporated by reference herein to reflect future events or developments, except as required by the Exchange Act.

We were incorporated in the State of Nevada on December 18, 2002, as ATM Financial Corp. On April 1, 2008, we changed our name from “ATM Financial Corp.” to “Prime Sun Power Inc.” On April 15, 2008, the Company changed its stock symbol from “AFIC” to “PSPW.” The Company’s common stock is traded on the National Association of Securities Dealers Inc.’s over-the-counter bulletin board.

The Company address is 100 Wall Street, 21st Floor, New York, NY 10005. The Company’s telephone number is 866-523-5551.

Plan of Operation

The Company is a development stage business planning to develop and sell solar photovoltaic power and other renewable energies. Although our Company has a new business purpose, we have not commenced any revenue generating operations under the new business model. We anticipate that we will do business mainly in Europe, and that our Company will operate photovoltaic energy production parks in which solar electrical power is produced for sale to the local electrical grid. We intend to enter into strategic alliances with other companies and organizations engaged in the manufacture and/or assembly of solar modules.

The Company presently faces a number of challenges, including raising capital, indentifying commercially viable photovoltaic power plant locations, obtaining rights and licenses for development, interacting with local governments, indentifying and entering into agreements with appropriate subcontractors for the development and operation of solar parks, and hiring and retaining qualified staff.

The continuing development of our plans are subject to many uncertainties that present material risks to investors. Shareholders of the Company and prospective investors are directed to the Risk Factors discussed in our most recent Annual Report on Form 10-K as filed with the U.S. Securities & Exchange Commission which is publicly available at www.sec.gov .

Project Acquisition by GPR Global Power Resources Ltd.

Throughout the construction process, the Company shall be required to provide GPR with regular progress reports and rights to inspect the facility. The Company shall inform GPR without delay about all present and expected legal, political and economic facts relating to PSP Italia S.r.l. and/or the solar power plant which may negatively affect the acquisition of PSP Italia S.r.l., the future operation of the solar power plant, the expected core data or key values of the solar power plant and/or the business expectations of GPR. In addition, the Company shall be required to maintain liability insurance in the amount of 5 million Euros per liability event, and, at the request of GPR, the Company shall be obliged to ensure that all losses and damages caused by sub-contractors are sufficiently covered by the corresponding insurance of the sub-contractors.

The Company will represent that its subsidiary PSP Italia S.r.l. has good and marketable title to all of its properties and assets, including the solar power plant, free and clear of any liens. The Company will also represent that PSP Italia S.r.l. holds all licenses, consents, permits, approvals and authorizations required for the operation of the solar power plant and its connection to the electrical grid, and that PSP Italia S.r.l. will hold such authorizations for a period of at least 20 years. The Company will also represent that PSP Italia S.r.l. holds all necessary guarantees and has no obligations (other than related to the right to operate the solar power plant).

The solar power plant shall be required to meet certain standards for electrical production capacity enumerated in the Acquisition Agreement. The Company shall be obliged to construct the solar power plant in accordance with the specifications agreed to in the Acquisition Agreement and in conformity with any applicable regulation of whatever nature. The Company has acknowledged and agreed that GPR shall be entitled to give binding instructions and directives with regard to the construction of the solar power plant to the extent that: (i) such instruction and directive does not lead to an increase of the construction costs, unless the Parties have otherwise agreed; and (ii) it does not negatively affect the achievement of connection to the electrical grid. The Company must advise GPR of any substantial deviations from agreed specifications.

The Company shall represent and warrant that the construction of the solar power plant has been performed in accordance with all applicable laws and regulations and in accordance with the generally accepted rules of building and construction. The Company shall furthermore represent and warrant that the solar power plant has been completed in accordance with all licenses and guarantees, and that the solar power plant, and all applicable licenses and guarantees shall be validly transferred upon the connection of the solar power plant to the electrical grid. The Company shall avoid performance in any manner that could lead to the revocation of any licenses, consents, permits, approvals, authorizations or other reasons attributable to the Company. At the time of connection to the electrical grid, the solar power plant shall have all necessary approvals and acceptance.

The Company shall also represent and warrant that the structure of the solar power plant shall remain in viable, suitable and useable condition for a time period of at least 20 years from the date of connection to the electrical grid, and that the solar power plant will produce electric power at the agreed capacity for a time period of at least 20 years. The Company shall be liable for any defect and damage to the solar power plant or drop in power production. The Company is also representing and warranting that spare parts for the solar power plant will be available for a period of 20 years, and that all relevant licenses relating to the solar power plant will be valid for a period of 20 years. The Company intends to satisfy these liabilities, representations and warranties by obtaining back-to-back representations and warranties regarding the same matters from established and reputable subcontractors who will engineer and construct the power plant.

The Company shall indemnify and hold harmless GPR and its affiliates, as well as their directors, officers and employees, from and against any and all losses arising out of any breach by the Company of any representation, warranty, agreement or covenant in the Acquisition Agreement, of which GPR gives notice to the Company within 20 years after the closing of this transaction, except for indemnifications related to taxes, which shall survive for 10 years after closing. GPR shall indemnify and hold harmless the Company and its directors, officers and employees from and against any and all losses arising out of any breach by GPR, which the Company gives GPR notice of within two years of the closing.

The Acquisition Agreement also contains standard representations regarding the capital structure and ownership of PSP Italia S.r.l., its articles of association, corporate organization, books and records, compliance with law, qualification to do business, consents and approvals and lack of pending legal proceedings. Both Parties to the Acquisition Agreement have agreed not to disclose confidential information.

Neither Party may assign the Acquisition Agreement. The Acquisition Agreement is governed by Swiss Law, and the jurisdiction of any dispute shall be Zurich. Disputes shall be settled by arbitration in accordance with the Swiss Rules of International Arbitration of the Swiss Chambers of Commerce.

The Acquisition Agreement was initiated and executed pursuant to the terms of a frame Agreement for PV-Plant Acquisitions (the “Frame Agreement”) entered into by the Parties on November 18, 2009. Pursuant to the Frame Agreement, the Parties established a general outline and framework under which the Company would develop a series of solar power plants (“PV Plants”) in Italy. The Parties agreed in the Frame Agreement that the Company would have a goal of developing 100 mega watts of power in 2010. The Parties agreed that as each project was finalized by the Company, the Company would offer such solar power plant to GPR for purchase. The purchase price, as set forth in the Frame Agreement, would not exceed: (i) 4.1 million Euros per mega watt for PV Plants grid connected in 2010 in the event that the Company delivers long-term debt funding of 85% or more; or (ii) 4.05 million Euros per mega watt for PV Plants grid connected in 2010 in the event that the Company delivers long-term debt funding of 80% or more. Under the terms of the Frame Agreement, the parties determined that upon definitive agreement regarding the terms and conditions for acquisition of the solar PV Plants, the Parties would enter into a separate binding acquisition agreement for each such PV Plant. Under the Frame Agreement, the Parties agreed that if they could not reach definitive agreement on all parameters relating to the acquisition, the Company would be free to offer that particular PV Plant to any third party investor. The Parties agreed that GPR would undertake to deliver at signing of the first specific acquisition agreement a rollover Bank Standby Letter of Credit in the amount of 100% of the equity portion of the purchase price for the first 5 mega watts, which shall be carried forward for the next tranches of 5 mega watts each. This letter of credit would be subject to the condition of the prior occurrence of the (i) grid connection of the solar power plant as defined in such acquisition agreement and the closing of such acquisition agreement; and (ii) the provision of long-term debt funding at a debt-equity ratio of 80:20 or at a higher debt rate and overall terms acceptable to GPR. The form of the Standby Letter of Credit will be subject to the approval and acceptance of the bank providing the long term debt. The Parties agreed the acquisition agreements will be subject to the delivery of long-term debt funding by the Company of at least 80% under terms and conditions acceptable for GPR. The Parties further agreed that the Company would deliver specified due diligence documentation. The Frame Agreement is to remain in effect until December 31, 2010. Neither Party may assign the Frame Agreement. The Frame Agreement is governed by Swiss Law, and the jurisdiction of any dispute is Zurich, Switzerland. On March 2, 2010, the Parties entered into the first of the acquisition agreement as contemplated under the Frame Agreement for the sale to GPR of a 25 megawatt power plant, as described above.

Financing Agreement with CRG Finance AG

On March 2, 2010, the Company entered into a Financing Agreement (the “Financing Agreement”) with CRG Finance AG (“CRG Finance”). Pursuant to the Financing Agreement, CRG Finance will loan the Company a total of 470,000 Euros. In further consideration for the making of this loan, the Company shall transfer 20% of the Company’s rights to its net profits to be made in the sale of PSP Italia S.r.l. to GPR (the “Net Profit Rights”).

CRG Finance has agreed that upon receipt of its Net Profit Rights, CRG Finance will reinvest at least 50% of such Net Profit Rights into either new projects of the Company or shares of the Company, at a purchase price to be mutually agreed upon. The Company has issued a senior promissory note to CRG Finance in the amount of 470,000 Euros. The principal of the note, along with interest at an annual rate of seven and one half percent, is due within thirty days of demand.

Project San Paolo and Project Puglia

On April 15, 2009, the Company entered into four agreements to obtain licenses and land lease call option rights for the development of certain photovoltaic power plant projects in Italy. These agreements included two Transfer Agreements: one for a project located in San Paolo, Italy (referred to herein as “Project San Paolo”) and one for a project located in Foggia/Apricena, Italy (referred to herein as “Project Puglia” and together with Project San Paolo, the “Projects”). The Project San Paolo and Project Puglia which previously were deemed to have been terminated as of the end of 2009 were provided with possibility of revival in respect of proceedings by the Italian Constitutional Court. The Italian Constitutional Court proceedings addressed the regional governmental procedures with respect to authorization of photovoltaic (PV) plants through a simplified “start-of works” declaration. The Company had previously planned to acquire the two Projects through the simplified regional procedures. On March 26, 2010, the Italian Constitutional Court declared the simplified regional procedures unconstitutional under Italian law. On the basis of the decision of the Constitutional Court the Company believes the Projects can be revived if the Italian regional licensing and authorization procedures are revised to comport with newly stated requirements constitutional applicable Italian federal laws or if the applications for the Projects are resubmitted under the long form procedures of Italian federal law. The period in which the Projects could possibly be revived is uncertain as of the date of this Report. The Company was not a party to the federal or regional Italian Constitutional Court lawsuit.

Sale of Project Rights

During the first quarter 2010, the Company sold rights of ownership in a one-megawatt photovoltaic power plant from the Company's photovoltaic projects planned for development in Italy. Under the terms for the transfer of such ownership, the Company will establish a special purpose company in Italy under which the holders of such rights will obtain ownership in the one-megawatt power plant. The Company has granted the right of ownership in the one-megawatt power plant in consideration for an aggregate purchase price of 350,000 Euros (approximately $486,000), of which the Company has received 175,000 Euros (approximately $243,000) during the period covered by this Report. The Company expects the balance of such payments to be received during the second quarter 2010. At the time of transfer of ownership of the one-megawatt power plant to the special purpose company, no additional payment or consideration will be due or payable.

Revenues

During the three month periods ended March 31, 2010 and March 31, 2009, the Company had no revenues from operations.

Results of Operations

The Company has incurred a significant decrease in expenses during this reporting period from the last comparative period. Expenses for the three months ended March 31, 2010 were $246,556, as compared to $513,229 for the three months ended March 31, 2009. The decreased expenses during the last comparative period are related to the Company having minimal personnel requirements.

The Company’s professional fees for the three month period ended March 31, 2010 were $50,000, as opposed to $191,268 for the three month period ended March 31, 2009. Personnel costs were $19,843 for the period ended March 31, 2010, as opposed to $123,476 for the three month period ended March 31, 2009. General and administrative expenses increased to $18,998 for the three month period ended March 31, 2010 from $20,219 for the three month period ended March 31, 2009.

From the inception of the Company through March 31, 2010, the Company has accumulated total expenses and total losses of $3,087,459. The Company’s expenses have included $280,426 on consulting and director fees, $767,821 on professional fees, $520,833 on management services, $607,053 on personnel costs, and $211,958 on general and administrative fees.

Liquidity and capital resources

As of the date of this Report, we have not yet generated any revenues from our business operations. Since inception, the Company has incurred total expenses of $3,087,459, including total expenses of $246,556 during the three months ended March 31, 2010.

Our consolidated cash balance at March 31, 2010 was $10,983. As of March 31, 2010, our total assets were $10,983 and our total liabilities were $2,717,274. Cash declined from $14,051 as of December 31, 2009, total assets decreased from $14,051 as of December 31, 2009 and total liabilities decreased from $2,474,417 as of December 31, 2009.

During the three months ended March 31, 2010 and through the date of this Report, our primary source of capital has been continued use of proceeds from loans made to the Company during the fourth quarter 2009 and first quarter 2010 from CRG Finance AG in the amount of 470,000 Euros (US$660,073) and proceeds from the sale of rights to a one-megawatt power plant in Italy during the first quarter 2010 in the amount of 179,630 Euros (US$242,921). Our pre-operational activities to date have consumed substantial amounts of cash. Our negative cash flow from operations is expected to continue and to accelerate in the foreseeable future as the Company invests in capital expenditures to commence operations.

To date, the Company has received loans in aggregate of $193,574 from Rudana (the “Shareholder Loans”). The Company has used the proceeds from the Shareholder Loans for general corporate purposes. The Shareholder Loans have an interest rate of seven and a half percent (7.5%) per annum, which together with the principal amount shall be repayable thirty (30) days after demand by Rudana. In connection with the Shareholder Loans, the Company intends to execute notes setting forth the terms thereof.

We are seeking alternative sources of financing, through private placement of securities and loans from our shareholders in order for us to maintain our operations. We cannot guarantee that we will be successful in raising additional cash resources for our operations. Rudana Investment Group AG, the majority shareholder of our Company, has loaned the Company funds for operations in the past, and has indicated that it will continue to loan funds as their financial circumstances may permit. Rudana, however, is under no obligation to make additional loans in the future.

The Company will require no less than $2,000,000 in additional funding in order to conduct proposed operations for the next year.

Plant and Equipment

We expect to start investing in the installation of solar parks in Italy during 2010. There will be significant investments required to start these development projects in Italy. These investments are expected to be financed through additional equity capital as well as financing loans.

Between March 14, 2010 and March 25, 2010, the Company entered into a total of sixteen Acquisition Agreements to acquire Turnkey Alternative Energy Plants producing a total of 161.20 mega watts of power. Fourteen of these Acquisition Agreements were with Partner Capital Group Gmbh; the remaining two were with GEO-Service KG/SAS. The closing of each of these Acquisition Agreements is contingent on the Company’s ability to secure financing, which the Company is presently seeking. The parties have agreed that the Company will be provided with the necessary information to perform due diligence on these plants prior to closing.

The Company is presently in negotiations with Partner Capital Group Gmbh and GEO-Service KG/SAS to revise the Acquisition Agreements so that the acquisition of control of these Turnkey Alternative Energy Plants would be accomplished by license and not by sale.

On March 29, 2010 the Company entered into a Frame Agreement (the “Hellenic Frame Agreement”) with Hellenic Technologies Monoprosopi EPE, a company organized in Greece (“Hellenic Technologies”). Pursuant to the Hellenic Frame Agreement, Hellenic Technologies shall supply the Company with certain materials based on certain work orders delivered by the Company from time to time, in accordance with the terms and conditions of the Hellenic Frame Agreement. The Hellenic Frame Agreement memorializes certain understandings reached on February 1, 2010. The Hellenic Frame Agreement shall continue until February 1, 2011. The Hellenic Frame Agreement shall renew for additional one year terms until notice of non-renewal is given.

Employees

As of March 31, 2010, the Company had only one employee: Olivier de Vergnies, the Company’s Acting Chief Executive Officer and Acting Chief Financial Officer. The Company has not yet determined its anticipated employee and staff needs for the year ending December 31, 2010.

Subsequent to the period covered by this Report, the Company announced that it has engaged a team of twelve engineers to manage and supervise the Company’s photovoltaic power plant projects. These engineers are employed by Hellenic Technologies. The team is lead by Mr. Dimitris Kazantzis, Chief Executive Officer of Hellenic Technologies. The Company intends to appoint Mr. Kazantzis as its Chief Operations Officer and will appoint him to the Company’s Board of Directors.

The engagement of these engineers is governed by the terms of the Hellenic Frame Agreement. This team is expected to more than double in personnel over the coming two years. The team scope of work includes the following activities:

Preparation of requests for proposals for engineering, procurement and construction, operation and maintenance, engaging security contractors, and coordination of responses to requests for proposals.

The qualification and selection of contractors, and the negotiation and finalization of technical contracts.

Design of the overall command and control system of the photovoltaic power plants and coordination of the operation and maintenance planning.

Project management on behalf of the Company, including, system design authority, supervision of engineering, procurement and construction contractors, reporting on projects, acceptance of projects from contractors, handling of technical claims and issues, supervision of maintenance/operation training, and the supervision of handover following grid connection.

Research and Development

We have not yet determined our anticipated spending on research and development activities for the year ending December 31, 2010. Research and development efforts are expected to be overseen by our former Chief Technology Officer, Cesare Boffa, who now serves the Company as a consultant.

Off Balance Sheet Arrangements

The Company does not have any off balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable.

ITEM 4. CONTROLS AND PROCEDURES

As of the end of the period covered by this report, the Company carried out, under the supervision and with the participation of the Company’s management, including its Acting Chief Executive Officer and Acting Chief Financial Officer, an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) in ensuring that information required to be disclosed by the Company in its reports is recorded, processed, summarized and reported within the required time periods. In carrying out that evaluation, management identified a material weakness (as defined in Public Company Accounting Oversight Board Standard No. 2) in our disclosure controls and procedures.

The material weakness identified by Management consisted of inadequate staffing and supervision within the bookkeeping and accounting operations of the Company. The relatively small number of employees who have bookkeeping and accounting functions prevents us from segregating duties within the Company’s disclosure control system. The inadequate segregation of duties is a weakness because it could lead to the untimely identification and resolution of accounting and disclosure matters or could lead to a failure to perform timely and effective reviews. Accordingly, based on their evaluation of the Company’s disclosure controls and procedures as of March 31, 2010, the Company’s Acting Chief Executive Officer and its Acting Chief Financial Officer have concluded that, as of that date, the Company’s disclosure controls and procedures were not effective for the purposes described above. The Company intends to take steps to remediate such procedures as soon as reasonably possible.

There was no change in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) during the quarter ended March 31, 2010 that has materially affected or is reasonably likely to materially affect the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On February 25, 2010, the Company received notification from Sunpower Corporation, a Delaware corporation (“SunCorp”), demanding that the Company cease and desist from using the words “Sun Power” in its name. SunCorp identified several U.S. and International trademark registrations of its “Sunpower” mark. The Company subsequently received a cease and desist letter from SunCorp legal counsel on April 1, 2010 asserting rights to the name “Sun Power.” The Company has determined that it will be economically more rational to change the Company’s name rather than engage in protracted litigation with SunCorp. The Company plans to accomplish the name change during the course of the second and third quarter of 2010.

ITEM 1A. RISK FACTORS

Not Applicable.

ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3: DEFAULTS UPON SENIOR SECURITIES

Not Applicable.

ITEM 4: RESERVED

Not Applicable.

ITEM 5: OTHER INFORMATION

Sale of Project Rights

During the first quarter 2010, the Company sold rights of ownership in a one-megawatt photovoltaic power plant from the Company's photovoltaic projects planned for development in Italy. The Company has granted the right of ownership in the one-megawatt power plant in consideration for an aggregate purchase price of 350,000 Euros (approximately $486,000), of which the Company has received 175,000 Euros (approximately $243,000) during the period covered by this Report. This sale is described in greater detail in Item 2 of this Report, entitled Management’s Discussion and Analysis of Financial Condition and Results of Operations, which is incorporated herein by reference thereto.

ITEM 6. EXHIBITS

Exhibit		Description

31.1		Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of the Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

PRIME SUN POWER INC.

By:	/s/ Olivier de Vergnies
	Name:	Olivier de Vergnies
	Title:	Acting Chief Executive Officer,
		Acting Principal Financial Officer and
		Acting Principal Accounting Officer

Dated: May 24, 2010

3Power Energy Group Inc. Reports

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