Note
1. Basis of Presentation
Nature
of Operation
On
October 16, 2008, Pax Clean Energy, Inc. (formerly, Pax Biofuels Inc., and
referred to herein as the “Company”) amended its Articles of Incorporation to
change its name from "Pax Biofuels Inc." to "Pax Clean Energy, Inc." to reflect
its new business direction.
Subsequent
to January 31, 2009 the Company entered into a stock purchase agreement with
Mobile Video Development, Inc. (“MVDI”) to acquire all of the issued and
outstanding share capital of MVDI (See Note 3). MVDI is an early stage
technology company targeting applications in the mobile social multi-media
market.
Unaudited
Interim Financial Statements
The
accompanying unaudited interim financial statements have been prepared in
accordance with U.S. generally accepted accounting principles for interim
financial statements and in accordance with the rules and regulations of the
Securities and Exchange Commission. They may not include all
information and footnotes required by generally accepted accounting principles
for complete financial statements. However, except as disclosed
herein, there has been no material changes in the information disclosed in the
notes to the financial statements for the year ended April 30, 2008 included in
the Company's Annual Report on Form 10-K filed with the Securities and Exchange
Commission. The unaudited interim financial statements should be read
in conjunction with those financial statements included in the Form
10-K. In the opinion of Management, all adjustments considered
necessary for a fair presentation, consisting solely of normal recurring
adjustments, have been made. Operating results for the nine months
ended January 31 2009 are not necessarily indicative of the results that may be
expected for the year ending April 30, 2009.
Note
2. Common Stock
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a)
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In
August 2008, the Company cancelled 2,620,000 common shares due to
non-payments from a subscriber.
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b)
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On
October 16, 2008, the Company completed a 20 for 1 (20:1) forward stock
split of its common shares. All shares and per share information in
these financial statements have been retroactively restated for all
periods presented to give effect to this stock split. The
Company also increased the number of authorized shares of common stock
from 100,000,000 to 300,000,000, with par value of $0.001 per
share.
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Note
3. Subsequent Event
On March
6, 2009, the Company entered into a stock purchase agreement (the “Agreement”)
with MVDI. MVDI entered into the Agreement on its own behalf and on
behalf of MVDI’s shareholders. Pursuant to the Agreement, the Company will
acquire 100% of the issued and outstanding shares of common stock of MVDI, in
exchange for the issuance of approximately 16,000,000 shares of to-be-designated
Series A Convertible Preferred Stock of the Company to the shareholders of MVDI.
In connection therewith, the Company agreed, among other things:
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(i)
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to
change its corporate name from “Pax Clean Energy, Inc.” to “Thwapr,
Inc.”;
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(ii)
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to
authorize twenty million (20,000,000) shares of blank check preferred
stock, par value $0.0001 per share, the voting powers, designations,
preferences and other special rights, and qualifications, limitations and
restrictions of which may be established from time to time by the Board of
Directors of the Company without approval of the holders of the Company’s
Common Stock and which may be issued in one or more series (the “Blank
Check Preferred Stock”);
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(iii)
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that the
Company’s authorized preferred stock would have the right to vote on an
“as-converted basis” together with the holders of the Company’s Common
Stock (not as a separate class) on all matters on which the holders of the
Company’s Common Stock are entitled to vote, including, but not limited
to, amendments to the Company’s Certificate of Incorporation affecting the
rights of the holders of the Company’s Common Stock;
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(iv)
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that the
Company will designate a class of Series A preferred stock that will have
5:1 voting rights to the Company’s common shares and have a
conversion rate of 36:1 into common shares of the Company;
and
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(v)
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as
part of this transaction 194,000,000 common shares, currently outstanding,
will be cancelled for no
consideration.
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This
transaction is subject to all customary closing conditions for transactions of
its type.
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The
following discussion and analysis of the financial condition and results of our
operations should be read in conjunction with our financial statements and the
notes thereto. The results shown herein are not necessarily indicative of the
results to be expected for any future periods.
You
should read the following discussion and analysis in conjunction with the
Financial Statements filed with Pax Clean Energy, Inc.’s (“we,” “us,” or “our”)
Annual Report on Form 10-K, which was filed with the Securities and Exchange
Commission (the “SEC”) on August 7, 2008, and amended on September 11, 2008, and
the notes thereto, and the other financial data appearing elsewhere in this
quarterly report on Form 10-Q. The information set forth in Management’s
Discussion and Analysis or Plan of Operations contains certain “forward-looking
statements,” including, among others (i) expected changes in our revenues and
profitability, (ii) prospective business opportunities, and (iii) our strategy
for financing our business. Forward-looking statements are statements other than
historical information or statements of current condition. Some forward-looking
statements may be identified by use of terms such as “believes,” “anticipates,”
“intends” or “expects.” These forward-looking statements relate to our plans,
objectives and expectations for future operations. Although we believe that our
expectations with respect to the forward-looking statements are based upon
reasonable assumptions within the bounds of our knowledge of our business and
operations, in light of the risks and uncertainties inherent in all future
projections, the inclusion of forward-looking statements in this report should
not be regarded as a representation by us or any other person that our
objectives or plans will be achieved.
Overview
We were
incorporated on February 5, 2007, in the state of Delaware. We originally
intended to be in the business of producing and distributing biodiesel fuel. We
had intended to construct and operate a 30,000 metric ton per year biodiesel
processing plant to be fed with a rapeseed oil crushing plant which we also
intended to construct and operate. Our plant was to be located in Serbia,
formerly part of Yugoslavia.
We had
anticipated that our primary source of revenue would be the sale of biodiesel,
both in blended and unblended forms with petroleum-based diesel fuel. Our sales
would have been dependent on the volume and price of the biodiesel fuel we would
sell in the future.
To date,
we have been unable to locate transactions in the biodiesel industry that were
on terms favorable to us. We became aware of alternate opportunities in the
clean energy market and were pursuing those alternate opportunities, which
management believed would be beneficial to our shareholders. Considering the
shift in the focus of our business direction, our Board of Directors unanimously
adopted a resolution declaring it advisable to amend our Articles of
Incorporation to, among other things, change our name to “Pax Clean Energy,
Inc.” On August 19, 2008, the holders of a majority of our voting stock approved
the amendment to our Articles of Incorporation.
On March
6, 2009, we entered into a stock purchase agreement (the “Agreement”) with
Mobile Video Development, Inc., a Delaware corporation (“MVDI”). MVDI
entered into the Agreement on its own behalf and on behalf of MVDI’s
shareholders. Pursuant to the Agreement, we will acquire 100% of the issued and
outstanding shares of common stock of MVDI, in exchange for the issuance of
approximately 16,000,000 shares of our to-be-designated Series A Convertible
Preferred Stock to the shareholders of MVDI. In connection therewith, we agreed,
among other things:
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(i)
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to
change our corporate name from “Pax Clean Energy, Inc.” to “Thwapr,
Inc.”;
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(ii)
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to
authorize twenty million (20,000,000) shares of blank check preferred
stock, par value $0.0001 per share, the voting powers, designations,
preferences and other special rights, and qualifications, limitations and
restrictions of which may be established from time to time by our Board of
Directors without approval of the holders of our Common Stock and which
may be issued in one or more series (the “Blank Check Preferred
Stock”);
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(iii)
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that
our authorized preferred stock would have the right to vote on an
“as-converted basis” together with the holders of our Common Stock (not as
a separate class) on all matters on which the holders of our Common Stock
are entitled to vote, including, but not limited to, amendments to our
Certificate of Incorporation affecting the rights of the holders of our
Common Stock;
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(iv)
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that the
Company will designate a class of Series A preferred stock that will
have 5:1 voting rights to the Company’s common shares and have a
conversion rate of 36:1 into our common shares; and
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(v)
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194,000,000
shares of our Common Stock, currently outstanding, will be cancelled for
no consideration.
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This
transaction is subject to all customary closing conditions for transactions of
its type.
Liquidity
and Capital Resources
We have
limited capital resources, as, among other things, we are a development stage
company with no operating history. We have not generated any revenues to date.
We may not be able to generate sufficient revenues to become profitable. In
addition, we may never secure the funding necessary to pursue transactions in
the clean energy market. We have no agreements, commitments or understandings to
secure this funding.
Our cash
reserves are not sufficient to meet our obligations for the next 12-month
period. As a result, we are seeking additional funding. We currently do not have
a specific plan of how we intend to obtain such funding; however, we anticipate
that additional funding will be in the form of equity or debt financings. At
this time, we cannot provide any assurances that we will be able to raise
sufficient funding to meet our obligations over the next 12 months. We do not
have any arrangements in place for future equity or debt financing.
At
January 31, 2009, we had total assets of $1,389 (consisting of cash of $200 and
equipment of $1,189), a decrease of $328 from $1,717 at April 30, 2008
(consisting of a cash increase of $158 and equipment amortization of
$468).
At
January 31, 2009, we had liabilities of $234,438 consisting of accounts payable
and accrued liabilities of $79,216 and amounts due to related parties of
$155,222. At April 30, 2008, we had liabilities of $128,466, consisting of
accounts payable and accrued liabilities of $30,825, and amounts due to related
parties of $97,641. The increase in our liabilities from April 30, 2008 to
January 31, 2009 of $105,972 is a result of an increase in amounts due to
Hammond Management Corporation of $55,016, a decrease in amounts due to
Scientific Biofuel Solutions Ltd. of $2,565, and an increase in our professional
fees payable of $48,391 attributable to legal and accounting fees associated
with the review of our SEC filings, including for our name change and forward
stock split.
Results
of Operations for the Three-Month Periods Ended January 31, 2009 and
2007
We did
not earn any revenues during the three-month periods ended January 31, 2009 and
January 31, 2008.
We
incurred operating expenses in the amount of $29,209 for the three-month period
ended January 31, 2009, a $17,204 decrease from $46,412 for the three month
period ended January 31, 2008. Our operating expenses are comprised of general
and administrative expenses, management fees, professional fees and travel
expenses. Operating expenses decreased primarily as a result of decreases in
professional fees; management fees; and travel expenses. Management fees
decreased by $4,072 to $15,819 for the three-month period ended January 31,
2009, as compared to $19,891 for the three-month period ended January 31, 2008.
Management fees decreased as a result of foreign exchange fluctuations.
Professional fees decreased by $7,808 to $12,063 for the three-month period
ended January 31, 2009, as compared to $19,871 for the three-month period ending
January 31, 2008. Travel expenses decreased by $5,242 to $234 for the
three months ended January 31, 2009, as compared to $5,476 for the three months
ended January 31, 2008.
Results
of Operations for the Nine Months Ended January 31, 2009 and 2008
We did
not earn any revenues during the nine-month periods ended January 31, 2009 and
January 31, 2008.
We
incurred operating expenses in the amount of $118,461 for the nine-month period
ended January 31, 2009, a $3,500 decrease from $121,961 for the nine month
period ended January 31, 2008. Professional fees were $61,798 for the nine
months ended January 31, 2009, an increase of $5,847 from $55,951 for the nine
months ended January 31, 2008. Professional fees increased as a
result of increases in legal and accounting fees associated with the review of
our SEC filings, including for our name change and forward stock
split.
Off-Balance
Sheet Arrangements
We have
no off-balance sheet arrangements.
Tabular
Disclosure of Contractual Obligations
We have
no contractual obligations as required by Item 303(a)(5) under Regulation
S-K.
ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not
applicable.
ITEM
4. CONTROLS AND PROCEDURES
(a)
Evaluation of Disclosure Controls and Procedures
Under the
supervision and with the participation of our management, including our
principal executive officer and principal financial officer, we have conducted
an evaluation of the effectiveness of the design and operation of our disclosure
controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the
General Rules and Regulations promulgated under the Securities and Exchange Act
of 1934, as amended, as of the end of the period covered by this report. Based
on this evaluation, our principal executive officer and principal financial
officer concluded as of the evaluation date that our disclosure controls and
procedures were effective such that the material information required to be
included in our SEC reports is recorded, processed, summarized and reported
within the time periods specified in SEC rules and forms relating to our
company, particularly during the period when this report was being
prepared.
(b)
Changes in Internal Control over Financial Reporting
There
were no changes in our internal control over financial reporting during our
fiscal quarter ended January 31, 2009 that have materially affected, or are
reasonably likely to materially effect, our internal control over financial
reporting.
PART
II. OTHER INFORMATION
ITEM
1. LEGAL PROCEEDINGS
None.
ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
No
unregistered sales of equity securities were made during the three-month period
ended January 31, 2009.
ITEM
3. DEFAULT UPON SENIOR SECURITIES
None.
ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5.
OTHER INFORMATION
None.
ITEM
6. EXHIBITS
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Exhibit
No.
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Description
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31.1
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Sec.
302 Certification of Principal Executive Officer, Financial Officer &
Accounting Officer
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32.1
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Sec.
906 Certification of Principal Executive Officer, Financial Officer &
Accounting Officer
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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.
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PAX
CLEAN ENERGY, INC.
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Date:
March 17, 2009
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By:
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/s/
Paul Leslie Hammond
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Paul
Leslie Hammond
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Principal
Executive Officer, Principal Financial Officer and Principal Accounting
Officer, President and Director
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EXHIBIT
INDEX
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Exhibit
No.
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Description
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31.1
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Sec.
302 Certification of Principal Executive Officer, Financial Officer &
Accounting Officer
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32.1
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Sec.
906 Certification of Principal Executive Officer, Financial Officer &
Accounting Officer
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