CBMJ 10-Q Quarterly Report March 31, 2010 | Alphaminr
CONSERVATIVE BROADCAST MEDIA & PUBLISHING, INC.
ALPHAMINR

CBMJ 10-Q Quarter ended March 31, 2010

Balance Sheet
Cash Flow
Income Statement
CONSERVATIVE BROADCAST MEDIA & PUBLISHING, INC.
10-Q 1 v186078_10q.htm Unassociated Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
( Mark One)
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

OR

¨
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: 333-156467

Crownbutte Wind Power, Inc.
(Exact name of registrant as specified in its charter)

Nevada
20-0844584
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)

111 5th Avenue NE
Mandan, ND
58554
(Address of principal executive offices)
(Zip Code)

(701) 667-2073
(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 x 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 to 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 a smaller reporting company) ¨
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 ¨ No x

As of May 20, 2010, there were 32,387,472 shares of the registrant’s common stock outstanding.


CROWNBUTTE WIND POWER, INC.
TABLE OF CONTENTS
Page
Part I – Financial Information
Item 1
Consolidated Financial Statements (Unaudited)
4
Item 2
Management’s Discussion and Analysis of Financial Condition and Results of Operations
15
Item 3
Qualitative and Quantitative Disclosure About Market Risk
19
Item 4T
Controls and Procedures
19
Part II – Other Information
Item 1
Legal Proceedings
20
Item 1A
Risk Factors
21
Item 2
Unregistered Sales of Equity Securities and Use of Proceeds
21
Item 3
Defaults Upon Senior Securities
22
Item 4
Removed and Reserved
22
Item 5
Other Information
22
Item 6
Exhibits
23
Signatures
24
2

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements, including, without limitation, in the section captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere. Any and all statements contained in this report that are not statements of historical fact may be deemed forward-looking statements. Terms such as “may,” “might,” “would,” “should,” “could,” “project,” “estimate,” “pro forma,” “predict,” “potential,” “strategy,” “anticipate,” “attempt,” “develop,” “plan,” “help,” “believe,” “continue,” “intend,” “expect,” “future,” and terms of similar import (including the negative of any of the foregoing) may be intended to identify forward-looking statements. However, not all forward-looking statements may contain one or more of these identifying terms. Forward-looking statements in this report may include, without limitation, statements regarding (i) the plans and objectives of management for future operations, including plans or objectives relating to exploration programs, (ii) a projection of income (including income/loss), earnings (including earnings/loss) per share, capital expenditures, dividends, capital structure or other financial items, (iii) our future financial performance, including any such statement contained in a discussion and analysis of financial condition by management or in the results of operations included pursuant to the rules and regulations of the SEC, and (iv) the assumptions underlying or relating to any statement described in points (i), (ii) or (iii) above.
The forward-looking statements are not meant to predict or guarantee actual results, performance, events or circumstances and may not be realized because they are based upon our current projections, plans, objectives, beliefs, expectations, estimates and assumptions and are subject to a number of risks and uncertainties and other influences, many of which we have no control over. Actual results and the timing of certain events and circumstances may differ materially from those described by the forward-looking statements as a result of these risks and uncertainties. Factors that may influence or contribute to the inaccuracy of the forward-looking statements or cause actual results to differ materially from expected or desired results may include, without limitation, our inability to obtain adequate financing, insufficient cash flows and resulting illiquidity, our inability to expand our business, government regulations, lack of diversification, volatility in energy prices, increased competition, results of arbitration and litigation, stock volatility and illiquidity, and our failure to implement our business plans or strategies.
Except as otherwise required by the federal securities laws, we disclaim any obligations or undertaking to publicly release any updates or revisions to any forward-looking statement contained in this Quarterly Report on Form 10-Q to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

3

PART I—FINANCIAL INFORMATION
Item 1.  Financial Statements.

Crownbutte Wind Power, Inc.
Consolidated Balance Sheets

March 31, 2010
December 31, 2009
(Unaudited)
(Audited)
ASSETS
Current Assets:
Cash and cash equivalents
$ 6,472 $ 17,322
Other current assets
18,345 3,949
Total current assets
24,817 21,271
Other assets:
Interconnect application deposits
285,697 91,638
Property and equipment, net
135,676 166,088
Total other assets
421,373 257,726
$ 446,190 $ 278,997
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable
$ 375,506 $ 371,297
Accrued expenses
311,153 239,886
Stockholder loans payable (net of debt discount of $148,000, and
$0 at March 31, 2010 and December 31, 2009, respectively)
52,000 20,000
Due to officer
30,880 42,380
Total current liabilities
769,539 673,563
Total liabilities
769,539 673,563
Stockholders' deficit:
Preferred stock, $0.001 par value, 25,000,000 shares authorized
none issued and outstanding
- -
Common stock, $0.001 par value, 300,000,000 shares authorized
32,287,472 and 31,300,331 issued and outstanding at March 31,
2010 and December 31, 2009, respectively
32,287 31,300
Additional paid-in capital
5,544,934 5,113,209
Retained earnings deficit
(5,900,570 ) (5,539,075 )
Total stockholders' deficit
(323,349 ) (394,566 )
Total liabilities and stockholders' deficit
$ 446,190 $ 278,997

See accompanying notes to unaudited consolidated financial statements.

4
Crownbutte Wind Power, Inc.
Consolidated Statements of Operations

For the three months ended March 31,
2010
2009
(Unaudited)
(Unaudited)
Sale of project development rights
$ - $ -
Consulting revenues
- -
Total revenues
- -
Cost of revenues:
Project development rights
- -
Consulting revenues
- -
Total cost of revenues
- -
Gross profit
- -
Operating expenses:
General and administrative (includes stock based compensation
of $0 and $246,082  in  2010 and 2009)
271,832 623,625
Depreciation expense
7,005 9,276
Total operating expenses
278,837 632,901
Net operating loss
(278,837 ) (632,901 )
Other income (expenses):
Interest income
- 751
Other income
- 100
Interest expense
(91,539 ) (119 )
Gain on fixed asset disposal
8,882 -
Total other income (expenses)
(82,657 ) 732
Net loss
$ (361,494 ) $ (632,169 )
Basic and diluted - net loss per common share
$ (0.01 ) $ (0.03 )
Basic and diluted - weighted average common shares outstanding
31,380,800 22,916,756

See accompanying notes to unaudited consolidated financial statements.

5

Crownbutte Wind Power, Inc.
Consolidated Statements of Cash Flows

For the three months ended March 31,
2010
2009
(Unaudited)
(Unaudited)
Cash flows from operating activities:
Net loss
$ (361,494 ) $ (632,169 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation
7,005 9,276
Stock-based compensation
- 246,082
Stock-based interest payment
89,712 -
Gain on disposal of fixed assets
(8,882 ) -
Changes in operating assets and liabilities:
Decrease (increase) in:
Other assets
(208,455 ) (16,347 )
Increase in:
Accounts payable
4,209 51,145
Accrued expenses
71,267 18,924
Total adjustments
(45,144 ) 309,080
Net cash used in operating activities
(406,638 ) (323,089 )
Cash flows from investing activities:
Certificates of deposit redeemed
- 101,351
Investment in certificates of deposit
- (1,494 )
Purchase of fixed assets
- (5,259 )
Proceeds from disposal of fixed assets
32,288 -
Net cash provided by investing activities
32,288 94,598
Cash flows from financing activities:
Proceeds from stockholder loans
200,000 -
Net proceeds of private placement
175,000 -
Payments on officer loan
(11,500 ) -
Net cash provided by financing activities
363,500 -
Net decrease in cash and cash equivalents
(10,850 ) (228,491 )
Cash and cash equivalents, beginning of period
17,322 304,703
Cash and cash equivalents, end of period
$ 6,472 $ 76,212
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest paid
$ 1,872 $ 119
Noncash transactions :
Stockholder loan payable converted to common stock
$ 20,000 $ -
Unamortized debt discount
$ 148,000 $ -

See accompanying notes to unaudited consolidated financial statements.

6
CROWNBUTTE WIND POWER, INC.
Notes to Unaudited Consolidated Financial Statements
For the three months ended March 31, 2010 and 2009
NOTE 1 – ORGANIZATION, DESCRIPTION OF BUSINESS AND MERGER

Crownbutte Wind Power LLC (“Crownbutte ND”) was founded on May 11, 1999 with the strategy of addressing the requirements of regional utility companies to satisfy increasing renewable energy demands. Crownbutte ND was formed as a limited liability company (LLC) in the State of North Dakota and elected to be taxed as an S corporation effective January 1, 2001. On March 11, 2008, Crownbutte ND no longer met the requirements to be treated as an S corporation.  As a result, effective March 11, 2008, Crownbutte ND has been taxed like a C corporation.  On May 19, 2008, Crownbutte ND filed with the Secretary of State of North Dakota to convert from an LLC to a C corporation becoming “Crownbutte Wind Power, Inc.”  On July 2, 2008, Crownbutte ND became a wholly owned subsidiary of Crownbutte Wind Power, Inc., a Nevada corporation, formerly ProMana Solutions, Inc. as described below.

In cooperation with a local utility, Crownbutte developed and constructed the first utility-scale wind facility in either of the Dakotas in 2001, consisting of two turbines near Chamberlain, South Dakota.

The Company currently functions as a wind park developer as well as a consulting and advisory service to power utilities.

ProMana Solutions, Inc. (or “ProMana”)

ProMana was incorporated in the State of Nevada on March 9, 2004, under the name ProMana Solutions, Inc. ProMana’s business was to provide web-based, fully integrated solutions for managing payroll, benefits, human resource management and business processing outsourcing to small and medium sized businesses. Following the merger described below, ProMana is no longer in that web services business. On July 2, 2008, ProMana amended its Articles of Incorporation to change its name to Crownbutte Wind Power, Inc.

Merger

On July 2, 2008, pursuant to a Merger Agreement entered into on the same date, Crownbutte Acquisition Sub Inc., a North Dakota corporation formed on June 6, 2008, and a wholly owned subsidiary (“Acquisition Sub”), merged with and into Crownbutte ND, with Crownbutte ND being the surviving corporation (the “Merger”). As a result of the Merger, Crownbutte ND became a wholly-owned subsidiary of the Company.

Pursuant to the Merger, ProMana ceased operating as a provider of web-based, fully integrated solutions for managing payroll, benefits, human resource management and business processing outsourcing, and acquired the business of Crownbutte ND to develop wind parks from green field to operation and has continued Crownbutte ND’s business operations as a publicly-traded company.  See “Split-Off Agreement” below.

At the closing of the Merger, each share of Crownbutte ND’s common stock issued and outstanding immediately prior to the closing of the Merger was converted into one share of the Company’s common stock. As a result, an aggregate of 18,100,000 shares of common stock were issued to the holders of Crownbutte ND’s common stock, 17,000,000 of which were issued to the original members of Crownbutte Wind Power LLC and 1,100,000 to investors in Crownbutte ND who purchased shares in a private placement prior to the merger. In addition, warrants to purchase an aggregate of 10,600,000 shares of Crownbutte ND’s outstanding at the time of the Merger became warrants to purchase an equivalent number of shares of the Company’s common stock.

Split-Off Agreement

Upon the closing of the Merger, under the terms of a Split-Off Agreement, ProMana transferred all of its pre-Merger operating assets and liabilities to its wholly-owned subsidiary, ProMana Technologies, Inc., a New Jersey corporation (“ProMana NJ”). Simultaneously, pursuant to the Split-Off Agreement, ProMana transferred all of the outstanding shares of capital stock of ProMana NJ to two stockholders prior to the Merger (the “Split-Off”), in consideration of and in exchange for (i) the surrender and cancellation of an aggregate of 144,702 shares of the common stock and warrants to purchase 19,062 shares of common stock held by those stockholders and (ii) certain representations, covenants and indemnities.
Stock Split

The Board of Directors authorized a one-for-65.723 reverse split of the Company’s common stock (the “Stock Split”), which was effective on July 31, 2008, for holders of record on July 14, 2008.  After giving effect to the Stock Split, there were outstanding 19,582,249 shares of common stock.  All share and per share numbers in this Report relating to the Common Stock prior to the Stock Split have been adjusted to give effect to the Stock Split retroactively unless otherwise stated.

7
CROWNBUTTE WIND POWER, INC.
Notes to Unaudited Consolidated Financial Statements
For the three months ended March 31, 2010 and 2009
For accounting purposes, the Merger was treated as a recapitalization of the Company. Crownbutte ND formerly Crownbutte Wind Power LLC is considered the acquirer for accounting purposes, and the Company’s historical financial statements before the Merger have been replaced with the historical financial statements of Crownbutte ND before the Merger in all subsequent filings with the Securities and Exchange Commission (the “SEC”).

As used herein, unless the context otherwise requires, the “Company” and “Crownbutte” refer to Crownbutte ND for periods prior to the merger and to Crownbutte Wind Power, Inc., a Nevada corporation, formerly ProMana Solutions, Inc., and its wholly-owned subsidiary, Crownbutte ND, for periods after the Merger.

NOTE 2 – BASIS OF PRESENTATION, CONSOLIDATION AND GOING CONCERN

In the opinion of management, the accompanying consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of (a) the consolidated balance sheets as of March 31, 2010 and December 31, 2009, (b) the consolidated statements of operations for the three months ended March 31, 2010 and 2009, (c) the consolidated statements of cash flows for the three months ended March 31, 2010 and 2009.
Interim results are not necessarily indicative of results for a full year.  The information included in this Form 10-Q should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations and the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2009.

Certain reclassifications have been made to prior year amounts to conform to the current year presentation.

The accompanying unaudited consolidated financial statements include the results of operations of the Company and its subsidiary for the three months ended March 31, 2010 and 2009.  All material intercompany accounts and transactions between the Company and its subsidiary have been eliminated in consolidation.

Going Concern

These consolidated financial statements have been prepared by management in accordance with accounting principles generally accepted in the United States on a “going concern” basis, which presumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future.

The Company has incurred operating losses and negative cash flows from its operating activities for the three months ended March 31, 2010, as well as an accumulated deficit of approximately $5,900,570 as of March 31, 2010 and a working capital deficit of $744,722.

As of March 31, 2010, the Company has only $6,472 in cash.  The Company’s ability to pay its obligations as they become due is in danger as it is in need of immediate financing.  The Company’s continued existence is dependent upon its ability to resolve its liquidity problems, principally by obtaining equity and or debt financing.  The Company’s current operations are not an adequate source of cash to fund future operations.  In the event that it is unable to obtain debt or equity financing, it may have to cease or curtail operations.

The Company’s management continues to focus on procurement of financing for its Gascoyne I project and is actively engaged in discussion with parties who may be interested in purchasing development rights of some of the Company’s other greenfield projects.

The Company’s ability to continue as a going concern is dependent upon either the sale of one or more greenfield projects, obtaining additional financing to develop the properties and the ultimate realization of profits through future production or sale of properties, and the success of the Company’s business plan.  The outcome of these matters cannot be predicted at this time.  These consolidated financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue its business.

8
CROWNBUTTE WIND POWER, INC.
Notes to Unaudited Consolidated Financial Statements
For the three months ended March 31, 2010 and 2009
NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition

The Company recognizes revenue in accordance with guidance issued by the Financial Accounting Standards Board (“FASB”) on revenue recognition, which requires 1) evidence of an agreement, 2) delivery of the product or services has occurred 3) at a fixed or determinable price, and 4) assurance of collection within a reasonable period of time.

Further, some revenues are recognized using the percentage of completion method of accounting. The Company believes that the use of the percentage of completion method is appropriate as the Company has the ability to make reasonably dependable estimates of the extent of progress towards completion, contract revenues and contract costs. The percentage to completion is measured by monitoring progress using records of actual time, materials and other costs incurred to date on specific projects compared to the total estimated project requirements, which corresponds to the costs related to earned revenues. Estimates of total project requirements are based on prior experience of customization, delivery and acceptance of the same or similar technology and are reviewed and updated regularly by management. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are first determined, in the amount of the estimated loss on the entire contract.

The Company currently functions in two business areas: as a wind park developer and as a consulting and advisory service to power utilities. During 2009 the Company recognized no revenues from consulting and advising services to power utilities (Consulting revenues).  The Company made no sales and had no consulting revenues for the three months ended March 31, 2010.

Consulting services revenue is recognized under guidance that differs from contract services revenue. Consulting services revenue is recognized when delivery of the service has occurred; the customer has already received the service, and along with other revenue recognition criteria, qualifies the transaction as a sale. Whereas, contract services revenue is recognized when delivery of the product or service has yet to be completed yet the transaction still qualifies as a sale. When recognizing contract services revenue, prior to the project’s start, the Company estimates the cost at each stage of the project. As time passes and the stages are completed, the contractor recognizes an estimate of the revenue that has been earned based on the percentage of the estimated costs that have already been incurred. Using the percentage of completion method allows revenues and their associated expenses to be recognized in the same accounting period according to the matching principle, even if the customer has yet to receive delivery of the goods and services, or if the goods and services have not been completed by the Company.

Cost of Revenues

The Company includes all direct costs related to its contract and sale of development rights revenues in cost of revenues.  The types of costs include materials and supplies and subcontractor fees and expenses specific to the project or contract. Additionally, allocations of payroll, taxes, and benefits are added to cost of revenues based on time worked on each project.
Any project expenses not directly related to revenue-generating contracts or sales are expensed to research and development within general and administrative expenses.

Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Cash and Cash Equivalents and Certificates of Deposit

For purpose of reporting cash flows, the Company considers all accounts with maturities of three months or less to be cash equivalents. Certificates of deposit with a maturity of more than three months when purchased are classified as current assets.

Property, Equipment and Leasehold Improvements

Property, equipment and leasehold improvements are stated at cost. The Company records straight-line depreciation based on the estimated useful life of the individual units of property and equipment. Estimated useful lives are five to ten years for the property and equipment.  Leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful lives of the assets or the terms of the leases.

Research and Development

The Company expenses research and development as incurred.

9
CROWNBUTTE WIND POWER, INC.
Notes to Unaudited Consolidated Financial Statements
For the three months ended March 31, 2010 and 2009
Income Taxes

Income taxes are accounted for in accordance with the provisions of FASB ASC 740, Accounting for Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized.

Customer Concentration

The Company had no revenues for the three months ended March 31, 2010 and 2009.

Concentration of Credit Risk

The Company maintains its cash deposits at various financial institutions. Bank balances periodically exceed the Federal Deposit Insurance Corporation limits at one bank.

Fair Value of Financial Instruments
Effective January 1, 2008, the Company adopted guidance issued by the Financial Accounting Standards Board (“FASB”) on “Fair Value Measurements” for assets and liabilities measured at fair value on a recurring basis. This guidance establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements establishes a framework for measuring fair value and expands disclosure about such fair value measurements. The adoption of this guidance did not have an impact on the Company’s financial position or operating results, but did expand certain disclosures.
The Financial Accounting Standards Board (“FASB”) defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, the “FASB” requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:

Level 1:
Observable inputs such as quoted market prices in active markets for identical assets or liabilities

Level 2:
Observable market-based inputs or unobservable inputs that are corroborated by market data

Level 3:
Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.

The Company did not have any Level 2 or Level 3 assets or liabilities as of March 31, 2010 and December 31, 2009.  The Company discloses the estimated fair values for all financial instruments for which it is practicable to estimate fair value. As of March 31, 2010 and December 31, 2009, the fair value short-term financial instruments including cash, certificates of deposit, other current assets, accounts payable, accrued expenses and due to officer, approximates book value due to their short-term duration.

Cash and cash equivalents include money market securities and commercial paper that are considered to be highly liquid and easily tradable. These securities are valued using inputs observable in active markets for identical securities and are therefore classified as Level 1 within the fair value hierarchy.
In addition, the Financial Accounting Standards Board (“FASB”) issued, “The Fair Value Option for Financial Assets and Financial Liabilities,” effective for January 1, 2008. This guidance expands opportunities to use fair value measurements in financial reporting and permits entities to choose to measure many financial instruments and certain other items at fair value. The Company did not elect the fair value option for any of its qualifying financial instruments.

10
CROWNBUTTE WIND POWER, INC.
Notes to Unaudited Consolidated Financial Statements
For the three months ended March 31, 2010 and 2009
Stock-Based Compensation

The Company accounts for the grant of stock and warrants awards in accordance with ASC Topic 718, Compensation – Stock Compensation (ASC 718).  ASC 718 requires companies to recognize in the statement of operations the grant-date fair value of warrants and stock options and other equity based compensation.

The Company uses the Black-Scholes option valuation model for estimating the fair value of traded options.  This option valuation model requires the input of highly subjective assumptions including the expected stock price volatility.

For the three months ended March 31, 2010 and 2009, the Company recorded stock-based compensation of $0 and $246,082, respectively.

Basic and Diluted Earnings per Share

Basic earnings per share are calculated by dividing income available to stockholders by the weighted average number of common shares outstanding during each period.  Diluted earnings per share are computed using the weighted average number of common and dilutive common share equivalents outstanding during the period.  Dilutive common share equivalents consist of shares issuable upon the exercise of stock options and warrants (calculated using the modified-treasury stock method).  The outstanding warrants amounted to 8,350,034 and 11,235,752 at March 31, 2010 and 2009 respectively.   For the three months ended March 31, 2010 and 2009, these potentially dilutive securities were not included in the calculation of loss per share because the Company incurred a loss during such periods and thus their effect would have been anti-dilutive.

New Accounting Pronouncements

On June 5, 2003, the United States Securities and Exchange Commission (“SEC”) adopted final rules under Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”), as amended by SEC Release No. 33-9072 on October 13, 2009. Commencing with its annual report for the year ending December 31, 2010, the Company will be required to include a report of management on its internal control over financial reporting. The internal control report must include a statement of:

·
Management’s responsibility for establishing and maintaining adequate internal control over its financial reporting;
·
Management’s assessment of the effectiveness of its internal control over financial reporting as of year- end; and
·
The framework used by management to evaluate the effectiveness of the Company’s internal control over financial reporting.

Furthermore, it is required to file the auditor’s attestation report separately on the Company’s internal control over financial reporting on whether it believes that the Company has maintained, in all material respects, effective internal control over financial reporting.

A variety of proposed or otherwise potential accounting standards are currently under study by standard setting organizations and various regulatory agencies. Due to the tentative and preliminary nature of those proposed standards, management has not determined whether implementation of such proposed standards would be material to our consolidated financial statements.

NOTE 4 – PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS

Property and equipment and related accumulated depreciation consists of the following:

March 31, 2010
December 31, 2009
Equipment and Vehicles
$ 147,832 $ 179,370
Software
39,289 39,289
Leasehold Improvements
938 938
Total Cost
188,059 219,597
Accumulated Depreciation
(52,383 ) (53,509 )
Net Property and Equipment
$ 135,676 $ 166,088

Equipment and vehicles are depreciated with an estimated useful life of 5 to 10 years and software has an estimated useful life of 5 years.  Depreciation expense was $7,005 and $9,276 for the three months ended March 31, 2010 and 2009 respectively.

11
CROWNBUTTE WIND POWER, INC.
Notes to Unaudited Consolidated Financial Statements
For the three months ended March 31, 2010 and 2009
NOTE 5 – ACCRUED EXPENSES

Accrued expenses consist of the following:

March 31, 2010
December 31, 2009
Accrued Payroll
$ 283,251 $ 216,254
Credit Cards Payable
27,902 23,262
Accrued Vacation
- 324
Accrued Interest
- 46
$ 311,153 $ 239,886
NOTE 6 – STOCKHOLDERS’ DEFICIT

On February 22, 2010, the Company Board of Directors executed a Unanimous Written Consent approving a private placement transaction to offer investors a minimum of $150,000 (428,571 shares) and a maximum of $700,000 (2,000,000 shares) of the Company’s common stock at $0.35 per share.  Each share sold will include one warrant to purchase one share of the Company’s common stock, exercisable for a period of four years, at an exercise price of $1.50 per share, and one warrant to purchase one share of common stock, exercisable for four years, at an exercise price of $2.50 per share.  The Company issued 499,999 shares and 999,998 warrants for proceeds of $175,000.

On February 24, 2010 the $20,000 short-term note payable to StarInvest Group, Inc. was converted to common stock through the private placement.  A total of 57,142 shares and 114,284 warrants were issued.

On March 29, 2010 the Company issued a total of 400,000 shares of common stock in exchange for short-term loans from two of the Company’s stockholders.  Terms of the loans are $100,000 payable in 60 days for 150,000 shares of stock in lieu of interest, and $100,000 payable in 60 days for 250,000 shares of stock in lieu of interest.  Principal payments on both loans are due June 7, 2010.

During the quarter ended March 31, 2010 the Company issued a total of 957,141 shares of common stock and 1,114,282 warrants under terms of the private placement and short-term loan agreements.

During the quarter ended March 31, 2010 the Company made an adjustment to increase common stock issued for 30,000 shares sold in 2009 in a transaction that was to be unwound by December 31, 2009. The stockholders later elected to keep the shares.

NOTE 7 – RELATED PARTY TRANSACTIONS

The Company borrowed funds from Timothy Simons, one of the Company’s stockholders and its CEO.  The terms of the loans are non-interest bearing and payable upon demand.  Amounts owed totaled $30,880 as of March 31, 2010 and $42,380 as of December 31, 2009, respectively.

The Company borrowed funds from StarInvest Group, Inc., one of the Company’s stockholders.  Terms of the loan are $20,000 at 6% annual interest, due within one year.  The date of the loan is December 18, 2009.  As of December 31, 2009, the Company owed $20,000.  On February 24, 2010, the note was converted to common stock and warrants through the private placement.  The principal balance as of March 31, 2010 is $0.  See Note 6.

On March 29, 2010 the Company borrowed a total of $200,000 from two of its stockholders.  Terms of the loans are $100,000 each payable on June 7, 2010.  Common stock was issued in lieu of interest payments.  See Note 6.

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CROWNBUTTE WIND POWER, INC.
Notes to Unaudited Consolidated Financial Statements
For the three months ended March 31, 2010 and 2009
NOTE 8 – RETIREMENT PLAN

In August 2007, the Company established a SIMPLE retirement plan. The Company matches employee contributions up to 3% of gross wages. The Company’s contributions to the plan were $983 and $2,710 for the three months ended March 31, 2010 and 2009 respectively.

NOTE 9 – PROJECT DEVELOPMENT COSTS AND INTERCONNECT APPLICATION DEPOSITS

The Company expenses all project development costs until management deems a project probable of being technically, commercially, and financially viable.  The Company capitalizes project development costs generally once management deems a project probable of being technically, commercially, and financially viable.  This generally occurs in tandem with management’s determination that a project should be classified as an advanced project, such as when favorable results of a system impact study are received, interconnect agreements obtained, and project financing is in place.

On May 27, 2008 the Company entered into a joint venture agreement with Westmoreland Power, Inc., a coal company, under the name of Gascoyne II Wind Project to develop, construct, manage, and operate a 200 MW wind power project in southwest North Dakota.  Crownbutte is the managing party.  For the three months ended March 31, 2010 and 2009, the Company expensed development costs of $7,172 and $2,728 respectively, for this project.

On June 20, 2008 the Company entered into an agreement with a wind development company to purchase the rights to develop a wind park near New England, ND for $100,000.  Assets purchased by the Company consist of one met tower, 3.5 years meteorological data, and a land lease cooperation agreement.  For the three months ended March 31, 2010 and 2009, the Company expensed development costs of $8,470 and $2,770 respectively for this project.

In 2007, the Company sold project development rights for a 20 MW wind park near Gascoyne, ND to a wind energy company.  The Company recognized $75,000 revenue in 2006 for preliminary development work completed and earned in 2006. For the year ended December 31, 2007, additional revenue of $250,000 for sale of project development rights was earned and recognized for final development work completed prior to transfer of ownership.

In 2008, the Company decided to repurchase the project.  On September 30, 2008 the Company entered into an agreement with the wind development company to repurchase the development rights for the 20 MW Gascoyne, ND wind park for $325,000.   For the three months ended March 31, 2010 and 2009, the Company expensed development costs totaling $25,088 and $69,016 respectively for this project as it has not yet deemed the project probable of being technically, commercially, and financially viable.

For the three months ended March 31, 2010 and 2009 the Company expensed an additional $23,889 and $10,054 respectively in development costs for smaller projects not listed above.

The Company has deemed all of the projects described above as research and development costs which have been expensed accordingly.

Interconnect Application Deposits

The Company pays in advance for electrical interconnect studies.  As the studies are performed, the portions of the advances that are used are expensed. These costs are incurred as part of the process to obtain an interconnect agreement. Interconnect deposits are classified as non-current assets as studies generally exceed one year in length.  If a study is complete, any unused deposits are refunded to the Company.  At March 31, 2010 and December 31, 2009, the Company had $285,697 and $91,638 respectively, of unused deposits on its balance sheet.

NOTE 10 – COMMITMENTS AND CONTINGENCIES

Legal proceedings

On August 19, 2008, Centre Square Capital, LLC filed a claim in the amount of $3,000,000 plus attorneys fees, interest, and arbitration costs in a demand for arbitration, claiming that the Company has not compensated it for introducing the Company to the firm that raised the private placement capital in March, 2008 and thereafter.   On March 16, 2009 a judge dismissed Centre Square Capital LLC’s claim and awarded the Company reimbursement of all attorney fees and costs related to the claim.  A reimbursement of approximately $129,227 is payable to the Company.

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CROWNBUTTE WIND POWER, INC.
Notes to Unaudited Consolidated Financial Statements
For the three months ended March 31, 2010 and 2009
The Company accounts for awards of attorney fees and costs resulting from judgments in its favor on a case-by-case basis.  Factors affecting the accounting treatment include timing of expenses incurred and date of award, likelihood of collection, and additional costs incurred in the collection process.  Judgments awarded that management deems collectible are recorded as a receivable.  Award amounts for expenses incurred in the same accounting period are recorded as reductions in the corresponding expense line item.  Reimbursements of prior period expenses are recorded as other income.  Collection of the Centre Square Capital judgment is uncertain and accordingly, no receivable has been recorded.  For the three months ended March 31, 2010 the Company collected $0 of this award.

On November 3, 2009, the Company was served with a lawsuit filed against us in the Philadelphia County Court of Common Pleas under Case ID: 091100318. Stradley, Ronon, Stevens & Young, LLP (the plaintiffs) filed a claim against the Company for nonpayment of legal fees and are seeking to recover $93,526 plus interest, attorneys’ fees and costs.  This claim arose as a result of legal services provided in the Centre Square Capital, LLC arbitration claim filed August 19, 2008.  The Company has included the $93,526 in accounts payable as of December 31, 2009.

On December 14, 2009, the Company received a Notice of Intent to Take Default Judgment from Stradley, Ronon, Stevens & Young, LLP for the unpaid balance of $93,526.  The Company has been working with the plaintiff to make payments on the debt.  In exchange, the plaintiffs have agreed to postpone execution of the judgment.  The Company owed $78,526 as of March 31, 2010 which is included in accounts payable.

NOTE 11 – SUBSEQUENT EVENTS

In accordance with ASC 855, “Subsequent Events” the Company evaluated subsequent events after the balance sheet date of March 31, 2010 through May 20, 2010, which is the date the financial statements were issued.

On April 27, 2010 the Company issued 100,000 shares common stock for payment of consultant fees.

On April 29, 2010, the Company Board of Directors executed a Unanimous Written Consent approving the issuance of warrants to four Company employees and executives.  The warrants consist of options to purchase 9,010,000 shares of the Company’s common stock at .1101 per share exercisable for a period of five years.

On May 19, 2010, the Company accepted the resignation of the Chief Financial Officer.

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Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion highlights the principal factors that have affected our financial condition and results of operations as well as our liquidity and capital resources for the periods described. This discussion contains forward-looking statements. Please see “Forward-Looking Statements” above and “Risk Factors” included in our Form 10-K for the fiscal year ended December 31, 2009, filed with the Securities and Exchange Commission (“SEC”) on April 15, 2010 (the “2009 Form 10-K”), for a discussion of the uncertainties, risks and assumptions associated with these forward-looking statements.

The following discussion and analysis of the Company’s financial condition and results of operations is based on our consolidated financial statements. Our consolidated financial statements have been prepared by management in accordance with accounting principles generally accepted in the United States on a “going concern” basis, which presumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. These condensed consolidated financial statements as of March 31, 2010, and for the three months ended March 31, 2010 and 2009, are unaudited. In the opinion of management, such financial statements include the adjustments and accruals necessary for a fair presentation of the results for the interim periods. These interim results are not necessarily indicative of results for a full year.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted in these financial statements as of March 31, 2010, and for the three months ended March 31, 2010 and 2009.

You should read this discussion and analysis together with such financial statements and the notes thereto.

Overview

Based in Mandan, ND, Crownbutte Wind Power, Inc. is an independent wind energy company focused exclusively on the development, ownership and operation of wind energy projects.  One wind park developed by us from “green-field” or blank state to operation was purchased directly in 2002 by Basin Electric Power Cooperative (2.6 megawatts (MW) near Chamberlain, South Dakota.  In addition to this operating park, we have completed various consulting activities with regional utilities and international energy companies.  Our goal is to develop, own and operate merchant wind parks in the 20-60 MW capacity range.  As of December 31, 2010, our portfolio of wind energy projects included approximately 638 MW (0 MW currently in operation) of prospective capacity in various stages of development primarily in the Dakotas and Montana.

The first wind park that we plan to build, own and operate is a 20 MW project called Gascoyne I located south of Dickinson, North Dakota.  Our goal is to have approximately 20 MW of owned operating capacity by the end of 2010, and we target the construction and commissioning of approximately 40 MW of owned operating capacity in 2011.  We do not currently and do not plan to act as an operator of wind parks we do not own.

Our business model focuses on the development of merchant parks.  We do not plan to enter into power purchase agreements unless they are offered on favorable terms.

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Results of Operations for Three Months Ended March 31, 2010
Revenues

For the three months ended March 31, 2010, we recognized no revenues.  The Company had no revenues for the same period 2009.  No new sales of development rights or consulting projects were secured during the current period.  We continue to engage in discussions with finders and interested parties.  However, we cannot be assured of success in our endeavors to sell development rights, secure consulting contracts, or to raise the necessary project financing required to construct and operate wind parks for the sale of electricity.  See further discussion in Financing Outlook.

Cost of Revenues

There was no cost of revenues.

Operating Expenses

Operating expenses for the quarter ended March 31, 2010 decreased $354,064 compared to the same quarter 2009.  The Company continued cost-containment measures implemented in 2009, which included reduction of non-essential staff and overhead.  The decrease in expenses was attributable to a $20,532 decrease in research and development expenses, a decrease of $15,084 in legal and accounting fees, a reduction in salary expenses of $282,902, and a $12,480 reduction of travel and entertainment expenses.  Other staff-related expense reductions such as payroll taxes, continuing education, and simple plan contributions totaled approximately $17,000.

The $20,532 decrease in research and development expenses resulted from less early-stage development activity for 2010 compared to the same period last year as the Company continues to focus on financing its shovel-ready projects.

Legal fees decreased for the current quarter compared to the same period last year due to legal expenses incurred first quarter 2009 related to the Centre Square Capital litigation.  Legal and accounting fees for the quarter ended March 31, 2010 totaled $96,347 compared to $111,431 for the same period in 2009.

Salaries and wages for the current quarter totaled $99,424 compared to $382,326 first quarter 2009.  Of the $282,902 salary reduction, approximately $246,000 was due to stock-based compensation payments recognized in 2009.  No stock-based compensation was incurred during the current quarter.

The Company curtailed all unnecessary travel and entertainment expenses after first quarter 2009.  Travel and entertainment for the quarter ended March 31, 2010 totaled $277 compared to $12,480 for the same period last year.

Other staff-related expenses, including payroll taxes, totaled $4,414 for the current quarter compared to $20,851 for the same period last year.

Non-Operating Income and Expenses

The Company recognized a gain on disposal of fixed assets totaling $8,882 for the current quarter.  No gain or loss on sale or disposal of fixed assets was recognized for the period ended March 31, 2009.  The Company earned no interest income during the current quarter compared to $751 earned the same period last year.

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Interest expense totaled $91,539 for the current quarter compared to $119 for the same period last year.  Approximately $90,000 of the current period interest expense was stock-based interest payments made on stockholder loans.

Financing Outlook
The Company continues to experience significant liquidity issues.  Even though cost-containment measures have been implemented, lack of revenues and difficulty in obtaining project financing has continued to negatively impact the Company.  A private placement initiated earlier this quarter has resulted in some capital investment into the Company.   The Company also borrowed funds from two stockholders during the quarter ended March 31, 2010.  These funds were used to finance Midwest Independent Systems Operator (MISO) deposit requirements for the Elgin and Wibaux projects.  By entering into financing agreements with stockholders, the Company was able to maintain fast-tracked status for both of these projects.  Fast-tracking through the MISO queue allows the Company to achieve an interconnect agreement much earlier than projects that remain in the regular queue awaiting further impact studies.  The Company anticipates Elgin and Wibaux, each 20 MW projects, should attain shovel-ready status before 2010 year end.

Future efforts to generate positive cash flow depend on Crownbutte’s success in selling development rights to parks in the short term, and constructing wind parks to generate electricity sales in the long term.  As of the date of this report, the Company continues to focus on efforts to finance the Gascoyne I wind park (a 19.5 MW project).   As disclosed in previous filings, the Company is in the due diligence phase with the lender to procure approximately $37.5 million in debt financing.

If we are successful at closing the pending Gascoyne I financing, we anticipate receipt of approximately $1,000,000 developer fee to be paid out of the financing.  Receipt of these funds will allow the Company to eliminate most of our liabilities and obligations through the date of financing, however, we will still be dependent upon sales of project development rights, consulting revenues, or other sources of cash flow until such time our parks are operational and generating sufficient revenues to meet corporate overhead.
Until we successfully complete due diligence, there is no assurance the lender will approve the financing.

We continue to seek financing for the Elgin and Wibaux projects and discussions are on-going with various interested parties.  The Company is also seeking to sell one or more projects.  To date, none of these discussions have advanced beyond exchange of information and there can be no assurance we will succeed in either financing or sale of these projects.

Liquidity and Capital Resources
The Company has accrued significant liabilities and has a working capital deficit of $744,722 as of March 31, 2010.  In the current quarter, we used $406,638 cash in operations compared to $323,089 used in operations during the same period in 2009.  The increase in cash used this quarter compared to the same period last year is mainly due to $200,000 invested in MISO interconnect application deposits compared to no investments made during the same period last year.  Cash used was partially offset by additional increases in accounts payable and accrued expenses for this quarter.  Key employees and officers have elected to defer compensation.   Payroll and staff-related expenses were significantly reduced for the quarter ended March 31, 2010 compared to last year as the Company employed approximately 50% less staff than the period ended March 31, 2009.

Cash flows from investing activities for the quarter totaled $32,288 compared to $94,598 for the same period last year.  The only source of cash flow from investing activities for the quarter ended March 31, 2010 was $32,288 insurance proceeds from loss of two met towers destroyed in an ice storm.  The Company redeemed certificates of deposit totaling $101,351 during the quarter ended March 31, 2009, invested $1,494 in certificates of deposit, and purchased $5,259 in fixed assets.

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Cash flows from financing activities for the quarter ended March 31, 2010 totaled $363,500 compared to $0 for the same period last year.  Sources of cash for the quarter included $175,000 net proceeds from a private placement and $200,000 borrowed from stockholders.  The Company made payments totaling $11,500 on a loan from officer.

Going Concern

This Management’s Discussion and Analysis and the consolidated financial statements included in this Report have been prepared on a “going concern” basis, which presumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future.

The Company has incurred operating losses and negative cash flows from its operating activities for the three months ended March 31, 2010, as well as an accumulated deficit of approximately $5,900,570 as of March 31, 2010 and a working capital deficit of $744,722.  Total current liabilities at March 31, 2010 were $769,539.

As of March 31, 2010, the Company had only $6,472 in cash.  As of the date of this Report, the Company has only approximately $1,400 in cash. The Company’s ability to pay its obligations as they become due is in danger as it is in need of immediate financing.  Our continued existence is dependent upon our ability to resolve our liquidity problems, principally by obtaining equity and or debt financing.  Our current operations are not an adequate source of cash to fund future operations or pay current liabilities.  In the event that we are unable to obtain debt or equity financing, we may have to cease or curtail operations.

Our ability to continue as a going concern is dependent upon either the sale of one or more greenfield projects, obtaining additional financing to develop the properties and the ultimate realization of profits through future production or sale of properties, and the success of our business plan.  The outcome of these matters cannot be predicted at this time.  These consolidated financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should we be unable to continue its business.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

New Accounting Pronouncements

On June 5, 2003, the United States Securities and Exchange Commission (“SEC”) adopted final rules under Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”), as amended by SEC Release No. 33-9072 on October 13, 2009. Commencing with its annual report for the year ending December 31, 2010, the Company will be required to include a report of management on its internal control over financial reporting. The internal control report must include a statement of:

·
Management’s responsibility for establishing and maintaining adequate internal control over its financial reporting;

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·
Management’s assessment of the effectiveness of its internal control over financial reporting as of year- end; and
·
The framework used by management to evaluate the effectiveness of the Company’s internal control over financial reporting.

Furthermore, it is required to file the auditor’s attestation report separately on the Company’s internal control over financial reporting on whether it believes that the Company has maintained, in all material respects, effective internal control over financial reporting.

A variety of proposed or otherwise potential accounting standards are currently under study by standard setting organizations and various regulatory agencies. Due to the tentative and preliminary nature of those proposed standards, management has not determined whether implementation of such proposed standards would be material to our consolidated financial statements.
Item 3.  Qualitative and Quantitative Disclosure about Market Risk

As a smaller reporting company, as defined in Rule 12b-2 of the Exchange Act, we are not required to provide disclosure under this Item 3.

Item 4T.  Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of March 31, 2010, the end of the period covered by this Report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of March 31, 2010, were not effective to ensure that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to the registrant’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure. A controls system cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

Our Chief Executive Officer and Chief Financial Officer are responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and Rule 15d-15(f)). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. Furthermore, smaller reporting companies face additional limitations. Smaller reporting companies employ fewer individuals and find it difficult to properly segregate duties. Often, one or two individuals control every aspect of the Company’s operation and are in a position to override any system of internal control. Additionally, smaller reporting companies tend to utilize general accounting software packages that lack a rigorous set of software controls.

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We have identified the following material weaknesses in our internal control over financial reporting:

Lack of Independent Board of Directors and Audit Committee

Management is aware that an audit committee composed of the requisite number of independent members along with a qualified financial expert has not yet been established.  Considering the costs associated with procuring and providing the infrastructure to support an independent audit committee and the limited number of transactions, management has concluded that the risks associated with the lack of an independent audit committee are not sufficient to justify the creation of such a committee at this time.  Management will periodically reevaluate this situation.

Lack of Segregation of Duties

Management is aware that there is a lack of segregation of duties at the Company due to the small number of employees dealing with general administrative and financial matters. However, at this time management has decided that considering the abilities of the employees now involved and the control procedures in place, the risks associated with such lack of segregation are low and the potential benefits of adding employees to clearly segregate duties do not justify the substantial expenses associated with such increases.  Management will periodically reevaluate this situation.

(b) Changes in Internal Control over Financial Reporting

During the quarter ended March 31, 2010, there was no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II—OTHER INFORMATION
Item 1.  Legal Proceedings.

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business.  However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters that may arise from time to time that may harm business.

Except for the matter described below, other than routine litigation arising in the ordinary course of business that we do not expect, individually or in the aggregate, to have a material adverse effect on us, there is no currently pending legal proceeding and, as far as we are aware, no governmental authority is contemplating any proceeding to which we are a party or to which any of our properties is subject, other than the Company’s applications for permits to install or erect wind turbines or weather-monitoring equipment, which are incidental to the business of the Company.

Although there can be no assurance as to the ultimate outcome, we have denied liability in the case pending against us, and we intend to defend vigorously such case.  Based on information currently available, we believe the amount, or range, of reasonably possible losses in connection with the action against us not to be material to our consolidated financial condition or cash flows.  However, losses may be material to our operating results for any particular future period, depending on the level of income for such period.

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On August 19, 2008, Centre Square Capital, LLC filed a claim with the American Arbitration Association in the amount of $3,000,000 plus attorneys’ fees, interest, and arbitration costs in a demand for arbitration, claiming that the Company has not compensated it for introducing the Company to the firm that identified the Company’s private placement investors in March 2008 and thereafter.  The Company maintained that the agreement pertains only to funds raised as a result of business with the People’s Republic of China.  On March 16, 2009, the court dismissed the plaintiff’s claim and awarded the Company reimbursement of all attorney fees and costs related to the claim.  A reimbursement of approximately $129,227 is payable to the Company.

As of the date of this report and as disclosed in the accompanying notes to consolidated financial statements as of March 31, 2010, and for the three months ended March 31, 2010 and 2009, the Company has received $0 of the damages awarded on March 16, 2009.  We believe there will be no recovery of this award.

Subsequent to the damages award, the Company was threatened with litigation over non-payment of attorney fees related to the Centre Square Capital arbitration and defense.  On November 3, 2009, the Company was served with a lawsuit filed in the Philadelphia County Court of Common Pleas by Stradley, Ronon, Stevens & Young, LLP, seeking to recover $93,526 plus interest, attorneys’ fees, and costs.  On December 14, 2009, the Company received a Notice of Intent to Take Default Judgment for the unpaid balance of $93,526.  The Company has been working with the plaintiff to make payments on the debt.  In exchange, the plaintiffs have agreed to postpone execution of the judgment.  There has been no change in the status of this situation and we continue to work toward full payment of the debt.

As of the date of this report, the Company owes Stradley, Ronon, Stevens & Young, LLP $78,526.  We anticipate paying the balance in full upon closing of the Gascoyne I financing, which is scheduled to occur on or before June 15, 2010.  There is no guarantee the financing will be approved or that we will have the capital available to pay this debt.

If the Gascoyne I financing does not materialize or the Company cannot raise sufficient capital through the sales of its equity securities, there is no guarantee the judgment against us will not be exercised.  Should they do so, the only liquid assets available to satisfy the judgment are the Company’s interconnect application deposits.  Forfeiture of the deposits would significantly impair the status of our project queue positions.  Loss of queue position may require new applications, additional deposits and development costs, and several years to obtain shovel-ready status.

Item 1A.  Risk Factors

There have been no material changes from the risk factors disclosed in our 2009 Form 10-K under Part I, Item 1A, therein.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.

On April 27, 2010, the Company issued 100,000 shares common stock to a consultant for services under a consulting agreement.  The Company’s issuance of the shares was not registered under the Securities Act of 1933, as amended (the “Securities Act”) in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act, which exempts transactions by an issuer not involving any public offering.

On April 29, 2010, in consideration of their services to the Company, the Company issued warrants to purchase shares of its common stock to the following officers and employees:

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·
Timothy H. Simons, the Company’s Chief Executive Officer, received a five-year warrant to purchase 1,000,000 shares of the Company’s common stock at an exercise price of $0.1101 per share;

·
Terry Pilling, the Company’s Executive Vice President, received a five-year warrant to purchase 5,000,000 shares of common stock at an exercise price of $0.1101 per share;

·
Kay Grinsteinner, the Company’s Controller, received a five-year warrant to purchase 3,000,000 shares of the Company’s common stock at an exercise price of $0.1101 per share; and

·
Andrew Buck, the Company’s Data Acquisition Manager, received a five-year warrant to purchase 10,000 shares of the Company’s common stock at an exercise price of $0.1101 per share.

The Company’s issuance of the warrants was not registered under the Securities Act in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act, which exempts transactions by an issuer not involving any public offering.


None.

Item 4.  (Removed and Reserved)
Item 5.  Other Information.

Effective May 19, 2010, the Company’s Chief Financial Officer, Manu Kalia, resigned from his position and from employment with the Company.

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Item 6.  Exhibits.

The following Exhibits are being filed or furnished with this Quarterly Report on Form 10-Q.

Exhibit
Number
Description
10.1
Promissory Note, dated as of March 29, 2010, in the principal amount of $100,000, issued by the Registrant to Catherine C. Coleman (incorporated by reference to Exhibit 10.20 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009)
10.2
Promissory Note, dated as of March 29, 2010, in the principal amount of $100,000, issued by the Registrant to David L. Cohen (incorporated by reference to Exhibit 10.21 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009)
10.3
*
Form of Common Stock Purchase Warrant issued to certain executive officers and employees on April 29, 2010
31.1
*
Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a)
32.1
*
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (This certification is being furnished and shall not be deemed “ filed ” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Registrant specifically incorporates it by reference.)


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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.

CROWNBUTTE WIND POWER, INC.
Dated: May 20, 2010
By:
/s/ Timothy H. Simons
Timothy H. Simons
Chief Executive Officer (Principal Executive Officer and Principal Financial Officer)
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EXHIBIT INDEX

Exhibit
Number
Description
10.3
Form of Common Stock Purchase Warrant issued to certain executive officers and employees on April 29, 2010
31.1
Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a)
32.1
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (This certification is being furnished and shall not be deemed “ filed ” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Registrant specifically incorporates it by reference.)
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