ITEM 1. DESCRIPTION OF BUSINESS
GENERAL DEVELOPMENT OF BUSINESS
Mass Megawatts Wind Power Inc., a Massachusetts Corporation ("Mass Megawatts" or the "Company") is in the business of producing wind turbines and selling wind generated electricity. The Company was organized under the laws of the Commonwealth of Massachusetts on May 27, 1997 as Mass Megawatts, Inc. and changed its name to Mass Megawatts Power, Inc. on January 2, 2001. Mass Megawatts Power, Inc. changed its name again on February 27, 2002 to Mass Megawatts Wind Power, Inc.
There has been no bankruptcy, receivership, or proceeding in the Company's history. No event has occurred involving material reclassification, merger, consolidation, or significant amount of assets purchased or sold not pertaining to the ordinary course of business. Mass Megawatts has not recorded any significant revenue since its inception and there is substantial doubt about the going concern status of the company without additional funding.
COMPANY SUMMARY
Mass Megawatts plans to build and operate wind energy power plants and plans to sell the electricity to the electric power exchange. The Company also plans to manufacture and sell solar tracking equipment The Company's technology is projected to compete effectively in the near term with new fossil fuel fired generating facilities at more locations than the current technology. The Company's licensed MultiAxis Turbosystem (MAT) technology (multiple patents granted and pending) is expected to contribute clean, cost-competitive wind energy.
If Mass Megawatts chooses to work through power brokers, the potential exists to sell the environmental correct "green" power at a premium price being higher than conventional fuel sources. Power brokers usually receive a premium of 1.5 cents per kWh above the wholesale price paid on the open market. Therefore, 5.5 cents per kWh is a conservative green market price paid to green power brokers. The market is new and subject to uncertainty including price fluctuations.
The sale of electricity to power brokers is more profitable than selling directly to the electricity commodities market. If the cost of the marketing infrastructure of selling green energy at a 2 cents per kWh premium is justified as opposed to the wholesale contracting of electricity at a lower price, then Mass Megawatts plans to market the electricity to green energy brokers. The green power is energy from clean energy production sources like wind energy in which consumers are willing to pay a premium in order to promote clean energy. Mass Megawatts plans to build and operate wind energy plants and sell the electricity either through contracts with utilities, which is the traditional method for independent power plants, or directly into the open market or electricity commodities market like a merchant plant similar to many natural gas fired power plants. In some cases, we have plans to sell the power plants themselves to large customers or utilities.
LICENSING RIGHTS
Pursuant to a Licensing Agreement dated June 21, 2000, Mass Megawatts has been granted an exclusive sublicense to market, within a limited territory, the MultiAxis Turbosystem (MAT) and associated technology relative to increasing wind velocity cost effectively with the use of external walls or structure to enhance the flow of air velocity for increasing power output. The Multiaxis Turbosystem has several mechanical and structural innovations in order to reduce the cost of wind power. There are also better methods of reducing the amount of material used in order to achieve a desired power output. The MAT is comprised of certain products and technology covered by several applications for United States Letters Patent by Mr. Ricker as well as patent grants in the United States and other countries. The patent rights comprise several innovations related to methods to increase wind velocity. The limited territory is defined as: Massachusetts, New York, New Jersey, Pennsylvania, California, Illinois, Kansas, Michigan, Minnesota, Nebraska, North Dakota, South Dakota, Texas, Vermont, Washington, and Wisconsin. Pursuant to the sublicensing agreement, Mass Megawatts must pay a royalty fee to Mr. Ricker based on two percent of the net sales of Mass Megawatts for the life of the patent of each product being licensed. The Sub licensor is Windstorm International of Putnam, CT who received a license agreement from Jonathan Ricker, Chairman and Chief Executive Officer of Mass Megawatts. Mr. Ricker, who is also the majority shareholder of Windstorm International, is the owner of the patents and patent rights of the licensed technology to Windstorm International. Several of the patents have filed Patent Cooperation Treaty Applications and National Phase patents in many nations and all major countries. The Patent Cooperation Treaty is the method used to simplify the intellectual property protection process standardizing the process with over 150 nations in the world. Since the company is highly dependent on the intellectual property rights for protection and growing the business, it is an important part of the potential success of the Company.
THE PRODUCT
The Company's product is the MultiAxis Turbosystem (MAT). Wind turbines take advantage of a free, clean, inexhaustible power source to convert wind energy into electricity. Each MAT consists of a rectangular fabricated steel frame comprising a series of shafts with each shaft comprising a plurality of turbine blades. The generators feed to a power collector panel which, in turn, connects to the power grid. Each MAT unit is rated at 360 kW which is large enough to power about 100 homes at locations which have an average annual wind speed of greater than 16 miles per hour. There are enough locations in the United States with 16 miles per hour average annual wind velocity to power twenty percent of the nation’s energy supply according to the United State’s Department of Energy.
In order to generate large amounts of cost-efficient energy, conventional turbines (airplane propeller style) require massive and expensive rotors to turn the huge blades. These blades must be of a diameter sufficient to increase the airflow impacting the blade's surface area. As the diameter of the blade increases, so too does the cost of other components. Large blades also create structural stress and fatigue problems in the gearbox, tower, and in the yawing system which turns the turbine into the optimal wind direction.
The MAT reduces blade cost by using a geometrically simple, smaller blade which addresses problems associated with vertical axis turbines. Vertical axis turbines suffer from severe structural stress problems caused by the forces of lift which push the blades back and forth causing heavy cyclical loads. As vertical turbines rotate, wind contacts them first from the left side, then from the right. This constant repetitive motion causes fatigue. The popular propeller, or horizontal version, also has horizontal lift stresses, although at a reduced level since the lift forces are not constantly reversing. MAT's small blade units eliminate the structural fatigue of longer, heavier blades. The need to accurately balance the lightweight blades are less critical. In other words, blades of less than 3 feet in diameter can survive a hurricane unlike the larger blades. It also enables MAT to more efficiently gather the mechanical power of the wind and transfers it to the generators for the production of electrical power. The higher speed of rotation of the smaller blades also allow the use of smaller and less expensive gearboxes in order to increase the rotation of the mechanical forces to power the generators cost effectively. This innovation also allows other critical parts of the wind turbine to be repositioned, thus reducing the structural complexity and cost of construction. For example, the heavy generator and shaft speed increasing device can now be placed at ground level, rather than mounted atop the tower. In conventional wind turbine design, the shaft speed increasing device is typically a heavy gearbox which must be sufficiently rugged to withstand the vibrations of the tower caused by the large blades. The combination of vibrations and yaw (the action of turning the turbine into the wind), causes structural stress.
By locating the drive train and generator at ground level, components with considerable weight or mass can be used. For example, a direct drive generator can be used, eliminating the need for a gearbox. This provides the advantages of variable-speed operation which increases power output at a lower cost. Ground level construction also allows easier access, which reduces maintenance costs.
Other environmental advantages specific to MAT include its noiseless turbines which will ease site permitting, and its high visibility to birds which will prevent them from flying into the rotation area.
BRIEF TECHNICAL OVERVIEW OF PRODUCT ADVANTAGES
Traditionally, wind turbines were supported by a single tower and in many cases with guy wires that lead to a multitude of vibration and frequency related problems. The blades of vertical axis turbines were large and therefore limited in their design and the materials. For example, aluminum extrusion and fiberglass pultrusion were used in the two most serious commercial applications of vertical axis turbines. Due to the large size of the fiberglass blades, transporting them require a straight shape. The strength was limited for the purpose of being able to bend the blades at the place of installation. In other vertical axis wind technology, the aluminum blades could not form a true aerodynamically optimal shape. The blades had to be made of significant length and the available extrusion equipment for the long length and large profiles are not available for producing a structural and aerodynamic blade at a cost competitive price. The patents of both serious commercial prior applications of vertical axis technology are described in "Vertical Axis Wind Turbine" Patent number 4,449,053 and "Vertical Axis Wind Turbine with Pultruded Blades" in Patent number 5,499,904. The MAT overcame the size related disadvantages. One such manufacturing advantage of the MAT includes the cost reduction of using smaller components instead of larger and fewer components. Other advantages include providing more solid blades, which help, resolve cyclical stress advantages include providing inexpensive repair and maintenance with components like the generator, heavy variable speed equipment and gearbox on the ground level while elevating the rotor high above the ground in order to avoid turbulence. The MAT is also easier to construct and uses standard off the shelf items which avoids the need of custom made parts with the exception of the mass-produced blades.
Mass Megawatts Wind Power, Inc. recently announced the company’s entry into the $12 billion, US solar power market with the development of a new solar tracking technology that significantly increases the level of energy produced by solar power systems. This innovative design, combined with substantial government incentives, has created an unprecedented opportunity for residential and commercial electric users.
The patent pending, Mass Megawatts 'Solar Tracking System' (STS) is a complete solar power system that’s designed to continually adjust the position of solar panels to receive the optimal level of direct sunlight throughout the day. Unlike other solar tracking technologies, the Mass Megawatts STS utilizes a low-cost structure that adds stability to the overall solar-power system while improving energy production levels for the customer.
There are many advantages to owning a Solar Tracking System (STS) …
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Increases solar energy production by 30+% over traditional solar power systems
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Provides an affordable, solar-power solution for home and business use
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Reduces (or eliminates) the need to purchase high-priced electricity from the local utility
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Significantly lowers your monthly electric bill with Net Metering.
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Provides an impressive ROI of 20 to 40% with payback occurring within a few years
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Available federal, state, and local incentives can reduce your costs dramatically…
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30% Federal Tax Credit on full purchase price of STS (no limit)
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State rebates, such as the Commonwealth rebate (up to $4,250)
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State Tax credit, such as MA credit of $1,000
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Sale of generated SRECs, which can add thousands in yearly revenue
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Flexible purchase plans offered by Mass Megawatts can limit out-of-pocket costs.
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Mass Megawatts handles everything, including installation and servicing, etc.
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STS is designed to withstand extreme weather and high winds
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Comes with a full performance guarantee from Mass Megawatts
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Helps our environment by reducing the demand for fossil-fuel energy sources that generate harmful CO2 emissions
MARKETS
Wind and solar energy experienced a 20% annual growth for the past five years according the American Wind Energy Association, an industry trade organization , and American Solar Energy Trade Organization. and more information for both wind and solar power can be viewed on AWEA and NREL ( National Renewable Energy Laboratory) web sites and it contains much information on the industry and its markets. Mass Megawatts could receive a selling price of 5 cents or greater per kWh for its clean electricity Recent national surveys show that approximately 40-70% of the population surveyed indicate a willingness to pay a premium for renewable energy. Although 10% of the respondents say they will participate in such a program, actual participation is estimated at 1%. Currently, more than a dozen utilities have green marketing programs. Public Service Company of Colorado, Central and South West Services Corporation of Texas, and Fort Collins Light and Power Company are leading the effort in wind and solar related green electricity marketing.
Although the green market relatively is new, utilities are using two approaches to take advantage of the growing public preference for renewable energy by initiating two approaches. One is offering customers a specific electricity source at a premium. The second approach is giving customers an opportunity to invest in future renewable energy projects.
COMPETITIVE COMPARISON
According to the Electric Power Research Institute, the past 10 years have seen traditional energy costs increase while wind energy costs have declined. Excluding MAT, the advances in technology, larger-scale and more efficient manufacturing processes, and increased experience in wind turbine operations has contributed substantially to this trend. This cost decline is paralleled with a several hundred fold increase in installed wind energy capacity. As a result, maintenance costs have fallen significantly. Wind energy sources comprise less than one percent of the current electricity generating industry.
The current status in wind energy economics compared with alternate energy sources is shown in Figure 1. Values are based on lifetime average cost studies including design, construction, and operations. Prior to the introduction of MAT, the best wind turbines potentially produce electricity at 4.5 per kWh under optimum wind conditions of an average annual wind speed of 16 miles per hour or greater. Although less than 1% of the Earth's surface experiences such conditions, Battelle Pacific Northwest laboratory estimates that wind energy could supply about 20% of the world's electricity using current wind technology. This figure does not factor the potential of MAT. A comparison of the cost of wind generated electricity with more conventional power plants shows wind energy is competitive. The table shown below is supported by information on the web site www.awea.org and many links located on the website.
* At good hydroelectric sites
** In 15 mph average wind speed conditions
*** Depending on size and location of facility, with smaller more remote locations having higher costs
SOURCING
The Company is not dependent upon exclusive or unique suppliers. However, certain custom-made items including bearings and blades will require four to six weeks lead time due to special manufacturing techniques. The Company has identified alternate suppliers if current business relationships cease.
The Company plans to use multiple suppliers, chosen through competitive bidding. The price of materials used is expected to be substantially similar from one vendor to the next due to the availability of raw supplies. The absence of special technologies negates dependence on any one supplier.
INDUSTRY ANALYSIS
According to the U.S. Department of Energy, wind energy is rapidly becoming one of the least expensive and most abundant new sources of electricity with capacity expected to increase and costs decrease over the next two decades. Over the past two decades, the wind energy industry has increasingly studied and improved wind turbine design and operation. Initially, federal research focused on very large utility scale machines each with a capacity potential of 1 to 5 megawatts. Focus continued on larger machines during the 1970's and 1980's when many international corporations developed large wind turbines with 200 ft. blades. In the 1990's, smaller wind turbines gained acceptance as the more viable option and the majority of wind turbines today are intermediate-sized with 50-500 kWh peak capacity. Most turbines being built today are mature propeller-based designs comprising upwind, horizontal axis 3-blades construction with a 500-600 kilowatt rating. These turbines look like giant fans with thin blades and while they have lent credibility to the wind industry within the investment and developer community, the cost of energy from these turbines may be near the upper limit due to size effectiveness and efficiencies of mass production. The acceptance of these propeller-driven turbines is based on many years of testing and experience but the industry's ability to develop more efficient innovations utilizing this design is limited and research potential is exhausted. Still, numerous alternative turbines have been developed and include one-blade and two-blade machines; vertical axis design, variable speed designs; direct drive between blades; generator rather than gearbox.
Not factoring the Company's MAT product, World Energy Council expects new wind capacity worldwide to continue to grow. The continued evolution of this technology is evident with the existence of varying wind turbine designs. However, there is division in the wind industry between those who want to capitalize on the emerging respect the business community has for established, mature wind technology, and those who seek new technologies designed to bring about significant cost reductions. Mass Megawatts chooses to seek new horizons beyond current perception and knowledge by developing new technologies that will significantly reduce wind energy costs. As a result, the Company products can be seen as participants in several different industries.
The Conventional Independent Power Producers (IPP)
The impact of deregulation of the electric utilities is expected to present opportunities for wind-related IPP's according to the Massachusetts Technology Collaborative. With current cost of wind power in limited high wind locations at 4.5 per kWh, the cost of large scale investment in wind energy is the same to the consumer as it would be for more conventional energy sources. In other words, combined gas turbines, modern coal technologies, and wind power in limited locations can all earn enough sufficient to encourage investment if and when the retail sale of the electricity produced is 4.5 per kWh.
The End of Line Industry
Modular sources of power generation at the end of a utility's distribution lines include small wind turbines, diesel generators, and photovoltaics. In growing communities, it is more cost effective to add small power-generating facilities such as wind turbines than to construct expensive new transmission capacity. In many regions, utilities are required to provide electric service and as a result, they are likely to pay a premium for electricity rather than incur the higher cost of constructing new power lines and substations for transport. In these areas, the price per kWh sold is several times higher than the normal selling price.
The Green Industry
In the new era of electric utility restructuring wherein consumers can choose their electricity sources, some are choosing green energy produced from clean and renewable sources such as wind or solar power. These resources are available as a commodity but the green consumer pays a premium for emission-free energy. The American Wind Energy Association in Washington, D.C. states that recent polls show that more than 5% of the general population is willing to pay more for renewable energy.
The Off-Grid Industry
This small industry is for consumers who are not in close proximity to power lines or who choose not to be connected to the grid. The industry includes wind, solar, wood burning furnaces, and small hydropower turbines. Like the green industry, these consumers have a strong environmental awareness. Although the potential market for off-grid energy is less than 1% of the electricity market, the dollar potential is estimated to be as much as $2 billion.
Renewable energy technologies, as well as diesel power, are the major sources of electricity for those who compete in the End of the Line, Green Energy, and Off-Grid industries.
Wind Energy Industry Participants
As wind energy technology gains wider acceptance, competition may increase as large, well-capitalized companies enter the business. Although one or more may be successful, the Company believes that its technological advantage and early entry will provide a degree of competitive protection.
As previously stated, wind energy is booming and it is the fastest growing source of energy worldwide for three consecutive years according to the National Renewable Energy Laboratory in Boulder, Colorado. Some fossil fuel energy companies, regarded for their forward thinking management, see opportunities in wind power development. Over $1.5 billion in worldwide sales of wind power plants has been achieved. The total world investment in wind power projects in 2007 is more than $8.5 billion according the American Wind Energy Association. Following are just a few of the companies involved in wind power, and they represent the largest wind turbine manufactures in the world.
The Danish firm, Vestas, is the world's leading producer of wind turbines and a major exporter of turbines to the United States. An innovator in structural and generator advancements, Vestas has 3,000 employees and its world market share in 2000 was 40%.
Sea West Energy Corporation is a wind farm developer with completed wind power projects totaling nearly 400 megawatts ($500 million). The company has a reputation for quality turbines.
Bonus Windpower of Denmark produce high quality turbines in Europe, located primarily in Wales, and has exported to the U.S.
Nordex of Denmark, Enercon, and DeWind both of Germany, produce turbines with a blade diameter greater than 150 feet.
Nedwind of the Netherlands manufactures turbines for export to the Caribbean and India.
Bergey Windpower produces small turbines; primarily for use where utility grid interconnect lines are not readily available.
As a footnote, recent economic growth in India and China has spurred on wind energy's high growth rate in those countries. As a result, they are world leaders in the demand for wind turbines.
DISTRIBUTION PATTERNS
Distribution begins with identifying energy demand in and near potential power plant sites. Replacement of older or obsolete power plants, as well as growth in the population and the economy, are factors in determining energy demand in identified areas. Assuming a sufficient energy demand, the Company would test the site to determine whether sufficient wind energy resources are available to effectively and efficiently displace current electricity sources, thus reducing pollution from fossil fuel. With a successful analysis, the Company would obtain land right and apply for permits to install and operate a wind power generating plant. In the past, zoning and permitting issues have included noise generated by wind farms; however, the MAT's slower moving blades should help eliminate this issue.
Mass Megawatts is claiming its stake in the growing electric power industry. The Company identifies competition in terms of specific products which fill the same needs as our products. Primary competitors are:
Combined-Cycle Gas Turbines - innovations in this technology have led to lower costs, higher efficiency, and cleaner emissions.
Modern Coal Technologies - New designs, which double or triple reheat scrubber-equipped plants, increase efficiencies and decrease pollution emissions relative to typical reheat designs.
Biomass-generated electricity - Gasifying the biomass to fuel high-efficiency gas turbine systems could be cost competitive with natural gas in the near term. Petroleum, photovoltaic cells and nuclear power are not a current threat to Mass Megawatts since the cost to produce electricity from these sources is higher than that of wind. Cost effective, profitable hydropower is limited to sites on swift moving water sources and with limited ability to increase market share it does not prove a major threat toward wind power.
FOREIGN SALES AND EXPORTS
With the exception of a 50kW project in Hungary, Mass Megawatts Wind Power, Inc. does not have any operations in foreign companies or export sales in the fiscal years ending April 30, 2014 or 2013.
RESEARCH AND DEVELOPMENT COSTS
Research and development costs are charged to operations when incurred and are included in operating expenses. The amounts charged for the years ended April 30, 2014 and 2013 amounted to $13,420 and $13,426, respectively. All of these costs are borne by the Company.
OPERATION SUMMARY
The highest priority is to complete the third party verification of the technology. The purpose is to prove the new product's long term durability in order to be eligible for debt financing and receive more favorable equity financing in the future.
The next priority is our marketing program. While it is true that minimal marketing efforts will be required, there will be some initial marketing of the product to bring it to the attention of potential buyers. Upon successful third party verification, Mass Megawatts can begin developing strategic alliances with other wind power developers who have done the initial more expensive and sometimes complicated steps of zoning, financing and other requirements toward developing much larger commercial wind energy projects. The developers would benefit from Mass Megawatt's new product if it can be proven to be more cost effective in the finance community. No assurance can be given as to the development of a successful new product. However, the third party verification should go a long way toward removing the doubt.
Included in the marketing program, is the initial establishment of strategic alliances with companies involved with green marketing programs. During the third party verification process, Mass Megawatts plans to begin these efforts with "word of mouth" techniques at business organizations and with power brokers. As a lower priority Mass Megawatts may be involved in very limited efforts to include direct advertising to green pricing customers either through direct mail or advertising in the media in conjunction with environmental related events. On a limited budget, the Company plans to be able to determine which marketing methods are most effective by marketing in a very limited geographical area.
As initial marketing efforts including "word of mouth" techniques have matured, the Company plans to advertise in local publications if cash flow allows continued marketing efforts. Again as noted earlier, no assurance can be given as to the development of a successful marketing program. If successful, television and radio advertisement could be utilized.
As our next priority, working capital and administrative support plans to be used for contingencies on an "as needed" basis.
Over the past year, Mass Megawatts has continued to refine the engineering details and construction processes required for commercial production of the Muti-Axis Turbosystem (MAT). These advances are currently being applied to the third party verification and ultimately accelerate worldwide awareness and acceptance of the MAT technology.
In addition, Mass Megawatts has created valuable financial analysis materials to allow our potential customer base to identify effective financing methods. This will facilitate the sale of MAT units going forward.
EMPLOYEES
As of April 30, 2014, the Company had no employees. Jonathan Ricker is an executive officer, and is not considered an employee. The Company does hire consultants and other professionals including carpenters, ironworkers, electricians and computer programmers working directly on construction projects as necessary. During the year ended April 30, 2014, there were no employees hired directly by the Company. Mass Megawatts has retained other members of the management team as consultants. Mass Megawatts believes that there will be no significant changes in the number of employees. The Company does not have a collective bargaining agreement and Mass Megawatts does not have an employment contract with Mr. Ricker.
STRATEGY AND MARKETING
The Company plans to approach the simplest method of initial market penetration and then sell directly to the power exchanges. The Company plans to try to avoid difficulties of evaluating wind resources, obtaining sites, 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. We have identified large users of electric power in high wind locations. Also, we had initial meetings with the local planning boards of the communities with the proposed sites and decision makers who purchase the electricity. We also plan to have strategic alliances with developers of proposed sites and construction companies as Mass Megawatts grows rapidly
Also, a groundswell across the nation for Green Power/renewable energy has prompted state and federal legislatures to offer tremendous tax credits and incentives including a federal tax credit of 30% of the capital cost passed by Congress and signed into law by President Obama. Capitalizing on this trend, Mass Megawatts Wind Power, Inc. has prepared a MAT sales presentation for high tax bracket individuals and corporations. For those qualifying, the financial risk of purchasing a MAT unit is minimized by the tax advantages. (Details may be found on our website under "New Developments -- Tax Package".) Revenue generated from these initial sales will accelerate internal growth and promote additional sales opportunities.
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 are planned to 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 provide a five percent non-refundable deposit on each block of electricity reserved for future purchases. Such brokers include All Energy, Green Mountain Resources, and Energy Vision. Another marketing resource for the Company’s product is Electricity Choice, which helps negotiate consumer electric sales. The Company plans to aggressively promote its products to brokers, focusing on cost savings and environmental benefits. It plans to 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 calculated as a percentage of power sales.
ITEM 2.
ITEM 2. DESCRIPTION OF PROPERTY
Mass Megawatts Wind Power, Inc. does not own any properties. The Company's administrative offices are on Prescott Street in Worcester, Massachusetts. A wind tunnel facility was built by Mass Megawatts Wind Power, Inc. on property leased at the same location on Prescott Street in Worcester, Massachusetts. In some examples of activities at the wind tunnel facility, we test new blades and other components for structural issues. We also collect data for power output of different blade configurations and certain method of increasing wind velocity into the blades. In Charlton, Massachusetts, a field test facility is located on top of a hill where Mass Megawatts has developed a prototype to verify the structural and mechanical durability of the product. The latest prototype, located in Blandford, Massachusetts is a pre commercial prototype designed for choosing the system for commercial production.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
The Company currently has no legal proceedings to which the Company is a party to or to which its property is subject to and, to the best of its knowledge, no adverse legal activity is anticipated or threatened.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On July 2, 2012, the Company submitted to a vote of security holders an amendment to the Articles of Incorporation to increase common stock authorized from 18,000,000 to 35,000,000 shares. The amendment was passed.
In January 2014, the Company submitted to a vote of security holders an amendment to the Articles of Incorporation to increase common stock authorized from 35,000,000 to 67,000,000 shares. The amendment was passed.
PART II
ITEM 5.
ITEM 5. MARKET FOR THE COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Common Stock of the Company is traded in the over-the-counter market and was quoted on the OTCQB Over-the-Counter Market under the symbol “MMMW." The following table sets forth, for the fiscal years ended April 30, 2014 and April 30, 2013, the high and low per share bid prices of the Company's Common Stock as reported by the OTC Markets . These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.
During the year ended April 30, 2014, 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 year ended April 30, 2014, the Company issued the following shares of stock:
Common stock issued for services is valued at its fair market value. These shares are not registered under Rule 506 of Regulation D, which is an exemption of Section 4(c) of the Securities Act of 1933.
Rule 506 of Regulation D is considered a "safe harbor" for the private offering exemption of Section 4(2) of the Securities Act. Companies using the Rule 506 exemption can raise an unlimited amount of money. A company can be assured it is within the Section 4(2) exemption by satisfying the following standards:
The company cannot use general solicitation or advertising to market the securities;
The company may sell its securities to an unlimited number of "accredited investors" and up to 35 other purchases. Unlike Rule 505, all non-accredited investors, either alone or with a purchaser representative, must be sophisticated-that is, they must have sufficient knowledge and experience in financial and business matters to make them capable of evaluating the merits and risks of the prospective investment;
Companies must decide what information to give to accredited investors, so long as it does not violate the antifraud prohibitions of the federal securities laws. But companies must give non-accredited investors disclosure documents that are generally the same as those used in registered offerings. If a company provides information to accredited investors, it must make this information available to non-accredited investors as well.
The company must be available to answer questions by prospective purchasers;
Financial statement requirements are the same as for Rule 505; and
Purchasers receive "restricted" securities, meaning that the securities cannot be sold for at least a year without registering them. While companies using the Rule 506 exemption do not have to register their securities and usually do not have to file reports with the SEC, they must file what is known as a "Form D" after they first sell their securities. Form D is a brief notice that includes the names and addresses of the company's owners and stock promoters, but contains little other information about the company.
DIVIDEND POLICY
The Company does not anticipate that it will pay cash dividends or distributions in the foreseeable future. In the past, Mass Megawatts had never declared any cash dividends or made any distributions. The Company plans to retain its earnings in order to help finance the growing operations.
As of April 30, 2014 there were approximately 541 shareholders of Common Stock, not including approximately 3,600 beneficial shareholders whose stock is held in a security depository, and 43,179,537 common shares issued and outstanding. The Company has 67,000,000 common shares authorized. All the shares have equal rights with respect to voting, liquidation, and dividend rights. Of the Company's total outstanding shares, approximately 42,276,864 shares may be sold, transferred or otherwise traded in the public market without restrictions, unless held by an affiliate or controlling shareholder of the Company. None of the free trading shares are held by an affiliate.
ITEM 6.
ITEM 6. MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
THIS FILING CONTAINS FORWARD-LOOKING STATEMENTS. THE WORDS "ANTICIPATED," "BELIEVE," "EXPECT," "PLAN," "INTEND," "SEEK," "ESTIMATE," "PROJECT," "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.
Results of Operations for the year ended April 30, 2014 compared to April 30, 2013
Net Sales
We generated $0 in revenues for the years ended April 30, 2014 (“Fiscal 2014 Period”) and April 30, 2013 (“Fiscal 2013 Period”).
Cost of Sales and Contracting Profit
Contracting profit was $0 for both Fiscal 2014 Period and Fiscal 2013 Period.
Operating Expenses
Our total operating expenses were $442,920 for the Fiscal 2014 Period compared to total operating expenses of $415,434 for the Fiscal 2013 Period. Our operating expenses for the Fiscal 2014 Period included $13,420 in wind project development expenses compared to $13,426 reported for the Fiscal 2013 Period and $394,217 in general and administrative expenses compared to $392,531 reported for the Fiscal 2013 Period.
Our general and administrative expenses included $27,415 in marketing expenses compared to $71,900 reported for the Fiscal 2013 Period; decreases in marketing expenses were primarily due to decreases in online advertising; $51,005 in legal and professional fees during the Fiscal 2014 Period compared to $45,237 for the Fiscal 2013 Period; other consulting and engineering fees reported for Fiscal 2014 Period were $208,491 compared to $173,133 for Fiscal 2013 Period; increases of $35,358 in other consulting and engineering fees were primarily due to increases in consulting for prototype development.; State taxes decreased to $8,500 for Fiscal 2014 Period from $17,000 for Fiscal 2013 Period; decreases in State Taxes was due to fewer share increases with the State of Massachusetts for the Fiscal 2014 Period than the Fiscal 2013 Period; $30,368 in rent expenses during the Fiscal 2014 Period compared to $18,094 for the Fiscal 2013 Period; increases in rent were due primarily to additional storage facilities leased; other administrative costs including office and other supplies, insurance, postage, telephone and utilities for Fiscal 2014 Period were $81,858 compared to $80,593 for Fiscal 2013 Period.
Losses on shares issued for compensation were $32,676 for the Fiscal 2014 Period compared to $5,600 for the Fiscal 2013 Period; the increase was due to increases in shares issued for consulting and engineering fees for prototype development.
Our net other expenses for the Fiscal 2014 Period were $12,778 compared to $13,710 for the Fiscal 2013 Period; our other expenses included interest expense of $12,779 for the Fiscal 2014 Period compared to $13,721 for the Fiscal 2013 Period; the decrease in interest expense of $942 was due to a decrease in average outstanding balances of credit card debt and interest on shareholder loan obligations.
Liquidity and Capital Resources
We had total assets of $29,726 as of April 30, 2014, which consisted of cash of $245, deposits and other current assets of $27,481, and fixed assets net of accumulated depreciation of $2,000.
We had total liabilities of $223,150 as of April 30, 2014, consisting of accounts payable and accrued liabilities of $172,143, loans and advances provided by director of $51,007.
We have had net losses since inception and had an accumulated deficit of $7,321,338 at April 30, 2014.
We had net cash used in operating activities of $229,265 for the year ended April 30, 2014. We had a net loss of $455,698 including non-cash items of $149,921 related to shares issued for services (consisting of $182,597 in shares issued at fair value less loss on shares issued of $32,676) and $2,607 of depreciation.
We had $229,387 in net cash provided by financing activities for the year ended April 30, 2014, including $225,666 in proceeds from the sale of stock.
We had no outstanding cash commitments as of April 30, 2014.
Mass Megawatts Wind 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 2014 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 significant revenues from operations since its inception, but has raised funds through other means to maintain liquidity. Specifically, the Company raised capital with a private placement memorandum under Regulation D, Rule 506, selling shares of its common stock to raise $225,666. The Company has used this money plus $5,342 raised from increased borrowing on shareholder credit cards for administration, working capital, marketing, and advertising of approximately $229,000 and to reduce net borrowing by approximately $2,000.
There is substantial doubt that the Company will have sufficient cash flows from operations to fund its operations for a minimum of 12 months following April 30, 2014 and is therefore dependent on financing from issuing capital stock or debt. Mass Megawatts plans to continue to pursue additional equity financing to provide funds for operations.
The Company also expects to generate sales in fiscal 2015 and expects to be able to fund its operations for an additional 12 months, but cannot predict with any certainty its ability to do so. Without additional future sales, there is substantial doubt about the Company’s ability to continue as a going concern.
The Company has twelve years of operating results, with no substantial revenues from operations. Much uncertainty exists about the Company's future as a result of the lack of operating revenue for several years. The lack of long-term experience in new product development could have an adverse impact on the Company.
The Company's ticker symbol is MMMW and can be found on the Over-The-Counter QB more commonly described as OTCQB: MMMW or MMMWQB.
Mass Megawatt's market share and any changes in the underlying economics of the industry are expected to have a minimal effect on the Company's operating results within the next 12 months. This is due to the large market for electricity and the Company’s overall market share having little or no impact on a market of this size.
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 unfavorable impact for the industry as a whole. It is anticipated, however, that restructuring could present more advantages and opportunities for the Company's product by enabling it to compete in the new marketplace.
Critical Accounting Estimates
Revenue Recognition
Mass Megawatts recognizes revenue when persuasive evidence of an arrangement exists, services have been rendered, the sales price is fixed or determinable, and collectability is reasonably assured. This typically occurs when the good is provided.
Revenues from fixed-price construction contracts are recognized on the completed-contract method. A contract is considered complete when all costs except insignificant items have been incurred and the installation is operating according to specifications or has been accepted by the customer. Revenues from time-and-material contracts are recognized as the work is performed.
Contract costs include all direct material and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools, and repairs costs. General and administrative costs are charged to expense as incurred. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Claims are included in revenues when received.
Costs in excess of amounts billed are classified as current assets under costs in excess of billings on uncompleted contracts. Billings in excess of costs are classified under current liabilities as billings in excess of costs on uncompleted contracts. Contract retentions are included in prepaid expenses and other current assets.
Share-based compensation
We account for stock based compensation in accordance with FASB ASC 718 which requires companies to measure the cost of employee services received in exchange for an award of an equity instrument based on the grant-date fair value of the award. For stock-based awards granted on or after January 1, 2006, stock-based compensation expense is recognized on a straight-line basis over the requisite service period. In prior years, we accounted for stock-based awards under APB No. 25, “Accounting for Stock Issued to Employees.” We account for non-employee share-based awards in accordance with FASB ASC 505-50.
During the years ended April 30, 2014 and 2013 Mass Megawatts did not grant any option to its employees.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
Mass Megawatts does not expect the adoption of any recently issued accounting pronouncements to have a significant impact on their financial position, results of operations or cash flows.
ITEM 7.
ITEM 7. FINANCIAL STATEMENTS
CONTENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Mass Megawatts Wind Power, Inc.
Worcester, Massachusetts
We have audited the accompanying balance sheets of Mass Megawatts Wind Power, Inc. (“Mass Megawatts”) as of April 30, 2014 and 2013 and the related statements of operations, changes in stockholders’ deficit and cash flows for each of the years then ended. These financial statements are the responsibility of Mass Megawatts’ management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatements. Mass Megawatts is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Mass Megawatts’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Mass Megawatts as of April 30, 2014 and 2013, and the results of its operations and its cash flows for each of the years then ended in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that Mass Megawatts will continue as a going concern. As discussed in Note 2 to the financial statements, Mass Megawatts has suffered losses from operations which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
MALONEBAILEY, LLP
www.malonebailey.com
Houston, Texas
August 13, 2014
Mass Megawatts Wind Power, Inc.
Balance Sheets
The accompanying notes are an integral part of these financial statements.
Mass Megawatts Wind Power, Inc.
Statements of Operations
The accompanying notes are an integral part of these financial statements
Mass Megawattts Wind Power, Inc.
Statements of Changes in Stockholders' Equity (Deficit)
The accompanying notes are an integral part of these financial statements.
Mass Megawatts Wind Power, Inc.
Statements of Cash Flows
The accompanying notes are an integral part of these financial statements
Mass Megawatts Wind Power, Inc.
Notes to Financial Statements
NOTE 1 - DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Mass Megawatts Wind Power, Inc. (“we”,”our”, “Mass Megawatts”, or “the Company”), a Massachusetts corporation, was incorporated as Mass Megawatts, Inc. on May 27, 1997. Mass Megawatts changed its name in January 2001 to Mass Megawatts Power, Inc. Mass Megawatts changed its name on February 27, 2002 to Mass Megawatts Wind Power, Inc. Mass Megawatts' principal line of business is to develop its prototype wind energy production equipment and locate and adapt suitable operating facilities. It intends to build, patent, and operate wind energy generated power plants utilizing proprietary MultiAxis Turbine technology. Mass Megawatts expects to sell the generated electricity to the power commodity exchange on the open market, initially in California. The corporate headquarters is located in Worcester, Massachusetts.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Basic and Diluted Net Loss per Share
Basic loss per share is computed using the weighted average number of shares of common stock outstanding during each period. Diluted loss per share includes the dilutive effects of common stock equivalents on an “as if converted” basis. Basic and diluted loss per share are the same due to the absence of common stock equivalents. Any potential dilutive securities that would have an anti-dilutive effect were not included in the calculation of diluted net loss per common share.
Cash and Cash Equivalents
For purposes of the statements of cash flows, cash equivalents include all highly liquid investments with original maturities of three months or less.
Fixed Assets and Depreciation
Fixed assets are recorded at cost. Depreciation is calculated using the straight-line basis over the estimated useful lives of the assets, which is five to ten years. Maintenance and repairs are charged to operations when incurred. Betterments and renewals are capitalized. When fixed assets are sold or otherwise disposed of, the asset account and related accumulated depreciation account are relieved, and any gain or loss is included in operations. Depreciation expense for the years ended April 30, 2014 and 2013 were $2,607 and $3,877, respectively.
Impairment of long-lived assets
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We evaluate long-lived assets to determine potential impairment by comparing the carrying amount to the undiscounted estimated future cash flows of the related assets.
Income Taxes
The Company has adopted the provisions of FASB ASC Topic 740, “Income Taxes” (“ASC 740”). As required under ASC 740, the Company accounts for income taxes using an asset and liability approach, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statements and tax bases of assets and liabilities at the applicable tax rates. A valuation allowance is utilized when it is more likely than not, that some portion of, or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
ASC 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Under ASC 740, the Company recognizes tax benefits only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement. A liability for “unrecognized tax benefits” is recorded for any tax benefits claimed in our tax returns that do not meet these recognition and measurement standards.
Research and Development Cost
Research and development costs are charged to operations when incurred and are included in operating expenses. Research and development costs were $13,420 and $13,426 for the years ended April 30, 2014 and 2013, respectively.
Revenue Recognition
Mass Megawatts recognizes revenue in accordance with ASC 605, “Revenue Recognition” when persuasive evidence of an arrangement exists, services have been rendered, the sales price is fixed or determinable, and collectability is reasonably assured. This typically occurs when the good is provided.
Revenues from fixed-price construction contracts are recognized on the completed-contract method due to undependable estimates that cause forecasts to be doubtful. A contract is considered complete when all costs except insignificant items have been incurred and the installation is operating according to specifications or has been accepted by the customer. Revenues from time-and-material contracts are recognized as the work is performed.
Contract costs include all direct material and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools, and repairs costs. General and administrative costs are charged to expense as incurred. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Claims are included in revenues when received.
Costs in excess of amounts billed are classified as current assets under costs in excess of billings on uncompleted contracts. Billings in excess of costs are classified under current liabilities as billings in excess of costs on uncompleted contracts. Contract retentions are included in prepaid expenses and other current assets.
Stock-Based Compensation
Stock-based compensation is accounted for in accordance with ASC 718, “Accounting for Stock-Based Compensation”, as interpreted by ASC 505-50. ASC 505-50 requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors including grants of employee stock options based on estimated fair values.
Stock-based compensation awards issued to non-employees for services are recorded at either the fair value of the services rendered or the instruments issued in exchange for such services, whichever is more readily determinable, using the measurement data guidelines enumerated in ASC 505-50, “Accounting for Equity-Based Payments to Non-Employees.” During the years ended April 30, 2014 and 2013, the Company issued 6,152,000 and 1,490,400 common shares respectively for services rendered.
NOTE 2 - GOING CONCERN
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liabilities in the ordinary course of business. As of and for the year ended April 30, 2014, the Company has a negative working capital of $195,424 and negative cash flows from operations. These conditions raise substantial doubt about Mass Megawatts' ability to continue as a going concern. Currently, management is soliciting additional equity investors through private placement offerings and is obtaining funding from Mass Megawatts' Chief Executive Officer to fund these losses; however, no assurance can be given as to the success of these efforts.
The financial statements of Mass Megawatts do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary if Mass Megawatts is unable to continue as a going concern.
NOTE 3 - RELATED PARTY TRANSACTIONS
At April 30, 2014, we owed $51,007 to certain stockholders, which included $ 36,926 owed for personal credit cards used for company expenditures and $14,081 for net cash advanced.
Funds advanced during the fiscal year are due on demand, bear no interest and are unsecured. Payments on stockholders credit cards are subject to the terms and conditions of the authorizing entities.
Pursuant to a Licensing Agreement dated June 21, 2000, Mass Megawatts was granted an exclusive sublicense to market, within a limited territory, the MultiAxis Turbosystem (MAT) and associated technology relative to wind velocity augmentation which is the ability to use external walls or structure to enhance the flow of air velocity for increasing power output. The MAT is comprised of certain products and technology covered by eight applications for United States Letters Patented by Jonathan Ricker. Mr. Ricker is the owner of the patent rights of the licensed technology to Windstorm International. He is also the Chairman and Chief Executive Officer of Mass Megawatts.
The Company must pay a royalty fee to Mr. Ricker of two percent of the net sales for the life of the patent of each product being licensed.
The limited territory is defined as: Massachusetts, New York, New Jersey, Pennsylvania, California, Illinois, Kansas, Michigan, Minnesota, Nebraska, North Dakota, South Dakota, Texas, Vermont, Washington, and Wisconsin. Mass Megawatts must pay a royalty fee to Mr. Ricker based on two percent of the net sales of Mass Megawatts for the life of the patent of each product being licensed pursuant to the sublicensing agreement. The sub-licensor is Windstorm International of Putnam, CT who received a license agreement from Mr. Ricker.
The above terms and amounts are not necessarily indicative of the terms and amounts that would have been received had comparable transactions been entered into with independent party.
NOTE 4 - FIXED ASSETS
Fixed assets consist of the following:
NOTE 5 - COMMON STOCK
During the year ended April 30, 2013:
- During July 2012, the Company submitted to a vote of security holders an amendment to the Articles of Incorporation to increase common stock authorized from 18,000,000 to 35,000,000 shares. The amendment was passed.
- On August 24, 2012 the Company filed with the Commonwealth of Massachusetts to increase the Authorized Shares of Common Stock from 18,000,000 to 20,500,000 shares.
- On December 7, 2012 the Company filed with the Commonwealth of Massachusetts to increase the Authorized Shares of Common Stock from 20,500,000 to 35,000,000 shares
- Mass Megawatts sold 7,175,555 shares of common stock for cash of $229,018.
- Mass Megawatts issued 1,490,400 shares of common stock to consultants for their services. These shares were recorded at fair value of $90,818 based on the quoted market price of our common stock.
- Additional paid in capital increased by $12,569. Of this amount $5,805 was due to a sale of common stock to the Company’s President in excess of market value. The remaining $6,764 was due to a settlement agreement entered into with the Company’s President, the Company and a third party to dismiss action initiated by the third party naming the Company a Nominal Defendant. The Company received $9,489 from the President and paid out $2,725 to the third party per the settlement.
During the year ended April 30, 2014:
- During January 2014, the Company submitted to a vote of security holders an amendment to the Articles of Incorporation to increase common stock authorized from 35,000,000 to 67,000,000 shares. The amendment was passed.
- On January 29, 2014 the Company filed with the Commonwealth of Massachusetts to increase the Authorized Shares of Common Stock from 35,000,000 to 38,500,000 shares.
- On March 21, 2014 the Company filed with the Commonwealth of Massachusetts to increase the Authorized Shares of Common Stock from 38,500,000 to 40,500,000 shares
- On April 29, 2014 the Company filed with the Commonwealth of Massachusetts to increase the Authorized Shares of Common Stock from 40,500,000 to 43,500,000 shares
- Mass Megawatts sold 11,293,400 shares of common stock for cash of $225,666.
- Mass Megawatts issued 6,152,000 shares of common stock to consultants for their services. These shares were recorded at fair value of $182,597 based on the quoted market price of our common stock.
NOTE 6 - INCOME TAXES
As of April 30, 2014, the Company had net operating loss carry forwards of approximately $5,440,000 that may be available to reduce future years’ taxable income through 2034. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards.
The components of the deferred tax asset, the statutory tax rate, the effective tax rate and the elected amount of the valuation allowance are indicated below:
The change in the valuation allowance for the years ending April 30, 2014 and April 30, 2013 was $93,238 and $113,127 respectively. The effective rate differs from the statutory rate due to the valuation allowance.
NOTE 7 - SUBSEQUENT EVENTS
- On May 9, 2014 the Company filed with the Commonwealth of Massachusetts to increase the Authorized Shares of Common Stock from 43,500,000 to 45,500,000 shares
- On June 6, 2014 the Company filed with the Commonwealth of Massachusetts to increase the Authorized Shares of Common Stock from 45,500,000 to 47,000,000 shares
From May through June 2014, the Company sold 1,340,000 shares of common stock for proceeds of $13,400.
From May through June 2014, the Company issued 2,200,000 shares of common stock for services.
ITEM 8.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
1. Disagreements with Accountants on Accounting and Financial Disclosure:
None
2. Changes in Registrant's Certifying Accountants.
None
ITEM 8A. CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures.
Our Management, principally our chief executive officer and chief financial officer, which is the same person, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based on this evaluation, our chief executive officer and chief financial officer concluded that, as of the end of such period, the Company’s disclosure controls and procedures were not effective, as required under Rules 13a-15(e) and 15d-15(e) under the Exchange Act. This conclusion by the Company’s chief executive officer and chief financial officer at the end of the fiscal year covered by this Annual Report does not relate to reporting periods after April 30, 2014.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes, in accordance with generally accepted accounting principles. Because of inherent limitations, a system of internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate due to change in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management, including our chief executive officer and chief financial officer at the end of the fiscal year covered by this Annual Report, conducted an evaluation of the effectiveness of our internal control over financial reporting. Based on its evaluation, our management concluded that our internal control over financial reporting is not effective due to a material weakness. A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
The material weakness relates to the monitoring and review of work performed by our Chief Financial Officer and lack of segregation of duties. In the preparation of audited financial statements, footnotes and financial data all of our financial reporting is carried out by our Chief Financial Officer, and we do not have an independent audit committee to monitor or review the work performed. The lack of segregation of duties results from lack of accounting staff with accounting technical expertise necessary for an effective system of internal control. In order to mitigate this material weakness to the fullest extent possible, all financial reports are monitored and reviewed by the Chief Executive Officer. All unexpected results are investigated. We currently hire accounting consultants to assist in implementing additional procedures for the monitoring and review of work performed by our chief financial officer.
In the future, the Company intends to hire additional management and accounting staff which can develop and implement a system to strengthen its internal controls over financial reporting.
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report in this Annual Report on Form 10-K.
Changes in Internal Control Over Financial Reporting
There have been no changes in the Company’s internal control over financial reporting during the year ended April 30, 2014 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.
Certification by each Director and executive officer has been executed.
PART III
ITEM 9.
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS OF THE REGISTRANT; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
EXECUTIVE OFFICER:
Chairman, Chief Executive Officer and Chief Financial Officer
Jonathan Ricker Age: 54
Term as officer: 1997 - current;
Term expiration: Term is continuous until an action by the majority shareholders.
For the past 31 years, Mr. Ricker has been involved in product development, strategic planning, and market evaluations for clients in growth businesses. He served as Senior Registered Options Principal in the Investment Banking industry, developing innovative risk protection solutions for clients. Mr. Ricker's involvement with investment banking provided insight into the significant long-term potential for opportunities related to wind energy and as a result he has been actively researching wind energy for more than 15 years.
Education (degrees, schools, and dates)
1978 - 1982 Bentley College Bachelor of Science, General Business
Waltham, MA Associates Degree, Science of Accounting
1974 - 1978 Worcester Academy Liberal Arts Worcester, MA
Chief Operating Officer
Gary Bedell, Age: 57
Term as officer: 2014 - current;
Term expiration: Term is continuous until an action by the majority shareholders.
Effective July 3, 2014, Gary Bedell as Chief Operating Officer. Mr. Bedell has over 23 years of experience in electrical and engineering management with several years of technical experience including structural, mechanical and computer engineering related work. Mr. Bedell has been involved with the planning and construction of projects requiring factory automation, production line planning and other process engineering related activities.
CONSULTANTS:
Michael A. Cook, Age: 57
Project Finance Manager
Mr. Cook has over 30 years of experience in the project finance in the energy industry including 19 years with wind energy. Since 2003, he consulted and advised several companies related to creative finance strategies and more cost effective and efficient ways of operating wind energy and other energy related companies. Between 1998 and 2003, he was President of Trade Winds Inc., a Finance and Insurance Consulting Company. He faced the challenges of renewable Technologies being experimental and lacking sufficient historical long life data of traditional energy projects. His first wind energy finance package was underwritten by Continental Insurance Company in 1984. Mike has been developing structured financial risk mitigation programs that gives added assurance of debt repayment to project lenders involved in new energy technology like wind energy. Mr. Cook gained his experience in new project finance when he was the Pacific Regional Manager of Special Risk Property and Machinery Department for 10 years at Continental Insurance Company. Mike managed a staff, which included professional division managers and 5 satellite offices. He also served 3 years as an Executive at the Special Risk Energy Technical Department of the Energy and Utility Division of CIGNA Corporation. Mike was involved in the development of financial methods for new projects for several energy companies including Ormat, Mission Energy, TOSCO, PG&E, SMUD, Colorado Public Service, LUZ Solar, and many wind projects. Mike's method of mitigating risk includes weather risk insurance coverage including the lack of good wind. With proper documentation generated by project due diligence and local public data, financial guarantees of the course of nature is available.
Thomas M. Dill, Age: 53
Director of Corporate Services
Mr. Dill has over 30 years of Manufacturing, Industrial Engineering, Real Estate, and Facilities management experience. Since the Year 2000, he was a consultant for primarily European Companies In the late 1990s Tom was the Director of Real Estate and Facilities for MKE-Quantum Corporation responsible for three facilities operations with two sites in the United States and Indonesia. Prior to MKQC Mr. Dill spent nine years as Director of Real Estate and Corporate Planning for two high tech companies. From 1975-1990, he worked as an industrial engineering manager in the semiconductor industry and printed circuit boards. His project management responsibilities included the construction of a $20 million class 1, clean room facility for semiconductor manufacturing, a $35 million office building expansion and a $6 million loading dock and chemical storage facility. Tom is a licensed Real Estate Broker and Massachusetts Construction Supervisor. In 1982, Tom received his B.S. in Business Administration from Boston University.
DIRECTORS
There are presently three Directors of the Company, two are inside directors, and one is an outside Director.
Gary Bedell Chief Operating Officer (See Executive Officers)
Debra Kasputis
Ms. Kasputis has several years of administrative oversight for the operational side of small business activity. Age: 52
Term as officer: 2008 - current; Term expiration: Term is continuous until an action by the majority shareholders.
Jonathan Ricker Chairman and Chief Executive Officer (See Executive Officers.)
AUDIT COMMITTEE
The Audit Committee consists of the entire Board of Directors. The Audit Committee selects the independent auditors; reviews the results and scope of the audit and other services provided by Mass Megawatts’ independent auditors, and reviews and evaluates Mass Megawatts’ internal control functions. The board of directors has determined that Jonathan Ricker is the audit committee “financial expert”, as such term is defined under federal securities law, and is not independent. Mr. Ricker is an expert by virtue of: (i) education and experience as a principal financial officer, principal accounting officer, controller, public accountant or auditor or experience in one or more positions that involve the performance of similar functions; (ii) experience actively supervising a principal financial officer, principal accounting officer, controller, public accountant, auditor or person performing similar functions; (iii) experience overseeing or assessing the performance of companies or public accountants with respect to the preparation, auditing or evaluation of financial statements; and (iv) other relevant experience.
ITEM 10.
ITEM 10. EXECUTIVE COMPENSATION
The Company does not have an incentive or profit sharing plan for its employees, officers or directors. Mr. Ricker and the other directors do not have any employment or compensation contracts with Mass Megawatts. Consulting fees paid to Jonathan Ricker, Chairman and Chief Executive Officer, are determined based on an hourly rate and for the past three years are as follows:
ITEM 11.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of April 30, 2014 known to own beneficially more than 10% of the outstanding Common Stock. Included are officers or directors who are beneficiary of any shares as individual or a group regardless of whether they own greater or less than 10% of the outstanding shares. There were 43,179,537 shares issued and outstanding as of April 30, 2014.
* Less that 1% of the issued and outstanding shares of common capital stock
ITEM 12.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Other than below, there have been no transactions between the Company and any shareholder owning greater than 5% of the Company's outstanding shares, executive officer, director, nominee for officer or director, or any of the above referenced individual's immediate family.
The majority shareholder has made several advances to the Company, during fiscal year ended April 30, 2014, to assist with its financial obligations. These advances are non-interest bearing, unsecured and due on demand.
LICENSING RIGHTS
Pursuant to a Licensing Agreement dated June 21, 2000, Mass Megawatts has been granted an exclusive sublicense to market, within a limited territory, the MultiAxis Turbosystem (MAT) and associated technology relative to wind velocity augmentation which is the ability to use external walls or structure to enhance the flow of air velocity for increasing power output. The MAT is comprised of certain products and technology covered by several applications still effective during 2013 for United States Letters Patent by Mr. Ricker. The limited territory is defined as: Massachusetts, New York, New Jersey, Pennsylvania, California, Illinois, Kansas, Michigan, Minnesota, Nebraska, North Dakota, South Dakota, Texas, Vermont, Washington, and Wisconsin. Mass Megawatts must pay a royalty fee to Mr. Ricker based on two percent of the net sales of Mass Megawatts for the life of the patent of each product being licensed pursuant to the sublicensing Agreement. The Sublicensor is Windstorm International of Putnam, CT who received a license agreement from Jonathan Ricker who is Chairman and Chief Executive Officer of Mass Megawatts. Mr. Ricker is the owner of the patent rights of the licensed technology to Windstorm International. Several of the patents has filed Patent Cooperation Treaty Applications and National Phase patents in many nations and all major countries.
ITEM 13.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
A) Form 8-K
The Company filed the following current reports on the Form 8-K on the following dates during the year ended April 30, 2014:
On August 9, 2013, reporting a press release announcing certain financial results for the fiscal year ended April 30, 2013
On August 9, 2013, reporting a disclosure of the description of a new solar product and entry into the solar power market
On September 23, 2013, reporting a disclosure of the description of new solar product.
On December 30, 2013, reporting a press release reporting design improvements and new product developments
On February 5, 2014, reporting amendments to Articles of Incorporation increasing authorized shares
On April 1, 2014, reporting improved cash flow status
B) Exhibits -
ITEM 14.
ITEM 14. PRINCIPAL ACCOUNTANTS FEES AND SERVICES
Audit Fees
During fiscal 2014 and 2013, we were billed by our auditors, MaloneBailey, LLP, approximately $14,000 for audit and review fees associated with our 10-K and 10-Q filings.
Audit related fees
2014: $14,000
2013: $14,000
Tax Fees
None
All Other Fees
None
Board of Directors Pre-Approval Process, Policies and Procedures
Our principal auditors have performed their audit procedures in accordance with pre-approved policies and procedures established by our Board of Directors. Our principal auditors have informed our Board of Directors of the scope and nature of each service provided. With respect to the provisions of services other than audit, review, or attest services, our principal accountants brought such services to the attention of our Board of Directors prior to commencing such services.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereto duly authorized:
In accordance with the Exchange Act, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.