ITEM 2. Management's Discussion and Analysis of Financial Conditions
and Results of Operations.
Forward Looking Statements
This quarterly report contains forward-looking statements
that involve risks and uncertainties. We use words such as anticipate, believe, plan, expect, future, intend and similar
expressions to identify such forward-looking statements. You should not place too much reliance on these forward-looking statements.
Our actual results are likely to differ materially from those anticipated in these forward-looking statements for
many reasons, including the risks faced by us described in this section.
Introduction
We were incorporated on July 15, 2002 under
the laws of the State of Nevada. We changed our business in 2008, entering into a license agreement with Terra Inventions on April
15, 2008, for the license of the development of their lithium battery technology. We sold our Zingo Telecom, Inc. and M/S Zingo
BPO Services Pvt. Ltd. subsidiaries that offered telecommunications services to business and residential customers utilizing VoIP
technology on May 15, 2008. To reflect our new business, we changed our name from Zingo, Inc. to Superlattice Power, Inc.
on April 25, 2008 and on April 5, 2011, we merged with our wholly-owned subsidiary, Sky Power Solutions Corp., and in the merger
the name of the Company was changed to Sky Power Solutions Corp.
We entered into a license agreement with Terra
Inventions on April 15, 2008, for the license of the technology related to the development of their lithium battery technology.
We also leased space within Li-ion’s plant and created a chemical lab and manufacturing facility to begin work on the lithium
battery technology we had licensed. Effective May 31, 2012, our lease was terminated with Terra Inventions due to the closure of
their facility. Clean Enviro’s physical assets are currently in storage as we search for a new facility. Consultants continue
working on our
residential Solar Concentrating, Electric Power Generation Systems
independently.
Results of Operations for the Three months Ended April 30,
2014
We incurred a net loss of $15,679 during the
three months ended April 30, 2014, which included: general and administrative (G&A) costs of $15,679 and research and development
(“R&D”) expenses of $0.
2014 Compared to 2013
Our net loss for the three months ended April
30, 2014 increased to $15,679 from $11,726 for the same period ending April 30, 2013. The increase was primarily due to a increase
in professional fees.
Results of Operations for the Nine months Ended April 30,
2014
We incurred a net loss of $61,980 during the
nine months ended April 30, 2014, which included: general and administrative (G&A) costs of $55,520 and research and development
(“R&D”) expenses of $6,460.
2014 Compared to 2013
Our net loss for the nine months ended April
30, 2014 decreased to $61,980 from $389,072 for the same period ending April 30, 2013. The decrease was primarily due to a decrease
in professional fees, an increase in research and development costs and a decrease in loss of extinguishment of debt.
Plan of Operations
Currently we have in development a Stand Alone
Residential Solar Concentrating Electric Power Generation System. Our system has proprietary elements that make it unique, with
better functionality than other systems. We designed and developed this system as we anticipate that the North American Power Grid
will not be able to support the recharging of anticipated sales of totally electric vehicles and other electric needs in the coming
years. We are developing safe rechargeable battery systems for varied applications ranging from portable electronics to onboard
energy storage in EVs. Lithium ion batteries are rechargeable and composed of cathode, anode, separator and electrolytes. In 1990,
Sony (Japan) introduced the lithium ion battery and used an expensive cathode material, which was also unsafe. We are pioneering
a superlattice cathode material for the use in lithium ion rechargeable batteries.
The Solar Concentrating Electric Power
Generation System is an extremely efficient photovoltaic solar power generation unit. This system is
able
to produce in excess of 2 Kilowatts (kw) of electric power with ZERO emissions with Sun Light as the only fuel including built-in
heat capture to provide hot water to users.
The lithium ion batteries that we plan to develop
are rechargeable batteries composed of cells linked together, each cell created from lithiated cathode powder coated on aluminum
foil (electrode material that the electron flows out from during charge) and anode powder coated on copper foil (electrode material
that the electro flows into during charge) with a separator (polymer material in between anode and cathode) in a mixture of electrolytes,
which is an ionically conductive medium.
Our goal is to continually improve our proprietary
semi-solid synthesis process for the development of lithium ion rechargeable battery technologies to meet the growing needs for
a less expensive, high-energy density, extended life and fast recharging battery while keeping safety as a priority.
We use a proprietary superlattice cathode material
and its technically advanced synthesis process. Our other technical expertise includes Battery Management Systems (“BMS”)
and a high current rate battery charger. A typical battery pack will consist of a number of lithium ion cells and a BMS.
Our technology development is in the initial
phase of prototyping and testing. Once a prototype is successfully obtained, we plan to work closely with production specialists
in the battery industry and material synthesis to lead the battery manufacturing unit along with marketing and sales teams. Our
primary focus will then simultaneously operate research and development, production and marketing of the new products.
Sources and Availability of Raw Materials
We have used raw materials from several manufacturers
in the United States, such as Alfa Aesar, Pred Chemicals, TIMCAL and Ferro Corporation. We use different types of lithium, manganese,
cobalt, nickel and titanium salts, electrolytes, copper and aluminum foil which are available in large scale.
License Agreement with Terra Inventions
Effective April 15, 2008, we entered into a
License Agreement (“License Agreement”) with Terra Inventions providing for Terra Inventions’ license to us of
Terra Inventions patent applications and technologies for rechargeable lithium-ion batteries for hybrid vehicles and other applications
(“Licensed Products”).
Under the License Agreement, Terra Inventions
has the right to purchase its requirements of lithium ion batteries from us, and its requirements of lithium ion batteries shall
be supplied in preference to, and on a priority basis as compared with, supply and delivery arrangements in effect for our other
customers. Terra Inventions’ cost for lithium ion batteries purchased from us is our actual manufacturing costs for such
batteries for our fiscal quarter in which Terra Inventions purchase takes place. On May 25, 2010 our agreement was amended to provide
that we have exclusive license rights for the United States and Terra Inventions may grant other companies rights elsewhere around
the world.
We have agreed to invest a minimum of $1,500,000
in each of the first two years under the License Agreement in development of the technology for the Licensed Products. In the
initial year under the License Agreement, the Company invested approximately $264,043 in the development of technology, and therefore
is not in compliance with its obligations under this covenant of the license agreement. Terra Inventions has advised us
that it will not give notice of default against us for our failure to comply with this over the term of the License Agreement.
To date in the fiscal year ended July 31, 2014; we are still not in compliance under this covenant.
Liquidity and Capital Resources
As of July 31, 2013, we had cash on hand
of $0. During the year ended July 31, 2013, we incurred a net loss of $1,057,142. On July 31, 2013, we had a working capital deficiency
of $595,278 and a stockholders' deficit of $590,764.
We had 9,838,721 shares of common stock issued and outstanding
as of June 13, 2014. Our common stock is quoted on the OTCQB of the OTC Markets Group.
As of April 30, 2014, we had cash on hand of
$0 and liabilities of $656,291 as compared with $595,278 at July 31, 2013, and our property plant and equipment, net decreased
to $3,547 at April 30, 2014, as compared with $4,514 at July 31, 2013. Accounts payable and accrued expenses increased at April
30, 2014, to $268,009 as compared with $206,996 at July 31, 2013, and advances were $214,682 at April 30, 2014, as compared to
$214,682 at July 31, 2013 and notes payable were $173,600 at April 30, 2014, as compared to $173,600 at July 31, 2013.
At April 30, 2014, we had a working capital deficiency
of $656,291 and a stockholders' deficit of $652,744.
We used net cash in operating activities of
$0 in the nine months ended April 30, 2014, as compared with $69,412 in the comparable period in 2013, and cash flows used in investing
activities for the purchase of property, plant and equipment was $0 during 2014 and $0 in 2013.
During the nine months ended April 30, 2014,
we received $0 and repaid $0, to a third party as compared with advances from related parties of $69,412 and repayments of $0 in
2013.
During the nine months ended April 30, 2014
we received $0 from the proceeds from our promissory note to Terra Inventions Corp. and repaid $0 as compared to advances received
in 2013, of $0 and repayment of $0.
Since our incorporation, we have
financed our operations almost exclusively through advances from our controlling shareholders. We expect to finance operations
through the sale of equity or other investments for the foreseeable future, as we do not receive significant revenue from
our new business operations. There is no guarantee that we will be successful in arranging financing
on acceptable terms.
Our ability to raise additional capital is
affected by trends and uncertainties beyond our control. We do not currently have any arrangements for financing
and we may not be able to find such financing if required. Obtaining additional financing would be subject to a number of factors,
including investor sentiment. Market factors may make the timing, amount, terms or conditions of additional financing unavailable
to us.
Our auditors are of the opinion that our continuation
as a going concern is in doubt. Our continuation as a going concern is dependent upon continued financial support
from our shareholders and other related parties.
Critical Accounting Issues
The Company's discussion and analysis of its
financial condition and results of operations are based upon the Company's financial statements, which have been prepared
in accordance with accounting principles generally accepted in the United States of America. The preparation of the financial
statements requires the Company to make estimates and judgments that affect the reported amount of assets, liabilities,
and expenses, and related disclosures of contingent assets and liabilities. On an on-going basis, the Company evaluates its
estimates, including those related to intangible assets, income taxes and contingencies and litigation. The Company bases
its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the
results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.