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EX-32 - CLEAN ENVIRO TECH CORPv225869_ex32.htm
EX-31 - CLEAN ENVIRO TECH CORPv225869_ex31.htm
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
FORM 10-Q
 
(Mark One)
 
¨
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the Quarterly Period Ended April 30, 2011
 
or
 
¨
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 000-50693
 

 
Sky Power Solutions Corp.
(Formerly Superlattice Power, Inc.)
(Name of Registrant as Specified in Its Charter)

Nevada
(State or Other Jurisdiction
of Incorporation or Organization)
 
90-0314205
(I.R.S. Employer
Identification No.)
     
420 N. Nellis Blvd., Suite A3-146, Las Vegas, Nevada
(Address of Principal Executive Offices)
 
89110
(Zip Code)
 
(702) 425-7376
(Issuer’s Telephone Number, Including Area Code)
 
Securities registered under Section 12(b) of the Exchange Act:
None
 
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, Par value $0.001per share
 

 
Indicate by check mark whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  x Yes   ¨  No
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ¨ Yes    ¨ No 
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a smaller reporting company.  (Check One):
 
Large accelerated filer  ¨      Accelerated filer  ¨     Non-accelerated filer    ¨     Smaller reporting company  x
 
(Do not check if a smaller reporting company)
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
 
¨ Yes x No
 
On June 14, 2011, there were 21,157,316 shares of common stock outstanding.
 
 
 

 
 
   
Page No.
PART I. FINANCIAL INFORMATION
   
     
ITEM I – Unaudited Financial Statements
   
     
Balance Sheets as of April 30, 2011 and July 31, 2010 (Unaudited)
 
4
     
Statements of Operations for the Nine and Three Months Ended April 30, 2011 and 2010 (Unaudited)
 
5
     
Statements of Cash Flows for the Nine Months Ended April 30, 2011 and 2010 (Unaudited)
 
6
     
Statement of Stockholders Deficiency (Unaudited)
 
7
     
Notes to Unaudited Financial Statements
 
8
     
ITEM 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations.
 
14
     
ITEM 3 – Quantitative and Qualitative Disclosures About Market Risk
 
16
     
ITEM 4T– Controls and Procedures.
 
16
     
PART II. OTHER INFORMATION
   
     
ITEM 6 - Exhibits
 
16
 
 
2

 
 
PART I. FINANCIAL INFORMATION

ITEM 1. Unaudited Financial Statements

Certain information and footnote disclosures required under accounting principles generally accepted in the United States of America have been condensed or omitted from the following financial statements pursuant to the rules and regulations of the Securities and Exchange Commission. It is suggested that the following financial statements be read in conjunction with the year-end financial statements and notes thereto included in the Company's Annual Report on Form 10K for the year ended July 31, 2010. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature.

The results of operations for the three and nine months ended April 30, 2011 and 2010, are not necessarily indicative of the results for the entire fiscal year or for any other period.
 
 
3

 
 
Sky Power Solutions Corp.
(Formerly Superlattice Power, Inc.)
(A Development Stage Company)
Balance Sheets
(Unaudited)
 
   
April 30,
   
July 31,
 
   
2011
   
2010
 
Assets
           
             
Current assets:
           
             
Cash and cash equivalents
  $ 178     $ 158  
                 
Total current assets
    178       158  
Property and equipment, net
    62,896       72,719  
                 
Total assets
  $ 63,074     $ 72,877  
                 
Liabilities and Stockholders' Deficiency
               
                 
Current liabilities:
               
                 
Accounts payable and accrued expenses
  $ 1,363,699     $ 1,076,413  
Advances
    849,067       841,207  
Due to related parties
    4,347,838       4,321,358  
                 
Total current liabilities
    6,560,604       6,238,978  
                 
Commitments and contingencies
            -  
                 
Stockholders' deficiency:
               
                 
Preferred stock, $.001 par value, 10,000,000 shares authorized, 0 issued and outstanding
    -       -  
Common stock, $.001 par value, 2,500,000 and 750,000,000 shares authorized as of April 30, 2011 and July 31, 2010, respectively. 1,370,007 and 345,000,000 issued and outstanding at April 30, 2011 and July 31, 2010, respectively
    1,370       345,000  
                 
Additional paid-in capital
    180,068       (211,082 )
Accumulated deficit
    (4,604,623 )     (4,604,623 )
Deficit accumulated during the development stage
    (2,074,345 )     (1,695,396 )
                 
Stockholders' deficiency
    (6,497,530 )     (6,166,101 )
                 
Total liabilities and stockholders' deficiency
  $ 63,074     $ 72,877  
 
See accompanying notes to unaudited financial statements

 
4

 
 
Sky Power Solutions Corp.
(Formerly Superlattice Power, Inc.)
(A Development Stage Company)
Statements of Operations
(Unaudited)
 
                 For the Period Entering  
    
For the Nine Months Ended
   
For the Three Months Ended
   
the Development Stage
 
    
April 30,
   
April 30,
   
August 1, 2008
 
    
2011
   
2010
   
2011
   
2010
   
- April 30, 2011
 
Net sales
  $ -     $ -     $ -     $ -     $ -  
                                         
Operating expenses:
                                       
General and administrative
    94,451       103,972       31,549       38,145       516,644  
Research and development
    23,527       134,648       6,080       35,303       432,274  
                                         
Loss from operations
    (117,978 )     (238,620 )     (37,629 )     (73,448 )     (948,918 )
                                         
Other (expenses)/income
                                       
Interest expense
    (323,149 )     (351,250 )     (105,305 )     (117,570 )     (1,187,605 )
Other income
    62,178       -       21,768       -       62,178  
                                         
Net loss before provision for (benefit from) income taxes
    (378,949 )     (589,870 )     (121,166 )     (191,018 )     (2,074,345 )
                                         
Provision for (benefit from) income taxes
    -       -       -       -       -  
                                         
Net loss
  $ (378,949 )   $ (589,870 )   $ (121,166 )   $ (191,018 )   $ (2,074,345 )
                                         
Net loss per common share - basic and diluted
  $ (0.32 )   $ (0.51 )   $ (0.11 )   $ (0.17 )        
                                         
Weighted average number of common shares outstanding - basic and diluted
    1,175,099       1,150,007       1,097,759       1,150,007          
 
See accompanying notes to unaudited financial statements
 
 
5

 
 
Sky Power Solutions Corp.
(Formerly Superlattice Power, Inc.)
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
 
               
For the Period Entering
 
    
Nine Months Ended
   
the Development Stage
 
    
April 30,
   
August 1, 2008
 
    
2011
   
2010
   
- April 30, 2011
 
CASH FLOWS FROM OPERATING ACTIVITIES:
                 
Net loss
  $ (378,949 )   $ (589,870 )   $ (2,074,345 )
Adjustments to reconcile net loss to net cash utilized by operating activities
                       
Depreciation
    9,823       9,030       90,747  
Increase (decrease) in cash flows from changes in operating assets and liabilities
                       
Accounts payable and accrued expenses
    287,286       352,706       1,199,440  
Net cash used in operating activities
    (81,840 )     (228,134 )     (784,158 )
                         
CASH FLOWS FROM INVESTING ACTIVITIES:
                       
Additions to property and equipment
    -       -       (17,015 )
Net cash used in investing activities
    -       -       (17,015 )
                         
CASH FLOWS FROM FINANCING ACTIVITIES:
                       
Proceeds from advances
    176,710       756,504       1,459,697  
Advances from related parties
    74,000       523,703       1,051,143  
Payments on advances
    (168,850 )     (441,781 )     (610,631 )
Payments to related parties
    -       (610,400 )     (1,114,553 )
Net cash provided by financing activities
    81,860       228,026       785,656  
                         
CHANGE IN CASH AND CASH EQUIVALENTS
                       
Net increase (decrease) in cash and cash equivalents
    20       (108 )     (15,517 )
Cash and cash equivalents at beginning of period
    158       191       15,695  
Cash and cash equivalents at end of period
  $ 178     $ 83     $ 178  
                         
SUPPLEMENTAL CASH FLOW DISCLOSURES
                       
Cash paid during the period for:
                       
Interest
  $ -     $ -     $ -  
Income taxes
  $ -     $ -     $ -  
                         
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES
                       
Shares issued for related party advances
  $ 47,520     $ -     $ 47,520  
 
See accompanying notes to unaudited financial statements

 
6

 
 
Sky Power Solutions Corp.
(Formerly Superlattice Power, Inc.)
(A Development Stage Company)
Statement of Stockholders' Deficiency
For the Periods Ended As Noted
(Unaudited)
 
   
Number of
   
Common
   
Additional paid
   
Accumulated
   
Deficit Accumulated
   
Total
 
    
Common Shares
   
Shares $0.001
   
in capital
   
Deficit
   
During the
       
          
Par Value
               
Development Stage
       
                                     
Balance August 1, 2008
    345,000,000     $ 345,000     $ (211,082 )   $ (4,604,623 )   $ -     $ (4,470,705 )
Net Loss
    -       -       -       -       (898,447 )     (898,447 )
Balance - July 31, 2009
    345,000,000       345,000       (211,082 )     (4,604,623 )     (898,447 )     (5,369,152 )
Net Loss
    -       -       -       -       (796,949 )     (796,949 )
Balance - July 31, 2010
    1,150,007       1,150       132,768       (4,604,623 )     (1,695,396 )     (6,166,101 )
Issurance of stock for related party advances
    220,000       220       47,300       -       -       47,520  
Net Loss
    -       -       -       -       (378,949 )     (378,949 )
Balance - April 30, 2011
    1,370,007     $ 1,370     $ 180,068     (4,604,623   $ (2,074,345 )   (6,497,530
 
See accompanying notes to unaudited financial statements

 
7

 
 
SKY POWER SOLUTIONS CORP.
(FORMERLY SUPERLATICE POWER, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
April 30, 2011
 
Note 1. Financial Statement Presentation
 
Sky Power Solutions Corp. (the “Company” or “Sky Power”) (formerly Superlattice Power, Inc.), following the merger with our wholly-owned subsidiary on April 2, 2011 (formed for the sole purpose of merging with its parent), continues to concentrate its efforts on further development of the lithium batteries technology licensed from Li-ion Motors Corp. (“Li-ion Motors”), the Company’s former parent.
 
The balance sheet as of April 30, 2011 and the statement of operations, stockholders’ deficiency and cash flow for the periods presented have been prepared by the Company and are unaudited.  In the opinion of management, all adjustments (consisting solely of normal recurring adjustments) necessary to project fairly the financial position, results of operations, changes in stockholder’s deficiency, and cash flow for all periods presented have been made.  The information for the balance sheet as of July 31, 2010, were derived from audited financial statements.
 
As of August 1, 2008, the Company is considered a development stage enterprise as defined in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915, “Development Stage Entities” (“ASC 915”).  The Company has limited revenue to date, continues to raise capital and there is no assurance that ultimately the Company will achieve a profitable level of operations.
 
The summary of significant accounting policies is presented to assist in the understanding of the financial statements. The financial statements and notes are the representations of management. These accounting policies conform to accounting policies generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.
 
On July 1, 2009, FASB established ASC as the primary source of authoritative Generally Accepted Accounting Principles (“GAAP”) recognized by the FASB to be applied by nongovernmental entities.  Although the establishment of the ASC did not change current GAAP, it did change the way we refer to GAAP throughout this document to reflect the updated referencing convention.
 
History and Nature of Business
 
On April 2, 2011, the Company’s Board of Directors (the “Board”) authorized the merger with our wholly-owned subsidiary, Sky Power Solutions Corp., and in the merger the name of our Company was changed to Sky Power Solutions Corp.
 
On April 15, 2008, Li-ion Motors sold its controlling interest of the Company’s outstanding common stock to Blue Diamond Investments, Inc. (“Blue Diamond”) With the sale of our VoIP telecommunications business, named Zingo Telecom, Inc., on May 15, 2008, the Company intends to concentrate efforts on further development of the lithium batteries technology licensed from Li-ion Motors, the Company’s former parent.
 
Effective April 15, 2008, the Company entered into a License Agreement (“License Agreement”) with Li-ion Motors providing for Li-ion Motors' license to the Company of Li-ion Motors patent applications and technologies for rechargeable lithium-ion batteries for hybrid vehicles and other applications (“Licensed Products”).
 
Under the License Agreement, Li-ion Motors has the right to purchase its requirements of lithium ion batteries from the Company, and its requirements of lithium ion batteries shall be supplied in preference to, and on a priority basis as compared with, supply and delivery arrangements in effect for our other customers.  Li-ion Motors' cost for lithium ion batteries purchased from the Company is the actual manufacturing costs for such batteries for our fiscal quarter in which Li-ion Motors purchase takes place.
 
 
8

 
 
On May 25, 2010, the agreement was amended to grant the Company the exclusive license rights for the United States and Li-ion Motors may grant other companies rights elsewhere around the world.
 
The Company agreed to invest a minimum of $1,500,000 in each of the first two years under the License Agreement in development of the technology for the Licensed Products.  In the initial year under the License Agreement, the Company invested approximately $264,043 in the development of technology, and therefore is not in compliance with its obligations under this covenant of the license agreement.  Li-ion Motors has advised the Company that it will not give notice of default against the Company for its failure to comply with this covenant over the term of the License Agreement.
 
Effective April 16, 2008, the Company agreed to lease approximately 5,000 square feet of space in Li-ion Motors’ North Carolina facility. The leased space is suitable, and utilized by the Company, for developmental and manufacturing operations for licensed products pursuant to the license agreement. The leased space is on a month-to-month basis with a monthly rental of $2,894, the monthly rental to be escalated five (5%) percent annually.  Also, effective April 16, 2008, the Company purchased certain equipment and supplies related to the license agreement from Li-ion Motors for the purchase price of $29,005.
 
 Basis of Presentation
 
Going Concern
 
The Company’s financial statements for the nine months ended April 30, 2011, have been prepared on a going concern basis which contemplates the realization of assets and settlement of liabilities and commitments in the normal course of business. The Company does not have any revenue and as of April 30, 2011, there was a working capital deficit of approximately $6.5 million. Management recognized that the Company’s continued existence is dependent upon its ability to obtain needed working capital through additional equity and/or debt financing and revenue to cover expenses as the Company continues to incur losses.
 
Since its incorporation, the Company financed its operations almost exclusively through advances from its controlling shareholders.  The Company expects to finance operations through the sale of equity or other investments for the foreseeable future, as the Company does not receive significant revenue from its new business operations.  There is no guarantee that the Company will be successful in arranging financing on acceptable terms.
 
The Company's ability to raise additional capital is affected by trends and uncertainties beyond its control.  The Company does not currently have any arrangements for financing and it may not be able to find such financing if required.  Obtaining additional financing would be subject to a number of factors, including investor sentiment.  Market factors may make the timing, amount, terms or conditions of additional financing unavailable to it.  These uncertainties raise substantial doubt about the ability of the Company to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of these uncertainties should the Company be unable to continue as a going concern.
 
Common Stock
 
On April 2, 2011, the Board approved the filing with the Secretary of State of Nevada a Certificate of Change that effected a 1:300 reverse split in our outstanding common stock and a reduction of our authorized common stock in the same 1:300 ratio, from 750,000,000 shares to 2,500,000 shares.  See Note 6 “Common Stock”, for further discussion.
 
On September 17, 2009, the Board declared a three-for-one forward stock split that was effected in the form of a stock dividend. All share and per share amounts have been restated to reflect the three-for-one forward stock split except for stockholders’ deficiency. See Note 6, “Common Stock,” for further discussion.
 
Note 2.  Summary of Significant Accounting Policies
 
The Company’s significant accounting policies are summarized in Note 1 of the Company’s Annual Report on Form 10-K for the year ended July 31, 2010.  There were no significant changes to these accounting policies during the nine months ended April 30, 2011, and the Company does not expect that the adoption of other recent accounting pronouncements will have a material impact on its financial statements.
 
 
9

 
 
Reclassifications
 
Certain prior period amounts have been reclassified to conform with current period presentations.
 
Note 3. Fair Value Measurements
 
The Company utilizes the accounting guidance for fair value measurements and disclosures for all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the condensed financial statements on a recurring basis or on a nonrecurring basis during the reporting period.  The fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based upon the best use of the asset or liability at the measurement date.  The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability.  The accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.  These tiers are defined as follows:
 
Level 1 -  Observable inputs such as quoted market prices in active markets
 
Level 2 -  Inputs other than quoted prices in active markets that are either directly or indirectly observable
 
Level 3 - Unobservable inputs about which little or no market data exists, therefore requiring an entity to develop its own assumptions
 
As of April 30, 2011, the Company held certain financial assets that are measured at fair value on a recurring basis.  These consisted of cash and cash equivalents.  The fair values of the cash and cash equivalents is determined based on quoted market prices in public markets and is categorized as Level 1.  The Company does not have any financial assets measured at fair value on a recurring basis as Level 3 and there were no transfers in or out of Level 1, Level 2 or Level 3 during the nine months ended April 30, 2011 and 2010.
 
The following table sets forth by level, within the fair value hierarchy, the Company’s financial assets accounted for at fair value on a recurring basis as of April 30, 2011 and July 31, 2010.
 
         
Assets at Fair Value as of April 30, 2011 and July 31, 2010 Using
 
          
Quoted Prices in
Active Markets for
Identical Asssets
   
Significant Other
Observable Inputs
   
Significant Observable
Inputs
 
    
Total
   
(Level 1)
   
(Level 2)
   
(Level 2)
 
April 30, 2011
                       
Cash and cash equivalents
  $ 178     $ 178     $ -     $ -  
                                 
July 31, 2010
                               
Cash and cash equivalents
  $ 158     $ 158     $ -     $ -  
 
The Company has other financial instruments, such as receivables, accounts payable and other liabilities which have been excluded from the tables above.  Due to the short-term nature of these instruments, the carrying value of receivables, accounts payable and other liabilities approximate their fair values.  The Company did not have any other financial instruments with the scope of the fair value disclosure requirements as of April 30, 2011.
 
Non-financial assets and liabilities, such as goodwill and long-lived assets, are accounted for at fair value on a nonrecurring basis.  These items are tested for impairment on the occurrence of a triggering event or in the case of goodwill, on at least an annual basis.  Management reviews long-lived assets for potential impairment whenever significant events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  An impairment exists when the carrying amount of the long-lived asset is not recoverable and exceeds its fair value.  The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the estimated undiscounted cash flows expected to result from the use and eventual depletion of the asset.  If an impairment exists, the resulting write-down would be the difference between the fair market value of the long-lived asset and the related net book value.  As of the balance sheet date, the carrying value of its long-lived assets are recoverable and no impairment existed.
 
 
10

 
 
Note 4. Property and Equipment
 
Property and equipment consists of:
 
   
April 30, 2011
   
July 31, 2010
 
             
Equipment
  $ 131,455     $ 131,455  
Leasehold improvements
    26,360       26,360  
                 
Property and equipment
    157,815       157,815  
Less: Accumulated depreciation
    (94,919 )     (85,096 )
                 
Property and equipment, net
  $ 62,896     $ 72,719  
 
Depreciation expense for the nine months ended April 30, 2011 and 2010, was $9,823 and $9,030, respectively.  For the three months ended April 30, 2011, depreciation expense was $3,482 and $3,010, respectively and is included in selling, general and administrative expenses on the Company’s statement of operations.
 
Note 5. Accounts Payable and Accrued Expenses
 
Accounts payable and accrued expenses consisted of:
 
   
April 30, 2011
   
July 31, 2010
 
             
Accounts payable
  $ 42,841     $ 36,690  
Wages, paid leave and payroll related taxes
    3,782       23,196  
Other accrued expenses
    2,400       25,000  
Accrued interest
    1,314,676       991,527  
                 
Total
  $ 1,363,699     $ 1,076,413  
 
Note 6. Common Stock
 
On April 25, 2011, the Board approved the conversion of $47,520 of debt due to Blue Diamond Investments for 220,000 shares of our common stock at a strike price of $0.216 per share.
 
On April 2, 2011, the Board approved the filing with the Secretary of State of Nevada a Certificate of Change that effected a 1:300 reverse split in our outstanding common stock and a reduction of our authorized common stock in the same 1:300 ratio, from 750,000,000 shares to 2,500,000 shares.
 
On September 17, 2009, the Company’s Board of Directors declared a three-for-one forward stock split of the Company’s common stock that was effected in the form of a stock dividend. A three-for-one forward split in our common stock was effective October 19, 2009. The Certificate of Change filed with the Nevada Secretary of State on September 18, 2009, providing for the forward split, changed the number of shares of our outstanding common stock from 115,000,000 to 345,000,000, and the number of shares of our authorized common stock increased in the same ratio, from 250,000,000 to 750,000,000. All share and per share amounts have been restated to reflect the three-for-one forward stock split except for stockholders’ deficiency.
 
See Note 7 “Net Loss Per Common Share,” for the impact on the Company’s earnings per share amounts as a result of the reverse stock split. This reverse stock split resulted in the reduction of approximately 344,885,000 shares of common stock and was accounted for by the transfer of $343,850 from common stock to additional paid-in-capital which is the amount equal to the par value of the reduction of shares to effect the reverse stock split.
 
 
11

 
 
Note 7. Net Loss Per Common Share
 
Loss per share is computed based on the weighted average number of shares outstanding during the year. Diluted loss per common share is computed by dividing net loss by the weighted average number of common shares and potential common shares during the specified periods. The Company has no outstanding options, warrants or other convertible instruments that could affect the calculated number of shares.
 
The following table sets forth the reconciliation of the basic and diluted net loss per common share computations for the nine months ended April 30, 2011 and 2010.
 
   
Nine Months Ended
   
Nine Months Ended
 
   
April 30, 2011
   
April 30, 2010
 
   
Income
   
Shares
   
Per-Share
   
Income
   
Shares
   
Per-Share
 
   
(Numerator)
   
(Denominator)
   
Amount
   
(Numerator)
   
(Denominator)
   
Amount
 
                                     
Net (loss)
  $ (378,949 )               $ (589,870 )            
                                         
Basic loss per common share
    (378,949 )     1,175,099       (0.32 )     (589,870 )     1,150,007       (0.51 )
                                                 
Effect of dilutive securities
    -                       -                  
                                                 
Diluted loss er common share
  $ (378,949 )     1,175,099       (0.32 )   $ (589,870 )     1,150,007       (0.51 )
 
 Net loss per common share for the nine months ended April 30, 2010 has been revised. This revision was immaterial to the Company’s consolidated results of operations and financial position. All share and per share amounts have been restated to reflect the one-for-three hundred reverse stock split as discussed in Note 6.
 
The amounts previously reported for nine months and three months ended April 30, 2010, were as follows:
 
   
Nine Months Ended
   
Three Months Ended
 
    
April 30, 2010
   
April 30, 2010
 
Basic and Diluted Loss Per Common Share
  $ (0.00 )   $ (0.00 )
                 
Weighted Average Number of Shares Outstanding -Basic and Diluted
    345,000,000       345,000,000  
 
Note 8. Related Party Transactions
 
On April 15, 2008, Blue Diamond assumed Li-ion Motors’ debt due from Sky Power. At April 30, 2011 and July 31, 2010, Blue Diamond was owed $4,273,838 and $4,321,358, respectively. During the three and nine months ended April 30, 2011 the Company converted $47,520 of debt for 220,000 shares of common stock at a strike price of $0.216 per share.  During the nine months ended April 30 2010, the Company did not receive or make any payments to Blue Diamond.  Interest for the nine months ended April 30, 2011 and 2010, was $323,149 and $351,250,  respectively.  Interest for the three months ended April 30, 2011 and 2010, was $105,305and $133,406,  respectively.  The related party transaction amounts are reported as current due to the relationship and bear an interest rate of 10 % per annum.
 
On December 15, 2010, the Company issued a non-interest bearing, due on demand, promissory note to Mehboob Charania, (chief executive and principal financial officer) for which it  received an advance of $74,000 and repaid $0.   The related party transaction amounts are reported as current due to the relationship.
 
Note 9. Advances
 
The Company's principal financing source in the last two fiscal years has been from its former parent, Li-ion Motors. At April 30, 2011 and July 31, 2010, the Company owed Li-ion Motors $849,067 and $841,207, respectively.  During the nine months ended April 30, 2011 and 2010, the Company received advances totaling $176,710 and $756,504, respectively; and made payments totaling $168,850  ($74,000 in cash  and $94,850  in reimbursement for one leased employee) and $441,781, respectively.  During the three months ended April 30, 2011 and 2010, the Company received advances totaling $67,430 and $593,287, respectively; and made payments  totaling $54,440 (in reimbursement for one leased employee) and $104,809, respectively.  The advances are interest free.  No term has been set for repayment and no payment is expected until the Company has begun to produce battery cells and has become a profitable venture.
 
 
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Note 10. Income Taxes
 
At April 30, 2011 and July 31, 2010, the Company has deferred tax assets as a result of the net operating losses incurred from inception. The resulting deferred tax assets are reduced by a valuation allowance as discussed in Note 1, equal to the deferred tax asset as it is unlikely, based on current circumstances, that the Company will ever realize a tax benefit. Deferred tax assets and the corresponding valuation allowances amounted to approximately $1.6 million and $1.6 million at April 30, 2011 and July 31, 2010, respectively. The statutory tax rate is 35% and the effective tax rate is zero.
 
Under current tax laws, the cumulative operating losses incurred amounting to approximately $6.5  million and $6.2  million at April 30, 2011 and July 31, 2010 respectively, will begin to expire in 2022.
 
Section 382 of the U.S. Internal Revenue Code imposes an annual limitation on loss carry-forwards to offset taxable income when an ownership change occurs.  The Company meets the definition of an ownership change and some of the net operating loss carry-forwards will be limited.
 
Note 11. Commitments and Contingencies
 
The Company entered into a month to month lease agreement with Li-ion Motors Corp. for 5,000 square feet within Li-ion Motors’ Mooresville facility on April 16, 2008 at the rate of $2,894. Approximately 80% of this space has been converted into offices and a battery development workshop including a dry room.
 
Total rent expense for the three months ended April 30, 2011 and 2010, was $10,656 and $10,125, respectively. Rental expense for the nine months ended April 30, 2011 and 2010, was $31,694 and $30,375,  respectively.
 
 Note 12. Subsequent Events
 
On May 4, 2011, Blue Diamond assigned $216,000 of its debt to Eurolink Corporation (“Eurolink”) and on June 8, 2011 Eurolink converted the assigned note for 1,000,000 shares of Common Stock at a strike price of $0.216 per share.
 
On May 4, 2011, Blue Diamond assigned $216,000 of its debt to Heritage Asset Management, Inc. (“Heritage”) and on June 8, 2011 Heritage converted the assigned note for 1,000,000 shares of Common Stock at a strike price of $0.216 per share.
 
On May 4, 2011, Blue Diamond assigned $216,000 of its debt to Kisumu S.A. (“Kisumu”) and on June 8, 2011 Kisumu converted the assigned note for 1,000,000 shares of Common Stock at a strike price of $0.216 per share.
 
On May 4, 2011, Blue Diamond assigned $216,000 of its debt to Starglow Asset, Inc. (“Starglow”) and on June 8, 2011 Starglow converted the assigned note for 1,000,000 shares of Common Stock at a strike price of $0.216 per share.
 
On May 4, 2011, Blue Diamond assigned $453,600 of its debt to Domino Developments, Inc. (“Domino”) and on June 8, 2011 Domino  converted the assigned note for 2,100,000 shares of Common Stock at a strike price of $0.216 per share.
 
On May 4, 2011, Blue Diamond assigned $453,600 of its debt to Honeycomb Developments, LLC (“Honeycomb”) and on June 8, 2011 Honeycomb  converted the assigned note for 2,100,000 shares of Common Stock at a strike price of $0.216 per share.
 
On May 4, 2011, Blue Diamond assigned $453,600 of its debt to Legend International, LLC (“Legend”) and on June 8, 2011 Legend converted the assigned note for 2,100,000 shares of Common Stock at a strike price of $0.216 per share.
 
On June 8, 2011, Blue Diamond  converted the principal balance of its note of $2,049,037.52 for 9,486,285 shares of Common Stock at a strike price of $0.216 per share.
 
 
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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 Li-ion Motors 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 2, 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.  .
 
On April 2, 2011, the Board also approved the filing with the Secretary of State of Nevada a Certificate of Change that effected a 1:300 reverse split in our outstanding common stock and a reduction of our authorized common stock in the same 1:300 ratio, from 750,000,000 shares to 2,500,000 shares.  

A three-for-one forward split in our common stock was effective October 19, 2009. The Certificate of Change filed with the Nevada Secretary of State on September 18, 2009, for the forward split changed the number of shares of our outstanding common stock from 115,000,000 to 345,000,000, and the number of shares of our authorized common stock in the same ratio, from 250,000,000 to 750,000,000.

Results Of Operations for the Three and Nine months Ended April 30, 2011

We incurred a net loss of $121,166  during the three months ended April 30, 2011, which included: general and administrative (G&A) costs of $31,549; research and development (“R&D”) expenses of  $6,080; and other income of $21,768.  During the nine months ended April 30, 2011, the Company  incurred a net loss of $378,949,  which included: G&A costs of $94,451, R&D expenses of $23,527 and other income.

2011 Compared to 2010

Our net loss for the three months ended April 30, 2011 decreased to $121,166 from $191,018 for the same period ending April 30, 2010.  The decrease was primarily due to a staff reduction in R&D and  the recognition of additional other income for a leased employee to our former parent, Li-ion Motors.

For the nine months ended April 30, 2011 our net loss decreased to $378,949 from $589,870 for the same period ending April 30, 2010. The decrease was primarily due to a staff reduction in R&D and  the recognition of additional other income for a leased employee to our former parent, Li-ion Motors.

Plan of Operations

Commercial Initiatives

We are developing rechargeable lithium ion batteries for power production for a variety of uses.  We plan to pioneer  a superlattice cathode material for the use in lithium ion rechargeable batteries.

License Agreement with Li-Ion Motors

Effective April 15, 2008, we entered into a License Agreement with Li-ion Motors, our former controlling stockholder, providing for Li-ion Motors’ license to us of their patent applications and technologies for rechargeable lithium-ion batteries for hybrid vehicles and other applications.
 
 
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Under the License Agreement, Li-ion Motors has the right to purchase its requirements of lithium ion batteries from us, and its requirements of lithium ion batteries shall be supplied in preference to, and on a priority basis as compared with, supply and delivery arrangements in effect for our other customers. Li-ion Motors cost for lithium ion batteries purchased from us will be our actual manufacturing costs for such batteries for our fiscal quarter in which Li-ion Motors’ purchase takes place. On May 25, 2010 the Agreement was amended limiting us to only the United States with Li-ion Motors able to grant other licenses to companies in other parts of the world.

Under Section 2.2 of the License Agreement, we have agreed to invest a minimum of $1,500,000 in each of the first two years of the term of the License Agreement in development of the technology for the Licensed Products. In the initial year under the License Agreement, we invested approximately $264,043 in the development of our technology, and therefore are not in compliance with our obligations under this covenant of the License Agreement.  Li-ion Motors has advised us that it will not give notice of default against us for our failure to comply with this covenant over the term of the License Agreement.

Effective April 16, 2008, we agreed to lease approximately 5,000 square feet of space in Li-ion Motors’ North Carolina facility, such Leased Space to be suitable for, and utilized by us for, our developmental and manufacturing operations for Licensed Products pursuant to the License Agreement.  The Leased Space is leased by Li-ion Motors to us on a month-to-month basis at a monthly rental of $2,894, the monthly rental to be escalated five (5%) percent annually. Effective April 16, 2008, Li-ion Motors also sold us for the purchase price of $29,005, specified equipment and supplies related to the licensed intellectual property.
 
Liquidity and Capital Resources

As of April 30, 2011, we had cash on hand of $178 and liabilities of $6,560,604 as compared with $6,238,978 at July 31, 2010, and our property plant and equipment decreased to $62,896 at April 30, 2011, as compared with $72,719 at July 31, 2010. Accounts payable and accrued expenses increased at April 30, 2011, to $1,363,699 as compared with $1,076,413 at July 31, 2010, and notes payable increased to $849,067 at April 30, 2011, as compared to $841,207 at July 31, 2010.

At April 30, 2011, we had a working capital  deficiency of $6,560,426 and a stockholders' deficit of $6,497,530.

We used net cash in operating activities of $81,838 in the nine months ended April 30, 2011, as compared with $352,200  in the comparable period in 2010, and cash flows used in investing activities for the purchase of property, plant and equipment was $0 during 2011 and $0 in 2010.

During the nine months ended April 30, 2011, we received $74,000 and repaid $0 to a related party as compared with advances from related parties of $523,703 and repayments of $610,400  in 2010.

During the nine months ended April 30, 2011, the Company converted $47,520 of its debt to Blue Diamond for 220,000 shares of common stock at a strike price of $0.216 per share.

For the nine months ended April 30, 2011, we received $176,710 from the proceeds of issuing a promissory note to Li-ion Motors Corp. and repaid $168,850, with a net effect of $7,860. During the nine months ended April 30, 2010, we received $756,504 from the proceeds of issuing a promissory note to Li-ion Motors Corp. and repaid $441,781, with a net effect of $314,723.

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 continuation as a going concern is in dependent  upon continued financial support from our shareholders and other related parties.
 
 
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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.

ITEM 3.  Quantitative and Qualitative Disclosures About Market Risk.

Commodity Price Risk – The raw materials for manufacturing our batteries could be affected by changes in the commodities markets, and if we commence manufacturing our own lithium ion batteries, we could be subject to this risk.

ITEM 4T. Controls and Procedures.

 The Company's Chief Executive Officer and Principal Financial Officer is primarily responsible for the accuracy of the financial information that is presented in this Quarterly Report.  This officer has, as of the close of the period covered by this Quarterly Report, evaluated the Company's disclosure controls and procedures (as defined in Rules 13a-14c and 15d-14c promulgated under the Securities Exchange Act of 1934) and determined that such controls and procedures were effective in ensuring that material information relating to the Company was made known to him during the period covered by this Quarterly Report.  In such officer’s evaluation, no changes were made to the Company's internal controls in this period that have materially affected, or are reasonably likely materially to affect, the Company’s internal control over financial reporting.
 
PART II. OTHER INFORMATION
 

 
ITEM 6. Exhibits

31
 
Certification  of  Chief Executive Officer and Principal  Financial Officer Pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002, filed herewith.
     
32
 
Certification of Chief Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section  1350,  as Adopted  Pursuant  to  Section  906 of the Sarbanes-Oxley Act of 2002, filed herewith.
 
 
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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.

   
SKY POWER SOLUTIONS CORP.
     
By:
 
/s/ Mehboob Charania
   
Chief Executive Officer and Principal Financial Officer
     
   
Date: June 14, 2011
 
 
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