LEOPARD ENERGY, INC.
10-Ks and 10-Qs
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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
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(Mark
One)
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¨
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QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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For
the Quarterly Period Ended October 31, 2010
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or
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¨
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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For
the transition period from
to
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Commission
file number 000-50693
(Name of
Registrant as Specified in Its Charter)
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Nevada
(State
or Other Jurisdiction
of
Incorporation or Organization)
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90-0314205
(I.R.S.
Employer
Identification
No.)
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420
N. Nellis Blvd., Suite A3-146, Las Vegas, Nevada
(Address
of Principal Executive Offices)
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89110
(Zip
Code)
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(702) 425-7376
(Issuer’s
Telephone Number, Including Area
Code)
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Securities
registered under Section 12(b) of the Exchange Act:
None
Securities
registered under Section 12(g) of the Exchange Act:
Common
Stock, Par value $0.001per share
Indicate
by check mark whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past
90 days.
x
Yes
¨
No
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).
¨
Yes
¨
No
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a smaller reporting company. (Check
One):
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Large
accelerated filer
¨
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Accelerated
filer
¨
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Non-accelerated
filer
¨
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Smaller
reporting company
x
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(Do
not check if a smaller reporting company)
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Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
¨
Yes
x
No
On
December 1, 2010, there were 345,000,000 shares of common stock
outstanding.
SUPERLATTICE
POWER, INC.
Index
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Page
No.
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PART
I. FINANCIAL INFORMATION
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ITEM
1 - Unaudited Financial statements
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1
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Balance
Sheets as of October 31, 2010 and July 31, 2010
(Unaudited)
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2
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Statements
of Operations for the Three Months Ended October 31, 2010 and 2009
(Unaudited)
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3
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Statements
of Cash Flows for the Three Months Ended October 31, 2010 and 2009
(Unaudited)
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4
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Statement
of Stockholders Deficiency (Unaudited)
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5
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Notes
to Unaudited Financial Statements
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6
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ITEM
2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations.
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12
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ITEM
3 - Quantitative and Qualitative Disclosures About Market
Risk
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14
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ITEM
4T - Controls and Procedures.
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14
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PART
II. OTHER INFORMATIION
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ITEM
6 - Exhibits
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14
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Certain information and footnote
disclosures required under accounting principles generally accepted in the
United States of America have been condensed or omitted from the following
financial statements pursuant to the rules and regulations of the Securities and
Exchange Commission. It is suggested that the following financial statements be
read in conjunction with the year-end financial statements and notes thereto
included in the Company's Annual Report on Form 10K for the year ended July 31,
2010. In the opinion of management, all adjustments considered necessary for a
fair presentation of the results of operations and financial position have been
included and all such adjustments are of a normal recurring nature.
The results of operations for the three
months ended October 31, 2010 and 2009 are not necessarily indicative of the
results for the entire fiscal year or for any other period.
1
Superlattice
Power, Inc.
(A
Development Stage Company)
(Unaudited)
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October 31,
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July 31,
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|||||||
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2010
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2010
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Assets
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||||||||
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Current
assets:
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||||||||
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Cash
and Cash equivalents
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$ | 128 | $ | 158 | ||||
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Total
current assets
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128 | 158 | ||||||
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Property
and equipment, net
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69,852 | 72,719 | ||||||
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Total
assets
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$ | 69,980 | $ | 72,877 | ||||
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Liabilities
and Stockholders' Deficiency
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||||||||
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Current
liabilities:
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||||||||
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Accounts
payable and accrued expenses
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$ | 1,145,765 | $ | 1,076,413 | ||||
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Notes
payable
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912,272 | 841,207 | ||||||
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Due
to related parties
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4,321,358 | 4,321,358 | ||||||
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Total
current liabilities
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$ | 6,379,395 | $ | 6,238,978 | ||||
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Commitments
and contingencies
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Stockholders'
deficiency:
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Preferred
stock, $.001 par value. 10,000,000 shares authorized, 0 issued and
outstanding
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Common
stock, $.001 par value, 750,000,000 shares authorized, 345,000,000 issued
and
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outstanding
at October 31, 2010 and 115.000,000 at October 31, 2009
respectively
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345,000 | 345,000 | ||||||
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Additional
paid-in capital
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(211,082 | ) | (211,082 | ) | ||||
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Accumulated
deficit
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(6,443,333 | ) | (6,300,019 | ) | ||||
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Stockholders'
deficiency
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(6,309,415 | ) | (6,166,101 | ) | ||||
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Total
liabilities and stockholders' deficiency
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$ | 69,980 | $ | 72,877 | ||||
See
accompany notes to unaudited financial statements
2
Superlattice
Power, Inc.
(A
Development Stage Company)
(Unaudited)
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For the Three Months Ended
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For the Period
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October
31,
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August 1, 2008 -
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2010
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2009
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October
31,
2010
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Net
Sales
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$ | - | $ | - | $ | - | ||||||
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Operating
expenses:
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General
and administrative
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25,247 | 33,771 | 446,484 | |||||||||
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Research
and development
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9,145 | 50,474 | 417,892 | |||||||||
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Loss
from operations
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(34,392 | ) | (84,245 | ) | (864,376 | ) | ||||||
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Other
expenses/(income)
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Interest
expense
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(108,922 | ) | (114,332 | ) | (973,378 | ) | ||||||
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Net
loss before provision for (benefit from) income taxes
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(143,314 | ) | (198,577 | ) | (1,837,754 | ) | ||||||
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Provision
for (benefit from) income taxes
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- | - | - | |||||||||
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Net
loss
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$ | (143,314 | ) | $ | (198,577 | ) | $ | (1,837,754 | ) | |||
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Net
loss per common share - basic and diluted
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$ | (0.00 | ) | $ | (0.00 | ) | ||||||
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Weighted
average number of common shares outstanding -
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basic
and diluted
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345,000,000 | 345,000,000 | ||||||||||
See
accompanying notes to unaudited financial statements
3
Superlattice
Power, Inc.
(A
Development Stage Company)
(Unaudited)
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For the Three Months Ended
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For the Period
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October
31,
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August 1, 2008 -
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2010
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2009
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October
31,
2010
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CASH
FLOWS FROM OPERATING ACTIVITIES:
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Net
Loss
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$ | (143,314 | ) | $ | (198,577 | ) | $ | (1,837,753 | ) | |||
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Adjustments
to reconcile net loss to net cash utilized by operating
activities
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Depreciation
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2,867 | 3,010 | 83,791 | |||||||||
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Increase
(decrease) in cash flows from changes in operating assets and
liabilities
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Accounts
payable and accrued expenses
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69,352 | 107,223 | 980,549 | |||||||||
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Net
cash used in operating activities
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(71,095 | ) | (88,344 | ) | (773,413 | ) | ||||||
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CASH
FLOWS FROM INVESTING ACTIVITIES:
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Additions
to property and equipment
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- | - | (17,015 | ) | ||||||||
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Net
cash utilized in investing activities
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- | - | (17,015 | ) | ||||||||
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CASH
FLOWS FROM FINANCING ACTIVITIES:
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Proceeds
from issuance of debt
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71,065 | 113,346 | 1,354,052 | |||||||||
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Advances
from related parties
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- | 55,400 | 977,143 | |||||||||
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Payments
for debt
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- | (10,800 | ) | (441,781 | ) | |||||||
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Payments
to related parties
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- | (69,700 | ) | (1,114,553 | ) | |||||||
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Net
cash provided by financing activities
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71,065 | 88,246 | 774,861 | |||||||||
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CHANGE
IN CASH AND CASH EQUIVALENTS
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Net
increase (decrease) in cash and cash equivalents
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(30 | ) | (98 | ) | (15,567 | ) | ||||||
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Cash
and cash equivalents at beginning of year
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158 | 191 | 15,695 | |||||||||
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Cash
and Cash equivalents at end of year
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$ | 128 | $ | 93 | $ | 128 | ||||||
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SUPPLEMENTAL
CASH FLOW DISCLOSURES
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Cash
paid during the period for:
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Interest
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$ | - | $ | - | $ | - | ||||||
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Income
taxes
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$ | - | $ | - | $ | - | ||||||
See
accompanying notes to unaudited financial statements
4
Superlattice
Power, Inc.
(A
Development Stage Company)
Statement
of Stockholders' Deficiency
For
the Periods Ended As Noted
(Unaudited)
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Common
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||||||||||||||||||||
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Number of
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Shares $0.001
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Additional paid
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Accumulated
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|||||||||||||||||
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Common Shares
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Par Value
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in capital
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Deficit
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Total
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Balance
- August 1, 2009
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115,000,000 | $ | 115,000 | $ | 18,918 | $ | (5,503,070 | ) | $ | (5,369,152 | ) | |||||||||
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Three-for-one
stock split
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230,000,000 | 230,000 | (230,000 | ) | - | - | ||||||||||||||
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Net
Loss
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- | - | - | (796,949 | ) | (796,949 | ) | |||||||||||||
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Balance
- July 31, 2010
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345,000,000 | $ | 345,000 | $ | (211,082 | ) | $ | (6,300,019 | ) | $ | (6,166,101 | ) | ||||||||
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Net
Loss
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- | - | - | (143,314 | ) | (143,314 | ) | |||||||||||||
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Balance
- October 31, 2010
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345,000,000 | $ | 345,000 | $ | (211,082 | ) | $ | (6,443,333 | ) | $ | (6,309,415 | ) | ||||||||
See
accompanying notes to unaudited financial statements
5
SUPERLATICE
POWER, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO UNAUDITED FINANCIAL STATEMENTS
October
31, 2010
Superlattice
Power, Inc. (the “Company” or “Superlattice Power”) (formerly Zingo, Inc.),
following the sale as of May 15, 2008, of its VoIP telecommunications business,
intends to concentrate its efforts on further development of the lithium
batteries technology licensed from Li-ion Motors Corp., the Company’s former
parent (“Li-ion Motors”).
As of
August 1, 2008, the Company is considered a development stage enterprise as
defined in the Financial Accounting Standards Board (“FASB”) Accounting
Standards Codification (“ASC”) 915, “Development Stage Entities” (“ASC
915”). The Company has limited revenue to date, continues to raise
capital and there is no assurance that ultimately the Company will achieve a
profitable level of operations.
The
summary of significant accounting policies is presented to assist in the
understanding of the financial statements. The financial statements and notes
are the representations of management. These accounting policies conform to
accounting policies generally accepted in the United States of America and have
been consistently applied in the preparation of the financial
statements.
On July
1, 2009, FASB established ASC as the primary source of authoritative Generally
Accepted Accounting Principles (“GAAP”) recognized by the FASB to be applied by
nongovernmental entities. Although the establishment of the ASC did
not change current GAAP, it did change the way we refer to GAAP throughout this
document to reflect the updated referencing convention.
History
and Nature of Business
On April
15, 2008, Li-ion Motors sold its controlling interest of the Company’s
outstanding common stock to Blue Diamond Investments, Inc. With the sale of our
VoIP telecommunications business, named Zingo Telecom, Inc., on May 15, 2008 the
Company intends to concentrate efforts on further development of the lithium
batteries technology licensed from Li-ion Motors, the Company’s former
parent.
Effective
April 15, 2008, the Company entered into a License Agreement (“License
Agreement”) with Li-ion Motors providing for Li-ion Motors' license to the
Company Li-ion Motors patent applications and technologies for rechargeable
lithium-ion batteries for hybrid vehicles and other applications (“Licensed
Products”)
Under the
License Agreement, Li-ion Motors has the right to purchase its requirements of
lithium ion batteries from the Company, and its requirements of lithium ion
batteries shall be supplied in preference to, and on a priority basis as
compared with, supply and delivery arrangements in effect for our other
customers. Li-ion Motors' cost for lithium ion batteries purchased
from the Company is the actual manufacturing costs for such batteries for our
fiscal quarter in which Li-ion Motors purchase takes place.
On May
25, 2010 the agreement was amended to grant the Company the exclusive license
rights for the United States and Li-ion Motors may grant other companies rights
elsewhere around the world.
The
Company agreed to invest a minimum of $1,500,000 in each of the first two years
under the License Agreement in development of the technology for the Licensed
Products. In the initial year under the License Agreement, the
Company invested approximately $264,043 in the development of technology, and
therefore is not in compliance with its obligations under this covenant of the
license agreement. Li-ion Motors has advised the Company that it will
not give notice of default against the Company for its failure to comply with
this over the term of the License Agreement.
6
Effective
April 16, 2008, the Company agreed to lease approximately 5,000 square feet of
space in Li-ion Motors’ North Carolina facility. The leased space will be
suitable, and utilized by the Company, for developmental and manufacturing
operations for licensed products pursuant to the license agreement. The leased
space is on a month-to-month basis with a monthly rental of $2,756, the monthly
rental to be escalated five (5%) percent annually. Also effective April 16,
2008, the Company purchased certain equipment and supplies related to the
license agreement from Li-ion Motors for the purchase price of
$29,005.
Basis of
Presentation
The
Company’s financial statements for the three months ended October 31, 2010 have
been prepared on a going concern basis which contemplates the realization of
assets and settlement of liabilities and commitments in the normal course of
business. The Company does not have any revenue and, as of October 31, 2010,
there was a working capital deficit of approximately $6.4 million. Management
recognized that the Company’s continued existence is dependent upon its ability
to obtain needed working capital through additional equity and/or debt financing
and revenue to cover expenses as the Company continues to incur
losses.
Since its
incorporation, the Company financed its operations almost exclusively through
advances from its controlling shareholders. The Company expects to
finance operations through the sale of equity or other investments for the
foreseeable future, as the Company does not receive significant revenue from its
new business operations. There is no guarantee that the Company will
be successful in arranging financing on acceptable terms.
The
Company's ability to raise additional capital is affected by trends and
uncertainties beyond its control. The Company does not currently have
any arrangements for financing and it may not be able to find such financing if
required. Obtaining additional financing would be subject to a number
of factors, including investor sentiment. Market factors may make the
timing, amount, terms or conditions of additional financing unavailable to
it. These uncertainties raise substantial doubt about the ability of
the Company to continue as a going concern. The accompanying financial
statements do not include any adjustments that might result from the outcome of
these uncertainties should the Company be unable to continue as a going
concern.
On
September 17, 2009 the Company’s Board of Directors declared a three-for-one
forward stock split that was effected in the form of a stock dividend. All share
and per share amounts have been restated to reflect the three-for-one forward
stock split except for stockholders’ deficiency. See Note 6, “Common Stock,” for
further discussion.
The
Company’s significant accounting policies are summarized in Note 1 of the
Company’s Annual Report on Form 10-K for the year ended July 31,
2010. There were no significant changes to these accounting policies
during the three months ended October 31, 2010 and the Company does not expect
that the adoption of other recent accounting pronouncements will have a material
impact on its financial statements.
Reclassifications
Certain
prior period amounts have been reclassified to conform with current period
presentations.
The
Company utilizes the accounting guidance for fair value measurements and
disclosures for all financial assets and liabilities and nonfinancial assets and
liabilities that are recognized or disclosed at fair value in the condensed
financial statements on a recurring basis or on a nonrecurring basis during the
reporting period. The fair value is an exit price, representing the
price that would be received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants based upon the best use of
the asset or liability at the measurement date. The Company utilizes
market data or assumptions that market participants would use in pricing the
asset or liability. The accounting guidance establishes a three-tier
fair value hierarchy, which prioritizes the inputs used in measuring fair
value. These tiers are defined as follows:
7
Level 1
- Observable inputs such as quoted market prices in active
markets
Level 2
- Inputs
other than quoted prices in active markets that are either directly or
indirectly observable
Level 3
- Unobservable inputs
about which little or no market data exists, therefore requiring an entity to
develop its own assumptions
As of
October 31, 2010, the Company held certain financial assets that are measured at
fair value on a recurring basis. These consisted of cash and cash
equivalents. The fair values of the cash and cash equivalents is
determined based on quoted market prices in public markets and is categorized as
Level 1. The Company does not have any financial assets measured at
fair value on a recurring basis as Level 3 and there were no transfers in or out
of Level 1, Level 2 or Level 3 during the three months ended October 31, 2010
and 2009.
The
following table sets forth by level, within the fair value hierarchy, the
Company’s financial assets accounted for at fair value on a recurring basis as
of October 31, 2010 and July 31, 2010.
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Assets at Fair Value as of October 31, 2010 and July 31, 2010 Using
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||||||||||||||||
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Quoted Prices in
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||||||||||||||||
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Activated Markets for
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Significant Other
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Significant Observable
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||||||||||||||
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Identical Asssets
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Observable Inputs
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Inputs
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||||||||||||||
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Total
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(Level 1)
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(Level 2)
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(Level 2)
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|||||||||||||
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October
31, 2010
|
||||||||||||||||
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Cash
and cash equivalents
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$ | 128 | $ | 128 | $ | - | $ | - | ||||||||
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July
31, 2010
|
||||||||||||||||
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Cash
and cash equivalents
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$ | 158 | $ | 158 | $ | - | $ | - | ||||||||
The
Company has other financial instruments, such as receivables, accounts payable
and other liabilities which have been excluded from the tables
above. Due to the short-term nature of these instruments, the
carrying value of receivables, accounts payable and other liabilities
approximate their fair values. The Company did not have any other
financial instruments with the scope of the fair value disclosure requirements
as of October 31, 2010.
Non-financial
assets and liabilities, such as goodwill and long-lived assets, are accounted
for at fair value on a nonrecurring basis. These items are tested for
impairment on the occurrence of a triggering event or in the case of goodwill,
on at least an annual basis. The Company's annual test on its
long-lived assets indicated that the carrying value of its long-lived assets was
recoverable and that no impairment existed as of the testing date.
Property
and equipment at consists of:
|
October 31, 2009
|
July 31, 2010
|
|||||||
|
Equipment
|
$ | 131,455 | $ | 131,455 | ||||
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Leasehold
improvements
|
26,360 | 26,360 | ||||||
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Property
and equipment, gross
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157,815 | 157,815 | ||||||
|
Less:
Accumulated depreciation
|
(87,963 | ) | (85,096 | ) | ||||
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Property
and equipment, net
|
$ | 69,852 | $ | 72,719 | ||||
Depreciation
expense for the three months ended October 31, 2010 and 2009, was $2,867 and
$3,010, respectively and is included in selling, general and administrative
expenses on the Company’s statement of operations.
8
Accounts
payable and accrued expenses consisted of:
|
October 31, 2010
|
July 31, 2010
|
|||||||
|
Accounts
payable
|
$ | 22,148 | $ | 36,690 | ||||
|
Wages,
paid leave and payroll related taxes
|
21,168 | 23,196 | ||||||
|
Other
accrued expenses
|
2,000 | 25,000 | ||||||
|
Accrued
interest
|
1,100,449 | 991,527 | ||||||
|
Total
|
$ | 1,145,765 | $ | 1,076,413 | ||||
On
September 17, 2009, the Company’s Board of Directors declared a three-for-one
forward stock split of the Company’s common stock that was effected in the form
of a stock dividend. A three-for-one forward split in our common stock was
effective October 19, 2009. The Certificate of Change filed with the Nevada
Secretary of State on September 18, 2009, providing for the forward split,
changed the number of shares of our outstanding common stock from 115,000,000 to
345,000,000, and the number of shares of our authorized common stock increased
in the same ratio, from 250,000,000 to 750,000,000. All share and per share
amounts have been restated to reflect the three-for-one forward stock split
except for stockholders’ deficiency.
See
Note 7 “Net Loss Per Common Share,” for the impact on the Company’s earnings per
share amounts as a result of the stock split. This stock split resulted in the
issuance of 230 million additional shares of common stock.
Loss per
share is computed based on the weighted average number of shares outstanding
during the year. Diluted loss per common share is computed by dividing net loss
by the weighted average number of common shares and potential common shares
during the specified periods. The Company has no outstanding options, warrants
or other convertible instruments that could affect the calculated number of
shares.
The
following table sets forth the reconciliation of the basic and diluted net loss
per common share computations for the three months ended October 31, 2010 and
2009.
|
Three Months Ended
|
Three Months Ended
|
|||||||||||||||||||||||
|
October 31, 2010
|
October 31, 2009
|
|||||||||||||||||||||||
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Income
|
Shares
|
Per-Share
|
Income
|
Shares
|
Per-Share
|
|||||||||||||||||||
|
(Numerator)
|
(Denominator)
|
Amount
|
(Numerator)
|
(Denominator)
|
Amount
|
|||||||||||||||||||
|
Net
Income (Loss)
|
$ | (143,314 | ) | $ | (198,577 | ) | ||||||||||||||||||
|
Basic
EPS
|
(143,314 | ) | 345,000,000 | (0.00 | ) | (198,577 | ) | 345,000,000 | (0.00 | ) | ||||||||||||||
|
Effect
of dilutive securities
|
- | - | ||||||||||||||||||||||
|
Diluted
EPS
|
$ | (143,314 | ) | 345,000,000 | (0.00 | ) | $ | (198,577 | ) | 345,000,000 | (0.00 | ) | ||||||||||||
Net loss
per common share for the three months ended October 31, 2009 has been
revised. This revision was immaterial to the Company’s results of
operations and financial position. See below for further discussion. All share
and per share amounts have been restated to reflect the three-for-one forward
stock split as discussed in Note 6.
9
|
Net
loss
|
$ | (198,577 | ) | |
|
Basic
and diluted loss per common share
|
$ | (0.00 | ) | |
|
Weighted
shares outstanding, basic and diluted
|
115,000,000 |
On April
15, 2008, Blue Diamond assumed Li-ion Motors’ debt due from Superlattice. At
October 31, 2010 and October 31, 2010, Blue Diamond was owed $4,321,358 and
$4,321,358, respectively. During the three months ended October 31, 2010 and
2009, the Company did not receive or make any payments to Blue
Diamond. Interest for the three months ended October 31, 2010 and for
the three months ended October 31, 2009 was $108,922 and
$114,332 respectively. The related party transaction amounts are
reported as current due to the relationship and bear an interest rate of 10 %
per anum.
The
Company's principal financing source in the last two fiscal years has been from
its former parent, Li-ion Motors. At October 31, 2010 and July 31, 2010, the
Company owed Li-ion Motors $912,272 and $841,207,
respectively. During the three months ended October 31, 2010 and
2009, the Company received advances totaling $71,065 and $113,346, respectively;
and made payments totaling $0 and $10,800,
respectively. The advances are interest free. No
term has been set for repayment and no payment is expected until the Company has
begun to produce battery cells and has become a profitable venture.
At
October 31, 2010 and July 31, 2010, the Company has deferred tax assets as a
result of the net operating losses incurred from inception. The resulting
deferred tax assets are reduced by a valuation allowance as discussed in Note 1,
equal to the deferred tax asset as it is unlikely, based on current
circumstances, that the Company will ever realize a tax benefit. Deferred tax
assets and the corresponding valuation allowances amounted to approximately
$1,638,000 and $1,588,000 at October 31, 2010 and July 31, 2010, respectively.
The statutory tax rate is 35% and the effective tax rate is zero.
Under
current tax laws, the cumulative operating losses incurred amounting to
approximately $4,680,000 and $4,536,000 at October 31, 2010 and July 31,2010
respectively, will begin to expire in 2029.
Section
382 of the U.S. Internal Revenue Code imposes an annual limitation on loss
carry-forwards to offset taxable income when an ownership change
occurs. The Company meets the definition of an ownership change and
some of the net operating loss carry-forwards will be limited.
Superlattice
Power, Inc entered into a month to month lease agreement with Li-ion Motors for
5,000 square feet within Li-ion Motors’ Mooresville facility on April 16, 2008
at the rate of $2,756. Approximately 80% of this space has been converted
into offices, and battery development workshop including a dry
room.
Total
rent expense for the three months ended October 31, 2010 and 2009, was $10,519
and $10,125, respectively.
Under
certain circumstances, the Company could possibly be exposed to potential
liability for fines and penalties under the rules and regulations of the Federal
Communications Commission for regulatory compliance issues involving the
Company's former subsidiary Zingo Telecom, Inc., which was sold on May 15, 2008.
The Company would vigorously contest any assertion against it of liabilities
deriving from regulatory compliance issues involving this former
subsidiary.
10
Effective
November 12, 2010, Ayaz Kassim, our sole director and officer, elected and
appointed Mehboob Charania as a director and as President, Treasurer and
Secretary of the Company. Following the appointment of Mr. Charania as a
director and officer, Mr. Kassim resigned as a director and officer of the
Company.
11
Forward
Looking Statements
This quarterly
report contains forward-looking statements that involve risks and
uncertainties. We use words such as anticipate, believe, plan, expect,
future, intend and similar expressions to identify such forward-looking
statements. You should not place too much reliance on these
forward-looking statements. Our actual results are likely to
differ materially from those anticipated in these
forward-looking statements for many reasons, including
the risks faced by us described in this section.
Introduction
We were incorporated on July 15, 2002
under the laws of the State of Nevada. We changed our business in 2008, entering
into a license agreement with Li-ion Motors on April 15, 2008, for the license
of the development of their lithium battery technology, and we sold our Zingo
Telecom, Inc. and M/S Zingo Bpo Services Pvt. Ltd. subsidiaries that offered
telecommunications services to business and residential customers utilizing VoIP
technology on May 15, 2008. To reflect our new business, we changed our
name from Zingo, Inc. to Superlattice Power, Inc. on April 25,
2008.
A three-for-one forward split in our
common stock was effective October 19, 2009. The Certificate of Change filed
with the Nevada Secretary of State on September 18, 2009, for the forward split
changed the number of shares of our outstanding common stock from 115,000,000 to
345,000,000, and the number of shares of our authorized common stock in the same
ratio, from 250,000,000 to 750,000,000.
Results
Of Operations for the Three Months Ended October 31, 2010
We incurred a net loss of
$143,314 during the three months ended October 31, 2010, which included
general and administrative costs of $25,247.
2010
Compared to 2009
Our net loss for the three months ended
October 31, 2010 decreased to $143,314 from $198,577 for the same period ending
October 31, 2009.
Plan
of Operations
Commercial
Initiatives
We are
developing rechargeable lithium ion batteries for power production for a variety
of uses. We plan to pioneer a superlattice cathode material for the
use in lithium ion rechargeable batteries.
License
Agreement with Li-Ion Motors
Effective April 15, 2008, we entered
into a License Agreement with Li-ion Motors, our former controlling stockholder,
providing for Li-ion Motors’ license to us of their patent applications and
technologies for rechargeable lithium-ion batteries for hybrid vehicles and
other applications.
Under the License Agreement, Li-ion
Motors has the right to purchase its requirements of lithium ion batteries from
us, and its requirements of lithium ion batteries shall be supplied in
preference to, and on a priority basis as compared with, supply and delivery
arrangements in effect for our other customers. Li-ion Motors cost for lithium
ion batteries purchased from us will be our actual manufacturing costs for such
batteries for our fiscal quarter in which Li-ion Motors’ purchase takes place.
On May 25, 2010 the Agreement was amended limiting us to only the United States
with Li-ion Motors able to grant other licenses to companies in other parts of
the world.
Under Section 2.2 of the License
Agreement, we have agreed to invest a minimum of $1,500,000 in each of the first
two years of the term of the License Agreement in development of the technology
for the Licensed Products. In the initial year under the License Agreement, we
invested approximately $264,043 in the development of our technology, and
therefore are not in compliance with our obligations under this covenant of the
License Agreement. Li-ion Motors has advised us that it will not give
notice of default against us for our failure to comply with this over the term
of the License Agreement.
12
Effective April 16, 2008, we agreed to
lease approximately 5,000 square feet of space in Li-ion Motors’ North Carolina
facility, such Leased Space to be suitable for, and utilized by us for, our
developmental and manufacturing operations for Licensed Products pursuant to the
License Agreement. The Leased Space is leased by Li-ion Motors to us on a
month-to-month basis at a monthly rental of $2,756, the monthly rental to be
escalated five (5%) percent annually. Effective April 16, 2008, Li-ion Motors
also sold us for the purchase price of $29,005, specified equipment and supplies
related to the licensed intellectual property.
Liquidity
and Capital Resources
As of
October 31, 2010, we had cash on hand of $128 and liabilities of
$6,379,395, as compared with $6,238,978 at July 31, 2010; and our property plant
and equipment decreased to $69,852 at October 31, 2010, as compared with
$72,719 at July 31, 2010. Accounts payable and accrued expenses increased
at October 31, 2010, to $1,145,765 as compared with $1,076,413 at July 31, 2010,
and notes payable increased to $912,272 at October 31, 2010, as compared to
$841,207 at July 31, 2010.
At
October 31, 2010, we had a working capital deficiency of $6,379,268
and a stockholders' deficit of $6,309,415.
We used
net cash in operating activities of $71,095 in the three months ended October
31, 2010, as compared with $88,344 in the comparable period in 2009, and cash
flows used in investing activities for the purchase of property, plant and
equipment was $0 during 2010 and $0 in 2009.
In the
three months ended October 31, 2010, we received and repaid $0 to a related
party as compared with advances from related parties of $55,400 and
repayments of $69,700 in 2009, giving effect to payments to related parties of
$14,300.
During
the three months ended October 31, 2010 we received $71,065 from the proceeds of
issuing a promissory note to Li-ion Motors and repaid $0, with a net effect of
$71,065. During the three months ended October 31, 2009 we received
$113,346 from the proceeds of issuing a promissory note to Li-ion Motors and
repaid $10,800, with a net effect of $102,546.
Since
our incorporation, we have financed our
operations almost exclusively through advances from our controlling
shareholders. We expect to finance operations through the sale of equity or
other investments for the foreseeable future, as we do not receive
significant revenue from our new business operations.
There is no guarantee that we will be
successful in arranging financing on acceptable terms.
Our
ability to raise additional capital is affected by trends and
uncertainties beyond our control. We do not currently have any
arrangements for financing and we may not be able to find such financing
if required. Obtaining additional financing would be
subject to a number of factors, including investor sentiment. Market factors may
make the timing, amount, terms or conditions of additional financing unavailable
to us.
Our
auditors are of the opinion that our continuation as a going concern is in
doubt. Our continuation as a going concern is
dependent upon continued financial support from our shareholders and other
related parties.
Critical
Accounting Issues
The Company's discussion and analysis
of its financial condition and results of operations are based upon
the Company's financial statements, which have been prepared in
accordance with accounting principles generally accepted in
the United States of America. The preparation of the financial
statements requires the Company to make estimates and judgments that
affect the reported amount of assets, liabilities, and expenses, and
related disclosures of contingent assets and liabilities. On an
on-going basis, the Company evaluates its estimates, including those
related to intangible assets, income taxes and contingencies
and litigation. The Company bases its estimates on historical
experience and on various assumptions that are believed to be
reasonable under the circumstances, the results of which form the
basis for making judgments about carrying values of assets and
liabilities that are not readily apparent from other sources. Actual
results may differ from these estimates under different assumptions or
conditions.
13
Commodity Price Risk – The raw
materials for manufacturing our batteries could be affected by changes in the
commodities markets, and if we commence manufacturing our own lithium ion
batteries, we could be subject to this risk.
The
Company's Chief Executive Officer and Principal Financial Officer is primarily
responsible for the accuracy of the financial information that is presented in
this Quarterly Report. This officer has, as of the close of the
period covered by this Quarterly Report, evaluated the Company's disclosure
controls and procedures (as defined in Rules 13a-14c and 15d-14c promulgated
under the Securities Exchange Act of 1934) and determined that such controls and
procedures were effective in ensuring that material information relating to the
Company was made known to him during the period covered by this Quarterly
Report. In such officer’s evaluation, no changes were made to the
Company's internal controls in this period that have materially affected, or are
reasonably likely materially to affect, the Company’s internal control over
financial reporting.
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31
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Certification
of Chief Executive Officer and Principal Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002, filed
herewith.
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32
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Certification
of Chief 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, filed
herewith.
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14
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.
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SUPERLATTICE
POWER, INC.
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By:
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/s/ Mehboob Charania
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|
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Chief
Executive Officer and Principal Financial Officer
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Date:
December 1 ,
2010
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15
TABLE OF CONTENTS
Part I. Financial InformationItem 1. Unaudited Financial StatementsNote 1. Financial Statement PresentationNote 2. Summary Of Significant Accounting PoliciesNote 3. Fair Value MeasurementsNote 4. Property and EquipmentNote 5. Accounts Payable and Accrued ExpensesNote 6. Common StockNote 7. Net Loss Per Common ShareNote 8. Related Party TransactionsNote 9. DebtNote 10. Income TaxesNote 11. Commitments and ContingenciesNote 12. Subsequent EventsItem 2. Management's Discussion and Analysis Or Of Financial Conditions and Results Of OperationsItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4T. Controls and ProceduresPart II. Other InformationItem 6. Exhibits