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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

 

(Mark One)

☑ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2017

OR

POWIN ENERGY CORPORATION

(Name of small business issuer in its charter)

Indicate by check mark if registrant is a well-known seasoned issuer, as defined under Rule 405 of the Securities Act   Yes  ☐  No☑

Indicate by check mark if registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act . Yes  ☐  No☑

 

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 during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  Yes ☐  No ☑

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

 

 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes   ☐  No ☑

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter, June 30, 2017: $4,684,882.

 

As of April 16, 2018, there were 45,263,070 shares of the issuer’s common stock outstanding.

 

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In this report, unless the context indicates otherwise, the terms "Powin," "Company," "we," "us," and "our" refer to Powin Energy Corporation, a Nevada corporation, and its subsidiaries.

 

 

 

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, or the "Securities Act," and Section 21E of the Securities Exchange Act of 1934 or the "Exchange Act."  These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or anticipated results.

 

In some cases, you can identify forward looking statements by terms such as "may," "intend," "might," "will," "should," "could," "would," "expect," "believe," "anticipate," "estimate," "predict," "potential," or the negative of these terms. These terms and similar expressions are intended to identify forward-looking statements. The forward-looking statements in this report are based upon management's current expectations and belief, which management believes are reasonable.  In addition, we cannot assess the impact of each factor on our business or the extent to which any factor or combination of factors, or factors we are aware of, may cause actual results to differ materially from those contained in any forward-looking statements.  You are cautioned not to place undue reliance on any forward-looking statements.  These statements represent our estimates and assumptions only as of the date of this report. Except to the extent required by federal securities laws, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

 

You should be aware that our actual results could differ materially from those contained in the forward-looking statements due to a number of factors, including:

Other risks and uncertainties include such factors, among others, as market acceptance and market demand for our products and services, pricing, the changing regulatory environment, the effect of our accounting policies, potential seasonality, industry trends, adequacy of our financial resources to execute our business plan, our ability to attract, retain and motivate key technical, marketing and management personnel, and other risks described from time to time in periodic and current reports we file with the United States Securities and Exchange Commission, or the "SEC." You should consider carefully the statements under "Item 1A. Risk Factors" and other sections of this report, which address additional factors that could cause our actual results to differ from those set forth in the forward-looking statements and could materially and adversely affect our business, operating results and financial condition. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the applicable cautionary statements.

 

 

PART I

 

ITEM 1.  BUSINESS

Powin Energy Corporation (“Company”, “we”, “us”) is a leading producer, designer and developer of commercially proven, cost-competitive, safe and scalable lithium-ion based energy storage solutions for utilities and microgrid. Our primary product is the Stack140 (“Stack”), a modular, flexible, purpose-built battery string that is easily and cost-effectively scalable from a single unit to multiple megawatts of capacity. Over the past 8 years we applied our competitive advantages to the nascent energy storage sector and are currently among the market leaders in providing utility-scale, turnkey battery energy storage solutions. 

The Company was founded in 1989 in Oregon and until 2016, operated as a contract manufacturer selling diverse products for leading North American retailers. In 2016, the Company sold off its contract manufacturing businesses to become a pure-play stationary energy storage company, and on October 6, 2016, completed a merger between Powin Corporation and its subsidiary Powin Energy Corporation, with the surviving entity Powin Corporation changing its name to Powin Energy Corporation. The Company is focused on the rapidly growing advanced energy storage industry, supported by its cutting edge and patented technology.

Competition

 

The international market for such energy products and services is intensely competitive and continually impacted by evolving industry standards, international and regional governmental regulations, rapid price changes and product obsolescence. Competitors in this market include several domestic and foreign companies, most of which have substantially greater financial, technical, marketing, manufacturing and other resources.  We believe that the Company currently presents a unique perspective in taking advantage of the value chain in battery energy storage compared to much of the competitive landscape.  While we are and will likely continue to be at a competitive disadvantage to most of our competitors in regard to company financial strength, we believe though patented technology and sophisticated procurement channels we will continue to produce a high-quality competitively priced product across multiple energy industry segments. 

 

 

 

We currently operate in one business segment, energy.  Geographical Stack sales and the development and operation of individual energy projects are held within consolidated legal entities. Below is a table listing the legal entities presented in this report, along with the corresponding business segment names and, for the purposes of continuity, the legal entity and segment names as disclosed in our previous filings:

 

As described in this Report		As described in 2016 Form 10K
Legal entity name	Business segment name	Legal entity name	Business segment Name
Powin Energy Corporation	Energy	Powin Energy Corporation	Energy
		Powin Corporation	Holding company
		Powin Industries S.A. de C.V.	Mexico
		Q Pacific Contract Manufacturing Corporation	Contract manufacturing
		Q Pacific Manufacturing Corporation	Manufacturing
Powin Canada B.C. Ltd	Energy
PPA Grand Johanna, LLC (1)	Energy
Powin SBI, LLC (1)	Energy
Don Lee BESS, LLC (1)	Energy
Powin Energy Ontario Storage II, LP	Energy
Powin Energy Storage 2, Inc.	Energy
Powin Energy Ontario Storage, LLC	Energy

 

Since 2014, the Company has met all requirements for certification as a bona fide Minority Business Enterprise defined by the National Minority Supplier Development Council, Inc. (NMSDC) and as adopted by the Northwest Minority Supplier Development Council. 

 

 

 

Our BESS products are sold to third parties that likely are required to comply with certain governmental regulations and attain approvals. We intend to design our products to minimize the regulatory burden to our customer but expect that our principal products and services may require governmental approvals to comply with certain government regulations.

 

We continue to monitor the changing governmental regulations so our business can comply with all rules and regulations.

We continue to monitor changing environmental laws to assure that our business can comply with all rules and regulations.

 

 

As of December 31, 2017, we employed 21 employees at our facilities in the United States.

 

ITEM 1A.  RISK FACTORS

This report includes forward-looking statements about our business and results of operations that are subject to risks and uncertainties. See "Forward-Looking Statements," above. Factors that could cause or contribute to such differences include those discussed below. In addition to the risk factors discussed below, we are also subject to additional risks and uncertainties not presently known to us or that we currently deem immaterial. If any of these known or unknown risks or uncertainties actually occur, our business could be harmed substantially.

RISKS RELATED TO OUR BUSINESS

The impact of the economic climate affecting our customers and tight financing markets may impact demand for our products and services.

 

Many of our existing and target customers are in the utility and power generation business sector. If these businesses experience economic hardship, it could negatively affect the overall demand for our products and services and, could cause delay and lengthen sales cycles and could cause our revenues to decline. Challenging economic conditions could have a negative impact on the results of our operations.

We may need additional capital and we may not be able to obtain it, which could adversely affect our liquidity and financial position.

We have relied on borrowings from individuals and companies with close ties to the Company for operating cash flows. While we believe that we will be able to continue to raise working capital from these and other sources for the foreseeable future, we cannot be assured that these sources will continue to meet our working capital needs. In order to meet potential cash needs, we may be required to sell additional equity or issue debt securities. The potential sale of additional equity securities could result in additional dilution to our existing shareholders; however, the incurrence of indebtedness would result in increased debt service obligations and bind us to operating and financing covenants that would restrict our operations and liquidity.

Our ability to obtain additional capital on acceptable terms is subject to a variety of uncertainties, including: investors’ perception of, and demand for, securities of alternative product suppliers; conditions of the United States and other capital markets in which we may seek to raise funds; and our future results of operations, financial condition and cash flows.

 

We cannot offer any assurances that financing will be available in amounts or on terms acceptable to us, if at all. Any failure to raise additional funds on terms favorable to us could have a material adverse effect on our liquidity and financial condition.

 

There may be deficiencies with our internal controls that require improvements, and we will be exposed to potential risks from legislation requiring companies to evaluate controls under Section 404 of the Sarbanes-Oxley Act of 2002.

While we believe that we currently have adequate internal control procedures in place, we are still exposed to potential risks from legislation requiring companies to evaluate controls under Section 404a of the Sarbanes-Oxley Act of 2002. Under the supervision and with the participation of our management, we have evaluated our internal controls system in order to allow management to report on our internal controls, as required by Section 404 of the Sarbanes-Oxley Act. We have performed the system and process evaluation and testing required in an effort to comply with the management certification requirements of Section 404. As a result, we have incurred additional expenses and a diversion of management’s time. If we are not able to meet the requirements of Section 404 in a timely manner or with adequate compliance, we might be subject to sanctions or investigation by regulatory authorities, such as the SEC.

 

If we do not maintain proper disclosure controls and procedures, our ability to produce accurate and timely financial statements could be impaired which could adversely affect our business, operating results and financial condition.

 

While the audit of our financial statements by our independent registered public accounting firm has included a consideration of internal control over financial reporting as a basis of designing audit procedures, the accounting firm has not considered internal controls over financial reporting for the purpose of expressing an opinion with respect to the effectiveness of our internal controls over financial reporting. If such an evaluation had been performed, material weaknesses or other control deficiencies may have been identified. In addition, material weaknesses and other control deficiencies may be identified when our management performs evaluations of internal controls in the future. Ensuring that we have adequate internal financial and accounting controls and procedures that allow us to produce accurate financial statements on a timely basis is costly and time-consuming and we are required to evaluate these controls frequently.

 

 

Manufacturing internationally may create risks.

There are many risks associated with international business. These risks include, but are not limited to, language barriers, fluctuations in currency exchange rates, political and economic instability, regulatory compliance difficulties, problems enforcing agreements and greater exposure of our intellectual property to markets where a high probability of unlawful appropriation may occur. A failure to mitigate any of these potential risks could damage our business.

 

Product liability and product warranty risks could adversely affect our operating results.

 

We maintain insurance addressing the risk of product liability claims arising from bodily injury or property damage, but there can be no assurance that the insurance coverage will be adequate or will continue to be available on terms acceptable to us. If we fail to meet the contractual requirements for a product, we may be subject to product warranty costs and claims. Product warranty costs are generally not insured.

 

Our quarterly operating results are difficult to predict and may fluctuate significantly from period to period in the future.

Our quarterly operating results are difficult to predict and may fluctuate significantly from period to period.  As a result, you may not be able to rely on period-to-period comparisons of our operating results as an indication of our future performance.  If our revenues for a particular quarter are lower than we expect, we may be unable to reduce our operating expenses for that quarter by a corresponding amount, which would harm our operating results for that quarter relative to our operating results from other quarters.

Our future acquisitions may expose us to potential risks and have an adverse effect on our ability to manage our business.

Selective acquisitions will form a part of our strategy to further expand our business. If we are presented with appropriate opportunities, we may acquire additional businesses, services or products that are complementary to our core business. Our integration of the acquired entities into our business may not be successful and may not enable us to expand into new manufacturing platforms as successful as we expect. This would significantly affect the expected benefits of these acquisitions. Moreover, the integration of any future acquisitions will require significant attention from our management.

 

The diversion of our management’s attention and any difficulties encountered in any integration process could have an adverse effect on our ability to manage our business. In addition, we may face challenges trying to integrate new operations, services and personnel with our existing operations. Future acquisitions may also expose us to other potential risks, including risks associated with unforeseen or hidden liabilities, the diversion of resources from our existing businesses and technologies, our inability to generate sufficient revenue to offset the costs, expenses of acquisitions and potential loss of, or harm to, relationships with employees and customers as a result of our integration of new businesses and new regulations. In addition, we cannot assure you that we will be able to realize the benefits we anticipate from acquiring other companies or that we will not incur costs, including those relating to intangibles or goodwill, in excess of our projected costs for these transactions. The occurrence of any of these events could have a material and adverse effect on our ability to manage our business, our financial condition and our results of operations.

 

There may be unknown risks inherent in our acquisitions of companies which could result in a material adverse effect on our business.

We will conduct due diligence with respect to any acquisition we undertake, but we may not be aware of all of the risks associated with any of the acquisitions. Any discovery of adverse information concerning any of these acquisitions could have a material adverse effect on our business, financial condition and results of operations. While we may be entitled to seek indemnification in certain circumstances, successfully asserting indemnification or enforcing such indemnification could be costly and time consuming or may not be successful at all.

Failure to manage our growth could strain our management, operational and other resources and we may not be able to achieve anticipated levels of growth in this new emerging industry in which we hope to operate, either of which could materially and adversely affect our business and growth potential.

We plan to expand, our operations in the United States, Canada, China and other countries. To manage our growth, we must develop and improve our existing administrative and operational systems and, our financial and management controls and further expand, train and manage our work force. As we continue this effort, we may incur substantial costs and expend substantial resources in connection with any such expansion due to, among other things, different technology standards, legal considerations and cultural differences. We may not be able to manage our current or future international operations effectively and efficiently or compete effectively in such markets. We cannot assure you that we will be able to efficiently or effectively manage the growth of our operations, recruit top talent and train our personnel. Any failure to efficiently manage our expansion may materially and adversely affect our business and future growth.

 

 

Unauthorized use of our intellectual property by third parties, and the expenses incurred in protecting our intellectual property rights, may adversely affect our business.

 

We regard our trade secrets and other intellectual property as critical to our success. Unauthorized use of the intellectual property used in our business may adversely affect our business and reputation.

We have historically relied on a combination of patent, trademark and copyright law, trade secret protection and restrictions on disclosure to protect our intellectual property rights. We enter into confidentiality and invention assignment agreements with all our employees. We cannot assure you that these confidentiality agreements will not be breached, that we will have adequate remedies for any breach, or that our proprietary technology will not otherwise become known to, or be independently developed by third parties.

We may register in China the trademarks used in our business. We cannot offer any assurances that any of our trademark applications will ultimately proceed to registration or will result in registration with scope adequate for our business. Some of our applications or registration may be successfully challenged or invalidated by others. If our trademark applications are not successful, we may have to use different marks for affected services or technologies or enter into arrangements with any third parties who may have prior registrations, applications or rights, which might not be available on commercially reasonable terms, if at all.

 

In addition, policing unauthorized use of our proprietary technology, trademarks and other intellectual property is difficult and expensive, and litigation may be necessary in the future to enforce our intellectual property rights. Future litigation could result in substantial costs and diversion of our resources, and could disrupt our business, as well as have a material adverse effect on our financial condition and results of operations.

We face significant competition, and if we do not compete successfully against new and existing competitors, we may lose our market share, and our profitability may be adversely affected.

We compete with other energy storage companies in the United States and globally. We compete for customers primarily on the basis of price, the range and quality of services that we offer and our brand name.  Increased competition could reduce our operating margins and profitability and result in a loss of market share. Some of our existing and potential competitors may have competitive advantages such as significantly greater financial, marketing or other resources, or exclusive arrangements with desirable clients and manufacturers, and others may successfully mimic and adopt our business model.  We cannot offer any assurance that we will be able to successfully compete against new or existing competitors.

RISKS RELATING TO REGULATION OF OUR BUSINESS AND TO OUR STRUCTURE

Contractual arrangements we have entered into may be subject to scrutiny by the tax authorities and a finding that we owe additional taxes or are ineligible for our tax exemption, or both, could substantially increase our taxes owed, and reduce our net income and the value of your investment.

Under local law, arrangements and transactions among related parties may be subject to audit or challenge by the local tax authorities. If any of the transactions we have entered into with our distributor are found not to be on an arm’s-length basis, or to result in an unreasonable reduction in tax under local tax law, the tax authorities have the authority to disallow our tax savings, adjust the profits and losses of our respective entities and assess late payment interest and penalties. A finding by the tax authorities that we are ineligible for our tax exemptions, would substantially increase our taxes owed and reduce our net income and the value of your investment. As a result of this risk, you should evaluate our results of operations and financial condition without regard to these tax savings.

Our business operations may be affected by legislative or regulatory changes.

Changes in laws and regulations or the enactment of new laws and regulations governing our business licenses or otherwise affecting our business in China may materially and adversely affect our business prospects and results of operations. We are not certain how the local government will implement any regulation or how it may affect our ability to compete in the manufacturing industry in China. We are particularly concerned with any regulations that might give rise to possible trade issues between China and the United States, and the effects of those regulations on our business. Accordingly, we need to conduct due diligence as to any possible regulations that might arise and substantially affect our operations. Further, we need to make every effort to hedge against any government regulation which may materially alter our business model.

 

RISKS RELATING TO BUSINESS IN CHINA

Much of our success is derived from our relationships and business dealings with manufacturing companies in China, and a significant portion of our final product is derived from manufacturers in China. Accordingly, our business, financial condition, results of operations and prospects are subject to a significant extent, to economic, political and legal developments in China.

 

 

The economic, political and social conditions, as well as governmental policies, could affect the financial markets in China and our liquidity and access to capital and our ability to operate our business.

China’s economy differs from the economies of most countries in many respects, including the amount of government involvement, level of development, growth rate, control of foreign exchange, and allocation of resources. While China’s economy has experienced significant growth over the past, growth has been uneven, both geographically and among various sectors of the economy. The Chinese government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures benefit the overall Chinese economy but may also have a negative effect on us. This may encourage foreign manufacturing companies with more experience, greater technological know-how and larger financial resources than we have to compete against us and limit the potential for our growth. Moreover, our financial condition and results of operations may be adversely affected by government control over capital investments or changes in tax regulations that are applicable to us.

 

China’s legal system embodies uncertainties which could limit the legal protections available to you and us.

 

Foreign currency fluctuations and inflationary pressures may have a negative impact on our financial condition and results of operations.

Our operations in China and Canada subject us to foreign currency fluctuations and inflationary pressures which may adversely affect our financial position and results of operations. Since we report our results of operations and financial condition in U.S. dollars, fluctuations in foreign currencies relative to the U.S. dollar may impact our financial results. We do not currently have a hedging program to address foreign currency fluctuations. Any steps taken by us to address foreign currency fluctuations may not eliminate all adverse effects.

 

RISKS RELATED TO OUR COMMON STOCK

Our stock is a penny stock.  Trading of our stock may be restricted by the Securities and Exchange Commission’s penny stock regulations which may limit a stockholder’s ability to buy and sell our stock.

Our stock is a penny stock.  The Securities and Exchange Commission has adopted Rule 15g-9 which generally defines “penny stock” to be any equity security that has a market price of less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities will be covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors”. The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the Securities and Exchange Commission which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.  

 

 

The Financial Industry Regulatory Authority, or FINRA, has adopted sales practice requirements which may also limit a stockholder’s ability to buy and sell our stock.

In addition to the “penny stock” rules described above, FINRA has adopted rules that require, that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.

Our common stock is illiquid, and the price of our common stock may be negatively impacted by factors which are unrelated to our operations

 

Our common stock currently trades on a limited basis on the OTC Bulletin Board. Trading of our stock through the OTC Bulletin Board is frequently thin and highly volatile. There is no assurance that a sufficient market will develop in our stock, in which case it could be difficult for shareholders to sell their stock. The market price of our common stock could fluctuate substantially due to a variety of factors, including market perception of our ability to achieve our planned growth, quarterly operating results of our competitors, trading volume in our common stock, changes in general conditions in the economy and the financial markets or other developments affecting our competitors or us. In addition, the stock market is subject to extreme price and volume fluctuations. This volatility has had a significant effect on the market price of securities issued by many companies for reasons unrelated to their operating performance and could have the same effect on our common stock.

 

The concentration of stock ownership by Joseph Lu, our Chief Executive Officer, may prevent new investors from influencing significant corporate decisions.

Joseph Lu and his family hold the majority of our issued and outstanding common stock. As a result, these shareholders will be able exercise control over all matters requiring shareholder approval, including the election of directors, amendments to our Articles of Incorporation and approval of major corporate transactions.

We do not expect to declare any dividends in the foreseeable future.

We do not anticipate declaring any cash dividends to holders of our common stock in the foreseeable future. Consequently, investors may need to rely on the sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investment.

 

ITEM 1B.  UNRESOLVED STAFF COMMENTS

There are no unresolved staff comments.

ITEM 2.  PROPERTIES

As of December 31, 2017, our principal properties consisted of the following:

 

Nature	Location	Held
Corporate headquarters	Tualatin, Oregon	Lease
Energy System	Stratford, Ontario	Lease land, own buildings

    

ITEM 3.  LEGAL PROCEEDINGS

We are not a party to any pending legal proceedings.

ITEM 4.  MINE SAFETY DISCLOSURES

Not applicable.

 

 

PART II

ITEM 5.  MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is traded under the symbol “PWON.OB.” Our common stock has been trading since September 30, 2010. The following table sets forth the quarterly high and low sales prices of our common stock for the last two fiscal years.  Such prices are inter-dealer quotations without retail mark-ups, mark-downs or commissions, and may not represent actual transactions.

 

 

Our common stock is subject to Rule 15g-9 of the Securities and Exchange Commission, known as the Penny Stock Rule which imposes requirements on broker/dealers who sell securities subject to the rule to persons other than established customers and accredited investors.  For transactions covered by the rule, brokers/dealers must make a special suitability determination for purchasers of the securities and receive the purchaser's written agreement to the transaction prior to sale.  The Securities and Exchange Commission also has rules that regulate broker/dealer practices in connection with transactions in "penny stocks." Penny stocks generally are equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in that security is provided by the exchange or system.  The Penny Stock Rules requires a broker/dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document prepared by the SEC that provides information about penny stocks and the nature and level of risks in the penny stock market.  The broker/dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker/dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations, and the broker/dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation.  These disclosure requirements have the effect of reducing the level of trading activity in the secondary market for our common stock. As a result of these rules, investors may find it difficult to sell their shares.

 

There were no shares issued other than to these directors and no shares were repurchased during the periods presented.

Dividend Policy

We have not paid any cash dividends on our common stock.  It is anticipated that our future earnings will be retained to finance our continuing development.  The payment of any future dividends will be at the discretion of our board of directors and will depend upon, among other things, future earnings, any contractual restrictions, success of business activities, regulatory and corporate law requirements and our general financial condition.

 

ITEM 6.      SELECTED FINANCIAL DATA

We are a smaller reporting company as defined by Rule 229.10(f) (1) and are not required to provide the information required by this Item.

 

 

ITEM 7.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Industry experts project the energy market to grow an average of 60% per year over the next five years.  The Company is targeting continuing its meaningful market share in North America and the Company will pursue strategic investment and partnerships which will allow for aggressive global growth.

Creating or maintaining a market position in certain strategically targeted markets and energy applications also requires us to adapt to new and changing market conditions. For example, our offerings from time to time may need to be competitively priced at levels associated with minimal gross profit margins, which may adversely affect our results of operations. We expect the profitability associated with our various sales offerings to vary from one another over time, and possibly vary from our internal long-range profitability expectations and targets, depending on the market opportunity and the relative competitiveness of our offerings compared with other energy solutions, traditional or otherwise, that are available to potential customers. In addition, as we execute on our long-term strategic plans, we will continue to monitor and adapt to any changing dynamics in emerging technologies. We will also continue to monitor and adapt to any changing dynamics in the market set of potential buyers of energy storage projects. Market environments with few potential project buyers and a higher cost of capital would generally exert downward pressure on the potential revenue from the energy storage projects we are developing, whereas, conversely, market environments with many potential project buyers and a lower cost of capital would likely have a favorable impact on the potential revenue from such battery projects.

 

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On occasion, we may temporarily own and operate certain systems with the intention to sell them at a later date. We may also elect to construct and temporarily retain ownership interests in partially contracted or uncontracted systems for which there is a partial or no Power Purchase Agreement (“PPA”) with an off-taker, such as a utility, but rather an intent to sell a portion of or all the electricity produced by the system on an open contract basis until the system is sold. Expected revenue from projects without a PPA for the full offtake of the system is subject to greater variability and uncertainty based on market factors and is typically lower than projects with a fully contracted PPA. Additionally, our business arrangements with strategic partners have and may in the future result in us temporarily retaining a noncontrolling ownership interest in the underlying systems projects we develop, supply Stacks to, or construct, potentially for a period of up to several years. In each of the above-mentioned examples, we may retain such ownership interests in a consolidated or unconsolidated separate entity.

 

We continually evaluate forecasted global demand, competition, and our addressable market, and seek to effectively balance manufacturing capacity with market demand and the nature and extent of our competition. Potential investments to add or otherwise modify our manufacturing capacity in response to market demand and competition may require significant internal and possibly external sources of liquidity and may be subject to certain risks and uncertainties described in Item 1A. “Risk Factors”.

 

Date of borrowing	Lender	Due Date		Interest rate		Amount
January 26, 2017	Joseph Lu	January 26, 2019		7%		$	1,000,000
June 5, 2017	Joseph Lu	January 4, 2018		6%		$	1,000,000
June 28, 2017	Xiaoyin Zhu	September 27, 2017		10%		$	3,000,000
June 28, 2017	Joseph Lu	January 27, 2018		6%		$	1,000,000
February 2, 2017	Xilong Zhu	March 1, 2017		0%		$	17,550

Date of borrowing	Lender	Due Date		Interest rate		Amount
March 16, 2017	Wolf Creek Capital, LLC	March 16, 2019		6.00%		$	2,000,000
June 13, 2017	Pao Chu Lin	June 14, 2018		10.00%		$	150,000
September 26, 2017	Brookfield BRP Holdings (Canada) Inc.	September 30, 2020		8.75%		$	4,446,213

The Company’s management does not believe the current cash and cash flow from operations will be sufficient to meet anticipated cash needs, including cash for working capital and capital expenditures in the foreseeable future. The Company will likely require additional cash resources that will require the Company to sell additional equity securities or debt securities. The sale of convertible debt securities or additional equity securities could result in additional dilution to the company’s stockholders. The incurrence of additional indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations and liquidity.

 

 

ITEM 7A.  QUANTITATIVE AND QUALITIATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company, as defined by Rule 229.10(f) (1) and are not required to provide the information required by this Item.

 

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

The Company’s financial statements are stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles.

It is the opinion of management that the audited financial statements for the calendar years ended December 31, 2017 and 2016 include all adjustments necessary in order to ensure that the audited financial statements are not misleading.

 

 

The following financial statements are filed as part of this annual report:

 

---

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the shareholders and board of directors of

Powin Energy Corporation

20500 SW 115th Avenue

Tualatin, Oregon 97062

 

Opinion on the Financial Statements

 

We have audited the accompanying consolidated balance sheet of Powin Energy Corporation and its subsidiaries (collectively, the “Company”) as of December 31, 2017, and the related consolidated statement of operations, comprehensive loss, stockholders’ deficit, and cash flows for the year then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017, and the results of their operations and their cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Going Concern Matter

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

/s/ MaloneBailey, LLP

We have served as the Company's auditor since 2017.

Houston, Texas

April 16, 2018

---

POWIN ENERGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

POWIN ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

		Years ended December 31,
		2017				2016
Sales
Product sales		$	47,597			$	337,153
Revenue from energy storage assets			5,123,889				-
Sales total			5,171,486				337,153
Cost of sales
Product sales			1,103,289				448,541
Cost from energy storage assets			5,303,199				-
Cost of sales total			6,406,488				448,541
Gross loss			(1,235,002	)			(111,388	)
Operating expenses:
Research and development			440,563				27,910
Selling, general and administrative			6,094,099				4,209,541
Total operating expenses			6,534,662				4,237,451
Operating loss			(7,769,664	)			(4,348,839	)
Other income (expenses):
Interest income (expense), net			39,833				(65,594	)
Other income, net			422,353				11,806
Loss on extinguishment of debt			(8,201,824	)			-
Loss on sale of subsidiaries			-				(1,065,660	)
Equity in loss of unconsolidated affiliates			(43,726	)			-
Other income (expense)			(7,783,364	)			(1,119,448	)
Loss before taxes			(15,553,028	)			(5,468,287	)
Income tax expense (benefit)			(10,614	)			7,500
Net loss from continuing operations			(15,542,414	)			(5,475,787	)
Loss from discontinued operations, net of income taxes			-				(1,719,906	)
Net loss before non-controlling interest			(15,542,414	)			(7,195,693	)
Net loss attributable to non-controlling interest			-				(523,988	)
Net loss		$	(15,542,414	)		$	(6,671,705	)
Basic and diluted net loss per share:
From continuing operations			(0.40	)			(0.21	)
From discontinued operations			-				(0.08	)
Combined loss per share attributable to common stockholders		$	(0.40	)		$	(0.29	)
Weighted-average number of shares used in per share calculations:
Basic and diluted			38,803,459				22,916,392

POWIN ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (audited)

		Years ended December 31,
		2017				2016
Net loss		$	(15,542,414	)		$	(5,475,787	)
Other comprehensive loss
Foreign currency translation adjustment			(14,965	)			(25,782	)
Comprehensive loss			(15,557,379	)			(5,501,569	)
Comprehensive loss attributable to non-controlling interest			0				(523,988	)
Comprehensive loss attributable to Powin Corporation		$	(15,557,379	)		$	(4,977,581	)

POWIN ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

		Series A Preferred Shares				Series A Preferred Shares Amount($)				2015 August Preferred Shares				2015 August Preferred Shares Amount($)				Common Stock Shares				Common Stock Shares Amount($)				Additional Paid-in Capital				Accumulated Other Comp. Income				Accumulated Deficit				Total Powin Energy  Corporation Stockholders' Equity				Minority Interest in Subsidiary				Total Powin Energy  Corporation Shareholders' Deficit and Minority Interest
Balance at 12/31/2015			10,237				1,023,700				13,625,826				7,630,464				16,255,839				16,256				23,909,992				(56,176	)			(22,060,870	)			10,463,366				(3,139,600	)			7,323,766
Foreign currency translation			-				-				-				-				-				-				-				(35,695	)			-				(35,695	)			9,913				(25,782	)
Preferred dividends declared			1,272				127,200				-				-				-				-				(127,200	)			-				-				-				-				-
Minority Interest decrease due to purchase 15% of non controlling interest			-				-				-				-				-				-				(818,324	)			-				-				(818,324	)			792,663				(25,660	)
Preferred Stock to convert common stock			-				-				(13,625,826	)			(7,630,464	)			13,625,826				13,626				7,616,838				-				-				-				-				-
Stock option comp expense			-				-				-				-				-				-			$	88,130				-				-				88,130				-				88,130
Shares issued for consulting			-				-				-				-				89,961				90				26,898				-				-				26,988				-				26,988
Shares issued for services			-				-				-				-				6,000				6				1,794				-				-				1,800				-				1,800
Shares issued for compensation			-				-				-				-				1,822,620				1,823				255,167				-				-				256,990				-				256,990
Disposal subsidiaries			-				-				-				-				-				-				(2,861,011	)			91,871				-				(2,769,140	)			2,861,012				91,872
Net loss			-				-				-				-				-				-				-				-				(4,951,799	)			(4,951,799	)			(523,988	)			(5,475,787	)
Assumption of debt			-				-				-				-				5,296,169				5,296				(5,296	)			-				-				-				-				-
Held for sale			-				-				-				-				-				-				-				-				(1,719,906	)			(1,719,906	)			-				(1,719,906	)
Balance at 12/31/2016			11,509				1,150,900				-				-				37,096,415				37,097				28,086,988				-				(28,732,576	)			542,409				0				542,409
Preferred stock to convert common stock			(11,509	)			(1,150,900	)			-				-				11,509				12				1,150,888				-				-				-				-				-
Conversion from notes payable																			8,155,146				8,155				14,344,902												14,353,057								14,353,057
Stock option comp expense			-				-				-				-				-				-				941,905				-				-				941,905				-				941,905
Accumulated other comprehensive loss																															(14,965	)							(14,965	)							(14,965	)
Net loss			-				-				-				-				-				-				-				-				(15,542,414	)			(15,542,414	)			-				(15,542,414	)
Balance at 12/31/2017			-				-				-				-				45,263,070				45,264				44,524,683				(14,965	)			(44,274,990	)			279,992				0				279,992

		December 31, 2017				December 31, 2016
Raw materials		$	543,373			$	547,953
Finished goods			1,307,981				1,221,001
Reserve for slow moving  and obsolete inventory			(1,540,790	)			(469,333	)
Inventories, net		$	310,564			$	1,299,621

Equipment	7-15 years
Leasehold improvements	39 years
Computers	3-5 years
Vehicles	5-7 years
Furniture and fixtures	3-5 years

•	Level 1:  Observable inputs such as quoted prices in active markets;

•	Level 2:  Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and

•	Level 3:  Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

Project Assets			December 31, 2017				December 31, 2016
PPA Grand Johanna - 2 MW / 8 MWh energy storage project connected to the Southern California Edison Distribution System in Irvine, California.		$	-			$	4,882,025
Powin Energy Ontario Storage II - 8.8 MW / 40.8 MWh energy storage project located in Stratford, Ontario			16,036,152				0
Total project assets		$	16,036,152			$	4,882,025

		December 31, 2017				December 31, 2016
Equipment			50,385				50,385
Leasehold improvements			7,564				7,564
Computers			99,365				99,365
Vehicles			32,983				32,983
			190,297				190,297
Accumulation depreciation			(118,420	)			(81,755	)
Property and equipment, net		$	71,877			$	108,542

		For the years ended December 31,
		2017				2016
Net loss attributable to Powin Corporation (A)			(15,542,414	)			(6,671,705	)
Less preferred share dividends			-				(127,200	)
Net loss available to Powin Corporation (B)			(15,542,414	)			(6,798,905	)
Weighted average outstanding shares of  common stock (C)			38,803,459				22,916,392
Dilutive effect of securities			-				-
Common stock and common stock equivalents (D)			38,803,459				22,916,392
Loss per share
Basic (B/D)		$	(0.40	)		$	(0.29	)
Diluted (B/D)		$	(0.40	)		$	(0.29	)

		December 31, 2017				December 31, 2016
Series A preferred stock			-				230,180
Warrants			100,000				100,000
Stock options			2,128,603				102,000
			2,228,603				432,180

		December 31, 2017								December 31, 2016
		Current				Non Current				Current				Non Current
Loan from a third party, originating March 16, 2017, due March 16, 2019, at 6% interest, with a security interest in the Company’s ownership stake in Powin Canada B.C. Ltd and a $1 million personal guarantee from Joseph Lu. Subject to meeting the requirements of a qualified financing event within 24 months of the date of this note, the note holder will have the right to convert the note balance into offered securities. The first $1 million of the note balance is eligible to be converted at 90% of the price paid per share under the qualified financing, and the remaining balance at the same price per share paid by the other participants.		$	-			$	2,000,000			$	-			$	-
Loan from a third party, originating June 13, 2017, due June 14, 2018, at 10% interest, with no collateral.			150,000
Loan from a third party, originating September 26, 2017, due September 27, 2020 at 8.75% interest. The loan is secured by Powin Energy Ontario Storage II, LP and guaranteed by Powin Canada B.C. Ltd. (a)			1,200,472				2,953,926
Total long-term debt,		$	1,350,472			$	4,953,926			$	-			$	-

		December 31, 2017								December 31, 2016
		Current				Non Current				Current				Non Current
On May 31, 2017, the Company renewed two loans from Lu Pacific Properties, LLC. The principal amount is $150,000 and the annual interest rate is 6%, due on May 31, 2018, with no collateral. As of December 31, 2017, accrued interest is $5,631. Interest expense amounted to $5,631 for the year ended December 31, 2017.		$	150,000			$	-			$	150,000			$	-
Loan originating July 5, 2016, due July 4, 2017, at a 6% annual interest rate, with no collateral On October 31, 2017, 3U Trading note transfer to Joseph Lu per agreement  Principal and accrued  interest may be converted into preferred stock.  As of December 31, 2017, and accrued interest is $5,144. Interest expense amounted to $12,463 for the year ended December 31, 2017			1,009,516								1,484,118
On October 26, 2016, the Company secured a loan from Lu Pacific Properties, LLC. The principal amount is $2,000,000, and the annual interest rate is 7%, due on October 26, 2018, secured by Company’s intellectual property. As of December 31, 2017, accrued interest is $13,648. Interest expense amounted to $140,000 for the year ended December 31, 2017.			2,000,000				-				-				2,000,000

On October 18, 2016, the Company secured a loan from Joseph Lu. The principal amount is $115,000 and the annual interest rate is 6%, due on January 31, 2018, with no collateral. As of December 31, 2017, and accrued interest is $0. Interest expense amounted to $5,161 for the year ended December 31, 2017. Note was converted to common stock On October 16, 2017.			-				-				115,000				-
On December 30, 2016, the Company borrowed the sum of $600,000 from Joseph Lu and issued its note in the principal amount of $600,000, with an annual interest rate of 6%, due January 31, 2018, with no collateral. As of December 31, 2017, accrued interest is $0. Interest expense amounted to $26,926 for the year ended December 31, 2017. Note was converted to common stock On October 16, 2017.			-				-				600,000				-
On January 26, 2017, the Company borrowed the sum of $1,000,000 from Joseph Lu, and issued its note in the principal amount of $1,000,000, with an annual interest rate is 7%, due on January 26, 2019. The note is secured by the Company’s intellectual property. As of December 31, 2017, accrued interest is $13,095. Interest expense amounted to $47,562 for the year ended December 31, 2017. Partial of the Note, $247,785 principal was converted to common stock on October 16, 2017.							742,215				-				-
On June 28, 2017, the Company borrowed the sum of $1,000,000 from Joseph Lu and issued its notes in the principal amount of $1,000,000, with an annual interest rate of 8%, due on January 27, 2018. The loan is secured by the assets of PPA and assets of PE Ontario. In the event of default, the note becomes convertible into equity. Interest expense amounted to $20,822 for the year ended December 31, 2017. Note and accrued interest were converted to common stock on October 16, 2017.			-				-				-				-
.
On October 14, 2016, the Company borrowed the sum of $35,100 from Xilong Zhu, a director of the Company and issued its note in the principal amount of $35,100, with an annual interest rate of 0%, due on March 1, 2017, with no collateral. As of December 31, 2017 accrued interest is $0. Interest expense amounted to $75,616 for the year ended December 31, 2017. The loan was paid off on March 6, 2017.			-				-				35,100				-
Total		$	3,159,516			$	742,215			$	2,384,218			$	2,000,000

		December 31, 2016 Balance				Borrowed				Paid				Transferred				Converted				December 31, 2017 Balance
Third party note, March 16, 2017		$	-			$	2,000,000			$	-			$	-			$	-			$	2,000,000
Third party note, June 13, 2017,			-				150,000				-				-				-				150,000
Third party note, September 26, 2017			-				4,446,213				(291,815	)			-				-				4,154,398
Renewal of two notes from Lu Pacific Properties, LLC, May 31, 2017			150,000				-				-				-				-				150,000
3U Trading note transfer to Joseph Lu, October 31, 2017			-				-				(474,601	)			1,484,117				-				1,009,516
3U Trading note, July 5, 2016			1,484,117				-				-				(1,484,117	)			-				0
Lu Pacific Properties, LLC note, October 26, 2016			2,000,000				-				-				-				-				2,000,000
Joseph Lu ntoe, October 18, 2016,			115,000				-				-				-				(115,000	)			-
Joseph Lu note, December 30, 2016,			600,000				-				-				-				(600,000	)			-
Joseph Lu note, January 26, 2017,			-				1,000,000				(10,000	)			-				(247,785	)			742,215
Joseph Lu note, June 28, 2017,			-				1,000,000				-				-				(1,000,000	)			-
Xilong Zhu note, October 14, 2016			35,100				17,550				(52,650	)			-				-				-
Joseph Lu note, June 5, 2017			-				1,000,000				-				-				(1,000,000	)			-
Xilong Zhu note, June 28, 2017			-				3,000,000				-				-				(3,000,000	)			-
Total		$	4,384,217			$	12,613,763			$	(829,066	)		$	-			$	(5,962,785	)		$	10,206,129

Year ending December 31,
2018		$	4,509,988
2019			4,178,401
2020			1,517,740
2021			-
2022			-
Thereafter			-
Total		$	10,206,129

Year ending December 31,
2018		$	432,795
2019			439,299
2020			445,995
2021			344,972
2022			244,140
Thereafter			1,052,052
Total		$	2,959,253

Lender	Borrower		Amount				Number of Shares of Preferred Stock
3U Trading Co., Limited	Powin Corporation		$	2,451,195				4,377,133
3U Trading Co., Limited	Powin Industries S.A. DE C.V.		$	211,474				377,631
Joseph Lu	Powin Corporation		$	3,333,091				5,951,947
Danny Lu	Powin Corporation		$	560,565				1,001,009
Peter Lu	Powin Corporation		$	560,565				1,001,009
Lu Pacific Properties, LLC	Powin Corporation		$	513,574				917,097
Total			$	7,630,464				13,625,826

										Average
						Weighted				Remaining
						average exercise				Contractual Life				Aggregate Intrinsic
		Warrants				price				(Years)				Value
Outstanding at December 31, 2016			100,000			$	25				1.4			$	-
Exercisable at December 31, 2016			100,000			$	25				1.4			$	-
Warrants granted			-				-				-				-
Warrants exercised			-				-				-				-
Warrants forfeited			-				-				-				-
Outstanding at December 31, 2017			100,000			$	25				0.4			$	-
Exercisable at December 31, 2017			100,000			$	25				0.4			$	-

Dividend Yield			0	%
Expected volatility			161.80	%
Risk-free interest rate			1.39	%
Term in years			9.92

Dividend Yield			0	%
Expected volatility			145.51	% - 146.80%
Risk-free interest rate			1.90	% - 2.17%
Term in years			5.04	- 5.62

		December 31, 2017				December 31, 2016
Assets held for sale - current		$	-			$	-
Assets held for sale- noncurrent			-				-
Liabilities held for sale - current			-				-

		Years Ended
		December 31,
		2017				2016
Sales		$	-			$	7,135,534
Cost of Goods Sold			-				6,121,675
Gross Profit			-				1,013,859
Operating Expenses			-				2,831,687
Other Income (Expense)			-				97,921
Income Tax Expense			-				-
Net loss from discontinued  operations		$	-			$	(1,719,907	)