10QSB 1 doc1.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 10-QSB [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended January 31, 2002 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934. For the transition period from ________, 20__, to ________, 20__. Commission File Number 000-32465 --------- MASS MEGAWATTS POWER, INC. -------------------------- (Exact Name of Registrant as Specified in Charter) Massachusetts 04-3402789 ------------- ---------- (State or Other Jurisdiction of (I.R.S. Employer Identification Number) Incorporation or Organization) 11 Maple Avenue, Shrewsbury, MA 01545 -------------------------------------- (Address of Principal Executive Offices) (508) 942-3531 -------------- (Registrant's Telephone Number, Including Area Code) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities 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 --- --- There were 2,075,210 shares of the Registrant's no par value common stock outstanding as of January 31, 2002. Transitional Small Business Format (check one) Yes NO X --- --- Mass Megawatts Power, Inc. (A Development Stage Enterprise) CONTENTS Part I - Financial Information ---------------------------------- Item 1. Financial Statements Item 2. Management's Discussion & Analysis of Financial Condition and Results of Operations Part II - Other Information ------------------------------- Item 1. Legal Proceedings Item 2. Changes in Securities Item 3. Defaults On Senior Securities Item 4. Submission of Matters to a Vote of Security Holders Item 5. Other Matters Item 6. Exhibits and Reports on Form 8-K Signatures ---------- PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Mass Megawatts Power, Inc. (A Development Stage Enterprise) Financial Statements Three and Nine Months Ended January 31, 2002 and 2001 (Unaudited) and the Period May 27, 1997 (Date of Inception) to January 31, 2002 (Unaudited) CONTENTS Financial Statements: Condensed Balance Sheet as of January 31, 2002 (Unaudited) . . . . . . . . 1 Condensed Statements of Operations for the Three and Nine Months Ended January 31, 2002 and 2001 (Unaudited) and for the Period May 27, 1997 (Date of Inception) to January 31, 2002 (Unaudited). . . . . . . . . . . 2 Condensed Statements of Changes in Stockholders' Equity for the Period May 27, 1997 (Date of Inception) to January 31, 2002 (Unaudited) . . . . 3-6 Condensed Statements of Cash Flows for the Nine Months Ended January 31, 2002 and 2001 (Unaudited) and for the Period May 27, 1997 (Date of Inception) to January 31, 2002 (Unaudited) . . . . . . . . . . . . . . . . 7 Notes to Condensed Financial Statements. . . . . . . . . . . . . . . . . . . 8
Mass Megawatts Power, Inc. (A Development Stage Enterprise) Condensed Balance Sheet January 31, 2002 (Unaudited) ASSETS Current assets: Cash $ 47,096 Equipment, net of accumulated depreciation 13,112 ---------- $ 60,208 ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable, trade $ 25,628 ---------- Stockholders' equity: Common stock; no par value; 2,200,000 shares authorized; 2,075,210 shares issued and outstanding 757,651 Deficit accumulated during development stage (723,071) ---------- Total stockholders' equity 34,580 ---------- $ 60,208 ==========
The accompanying notes are an integral part of the condensed financial statements. 1
Mass Megawatts Power, Inc. (A Development Stage Enterprise) Condensed Statements of Operations (Unaudited) May 27, Three Months Ended Nine Months Ended 1997 (Date of January 31, January 31, Inception) to ------------------------ ------------------------ January 31, 2002 2001 2002 2001 2002 ----------- ----------- ----------- ----------- ----------- Revenues: Other income $ 159 $ 148 $ 1,074 $ 383 $ 3,099 ----------- ----------- ----------- ----------- ----------- Expenses: Operating costs and expenses 198,664 72,091 460,738 155,332 722,182 Depreciation 855 244 2,565 244 3,988 ----------- ----------- ----------- ----------- ----------- 199,519 72,335 463,303 155,576 726,170 ----------- ----------- ----------- ----------- ----------- Net loss $ (199,360) $ (72,187) $ (462,229) $ (155,193) $ (723,071) =========== =========== =========== =========== =========== Net loss per share $ (.09) $ (.04) $ (.23) $ (.08) $ (.39) =========== =========== =========== =========== =========== Weighted average number of common shares 2,043,698 1,870,428 1,997,648 1,860,124 1,848,599 =========== =========== =========== =========== ===========
The accompanying notes are an integral part of the condensed financial statements. 2
Mass Megawatts Power, Inc. (A Development Stage Enterprise) Condensed Statements of Changes in Stockholders' Equity For the Period May 27, 1997 (Date of Inception) to January 31, 2002 (Unaudited) Deficit Accumulated Common Stock During -------------------- Development Shares Amount Stage Total ---------- -------- --------- ------- Balance, May 27, 1997 $ 0 $ 0 $ 0 $ 0 Issuance of common stock in settlement of a payable (June 1997) 1,800,000 3,744 3,744 Net loss for the period (1,584) (1,584) ---------- -------- --------- ------- Balance, April 30, 1998 1,800,000 3,744 (1,584) 2,160 Net loss for the year (1,905) (1,905) ---------- -------- --------- ------- Balance, April 30, 1999 1,800,000 3,744 (3,489) 255 Issuance of common stock for cash (April 2000)* 40,200 90,450 90,450 Net loss for the year (8,142) (8,142) ---------- -------- --------- ------- Balance, April 30, 2000 1,840,200 94,194 (11,631) 82,563 Issuance of common stock for cash (October 2000)* 9,300 20,925 20,925 Issuance of common stock for cash (November 2000)* 12,700 28,575 28,575 Issuance of common stock for services (November 2000)* 3,843 8,647 8,647 Issuance of common stock for cash (December 2000)* 13,228 29,763 29,763 Issuance of common stock for services (December 2000)* 310 698 698
The accompanying notes are an integral part of the condensed financial statements. 3
Mass Megawatts Power, Inc. (A Development Stage Enterprise) Condensed Statements of Changes in Stockholders' Equity For the Period May 27, 1997 (Date of Inception) to January 31, 2002 (Unaudited) Deficit Accumulated Common Stock During --------------------- Development Shares Amount Stage Total ---------- --------- --------- -------- Issuance of common stock for a vehicle (December 2000)* 6,500 14,625 14,625 Issuance of common stock for cash (January 2001)* 1,074 2,417 2,417 Issuance of common stock for services (January 2001)* 1,138 2,561 2,561 Issuance of common stock for cash (February 2001)* 9,045 20,350 20,350 Issuance of common stock for services (February 2001)* 400 900 900 Issuance of common stock for cash (March 2001)* 9,150 20,588 20,588 Issuance of common stock for services (March 2001)* 91 205 205 Issuance of common stock for a computer (March 2001)* 1,100 2,475 2,475 Issuance of common stock for cash (April 2001)* 14,176 31,896 31,896 Issuance of common stock for services (April 2001)* 2,048 4,607 4,607 Net loss for the year (249,211) (249,211) ---------- --------- --------- -------- Balance, April 30, 2001 1,924,303 283,426 (260,842) 22,584
The accompanying notes are an integral part of the condensed financial statements. 4
Mass Megawatts Power, Inc. (A Development Stage Enterprise) Condensed Statements of Changes in Stockholders' Equity For the Period May 27, 1997 (Date of Inception) to January 31, 2002 (Unaudited) Deficit Accumulated Common Stock During --------------------- Development Shares Amount Stage Total ---------- --------- --------- ------- Issuance of common stock for cash (May 2001)* 54,903 123,532 123,532 Issuance of common stock for services (May 2001)* 15,014 33,781 33,781 Issuance of common stock for cash (June 2001)* 9,963 22,417 22,417 Issuance of common stock for cash (July 2001)* 1,000 2,250 2,250 Issuance of common stock for services (July 2001)* 3,145 7,076 7,076 Issuance of common stock for cash at $3.12 per share (August 2001) 6,212 19,381 19,381 Issuance of common stock for services at $3.12 per share (September 2001) 20,000 62,438 62,438 Net loss for the period (262,869) (262,869) ---------- --------- --------- ------- Balance, October 31, 2001 2,034,540 554,301 (523,711) 30,590 Issuance of common stock for cash at $5.00 per share (November 2001) 1,800 9,000 9,000
The accompanying notes are an integral part of the condensed financial statements. 5
Mass Megawatts Power, Inc. (A Development Stage Enterprise) Condensed Statements of Changes in Stockholders' Equity For the Period May 27, 1997 (Date of Inception) to January 31, 2002 (Unaudited) Deficit Accumulated Common Stock During ------------------- Development Shares Amount Stage Total --------- -------- ---------- ---------- Issuance of common stock for services at $5.00 per share (December 2001) 180 900 900 Issuance of common stock for cash at $5.00 per share (December 2001) 38,690 193,450 - 193,450 Net loss for the period (199,360) (199,360) --------- -------- ---------- ---------- Balance, January 31, 2002 2,075,210 $757,651 $(723,071) $ 34,580 ========= ======== ========== ========== *Common stock issued at $2.25 per share.
The accompanying notes are an integral part of the condensed financial statements. 6
Mass Megawatts Power, Inc. (A Development Stage Enterprise) Condensed Statements of Cash Flows (Unaudited) May 27, Nine Months Ended 1997 (Date of January 31, Inception) to ---------------------- January 31, 2002 2001 2002 ---------- ---------- ---------- OPERATING ACTIVITIES Net loss $(462,229) $(155,193) $(723,071) ---------- ---------- ---------- Adjustments to reconcile net loss to net cash used by operating activities: Issuance of common stock in exchange for services and operating expenses 104,195 11,906 125,557 Depreciation 2,565 244 3,988 (Decrease) increase in: Accounts payable (7,852) 3,711 25,628 Accrued expenses (456) ---------- ---------- ---------- Total adjustments 98,908 15,405 155,173 ---------- ---------- ---------- Net cash used by operating activities (363,321) (139,788) (567,898) ---------- ---------- ---------- FINANCING ACTIVITIES Proceeds from issuance of common stock 370,030 81,680 614,994 ---------- ---------- ---------- NET INCREASE (DECREASE) IN CASH 6,709 (58,108) 47,096 CASH AT BEGINNING OF PERIOD 40,387 83,381 ---------- ---------- ---------- CASH AT END OF PERIOD $ 47,096 $ 25,273 $ 47,096 ========== ========== ========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: During the year ended April 30, 2001, the Company exchanged 7,600 shares of common stock valued at $17,100 for a vehicle and a computer.
The accompanying notes are an integral part of the condensed financial statements. 7 Mass Megawatts Power, Inc. (A Development Stage Enterprise) Notes to Condensed Financial Statements Three and Nine Months Ended January 31, 2002 and 2001 (Unaudited) and the Period May 27, 1997 (Date of Inception) to January 31, 2002 (Unaudited) 1. CONDENSED FINANCIAL STATEMENTS In the opinion of management, all adjustments consisting only of normal recurring adjustments necessary for a fair statement of (a) the results of operations for the three- and nine-month periods ended January 31, 2002 and 2001 and the period May 27, 1997 (date of inception) to January 31, 2002, (b) the financial position at January 31, 2002, and (c) cash flows for the nine-month periods ended January 31, 2002 and 2001 and the period May 27, 1997 (date of inception) to January 31, 2002, have been made. The unaudited condensed financial statements and notes are presented as permitted by Form 10-QSB. Accordingly, certain information and note disclosures normally included in condensed financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted. The accompanying condensed financial statements and notes should be read in conjunction with the audited financial statements and notes of the Company for the fiscal year ended April 30, 2001. The results of operations for the three- and nine-month periods ended January 31, 2002 are not necessarily indicative of those to be expected for the entire year. Certain minor reclassifications have been made in the 2001 condensed financial statements to conform to the classifications used in 2002. 2. GOING CONCERN The accompanying condensed financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liabilities. As the Company has no revenues from operations, operating losses have been incurred each period since inception, resulting in an accumulated deficit of approximately $(723,000) and negative cash flows from operations of approximately $(363,000) for the nine-month period ended January 31, 2002. Currently, management is soliciting additional equity investors to fund these losses until such time as revenues can be generated from operations. However, these conditions raise substantial doubt about the Company's ability to continue as a going concern. The condensed financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. 8 PART I - FINANCIAL INFORMATION ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION THIS FILING CONTAINS FORWARD-LOOKING STATEMENTS. THE WORDS "ANTICIPATED," "BELIEVE," "EXPECT," "PLAN," "INTEND," "SEEK," "ESTIMATE," "PROJECT," "WILL," "COULD," "MAY," AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. THESE STATEMENTS INCLUDE, AMONG OTHERS, INFORMATION REGARDING FUTURE OPERATIONS, FUTURE CAPITAL EXPENDITURES, AND FUTURE NET CASH FLOW. SUCH STATEMENTS REFLECT THE COMPANY'S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND FINANCIAL PERFORMANCE AND INVOLVE RISKS AND UNCERTAINTIES, INCLUDING, WITHOUT LIMITATION, GENERAL ECONOMIC AND BUSINESS CONDITIONS, CHANGES IN FOREIGN, POLITICAL, SOCIAL, AND ECONOMIC CONDITIONS, REGULATORY INITIATIVES AND COMPLIANCE WITH GOVERNMENTAL REGULATIONS, THE ABILITY TO ACHIEVE FURTHER MARKET PENETRATION AND ADDITIONAL CUSTOMERS, AND VARIOUS OTHER MATTERS, MANY OF WHICH ARE BEYOND THE COMPANY'S CONTROL. SHOULD ONE OR MORE OF THESE RISKS OR UNCERTAINTIES OCCUR, OR SHOULD UNDERLYING ASSUMPTIONS PROVE TO BE INCORRECT, ACTUAL RESULTS MAY VARY MATERIALLY AND ADVERSELY FROM THOSE ANTICIPATED, BELIEVED, ESTIMATED, OR OTHERWISE INDICATED. CONSEQUENTLY, ALL OF THE FORWARD-LOOKING STATEMENTS MADE IN THIS FILING ARE QUALIFIED BY THESE CAUTIONARY STATEMENTS AND THERE CAN BE NO ASSURANCE OF THE ACTUAL RESULTS OR DEVELOPMENTS. Mass Megawatts Power, Inc. (the "Company") cautions readers that in addition to important factors described elsewhere, the following important facts, among others, sometimes have affected, and in the future could affect, the Company's actual results, and could cause the Company's actual results during 2002 and beyond to differ materially from those expressed in any forward-looking statements made by, or on behalf of the Company. The Company has not had revenues from operations since its inception, but anticipates raising funds in the near future. Specifically, the Company plans to file a private placement memorandum under the Securities Act of 1933 under Regulation D, Rule 506, selling shares of its common stock to raise up to $200,000. The Company anticipates that approximately $120,000 of this money will be used to develop a full-scale power plant prototype to be utilized for manufacturing. The Company also anticipates that approximately $20,000 will be used toward the test and data analysis and approximately $60,000 will be used for administration, working capital, marketing, and advertising. The Company believes that it has sufficient funds to fund its operations for a minimum of three months following January 31, 2002. Although no assurance can be given, the Company expects to raise $200,000 from the private placement offering and, with those funds, expects to be able to fund its operations for an additional three months. Without the additional equity investors, there is substantial doubt about the Company's ability to continue as a going concern. 9 The Company shows a loss in the most recent fiscal quarter. The loss was related mostly to the development of a prototype, including engineering work. Other costs include development of site locations for future projects, as well as administrative expenses. The Company has only two years of operating results and much uncertainty exists about the Company's future as a result of the lack of historical operating data for several years. The lack of long-term experience in new product development could have an adverse impact on the Company. However, as far as the Company's market share is concerned, there is expected to be little significant negative impact on the Company's operating results from any changes in the underlying economics of the industry within the next 12 months; the market for electricity is large enough, whereas the Company's overall market share objective has little or no impact on the much larger electricity market. The wind industry is favorably impacted by new legislation and regulations toward a cleaner air environment. This trend toward wind generated electricity continues to grow, particularly in view of the non-polluting nature of wind generation and its endless renewable source. However, there remains some uncertainty on whether or not the federal or state governments will continue with favorable environmental legislation despite popular support toward renewable energy. The electric power industry is undergoing a period of deregulation and restructuring that is similar to the telecommunication deregulation of the 1980's. It is impossible to predict whether this change will have a favorable or negative impact for the industry as a whole. However, restructuring can present more advantages and opportunities for the Company's very competitive product in competing vigorously in the new marketplace. OPERATION SUMMARY The highest priority will continue to be constructing power plant prototypes in the near future. New parts from earlier versions may be needed and there is cash reserved for potential contingencies. The next priority is our marketing program. The first effort will be toward developing strategic alliances with other wind power developers who have done the initial steps of zoning, financing, and other requirements toward developing successful wind energy projects. The developers would benefit from the Company's new and more cost effective product. As our next priority, working capital and administrative support will be used for contingencies on an "as needed" basis. On November 12, 2001, the Company was cleared by the NASD to begin public trading. The Company's ticker symbol is MMGW and can be found on the Over The Counter Bulletin Board, more commonly described as OTC-BB: MMGW. Also, recent news articles on the Company, and the latest developments of its first prototype, can be found on the front page of the business section of the November 6, 2001 Telegram and Gazette, and on the front page of the November 1, 2001 Daily Southbridge News. 10 The Company is planning to build a full size MAT (Multiaxis Turbosystem), which has dimensions as follows: 130' x 80' x 40', consisting of 512 three-feet diameter blades that are mounted vertically on shafts that power the generators located at the bottom of the turbine. The lattice structure of the MAT provides for a definite advantage in its stiffness to weight ratio and reduces the weight by a very substantial 50 percent. The theory behind using numerous smaller blades rather than three large blades, as is found in current wind turbines, is best explained by the following analysis. As the output increases with the square of the length, the weight of the blade using the same material and design increases with the cube of the length. In other words, a rotor ten times the diameter will weigh a thousand times as much and only capture a hundred times as much wind. In short, a rotor that is ten times larger, as found in current turbines, is capturing one-tenth the amount of energy in the wind when compared to its mass. The final design of the MAT was the result of over ten long years of diligent research, evaluation, and analysis of current wind turbines. The focus of this research specifically addressed the problems with vertical axis turbines. A wind tunnel was constructed in Worcester, Massachusetts, which can bring airflow to a desired velocity to test and analyze the blades for structural and mechanical properties, as well as power curve measurements. One MAT in a class V wind zone, an annual wind average of 15 mph, can produce one million kilowatt hours of electricity in one year. In other words, enough energy to supply 150 homes with energy for one year. In a class VI wind zone, such as some mountain passes in Southern California where wind farms have been existing for over 20 years, one MAT can supply enough power for 200 to 300 homes annually. EMPLOYEES As of January 31, 2002, the Company had three employees, two of which are employed on a part-time basis. The Company has retained all other members of the management team as consultants. The Company believes its employee relations to be good and no significant changes in the number of employees are expected. STRATEGY AND MARKETING The Company plans to approach the simplest method of initial market penetration and then sell directly to the California Power Exchange. The Company will try to avoid difficulties of evaluating wind resources, obtaining siting, financing, and locating potential purchasers of power plants by redeveloping abandoned or obsolete wind farms. Our strategy places turbines in high wind areas where the purchase contracts from utilities for wind energy are already available. 11 DISTRIBUTION Although little marketing is required for profitable trades on the power exchanges, the Company will, at some time in the future, seek a higher price for each kilowatt/hour sold. When the Company pursues this effort, sales and service activities will be handled through strategic alliances with new and emerging electric power brokers, which have formed as a result of deregulation in the retail sale of electricity. Power brokers buy blocks of electricity in megawatt/hour units. For example, a power broker would enter into a contract to purchase 10,000 megawatts/hours of electricity for $400,000 over a period of one year and provides a five percent non-refundable deposit on each block of electricity reserved for future purchase. Such brokers include All Energy, Green Mountain Resources, and Energy Vision. Electricity choice, which helps negotiate consumer electric sales, is another marketing resource for the Company's products. The Company will aggressively promote its products to brokers, focusing on cost savings and environmental benefits. It will also solicit bids from power brokers, most of whom are registered in the states in which they do business. Compensation to brokers is straightforward and is typically a percentage of power sales. 12 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS During the three- and nine-month periods ended January 31, 2002, there were no legal proceedings against the Company. ITEM 2. CHANGES IN SECURITIES During the three- and nine-month periods ended January 31, 2002, there was no modification of any instruments defining the rights of holders of the Company's common stock and no limitation or qualification of the rights evidenced by the Company's common stock as a result of the issuance of any other class of securities or the modification thereof. During the nine months ended January 31, 2002, the Company issued the following shares of stock: Common stock for cash at $2.25 per share (May 2001) 54,903 Common stock for services at $2.25 per share (May 2001) 15,014 Common stock for cash at $2.25 per share (June 2001) 9,963 Common stock for cash at $2.25 per share (July 2001) 1,000 Common stock for services at $2.25 per share (July 2001) 3,145 Common stock for cash at $3.12 per share (August 2001) 6,212 Common stock for services at $3.12 per share (September 2001) 20,000 Common stock for cash at $5.00 per share (November 2001) 1,800 Common stock for services at $5.00 per share (December 2001) 180 Common stock for cash at $5.00 per share (December 2001) 38,690 The stock was valued at its fair market value. These shares are not registered under the Securities Act of 1933 and have been offered under an exemption for offerings not involving a public offering. ITEM 3. DEFAULTS ON SENIOR SECURITIES During the three- and nine-month periods ended January 31, 2002, the Company was not in default on any of its indebtedness. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS During the three- and nine-month periods ended January 31, 2002, the Company did not submit any matters to a vote of its security holders. 13 ITEM 5. OTHER MATTERS In May 1999, the Company purportedly executed a document with an individual who represented that he had valuable technology and patents relevant to the Company's business that he would transfer to the Company, and represented that he would assist the Company in financing activities. Under this document, the Company would transfer shares of capital stock to the individual in exchange for the patents and technology and his services in connection with the financing. The Company subsequently determined that this individual's representation that he had valuable patents and technology relevant to the Company's business was fraudulent. The Company did not receive any material services from this individual relating to its financing activities, and never received any financing from sources introduced by this individual. The individual is now claiming the right to 20 percent of the Company's outstanding shares under this document. The Company does not believe that it has an obligation to issue any shares to this individual. Counsel of the Company has reviewed the matter and advised the Company that it is highly unlikely that this individual would recover a material number of shares if he brought a lawsuit against the Company. The Company is aware of an identical contemporaneous document giving a second individual the right to ten percent of the Company's shares for the same consideration. No claim has been made based on the second document. If a claim were made, the Company's conclusions regarding the validity and likelihood of success would be the same as they are with respect to the first claim. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits - None (b) Reports on Form 8-K - None 14 SIGNATURES ---------- Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned, thereto duly authorized: MASS MEGAWATTS POWER, INC. Dated: , 2002 By: /s/ -------------- --------------------------------- Dated: , 2002 By: /s/ -------------- --------------------------------- Dated: , 2002 By: /s/ -------------- --------------------------------- 15