3Power Energy Group Inc. - FORM 10-Q

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EX-31.1 - 3Power Energy Group Inc.	v223785_ex31-1.htm
EX-32.1 - 3Power Energy Group Inc.	v223785_ex32-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2011

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number: 333-103647

3Power Energy Group Inc.

(Exact Name of Registrant as Specified in its Charter)

Nevada		98-0393197
(State or other jurisdiction of		(IRS Employer
incorporation or organization)		Identification No.)

100 Wall Street, 21st Floor

New York, NY 10005

(Address of principal executive offices)

011 44 203 318 2995

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former Name, Former Address and Former Fiscal Year,

if Changed Since Last Report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes o No x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec.323.405 of this chapter) during the preceding 12 months (or shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer	¨	Accelerated Filer	¨
Non-Accelerated Filer	¨	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No x

As of May 20, 2011, the Issuer had 109,722,743 shares of its Common Stock outstanding.

TABLE OF CONTENTS

PART I: FINANCIAL INFORMATION

Item 1: Financial Statements
Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operation
Item 3: Quantitative and Qualitative Disclosures about Market Risk
Item 4: Controls and Procedures

PART II: OTHER INFORMATION

Item 1: Legal Proceedings
Item 1A: Risk Factors
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds
Item 3: Defaults Upon Senior Securities
Item 4: Reserved
Item 5: Other Information
Item 6: Exhibits

SIGNATURES

3Power Energy Group Inc.

formerly known as Prime Sun Power Inc.

(A development stage company)

Balance Sheets

(unaudited)

	March 31,			December 31,
	2011			2010

ASSETS

Current Assets

Cash	$	142		$	142


Total Current Assets and Total Assets	$	142		$	142



LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current Liabilities
Accounts payable and accrued liabilities	$	1,198,738		$	1,202,420
Advanced deposit		242,921			242,921
Note payable - finance company		660,073			660,073
Accrued management services - related party		937,500			833,333
Accrued interest - related party		83,122			78,270
Accrued interest - note payable - finance company		58,275			46,204
Loan from shareholder		250,599			196,414

Total Current Liabilities and Total Liabilities		3,431,228			3,259,635

Stockholders' Deficiency:
Common Stock, par value $.0001 per share
100,000,000 shares authorized,
40,114,900 shares issues and outstanding at		4,011			4,011
March 31, 2011 and December 31, 2010

Additional paid in capital		555,738			377,157
Deficit accumulated during development stage		(3,990,835	)		(3,640,661	)

Total Stockholders' Deficiency		(3,431,086	)		(3,259,493	)

Total Liabilities and Stockholders' Deficiency	$	142		$	142

See Notes to Financial Statements

3Power Energy Group Inc.

formerly known as Prime Sun Power Inc.

(A development stage company)

Statement of Operations

(unaudited)

							Accumulated from
	Months Ended						December 18, 2002
	March 31,						(Date of Inception)
							to March 31,
	2011			2010			2011

Revenue		-			-			-

EXPENSES


Consulting and director fees		-			34,627			280,425
Professional fees		25,462			50,000			929,797
Management services - related party		104,166			104,167			937,500
Personnel costs		20,054			19,843			661,950
General & administrative		4,988			18,998			237,657
Land licensing and development fees		-			-			428,980
Interest expense		16,923			18,290			142,423
Gain on debt settlement					-			(14,176	)
Non-cash compensation		178,581			631			386,279

Total Expenses		350,174			246,556			3,990,835

Net Loss	$	(350,174	)	$	(246,556	)	$	(3,990,835	)

Basic and Diluted Loss Per Share	$	(0.01	)	$	(0.01	)

Weighted Average Shares Outstanding		40,114,900			40,114,900

See Notes to Financial Statements

3Power Energy Group Inc.
formerly known as Prime Sun Power Inc.
(A development stage company)
Statement of Stockholders' Deficiency
For the Period from December 18, 2002 (Date of Inception) to December 31, 2010
(unaudited)

								Deficit
								Accumulated
								During the
	Common Stock				Additional			Development
	Shares		Par		Paid-in Capital			Stage			Total
Balance - December 18, 2002	#		Value ($)		($)			($)			($)
(Unaudited)
Common stock issued for cash at
$0.0001 per share		28,000,000		2,800		(2,400	)					400
Net loss for the period									(21,990	)		(21,990	)
Balance - December 31, 2002		28,000,000		2,800		(2,400	)		(21,990	)		(21,590	)
Net loss for the Year									(24,216	)		(24,216	)
Balance - December 31, 2003		28,000,000		2,800		(2,400	)		(46,206	)		(45,806	)
Net loss for the Year									(13,398	)		(13,398	)
Balance - December 31, 2004		28,000,000		2,800		(2,400	)		(59,604	)		(59,204	)
February 14, 2005 - shares
issued for cash at $0.10 per share		12,114,900		1,211		171,859						173,070
Net loss for the Year									(18,609	)		(18,609	)
Balance - December 31, 2005		40,114,900		4,011		169,459			(78,213	)		95,257
Net loss for the Year									(16,167	)		(16,167	)
Balance - December 31, 2006		40,114,900		4,011		169,459			(94,380	)		79,090
Net loss for the Year									(56,129	)		(56,129	)
Balance - December 31, 2007		40,114,900		4,011		169,459			(150,509	)		22,961
Non-cash compensation						52,959						52,959
Net loss for the Year									(697,924	)		(697,924	)
Balance - December 31, 2008		40,114,900		4,011		222,418			(848,433	)		(622,004	)
Non-cash compensation						154,108						154,108
Net loss for the year									(1,992,470	)		(1,992,470	)
Balance - December 31, 2009		40,114,900		4,011		376,526			(2,840,903	)		(2,460,366	)
Non-cash compensation						631						631
Net loss for the period									(799,758	)		(799,758	)
Balance - December 31, 2010		40,114,900	$	4,011	$	377,157		$	(3,640,661	)	$	(3,259,493	)
Non-cash compensation						178,581						178,581
Net loss for the period									(350,174	)		(171,593	)
Balance - March 31, 2011		40,114,900	$	4,011	$	555,738		$	(3,990,835	)	$	(3,252,505	)

See Notes to Financial Statements

3Power Energy Group Inc.

formerly known as Prime Sun Power Inc.

(A development stage company)

Statement of Cash Flow

(unaudited)

							Accumulated from
	For the Months Ended						December 18, 2002
	March 31,						(Date of Inception)
	2011			2010			to March 31, 2011


Operating Activities
Net loss	$	(350,174	)	$	(246,556	)	$	(3,990,835	)
Adjustments to reconcile net loss to net cash
provided by (used) in operations:
Non-cash compensation		178,581			631			386,279
Interest accrued to related party		4,851			8,978			83,121
Interest accrued on bank note		12,071			9,312			58,275
Gain in debt settlement		-			-			14,176
Accrued management services - related party		104,167			104,167			937,500
Land licensing and development fees		-			-			-
Change in operating assets and liabilities					-			-
Advanced deposits		-			242,921			242,921
Accounts payable and accrued liabilities		50,504			29,460			1,252,924
Net cash provided by (used) in operating activities		-			148,913			(1,015,639	)


Financing Activities
Proceeds and repayment of loans from Shareholder		-			(397,427	)		196,414
Proceeds from finance company		-			245,446			660,073
Gain in debt settlement		-			-			(14,176	)
Common stock issued		-			-			173,470

Net cash provided by (used in) financing activities		-			(151,981	)		1,015,781


Increase (decrease) in Cash		-			(3,068	)		142
Cash - beginning of period		142			14,051			-

Cash - end of period	$	142		$	10,983		$	142

See Notes to Financial Statements

3POWER ENERGY GROUP INC.

Formerly known as PRIME SUN POWER INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2011

1.	BUSINESS DESCRIPTION

Organization and Business Description

3Power Energy Group Inc. (the “Company”) was incorporated in the State of Nevada on December 18, 2002 and is a development stage company as defined by current account guidance. On March 30, 2011, the Company changed its name from Prime Sun Power Inc. The Company plans to pursue a business model producing renewable generated electrical power and other alternative energies.

Going Concern

The Company has been in the development stage since its inception and has not yet realized any revenues from its planned operations. As shown in the accompanying financial statements, the Company has incurred a net loss of $3,990,835 for the period from inception (December 18, 2002) to March 31, 2011, has a working capital deficiency of $3,431,086. The ability of the Company to continue as a going concern and to emerge from the development stage is dependent upon, among other things, its successful execution of its plan of operations and ability to raise additional financing or capital. There is no guarantee that the Company will be able to raise additional financing capital or sell any of services or products at a profit. These factors, among others, raise substantial doubt regarding the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

2.	SIGNIFICANT ACCOUNTING POLICIES

Use of estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and 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. The actual results experienced by the Company may differ materially from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected and the effect could be material.

Cash and Cash equivalents

The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents.

The Company maintains cash balances at various financial institutions. Accounts at each institution are insured by the Federal Deposit Insurance Corporation up to $250,000. The Company’s accounts at these institutions may, at times, exceed the federally insured limits. The Company has not experienced any losses in such accounts.

Property and equipment and depreciation policy

Depreciation is based on the estimated useful lives of the related assets and is computed using the straight-line method. Equipment is recorded at cost and depreciation is provided over the useful lives of five years.

Income taxes

The Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.

ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and 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. ASC Topic 740.10.40 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented.

Impairment of long-lived assets

The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. To determine if impairment exists, the Company compares the estimated future undiscounted cash flows from the related long-lived assets to the net carrying amount of such assets. Once it has been determined that impairment exists, the carrying value of the assets is adjusted to the fair value. Factors considered in the determination of the fair value. Factors considered in the determination of the fair value include current operating results, trends and the present value of estimated expected future cash flows.

Stock based compensation

We recognize compensation expense for stock-based compensation in accordance with ASC Topic 718. For employee stock-based awards, we calculate the fair value of the award on the date of grant using the Black-Scholes method for stock options and the quoted price of our common stock for unrestricted shares; the expense is recognized over the service period for awards expected to vest. For non-employee stock-based awards, we calculate the fair value of the award on the date of grant in the same manner as employee awards, however, the awards are revalued at the end of each reporting period and the pro rata compensation expense is adjusted accordingly until such time the nonemployee award is fully vested, at which time the total compensation recognized to date equals the fair value of the stock-based award as calculated on the measurement date, which is the date at which the award recipient’s performance is complete. The estimation of stock-based awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from original estimates, such amounts are recorded as a cumulative adjustment in the period estimates are revised. We consider many factors when estimating expected forfeitures, including types of awards, employee class, and historical experience.

Fair value measurements

The Company adopted the provisions of ASC Topic 820, “Fair Value Measurements and Disclosures”, which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements.

The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts and notes payable, and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments.

ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:

Level 1 — quoted prices in active markets for identical assets or liabilities

Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable

Level 3 — inputs that are unobservable (for example cash flow modeling inputs based on assumptions)

Loss per share

Loss per share is computed using the weighted average number of shares outstanding during the period. Diluted loss per share is equivalent to basic loss per share.

Recently Issued Accounting Standards

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board or other standard setting bodies that may have an impact on the Company’s accounting and reporting. The Company believes that such recently issued accounting pronouncements and other authoritative guidance for which the effective date is in the future either will not have an impact on its accounting or reporting or that such impact will not be material to its financial position, results of operations, and cash flows when implemented.

3. NOTE PAYABLE – FINANCE COMPANY

On March 2, 2010, the Company entered into a Financing Agreement (the “Financing Agreement”) with CRG Finance AG (“CRG Finance”). Pursuant to the Financing Agreement, CRG Finance loaned the Company a total of 470,000 Euros ($660,073 as of March 31, 2011). In further consideration for the making of this loan, the Company shall transfer 20% of the Company’s rights to its net profits to be made in the sale of PSP Italian S.r.l. to GPR (the “Net Profit Rights”).

CRG Finance has agreed that upon receipt of its Net Profit Rights, CRG Finance will reinvest at least 50% of such Net Profit Rights into either new projects of the Company or shares of the Company, at a purchase price to be mutually agreed upon. The Company has issued a senior promissory note to CRG Finance in the amount of 470,000 Euros ($660,073 as of March 31, 2011). The principal of the note, along with interest at an annual rate of seven and one half percent, is due within thirty days of demand.

4. CREDIT FACILITY

On March 10, 2011, the Company entered into a Financing and Security Agreement with CR&P Holding S.p.A., an Italian investment group, for a $50 million loan. The Company intends to use the facility to finance photovoltaic, wind and hydro power plant development projects and prospective acquisitions in Italy, France Turkey, Albania and Chile. The proceeds of the loan will principally be utilized to finance the equity portion of the first projects from the Company’s existing pipeline as well as to cover some of the Company’s operational expenses and predevelopment costs.

The loan is being made available to the Company at a fixed rate of 5% per annum for a period of 10 years. In addition, the lender will also receive 20% of the annual net profits derived from each project for the duration of the loan. The loan will be secured by the assets of each special purpose project subsidiary holding company. Each draw of the loan amount by the Company will be subject to customary due diligence by the lender. The Company’s management is coordinating with CR&P in regard to the selected projects details and use of loan proceeds information in order to finalize the loan proceeds disbursement plans.

5. INCOME TAXES

The Company has available approximately $3,895,000 of net operating loss carry forwards to offset future taxable income, if any. The carry forwards expire as follows:

2022	$	22,000
2023	$	24,000
2024	$	13,000
2025	$	19,000
2026	$	16,000
2027	$	56,000
2028	$	695,000
2029 and after	$	3,050,000

Utilization of these carryforwards may be limited due to the changes in ownership referred to in Note 1. The Company has a deferred tax asset of approximately $950,000 relating to available net operating loss carry forwards for which 100% valuation allowance has been provided.

The computed credit for income taxes for the years ended December 31, 2010 and 2009 differs from the expected Federal tax rate as follows:

	2010			2009
Computed expected tax rate		35	%		35	%
Valuation allowance		35	%		35	%
Income tax credit		0			0

6. STOCKHOLDERS’ DEFICIENCY

On January 22, 2008, the Board of Directors declared the payment of a stock dividend to the stockholders of record of the Company as of February 4, 2008. The stock dividend was paid on February 4, 2008. Each stockholder received six additional shares of the Company’s common stock for each one share of the Company’s common stock which they held on the record date. Following the payment of the stock dividend, the issued and outstanding share ownership of the Company increased from 5,730,700 shares of Company common stock to 40,114,900 shares of common stock. The Statement of Stockholders’ Deficiency and per share amounts has been retroactively adjusted to reflect the historical impact of the stock dividend.

On February 24, 2011 the Company granted an option to purchase 1,000,000 shares of the Company’s common stock. These options were granted at an exercise price of $0.172 per share which was equal to the closing price of the Company’s common stock as quoted on the Nasdaq Over-the-Counter Bulletin Board on the day immediately preceding the date of grant.

The Company accounted for this grant under the fair value method of accounting using a Black Scholes valuation model to measure stock option expense at the date of grant. The fair value of the stock option was $178,581 which was charged to operations as the options vested upon grant.

The fair value was estimated based on the following assumptions:

Risk-free rate		1.2	%
Expected volatility		100	%
Expected life	5 years
Dividend yield		-

7. SUBSEQUENT EVENTS

Stock Purchase Agreement

On May 13, 2011, the Company entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with Seawind Energy Limited (“Seawind Energy”), Seawind Services Limited (“Seawind Services,” and together with Seawind Energy, the “Seawind Companies”) and the shareholders of Seawind Energy (the “Seawind Group Shareholders” and together with the Company, and the Seawind Companies, the “Parties”). The Company has acquired Seawind Energy, and its wholly owned subsidiary Seawind Services, from the Seawind Group Shareholders in exchange for the issuance of 40,000,000 restricted shares of the Company’s common stock (such acquisition is referred to herein as the “Seawind Acquisition”). The valuation for purposes of such acquisition was determined to be $2,400,000 on the basis of an understanding between the Company and the representatives of the Seawind Companies as of January 25, 2011, with the number of shares to be issued thereof calculated by reference to the publicly quoted closing price of the Company’s Common Stock on January 25, 2011.

The Seawind Companies have become wholly owned subsidiaries of the Company. The Stock Purchase Agreement contains conventional provisions for restricted share transactions, including customary representations and warranties given by the Seawind Group Shareholders regarding the authority to execute the Stock Purchase Agreement, valid ownership and transferable title to their shares which are unencumbered, free and clear of third party claims or conflicts contingent or otherwise, and that no consent of any party is necessary or required to effectuate the transfer. In addition, the Seawind Group Shareholders made representations and warranties which the Company has relied upon for purposes of assessing and determining the validity of the exemption of the share issuances from registration under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

In anticipation of the closing of the Stock Purchase Agreement, the Company changed its name to 3Power Energy Group Inc. and increased its authorized share capital to 300,000,000 shares.

Facilitation Agreement

The Company has arranged with Viewpoint Investments Corp. (“Viewpoint”) to pay a $1,000,000 fee, to be paid in Company Common Stock, payable upon the closing of the acquisition of the Seawind Companies (the “Facilitation Agreement”) which occurred on May 13, 2011. Pursuant to the Facilitation Agreement, the Company has issued 19,607,843 restricted shares of the Company’s common stock to Viewpoint in consideration for services rendered to the Company. Viewpoint assisted and advised the Company with respect to identifying, negotiating and closing the transaction with the Seawind Group of Companies. The consideration paid to Viewpoint by the Company was deemed to be fair and reasonable by our Board of Directors with respect to the creation and enhancement of share value for all shareholders responsive to the acquisition of Seawind Energy and Seawind Services due to the efforts of Viewpoint. The number of shares issued to Viewpoint was calculated by reference to 85% of the publicly quoted closing price of the Company’s Common Stock on January 25, 2011

SPECIAL EXPLANATORY NOTE

Subsequent to the period covered by this Report, the Company completed the acquisition of Seawind Energy Inc. and Seawind Services Inc. (collectively, the “Seawind Companies”) on May 13, 2011. As a result of the acquisition of the Seawind Companies, the Company is no longer a “shell company” as such term is defined in Rule 405 of the Securities Act and Rule 12b-2 of the Exchange Act. In addition, the acquisition of the Seawind Companies has for accounting purposes been treated as a reverse acquisition where Seawind Services is the accounting survivor. Going forward, all financial information reported by the Company with respect to periods on and after May 13, 2011 will be historical and current information pertaining only to Seawind Services. However, the financial statements and notes included as part of this Report pertain to periods prior to the acquisition of the Seawind Companies and therefore do not reflect or incorporate the treatment of Seawind Services as the accounting survivor. For comprehensive information and annual financial statements (audited) of the Seawind Companies with unaudited interim period financial statements (unaudited) of the Seawind Companies, readers are directed to the Form 8-K filed by the Company with the U.S. Securities & Exchange Commission on May 13, 2011, as amended on May 19, 2011.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

The following cautionary statements identify important factors that could cause our actual results to differ materially from those projected in forward-looking statements made in this Quarterly Report on Form 10-Q (this “Report”) and in other reports and documents published by us from time to time. Any statements about our beliefs, plans, objectives, expectations, assumptions, future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as “believes,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimated,” “intend,” “plan,” “projection,” “outlook” and the like, constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). However, as we issue “penny stock,” as such term is defined in Rule 3a51-1 promulgated under the Exchange Act, we are ineligible to rely on these safe harbor provisions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of our Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned to carefully read all “Risk Factors” set forth under Item 1A and not to place undue reliance on any forward-looking statements. We disclaim any obligation to update any such factors or to announce publicly the results of any revisions of the forward-looking statements contained or incorporated by reference herein to reflect future events or developments, except as required by the Exchange Act. New factors emerge from time to time, and it is not possible for us to predict which will arise or to assess with any precision the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

Unless otherwise provided in this Report, references to the “Company,” the “Registrant,” the “Issuer,” “we,” “us,” and “our” refer to 3Power Energy Group Inc. (formerly known as Prime Sun Power Inc.).

PART I FINANCIAL INFORMATION

[Insert]

ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The Company's Operations

The following discussion of the financial condition and results of operations of 3Power Energy Group Inc. should be read in conjunction with the financial statements and the related notes thereto included elsewhere in this Report. This Report contains certain forward-looking statements and the Company's future operating results could differ materially from those discussed herein. Certain statements contained in this Report, including, without limitation, statements containing the words “believes”, “anticipates,” “expects” and the like, constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). However, as the Company intends to issue “penny stock,” as such term is defined in Rule 3a51-1 promulgated under the Exchange Act, the Company is ineligible to rely on these safe harbor provisions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligation to update any such factors or to announce publicly the results of any revisions of the forward-looking statements contained or incorporated by reference herein to reflect future events or developments, except as required by the Exchange Act.

We were incorporated in the State of Nevada on December 18, 2002, as ATM Financial Corp. On April 1, 2008, we changed our name from “ATM Financial Corp.” to “Prime Sun Power Inc.” On April 15, 2008, the Company changed its stock symbol from “AFIC” to “PSPW.” On March 30, 2011, the Company changed its name to 3Power Energy Group Inc. The Company’s common stock is traded on the Financial Industry Reporting Authority over-the-counter bulletin board.

The Company address is 100 Wall Street, 21st Floor, New York, NY 10005. The Company’s telephone number is 011 44 203 318 2995.

Operations

The Company’s main activities during this period included (i) arranging credit a credit facility for project development; and (ii) negotiating the acquisition of Seawind Energy Services and Seawind Energy Limited which closed subsequent to the period covered by this Report on May 13, 2011.

Plan of Operation

The Company is a development stage business planning to develop construct and operate wind energy power plants, solar photovoltaic power plants, biomass power plants and other renewable technologies. The Company expects to sell the electrical power produced to private and utility customers. In regard to our wind energy power plant business, we intend to commence operations in South America with wind energy projects in Chile. We intend to acquire the development rights to build two wind energy projects, with a total capacity of 58MW and expect that first power-to-grid will be achieved in the first quarter of 2012. We intend to enter into sub-contractor arrangements with high quality and expert Chilean companies and organizations to provide the engineering, construction, procurement, installation and commissioning of the projects. We intend to enter into long term operating and maintenance agreements with the wind turbine equipment supplier. Our Company will sell the energy under power purchase agreements to private customers, in the public spot-price market, or a combination of both. We intend to increase our wind energy project portfolio in Chile further by acquiring the development rights to build other attractive projects and in parallel expect to undertake project development of green-field sites. We intend to expand our wind energy operations in other Latin American countries by entering into strategic alliances with local partners to create a strong local presence in countries such as Peru, Ecuador and Argentina, and create a wind energy portfolio through a combination of acquiring the development rights to wind energy projects, and carrying out project development of green-field sites. We anticipate expanding our wind energy operations into Asia through strategic alliances with local partners and by acquiring the development rights to build suitable wind energy projects.

We anticipate that our solar energy power plant business will do business mainly in Europe. We expect our Company will operate photovoltaic energy production parks in which solar electrical power is produced for sale to local electrical grids. We intend to enter into strategic alliances and sub-contractor arrangements with other companies and organizations with respect to engineering, construction, procurement and installation as well as companies engaged in the manufacture and/or assembly of solar modules.

The Company presently faces a number of challenges, including raising additional capital, indentifying commercially viable qualified projects, obtaining rights and licenses for development, interacting with local governments, indentifying and entering into agreements with appropriate subcontractors for the development and operation of our energy production facilities, and hiring and retaining qualified staff.

Revenues

During the three month periods ended March 31, 2011 and March 31, 2010, the Company had no revenues from operations.

Results of Operations

The Company has incurred an increase in expenses during this reporting period from the last comparative period. Expenses for the three months ended March 31, 2011 were $350,174, as compared to $246,556 for the three months ended March 31, 2010. The three month period ended March 31, 2011 experienced declines in consulting and director fees, professional fees, general and administrative costs, and interest expenses. Other expenses increased, including non-cash compensation. The Company’s total expenses from inception through March 31, 2011 were $3,990,835. The Company’s net loss for each of the periods referenced above is equal to the amount for expenses.

The Company’s consulting and director fees for the three month period ended March 31, 2011 were $0, as compared to $34,627 for the three month period ended March 31, 2010. The Company’s total consulting and director fees from inception through March 31, 2011 were $280,425.

The Company’s professional fees for the three month period ended March 31, 2011 were $25,462, as compared to $50,000 for the three month period ended March 31, 2010. The Company’s total professional fees from inception through March 31, 2011 were $929,797.

The Company’s fees for management services for the three month periods ended March 31, 2011 and March 31, 2010 were $104,166 and $104,167, respectively. The Company’s fees for management services from inception through March 31, 2011 were $937,500.

The Company’s personnel costs for the three month period ended March 31, 2011 were $20,054, as compared to $19,843 for the three month period ended March 31, 2010. The Company’s total personnel costs from inception through March 31, 2011 were $661,950.

The Company’s general and administrative costs for the three month period ended March 31, 2011 were $4,988, as compared to $18,998 for the three month period ended March 31, 2010. The Company’s total general and administrative costs from inception through March 31, 2011 were $237,657.

The Company has not incurred any fees for land licensing and development in the three months ended March 31, 2011 or 2010. The Company’s total fees for land licensing and development from inception through March 31, 2011 were $428,980.

The Company’s interest expenses for the three month period ended March 31, 2011 were $16,923, as compared to $18,290 for the three month period ended March 31, 2010. The Company’s total interest expenses from inception through March 31, 2011 were $142,423.

The Company’s non-cash compensation costs for the three month period ended March 31, 2011 were $178,581, as compared to $631 for the three month period ended March 31, 2010. The Company’s total non-cash compensation costs from inception through March 31, 2011 were $386,279.

Liquidity and capital resources

As of the date of this Report, we have not yet generated any revenues from our business operations.

Our total cash balance at March 31, 2011 was $142, which was identical to a cash balance of $142 as of December 31, 2010. As of March 31, 2011, our total assets were also $142, which also equal to $142 as of December 31, 2010. Our total liabilities were $3,431,228 as of March 31, 2011, which was an increase from $3,259,635 as of December 31, 2010.

Through March 31, 2011, 3Power Energy Group Inc.’s primary source of capital was loans from Rudana Investment Group AG (“Rudana”). In addition, 3Power Energy Group Inc. received loans from CRG Finance AG, and the sale of rights to a power plant. 3Power Energy Group has received loans from CRG Finance AG in the amount of 470,000 Euros (US$660,073) and proceeds from the sale of rights to a one-megawatt power plant in Italy during the first quarter of 2010 in the amount of 179,630 Euros (US$242,921).

To date, 3Power Energy Group has received loans from Rudana (the “Shareholder Loans”). The Shareholder Loans include amounts loaned by Rudana and invoices paid by Rudana. 3Power Energy Group has used the proceeds from the Shareholder Loans for general corporate purposes. The Shareholder Loans have an interest rate of seven and a half percent (7.5%) per annum, which together with the principal amount shall be repayable thirty (30) days after demand by Rudana. In connection with the Shareholder Loans, 3Power Energy Group intends to execute notes setting forth the terms thereof. In addition, the Company’s accrued fees owed for management services received from Prime Asset Finance Limited, a subsidiary of Rudana, from inception through March 31, 2011 total $937,500.

Our pre-operational activities to date have consumed substantial amounts of cash. Our negative cash flow from operations is expected to continue and to accelerate in the foreseeable future as the Company invests in capital expenditures to commence operations.

We will need to raise additional capital to implement our new business plan and continue operations for any length of time. We are seeking alternative sources of financing, through private placement of securities and loans from our shareholders in order for us to maintain our operations. We cannot guarantee that we will be successful in raising additional cash resources for our operations. Rudana, a shareholder of the Company, has loaned the Company funds for operations in the past, and has indicated that it will continue to loan funds as their financial circumstances may permit. Rudana, however, is under no obligation to make additional loans in the future.

Our future capital requirements will depend on a number of factors, including our ability to grow our revenues and manage our business. Our growth will depend upon our ability to raise additional capital, possibly through the issuance of long-term or short-term indebtedness or the issuance of our equity securities in private or public transactions. If we are successful in raising equity capital, because of the number and variability of factors that will determine our use of the capital, our ultimate use of the proceeds may vary substantially from our current plans. Global financial market conditions will be relevant to the Company’s ability to raise funds and make sales in the particular markets in which we will be active. While the Company believes that the opportunity exists to proceed in spite of these factors, major market disruptions, recent adverse changes in global market conditions, and the regulatory climate may affect our business.

The Company will require no less than $2,000,000 in additional funding in order to conduct proposed operations for the next year. Should the Company fail to raise such funds, the Company will not be able to commence construction of the solar power plants. In order to commence construction on all of the Company’s currently contemplated projects, the Company would be required to raise 15,000,000 Euros (approximately $19,220,000) to acquire definitive licenses to own and operate solar parks, and then organize construction bridge loans to pay for the construction of the solar parks.

Credit Facility

On March 10, 2011, the Company entered into a Financing and Security Agreement with CR&P Holding S.p.A., an Italian investment group, with respect to a $50 million credit facility. The Company intends to use the credit facility to finance photovoltaic, wind and hydro power plant development projects and prospective acquisitions in Italy, France, Greece, Turkey, Albania and Chile. The proceeds of the credit facility will principally be utilized to finance the equity portion of the first projects from the Company’s existing pipeline as well as to cover some of the Company’s operational expenses and predevelopment costs. The loan pursuant to the credit facility is being made available to the Company at a fixed rate of 5% per annum for a period of 10 years. In addition, the lender will also receive 20% of the annual net profits derived from each project for the duration of the loan. The loan will be secured by the assets of each special purpose project subsidiary holding company. Each draw of the loan amount by the Company will be subject to customary due diligence by the lender. The Company’s management is coordinating with CR&P in regard to the selected projects details and use of loan proceeds information in order to finalize the loan proceeds disbursement plans. The credit facility will be activated as and when the Company and CR&P agree upon the use of proceeds for the selected projects.

Plant and Equipment

During the period covered by this Report, the Company did make any expenditures on products and equipment.

Employees

As of March 31, 2011, the Company had one senior management employee. Subsequent to the period covered by this Report, the Company appointed additional senior management members and employees, as described in the Form 8-K filed by the Company with the U.S. Securities & Exchange Commission on May 13, 2011, as amended on May 19, 2011.

Research and Development

The Company has not expended significant amounts on research and development. The Company intends to assess prospective research and development undertakings during the foreseeable future and allocate a budget accordingly.

Off Balance Sheet Arrangements

As of March 31, 2011, we did not have any off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Subsequent Events

Subsequent to the period covered by this Report, the Company completed the acquisition of Seawind Energy Inc. and Seawind Services Inc. (collectively, the “Seawind Acquisition”) and increased the members of the Company’s Board of Directors and Management. As a result of the Seawind Acquisition, the Company is no longer a “shell company” as such term is defined in Rule 405 of the Securities Act and Rule 12b-2 of the Exchange Act. On May 13, 2011 the Board approved a change in the Company’s fiscal year end from December 31st to March 31st. Comprehensive further information regarding the Seawind Acquisition is set forth in the Form 8-K filed by the Company with the U.S. Securities & Exchange Commission on May 13, 2011, as amended on May 19, 2011.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable.

ITEM 4. CONTROLS AND PROCEDURES

As of the end of the period covered by this Report, an evaluation was carried out under the supervision and with the participation of our management, including our Acting Chief Executive Officer and Acting Chief Financial Officer, of the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934 (the “Exchange Act”). In carrying out that evaluation, management identified a material weakness (as defined in Public Company Accounting Oversight Board Standard No. 2) in our disclosure controls and procedures regarding a lack of adequate personnel and adequate segregation of duties. Based on their evaluation of our disclosure controls and procedures as of March 31, 2011, the Company’s Acting Chief Executive Officer and Acting Chief Financial Officer have concluded that, as of that date, the Company’s disclosure controls and procedures were not effective for the purposes described above.

The material weakness identified by Management consisted of inadequate staffing and supervision within the bookkeeping and accounting operations of the Company. The Company’s bookkeeping and accounting functions are overseen by a single individual who serves as a consultant to the Company, which prevents us from segregating duties within the Company’s disclosure control system. The inadequate segregation of duties is a weakness because it could lead to the untimely identification and resolution of accounting and disclosure matters or could lead to a failure to perform timely and effective reviews. Accordingly, based on their evaluation of the Company’s disclosure controls and procedures as of March 31, 2011, the Company’s Acting Chief Executive Officer and its Acting Chief Financial Officer have concluded that, as of that date, the Company’s disclosure controls and procedures were not effective for the purposes described above. The Company intends to take steps to remediate such procedures as soon as reasonably possible.

There was no change in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) during the quarter ended March 31, 2011 that has materially affected or is reasonably likely to materially affect the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Not Applicable.

ITEM 1A. RISK FACTORS

Not Applicable.

ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the period covered by this report, the Company granted an option for the purchase of one million shares of restricted common stock to Corporate Secretarial Services LLC in respect of corporate and ministerial services rendered to the Company. The option is exercisable at a purchase price of $0.17 per share, being the average closing price per share during the twenty trading days prior to the date of grant. The option is exercisable for a period of five years. The Company relied upon Section 4(2) of the Securities Act in respect of exemption from registration of the issuance of the option.

ITEM 3: DEFAULTS UPON SENIOR SECURITIES

Not Applicable.

ITEM 4: RESERVED

Not Applicable.

ITEM 5: OTHER INFORMATION

Not Applicable.

ITEM 6. EXHIBITS

Exhibit		Description

31.1		Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of the Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

3POWER ENERGY GROUP INC.

By:	/s/ Toby Durrant
	Name:	Toby Durrant
	Title:	Acting Chief Executive Officer,
		Acting Principal Financial Officer and
		Acting Principal Accounting Officer

Dated: May 23, 2011

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