UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended May 31, 2007
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from _________________ to __________________
Commission file number: 333-126580
KEEWATIN WINDPOWER INC.
(Name of small business issuer in its charter)
Nevada Pending
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
666 Burrard Street, Suite 617
Vancouver. B.C.
Canada, V6C 3P6
(Address of principal executive offices)
(604) 818-4100
Issuer's telephone number
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
------------------- ------------------------------
None None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock
(Title of Class)
Check whether the Issuer (1) filed all reports required to be filed by Section13
or 15(d) of the Securities 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.
Yes [X] No [ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will 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-KSB
or any amendment to this Form 10-KSB. Yes [X] No [ ]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
State issuer's revenues for its most recent fiscal year: Nil
State 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 sold, or the average bid and asked price of such common equity, as of a
specified date within the past 60 days. (See definition of affiliate in Rule
12b-2 of the Exchange Act.)
$18,587,250 as at September 7, 2007 based on 12,391,500 shares outstanding at
$1.50 per share representing the last sale price of Keewatin's common stock on
that date.
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.
12,391,500 shares of common stock as at September 7, 2007
ITEM 1: DESCRIPTION OF BUSINESS............................................ 3
ITEM 2: DESCRIPTION OF PROPERTY............................................ 11
ITEM 3: LEGAL PROCEEDINGS.................................................. 11
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS................ 11
ITEM 5: MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS........... 11
ITEM 6: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.......... 12
ITEM 7: FINANCIAL STATEMENTS............................................... 16
ITEM 8: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURES.......................................... 28
ITEM 8A: CONTROLS AND PROCEDURES............................................ 28
ITEM 9: DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS....... 29
ITEM 10: EXECUTIVE COMPENSATION............................................. 31
ITEM 11: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT..... 31
ITEM 12: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..................... 32
ITEM 13: EXHIBITS AND REPORTS............................................... 32
ITEM 14: PRINCIPAL ACCOUNTANT FEES AND SERVICES............................. 33
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PART I
ITEM 1: DESCRIPTION OF BUSINESS
BUSINESS DEVELOPMENT
Keewatin Windpower Corp ("the Corporation") intends to become a wind energy
electrical generation company, known in the industry as an independent power
producer. The Corporation is a development stage company that has not generated
any revenue from operations since incorporation on February 25, 2005.
From November 2001 to February 2005, the Corporation's sole employee, officer
and director, Mr. Chris Craddock, acted as the President of Westgreen Power
Development Corp., a private Vancouver, British Columbia based company involved
in the development of alternative energy projects in British Columbia and
Saskatchewan. The Corporation will rely upon Mr. Craddock's experience and the
expertise of independent contractors in order to carry out it's business plan.
The independent contractors that are being retained in this regard are a
meteorologist with respect to conducting a wind study and two engineering
consulting firms, one with respect to the erection of wind turbines and the
other with respect to the environmental assessment.
The Corporation does not have any written agreements in place with any
independent contractors. The engineering company that oversees the erection of
wind turbines is generally arranged in cooperation with the turbine
manufacturer.
To date, the Corporation has assessed wind speed data gathered and issued by
Environment Canada, a department of the Canadian government, in order to locate
areas in the province of Saskatchewan that have the best wind potential. In June
2005, the Corporation's President, Mr. Chris Craddock, attended various
locations in Saskatchewan to personally assess properties that possess promising
wind resources. In August 2005, the Corporation entered into an agreement with
Edward and Charlotte Bothner which provides the right to erect a meteorological
tower ("MET") on certain land that comprises 640 acres located in southwestern
Saskatchewan situated near the town of Beechy with a legal description of
Section 5-22-12 W3M. The Corporation pays $500 annually to Mr. and Mrs. Bothner
for this right. The Corporation has not executed an agreement with them to erect
wind turbines on their property if a sufficient wind resource is discovered.
In September 2005, the Corporation purchased a meteorological tower and in
October 2005, assembled and erected the tower on the Saskatchewan property in
order to directly assess the property's potential for an operating wind power
project.
The Corporation has completed the 12 month MET assessment to determine whether
the property possesses sufficient wind to justify the erection of wind turbines.
This study concluded the viability of the wind resource to provide sufficient
yield of electricity.
Prior to generating any revenue, the Corporation must accomplish the following
business objectives:
1. enter into lease agreements with land owners in proximity to the study
tower.
2. enter into agreements for the purchase and sale of the electric power
generated by the turbines and for the erection of wind turbines on the
land; and
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3. purchase and erect turbines on the property and arrange for the
connection of those turbines to Saskatchewan's electrical grid.
WIND POWER DEVELOPMENT IN SASKATCHEWAN
The Corporation has chosen to develop a wind power project in the southwest
region of the Canadian province of Saskatchewan due to the area's wind
potential, government's acceptance of wind power projects and the ease of
electricity transmission.
Data from the MET will continue to be collected for further validation of the
wind resource. The 12 month study period has produced data that has been
assessed and correlated with other study towers in the area. This work has been
carried out by the independent engineering company that erected the MET.
Another significant factor is the property's proximity to the province's
electrical transmission lines. The Corporation must pay to connect any wind
turbines to this transmission line. These connection costs are typically
justified if the property is within 15 miles of the transmission line. The
Saskatchewan property is located approximately two miles from the nearest
transmission line.
The most important criteria for a wind power project is the speed of the wind on
a property, measured in meters per second, combined with the number of hours
that the wind moves at various speeds. This calculation is referred to as the
capacity of the wind resource.
The Corporation is also focusing on Saskatchewan due to its Open Access
Transmission Tariff, which allows power producers to transmit electricity via
the province's electrical grid throughout Saskatchewan and to neighboring
jurisdictions. This will allow the Corporation to potentially access a broader
base of customers seeking electricity.
Currently, Saskatchewan has three wind power projects in operation.
ACQUIRING A PROPERTY INTEREST
The Corporation has acquired the right to erect a meteorological tower on the
Saskatchewan property located in southwestern Saskatchewan near the town of
Beechy. This property covers one section of land which is equal to one square
mile in area, or 640 acres.
The number of turbines that can economically occupy an acre of land depends upon
a variety of factors including predominant wind direction, topography and
property dimensions. The Corporation intends to erect a 50 megawatt wind power
project, which typically requires approximately 2,500 acres of land. A megawatt
is a unit of electrical power equal to one million watts. In order to construct
a project of this size, the Corporation would need to acquire the rights to
erect turbines on 2,500 acres that are located within two of the meteorological
towers.
In August 2005, the Corporation executed an agreement permitting access to 640
acres of land located in southwestern Saskatchewan for a period of up to 14
months. This was done in order to erect a meteorological tower for the purposes
of determining the feasibility of constructing wind turbines on this land. The
Corporation erected this tower on the property in early October 2005. The
Corporation owns the wind data gathered from the property.
4
Following the meteorological tower study of the Saskatchewan property, the
Corporation will have to negotiate a lease or further land access agreement with
the owners of the Saskatchewan property and/or surrounding land-owners. Typical
lease agreements in the sector provide the landowner with annual payments based
on the number of turbines erected.
In order for a wind power project to be profitable, the Corporation needs to
identify a wind resource that yields a capacity factor of over 30%. The capacity
factor, sometimes referred to as the load factor, of a wind project is the
energy produced during a given period divided by the energy that would have been
produced had the project been running continually and at maximum output, e.g.:
Capacity Factor = electricity production during the period (MWH)installed
capacity (MW)x number of hours in period (h)Since wind energy output is the cube
of the wind speed, the number of hours at higher wind speeds is significantly
more important than additional hours at lower wind speeds.
WIND ASSESSMENT
In October 2005, the Corporation erected a MET on the Saskatchewan property to
record various data, including wind speed, wind direction, temperature, and
barometric pressure every ten minutes.
As part of this process, the Corporation retained a meteorologist who selected
the specific site on the property for the MET, oversaw the erection of the MET
and will monitor and interpret the data recorded by the MET.
The one year wind assessment study was completed in early October 2006.Data will
continue to be collected indefinitely. In order to obtain debt financing from a
financial institution for a wind power project, financial institutions require a
complete year of MET wind data from the property as well as an executed power
purchase agreement with a credit worthy counterparty. While the Corporation has
not had any specific communications with any representative of a debt financing
institution, financiers have indicated, on an informal basis, that the 12 month
wind study requirement is standard in the industry.
The Corporation has made a determination, based upon wind data to date from the
MET, that the Saskatchewan property contains a wind resource sufficient to
justify the erection of a wind power project.
POWER PURCHASE AGREEMENT
Following completion of the MET study, the Corporation will try to enter into an
agreement, known as a power purchase agreement, to sell the electricity that
will be generated from the proposed wind power project. Power purchase
agreements include clauses regarding the price to be paid for the electricity in
cents per kilowatt-hour, the term of the agreement (typically 20 or more years),
terms of interconnection costs and termination provisions.
The Corporation will likely attempt to sell the electricity that is produced to
a utility located in the province of Saskatchewan, in the neighboring provinces
of Alberta or Manitoba, or in North Dakota, the neighboring state to the south.
The Corporation has not entered into any discussions with potential power
purchasers and cannot be assured that an agreement will be reached on acceptable
terms.
5
CONSTRUCTION OF WIND POWER PROJECT
If the Corporation is to reach a power purchase agreement with a third party, it
will then undertake the construction of a wind power project on the property.
The estimated cost to construct a 50 megawatt wind power project is
approximately $114,500,000. This amount consists of the following:
1. $500,000 in pre-development costs 2. $105,000,000 in wind turbine costs 3.
$9,000,000 in balance of station costs
Pre-development costs include further wind assessment costs of $150,000,
property permitting costs of $50,000, civil engineering costs of
$50,000,environmental assessment costs of $150,000, legal fees of $25,000 and
travel and general expenses of $75,000.
The wind turbine costs, including unit costs, construction and installation,
site preparation and other associated miscellaneous costs will be for 25 to 35
turbines. Different manufacturers produce several types of turbines at various
rated outputs. The correct turbine is decided upon after the wind resource is
determined to maximize generation output.
The above turbine price is an estimate that is negotiated with the supplier.
This negotiation includes price, delivery time, delivery penalties, warranties
and tower costs.
Banks and other lenders will typically finance up to 75% of wind power
construction costs subject to review of the wind assessment data and the power
purchase agreement. The lender will ensure the project has sound fiscal
parameters necessary to be profitable, namely the price to be received per
megawatt hour and the number of megawatts of rated capacity. The Corporation has
not had any specific communications with any representative of a debt financing
institution regarding the proposed wind power project.
The Corporation intends to raise the remaining required funding from the sale of
its common stock. No arrangements are in place for such financing.
COMPETITIVE BUSINESS CONDITIONS
The wind power and alternative energy businesses are currently experiencing a
strong growth phase in Canada. Several developers with existing generating
facilities and new developers with current land holdings are engaged in the same
business that the Corporation has entered.
The Corporation will be competing with other independent power producers for
transmission and supply contracts. As well, coal and oil and gas producers in
the region are able to generate and supply electricity to customers at a less
expensive price.
The Corporation's competitive advantage will be providing electricity generated
without greenhouse gas emissions to customers. In 2004, the Canadian government
executed the Kyoto Accord, an international treaty whereby countries mutually
agree to reduce the amount of greenhouse gases they emit. In order to meet their
obligations under the Kyoto Accord, many Canadian utilities must reduce the
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consumption of electricity generated by fossil fuels such as coal and oil and
find environmental alternatives such as wind generated power. However, if
electricity purchasers are not prepared to pay higher prices for wind generated
power, the Corporation's ability to execute a power purchase agreement that will
result in its profitability will be questionable.
PRINCIPAL SUPPLIERS
The main component of a wind power project is the wind turbines. The wind power
business is global with the majority of turbines being manufactured in Europe
and the United States. Supply to Canada has usually been from either Vestas Wind
Systems or General Electric Energy. Both of these companies have corporate
offices in Canada. However, wind turbine supply is currently scarce due to the
small total number of wind turbine suppliers and high demand.
POTENTIAL ACQUISITION
The corporation entered into a letter agreement dated March 26, 2007 to acquire
100% of the issued and outstanding common shares of Sky Harvest Windpower Corp.
("Sky Harvest") a private Canadian company incorporated under the laws of
British Columbia. Sky Harvest holds the rights to construct a wind power
facility on approximately 8,500 acres of land located in Southwestern
Saskatchewan. Sky Harvest has completed a wind resource assessment on the
property that demonstrates that the potential wind resource greatly exceeds the
minimum capacity factor necessary to justify the planning and construction of a
150 megawatt wind power project. The assessment was completed by Phoenix
Engineering Inc. of Calgary, Alberta.
Golder Associates Ltd, also of Calgary, is now in the process of completing the
necessary environmental assessment and permitting of the property.
Sky Harvest has also commenced initial discussions regarding the potential sale
of electricity that would be generated by a wind power facility.
Sky Harvest is committed to involve the community in the development process and
has fully briefed local council members on project details. Council has
responded with complete cooperation and goodwill. A by-law has been amended to
allow wind power development in the Rural Municipality, which met with no
opposition.
In order to acquire a 100% interest in Sky Harvest Windpower Corp., Keewatin has
agreed to issue a total of 17,343,516 restricted shares of common stock to the
shareholders of Sky Harvest, equating to 1.5 shares of common stock in the
capital of Keewatin for every currently issued common share of Sky Harvest. The
acquisition will be subject to Sky Harvest completing an audit of its financial
statements, Keewatin changing its name to "Sky Harvest Windpower Corp." and
shareholders of both companies approving the acquisition agreement. As the
directors of Keewatin Windpower Corp. are also directors and principal
shareholders of Sky Harvest Windpower Corp., they will abstain from voting their
shares in respect of the transaction. The closing of this transaction is subject
to shareholder approval.
GOVERNMENT APPROVALS AND ENVIRONMENTAL LAWS
In order to erect turbines on a property, the Corporation may need to apply for
and obtain municipal permits relating to zoning and building. Until the
Corporation determines the exact location of the property on which to erect
7
turbines, it will not know the specific permitting requirements for its project.
However, all of the proposed sites for the wind power project are not near any
significant population centers.
The creation of a wind power project will also involve the excavation of
portions of the land and the installation of concrete platforms below the land
surface. Before the Corporation commences this, it will need to obtain
environmental approval from the Saskatchewan provincial government. Any
development of this nature is subject to the provisions of the Saskatchewan
Environmental Assessment Act. This Act requires that prior to commencing the
construction of a wind power project the Corporation must receive approval from
Saskatchewan's Ministry of the Environment. The Corporation must apply for
approval by completing an environmental impact assessment and statement, as well
as by providing public notice of the proposed development. After the public
review, usually a 30 day period which may involve public meetings, the Ministry
makes a final decision regarding the project. An approval may include a number
of conditions to reduce environmental impact.
The Corporation anticipates that the cost of complying with all environmental
laws will cost approximately $150,000. Recent changes to environmental
assessments have increased the costs of these programs. The Corporation has not
applied for any government approvals to date.
EMPLOYEES
The Corporation has no employees as of the date of this annual report.
RESEARCH AND DEVELOPMENT EXPENDITURES
The Corporation has not incurred any other research or development expenditures
since its incorporation.
SUBSIDIARIES
The Corporation does not have any subsidiaries.
PATENTS AND TRADEMARKS
The Corporation does not own, either legally or beneficially, any patents or
trademarks.
RISK FACTORS
An investment in the Corporation's common stock involves a high degree of risk.
You should carefully consider the risks described below and the other
information in this annual report before investing in the Corporation's common
stock. If any of the following risks occur, the Corporation's business,
operating results and financial condition could be seriously harmed. The trading
price of the common stock could decline due to any of these risks, and you may
lose all or part of your investment.
IF THE CORPORATION DOES NOT OBTAIN ADDITIONAL FINANCING, THE BUSINESS WILL FAIL.
The Corporation's current operating funds are not sufficient to complete its
intended business objectives. As of May 31, 2007, the Corporation had cash on
hand in the amount of $449,185. The Corporation anticipates spending $60,000 on
annual land lease costs and $114,500,000 on erecting wind turbines on the
8
property upon completion of the wind power study on the Saskatchewan property.
Cash on hand will not cover these costs. The Corporation will need to acquire
additional financing in order to cover remaining business costs.
The Corporation does not currently have any arrangements for financing and may
not be able to find such financing if required. It currently has no operations
and no income.
The most likely sources of future funds that will be available to the
Corporation are through debt financing and through the issuance of equity
capital. The Corporation will only be able to secure debt financing for wind
turbines if it is able to prove that an economic wind resource exists on a
property that is acquired and that it has negotiated a power purchase agreement
with a credit worthy counter-party.
The Corporation does not have any arrangements in place for debt financing nor
for the sale of its securities.
BECAUSE THE CORPORATION HAS NOT COMMENCED BUSINESS OPERATIONS, IT FACES A HIGH
RISK OF BUSINESS FAILURE.
The Corporation has not yet commenced business operations as an independent
power producer; accordingly, it has no way to evaluate the likelihood that its
business will be successful. It was incorporated on February 25, 2005 and to
date has been involved primarily in organizational activities and wind
assessment of the Saskatchewan property.
Potential investors should be aware of the difficulties normally encountered by
development stage companies and the high rate of failure of such enterprises.
Prior to earning revenue, of which there is no assurance, the Corporation will
likely incur costs of about $114,620,000 and expects to incur significant losses
in the foreseeable future. If the Corporation is unable to acquire a property
interest and erect a wind farm on it, it will not earn profits nor be able to
continue operations.
BECAUSE THE CORPORATION'S CONTINUATION AS A GOING CONCERN IS IN DOUBT, IT WILL
BE FORCED TO CEASE BUSINESS OPERATIONS UNLESS IT CAN GENERATE PROFITABLE
OPERATIONS IN THE FUTURE.
The Corporation incurred losses since its inception. Further losses are
anticipated in the development of its business. As a result, there is
substantial doubt about its ability to continue as a going concern. The
Corporation's ability to continue as a going concern is dependent upon its
ability to generate profitable operations in the future and/or to obtain the
necessary financing to meet its obligations and repay its liabilities arising
from normal business operations when they come due. If the Corporation cannot
raise financing to meet its obligations, it will be insolvent and will cease
business operations.
IF THE CORPORATION IS NOT ABLE TO OBTAIN AN INTEREST IN A SUITABLE PROPERTY WITH
A POTENTIAL WIND RESOURCE, ITS BUSINESS WILL FAIL.
The Corporation has entered into an agreement to erect a meteorological tower on
a property in southwestern Saskatchewan to determine whether it possesses a
sufficient wind resource to justify the erection of wind turbines. However, the
Corporation does not have an arrangement where it may erect turbines on the
property if it contains an economic wind resource.
9
Even if it is able to reach an agreement to acquire an interest in this
property, it may not be able to obtain the financing necessary to complete the
lease or purchase. If the Corporation is unable to acquire a suitable property
interest, its business will fail.
FUTURE CHANGES IN WEATHER PATTERNS COULD NEGATIVELY IMPACT THE CORPORATION'S
BUSINESS, REDUCING POTENTIAL PROFITABILITY OR CAUSING ITS BUSINESS TO FAIL.
Changes in weather patterns may affect the Corporation's ability to operate a
wind power project on any property it acquires. Wind data that it collects from
a meteorological tower may vary from results actually achieved when a wind
turbine is installed. Changing global environmental and weather conditions may
also affect the reliability of the data relating to a property.
Any wind farm that the Corporation develops, no matter where it is located,
would be subject to variations in wind and changes in worldwide climatic
conditions. Sudden or unexpected changes in environmental and meteorological
conditions could reduce the productivity of the Corporation's wind farm.
Climatic weather patterns, whether seasonal or for an extended period of time,
resulting in lower, inadequate and/or inconsistent wind speed to propel the wind
turbines may render the Corporation's wind parks incapable of generating
adequate, or any, electrical energy.
THE CORPORATION'S ABILITY TO ERECT TURBINES ON A PROPERTY IN SASKATCHEWAN WILL
BE CONTINGENT UPON IT OBTAINING ENVIRONMENTAL AND MUNICIPAL PERMITS. IF IT
CANNOT ACQUIRE THESE PERMITS, ITS BUSINESS WILL FAIL.
In order to erect turbines on the Saskatchewan property, the Corporation must
excavate portions of the land and install concrete platforms below surface.
Before the Corporation commences this, it will need to obtain environmental and
municipal permits from the Saskatchewan provincial government and the town
responsible for the property interest it acquires. Depending on environmental
impact, its proposed land disturbance may be unacceptable to these government
bodies. In addition, the turbines themselves may be seen to have a negative
impact on bird migration patterns or on the aesthetics of the region. These
factors may prevent the Corporation from obtaining necessary permits. In such
circumstances, the Corporation would be forced to abandon its business plan.
IF THE CORPORATION CANNOT FIND A PARTY TO PURCHASE ELECTRICITY FROM IT ON
ACCEPTABLE TERMS, THE CORPORATION WILL NOT BE ABLE TO ESTABLISH A WIND POWER
PROJECT AND ITS BUSINESS WILL FAIL.
Even if the Corporation demonstrates a significant wind resource on a property
that it acquires, it may not be able to secure a purchaser for any electricity
that it produces on acceptable terms. Without a purchaser for electricity from a
property, the Corporation will not be able to proceed with its business plan.
BECAUSE THE CORPORATION WILL INCUR SIGNIFICANT COSTS COMPLYING WITH ITS
OBLIGATIONS AS A REPORTING ISSUER, ITS ABILITY TO ATTAIN PROFITABLE OPERATIONS
WILL BE ADVERSELY IMPACTED.
As a reporting issuer, the Corporation is required to file periodic reports with
the Securities & Exchange Commission, including financial statements and
disclosure regarding changes in its operations. The Corporation anticipates that
it will incur approximately $20,000 per year in order to comply with these
10
reporting requirements. As its operations become more complex, it is anticipated
that these costs will increase significantly. These compliance costs will be
charged to operations and will negatively impact the Corporation's ability to
attain profitable operations.
BECAUSE ALL OF THE CORPORATION'S ASSETS AND ITS DIRECTORS AND OFFICERS ARE
LOCATED IN CANADA, U.S. RESIDENTS' ENFORCEMENT OF LEGAL PROCESS MAY BE
DIFFICULT.
All of the Corporation's officers and directors reside in Canada. As well, all
of its assets are located in Canada. Accordingly, service of process upon the
Corporation, or upon individuals related to the Corporation, may be difficult or
impossible to obtain within the United States. As well, any judgment obtained in
the United States against the Corporation may not be collectible within the
United States.
FORWARD-LOOKING STATEMENTS
This annual report contains forward-looking statements that involve risks and
uncertainties. The Corporation uses 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. The Corporation's actual results are most likely to differ
materially from those anticipated in these forward-looking statements for many
reasons, including the risks faced by it described in the "Risk Factors" section
and elsewhere in this annual report.
ITEM 2: DESCRIPTION OF PROPERTY
The Corporation does not own or lease any property.
ITEM 3: LEGAL PROCEEDINGS
There are no legal proceedings pending or threatened against the Corporation.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted during the fourth quarter of the Corporation's fiscal
year to a vote of security holders, through the solicitation of proxies or
otherwise.
PART II
ITEM 5: MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS MARKET
INFORMATION
The Corporation's shares of common stock are quoted for trading on the OTC
Bulletin Board under the symbol KEWW
The following quotations reflect the high and low bids for the Corporation's
common stock based on inter-dealer prices, without retail mark-up, mark-down or
commission and may not represent actual transactions:
11
National Association of Security Dealers
OTC Bulletin Board
Quarter Ended High Low
------------- ---- ---
August 31, 2007 $1.79 $1.40
May 31, 2007 $1.50 $1.31
February 28, 2007 $1.40 $0.93
On September 25, 2006 the Corporation effected a 3:1 forward split of its share
capital such that every one share of common stock issued and outstanding prior
to the split was exchanged for three post-split shares of common stock. The
Corporation also changed its post-split authorized capital to 100,000,000 shares
of common stock with a par value of $0.001 per share, and to 10,000,000 shares
of preferred stock with a par value of $0.001 per share. All share amounts have
been retroactively adjusted for all periods presented.
During the year ended May 31, 2007, the Corporation received private placement
subscriptions of $500,500 through an offering of up to 715,000 shares of common
stock at $0.70 per share. The Corporation will pay a 10% finder's fee consisting
of 71,500 shares of common stock. To date, the shares have not been issued.
On July 27, 2007 the Corporation completed a private placement consisting of
1,075,000 shares of common stock at $1.20 per share (cash proceeds of
$1,290,000) and 1,000,000 share purchase warrants entitling the holder to
acquire an additional share of common stock for $2.50. Finders' fees of $126,750
were paid related to this placement.
The Corporation has 30 shareholders of record as at the September 7, 2007
DIVIDENDS
There are no restrictions in the Corporation's articles of incorporation or
bylaws that prevent it from declaring dividends. The Nevada Revised Statutes,
however, do prohibit the Corporation from declaring dividends where, after
giving effect to the distribution of the dividend:
1. the Corporation would not be able to pay its debts as they become due
in the usual course of business; or
2. its total assets would be less than the sum of our total liabilities
plus the amount that would be needed to satisfy the rights of
shareholders who have preferential rights superior to those receiving
the distribution.
The Corporation has not declared any dividends, and it does not plan to declare
any dividends in the foreseeable future.
ITEM 6: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Corporation's plan of operations for the twelve months following the date of
this annual report is to:
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1. continue the review of wind data from the meteorological tower that
has been erected on the Saskatchewan property to assess the wind
resource and
2. commence discussions with potential customers that may be interested
in purchasing electricity that would be generated from the potential
wind power project, contact wind turbine suppliers regarding the
planned purchase and delivery of equipment and seek potential sources
of debt and equity financing.
The Corporation has erected a meteorological tower on a property in southwest
Saskatchewan for the purpose of determining whether the property possesses a
wind resource sufficient to justify the erection of wind turbines.
Results from this wind study to date indicate that the Saskatchewan property has
a wind resource that warrants the erection of wind turbines. It is now the
Corporation's objective to negotiate a lease with the landowners of the
Saskatchewan property and/or surrounding land owners. Currently, all land owners
in the area have indicated their preference to retain ownership of their lands
and enter into a lease arrangement, although the Corporation has not reached any
formal agreement in this regard. Accordingly, the Corporation does not expect to
incur any expenses in connection with acquiring a property interest until the
wind towers have been erected. Land lease costs are estimated to be $60,000 per
annum.
Over the next 12 months, the Corporation anticipates spending $60,000 on
administrative costs, including management fees payable to its President,
professional fees and general business expenses, including costs related to
complying with filing obligations as a reporting company.
The Corporation also anticipates that it will incur approximately $20,000 per
year in order to comply with reporting requirements. As the Corporation's
operations become more complex, it is anticipated that these costs will
increase.
To erect wind turbines on the property, at an anticipated cost of $114,500,000,
the Corporation expects to raise up to 75%, or approximately $85,500,000 by way
of debt financing and 25%, or approximately $29,000,000 through the sale of
common stock. It is unlikely that the Corporation will be able to make
arrangements for debt financing until its environmental assessment is completed,
which will not occur until October 2008 at the earliest, and it has negotiated a
power purchase agreement with a credit worthy counterparty sometime in early
2008.
The chartered banks in Canada, as well as many United States financial
institutions, each have departments that are familiar with financing wind power
projects and assessing the ability of companies with proposed projects to
generate profit through operations. These institutions may be approached for
debt financing following completion of the wind study and once the Corporation
has entered into an agreement in principal to sell the power to be generated
from the project. The factors that the banks consider in providing the debt
financing include wind study data, the size and number of wind turbines to be
erected and the price the purchaser has agreed to pay for the power produced.
The Corporation has not had any specific communications with any representative
of a debt financing institution regarding its proposed wind power project.
Accordingly, the Corporation cannot guarantee that it will be able to raise 75%
of required funds through debt financing.
13
The Corporation has begun sourcing equity financing to cover the balance of its
anticipated costs for the next 12 months and anticipated costs relating to the
erection of wind turbines. Until such financing is arranged, it will rely on the
proceeds of a recent financing concluded on July 27, 2007 for net proceeds of
approximately $1,073,000 to cover the cost of operations before the erection of
wind turbines.
The following table discloses the number of shares of common stock that the
Corporation would have to issue in order to raise $29,000,000 in equity
financing at various prices, resulting in dilution to existing shareholders:
Price Per Share No. of Shares Issuable
--------------- ---------------------
$1.50 19,333,333
$2.00 14,500,000
$2.50 11,600,000
$3.00 9,666,666
Wind power generation companies typically make marginal profit based upon the
price they receive for each kilowatt-hour of power they sell. Government
subsidies and credits add to the profit margin that such companies realize.
The Corporation will attempt to execute a power purchase agreement with a
utility in Saskatchewan or a neighboring jurisdiction. The agreement will
include the price to be paid for the electricity produced in cents per
kilowatt-hour and the term of the agreement. It will also be subject to
obtaining the necessary financing to proceed with the wind power project.
Debt financiers will only provide financing if the project will be economically
viable based on the terms of the power purchase agreement.
RESULTS OF OPERATIONS FOR THE FISCAL YEAR ENDED MAY 31, 2007
The Corporation did not earn any operating revenue during the fiscal year ended
May 31, 2007 and does not anticipate earning revenue until completion of an
Environmental Assessment on the property, securing a power purchase agreement
and erecting turbines on the land, of which there is no guarantee.
The Corporation incurred operating expenses in the amount of $444,916 for the
fiscal year, which were comprised of $365,568 in stock-based compensation,
$30,000 in management fees to the Corporation's President and various travel,
meteorological fees, professional fees, and other general and administrative
expenses of $49,348. The Corporation has accumulated losses of $505, 291 since
inception on February 25, 2005.
The Corporation has not attained profitable operations and is dependent upon
obtaining financing to complete its business plan.
LIQUIDITY AND CAPITAL RESOURCES
As at May 31, 2007, the Corporation had total assets of $465,121, comprised
principally of cash on hand of $449,185, and liabilities of $49,904, comprised
primarily of management fees payable to the Corporation's President. On July 27,
2007, the Corporation completed a private placement for net cash proceeds of
approximately $1,073,000.
14
The Corporation's current operating funds are not sufficient to complete its
intended business objectives. To erect wind turbines on the property, it is
anticipated that the Corporation will require financing of $114,500,000. The
Corporation does not currently have any arrangements for financing and may not
be able to find such financing if required. The most likely sources of future
funds that will be available to the Corporation are through debt financing and
through the sale of equity.
OFF-BALANCE SHEET ARRANGEMENTS
The Corporation has no off-balance sheet arrangements.
15
ITEM 7: FINANCIAL STATEMENTS
Keewatin Windpower Corp.
(A Development Stage Company)
May 31, 2007
Index
-----
Report of Independent Registered Public Accounting Firm..................... 17
Balance Sheets.............................................................. 18
Statements of Operations.................................................... 19
Statements of Cash Flows.................................................... 20
Statement of Stockholders' Equity (Deficit)................................. 21
Notes to the Financial Statements........................................... 22
16
Chang G. Park, CPA, Ph. D.
371 E STREET CHULA VISTA CALIFORNIA 91910-2615
TELEPHONE (858)722-5953 FAX (858) 408-2695 FAX (858) 764-5480
E-MAIL changgpark@gmail.com
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders
Keewatin Windpower Corp.
We have audited the accompanying balance sheet of Keewatin Windpower Corp. (the
"Company") as of May 31, 2007 and the related statements of operation, changes
in shareholders' equity and cash flows for the year then ended and for the
period February 25, 2005 (inception) to May 31, 2007. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Keewatin Windpower corp. as of
June 30, 2007, and the results of its operation and its cash flows for the year
then ended and for the period February 25, 2005 (inception) to May 31, 2007 in
conformity with U.S. generally accepted accounting principles.
The financial statements have been prepared assuming that the Company will
continue as a going concern. As discussed in Note 1 to the financial statements,
the Company's losses from operations raise substantial doubt about its ability
to continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Chang G. Park, CPA
-------------------------------
CHANG G. PARK, CPA
September 11, 2007
Chula Vista, CA
17
Keewatin Windpower Corp.
(A Development Stage Company)
BALANCE SHEETS
(Expressed in US Dollars)
May 31, May 31,
2007 2006
-------- --------
$ $
ASSETS
CURRENT ASSETS
Cash and cash equivalents 449,185 3,001
Prepaid expenses -- 1,338
-------- --------
Total Current Assets 449,185 4,339
Property and equipment, net (Note 4) 15,936 20,096
-------- --------
TOTAL ASSETS 465,121 24,435
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
LIABILITIES
Accounts payable 3,040 --
Accrued liabilities 1,764 --
Loans payable to related party (Note 5) -- 22,100
Management fees payable (Note 5) 45,100 17,700
-------- --------
Total Liabilities 49,904 39,800
-------- --------
Contingencies (Note 1)
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred Stock:
Authorized: 10,000,000 shares, $0.001 par value
Issued and outstanding: None -- --
Common Stock:
Authorized: 100,000,000 shares, $0.001 par value
Issued and outstanding: 10,530,000 shares
(May 31, 2006 - 10,530,000 shares) 10,530 10,530
Additional paid-in capital 409,478 43,970
Common stock subscribed (Note 6) 500,500 --
Deficit accumulated during the development stage (505,291) (69,865)
-------- --------
Total Stockholders' Equity (Deficit) 415,217 (15,365)
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) 465,121 24,435
======== ========
(The accompanying notes are an integral part of these financial statements)
18
Keewatin Windpower Corp.
(A Development Stage Company)
Statements of Operations
(Expressed in US Dollars)
Accumulated from
February 25, 2005
(Date of Inception)
To Year Ended Year Ended
May 31, May 31, May 31,
2007 2007 2006
----------- ----------- -----------
$ $ $
Expenses
Management fees 160,077 121,377 30,000
General and administrative 354,704 323,539 27,544
----------- ----------- -----------
Operating loss 514,781 444,916 57,544
----------- ----------- -----------
Other Income
Interest income (9,490) (9,490) --
----------- ----------- -----------
Net loss 505,291 435,426 57,544
=========== =========== ===========
Net loss per common share - basic and diluted (0.04) (0.01)
=========== ===========
Weighted average number of common stock outstanding 10,530,000 10,530,000
=========== ===========
(The accompanying notes are an integral part of these financial statements)
19
Keewatin Windpower Corp.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Expressed in US Dollars)
Accumulated from
February 25, 2005
(Date of Inception)
To Year Ended Year Ended
May 31, May 31, May 31,
2007 2007 2006
-------- -------- --------
$ $ $
OPERATING ACTIVITIES
Net loss for the period (505,291) (435,426) (57,544)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 4,877 4,160 717
Stock-based compensation 365,508 365,508 --
Changes in operating assets and liabilities:
Prepaid expenses -- 1,338 (3)
Accounts payable and accrued liabilities 4,804 4,804 --
Management fees payable 45,100 27,400 17,700
-------- -------- --------
NET CASH FLOWS USED IN OPERATING ACTIVITIES (85,002) (32,216) (39,130)
-------- -------- --------
INVESTING ACTIVITIES
Purchase of equipment (20,813) -- (20,813)
-------- -------- --------
NET CASH FLOWS USED IN INVESTING ACTIVITIES (20,813) -- (20,813)
-------- -------- --------
FINANCING ACTIVITIES
Proceeds from common stock issuances 54,500 -- --
Proceeds from common stock subscriptions 500,500 500,500 --
(Repayment of) proceeds from related party loans -- (22,100) 22,100
-------- -------- --------
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 555,000 478,400 22,100
-------- -------- --------
Increase (decrease) in cash and cash equivalents 449,185 446,184 (37,843)
Cash and cash equivalents - beginning of period -- 3,001 40,844
-------- -------- --------
Cash and cash equivalents - end of period 449,185 449,185 3,001
======== ======== ========
Supplementary disclosures
Interest paid -- -- --
======== ======== ========
Income taxes paid -- -- --
======== ======== ========
(The accompanying notes are an integral part of these financial statements)
20
Keewatin Windpower Corp.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
(Expressed in US Dollars)
Deficit
Accumulated
Additional Common During the
Common Paid-in Stock Development
Shares Amount Capital Subscribed Stage Total
------ ------ ------- ---------- ----- -----
# $ $ $ $ $
Balance - February 25, 2005 (Date of Inception) -- -- -- -- -- --
Common stock issued on March 2, 2005 to
founders for cash at $0.00167 per share 6,000,000 6,000 4,000 -- -- 10,000
Common stock issued from March 4, 2005 to
March 20, 2005 for cash at $0.0033 per share 3,000,000 3,000 7,000 -- -- 10,000
Common stock issued on March 31, 2005 for cash
at $0.0167 per share 300,000 300 4,700 -- -- 5,000
Common stock issued from April 7, 2005 to
April 28, 2005 for cash at $0.0167 per share 480,000 480 7,520 -- -- 8,000
Common stock issued from May 1, 2005 to
May 25, 2005 for cash at $0.0167 per share 690,000 690 10,810 -- -- 11,500
Common stock issued on May 29, 2005 for cash
at $0.0167 per share 60,000 60 9,940 -- -- 10,000
Net loss May 31, 2005 -- -- -- -- (12,321) (12,321)
---------- ------- -------- -------- --------- --------
Balance - May, 31 2005 10,530,000 10,530 43,970 -- (12,321) 42,179
Net loss May 31, 2006 -- -- -- -- (57,544) (57,544)
---------- ------- -------- -------- --------- --------
Balance - May 31, 2006 10,530,000 10,530 43,970 -- (69,865) (15,365)
Common stock subscribed -- -- -- 500,500 -- 500,500
Stock-based compensation -- -- 365,508 -- -- 365,508
Net loss May 31, 2007 -- -- -- -- (435,426) (435,426)
---------- ------- -------- -------- --------- --------
Balance - May 31, 2007 10,530,000 10,530 409,478 500,500 (505,291) 415,217
========== ======= ======== ======== ========= ========
(The accompanying notes are an integral part of these financial statements)
21
1. Organization and Description of Business
The Company was incorporated in the State of Nevada on February 25, 2005.
The Company is a Development Stage Company, as defined by Statement of
Financial Accounting Standard ("SFAS") No.7 "ACCOUNTING AND REPORTING FOR
DEVELOPMENT STAGE COMPANIES". Its activities to date have been limited to
capital formation, organization, and development of its business plan for
the exploration and development of wind power projects in Canada.
These financial statements have been prepared on a going concern basis,
which implies the Company will continue to realize its assets and discharge
its liabilities in the normal course of business. The Company has never
generated revenues since inception and has never paid any dividends and is
unlikely to pay dividends or generate earnings in the immediate or
foreseeable future. The continuation of the Company as a going concern is
dependent upon the continued financial support from its shareholders, the
ability of the Company to obtain necessary equity financing to continue
operations, the successful exploitation of economically recoverable
electricity in its wind power projects, and the attainment of profitable
operations. As at May 31, 2007, the Company has accumulated losses of
$505,291 since inception. These factors raise substantial doubt regarding
the Company's ability to continue as a going concern. These financial
statements do not include any adjustments to the recoverability and
classification of recorded asset amounts and classification of liabilities
that might be necessary should the Company be unable to continue as a going
concern.
Management plans to raise additional funds through debt and equity
offerings. Management has yet to decide what type of offering the Company
will use or how much capital the Company will attempt to raise. There is no
guarantee that the Company will be able to raise any capital through any
type of offering. On July 27, 2007 the Company completed a private placement
consisting of 1,075,000 shares of common stock at $1.20 per share (cash
proceeds of $1,290,000) and 1,000,000 share purchase warrants entitling the
holder to acquire an additional share of common stock for $2.50. Finders'
fees of $126,750 were paid related to this placement.
As at May 31, 2007, $500,500 was received in stock subscriptions from
another private placement. Offering consisting of up to 715,000 shares of
common stock at $0.70 per share for proceeds of $500,500. The Company will
pay a 10% finders' fee consisting of 71,500 shares of common stock. To date,
the common stock has not been issued.
2. Significant Accounting Polices
a. Basis of Accounting
The Company's financial statements are prepared using the accrual
method of accounting. The Company has elected a May 31, year-end.
b. Cash Equivalents
The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.
c. Financial Instruments
The fair values of financial instruments, which include cash, accounts
receivable, accounts payable and accrued liabilities, loan payable,
convertible debentures and due to related party approximate their
carrying values due to the relatively short maturity of these
instruments.
d. Equipment
Equipment is carried at cost. Depreciation is computed using a
straight-line method over the estimated useful lives of the
depreciable property, which range from 3 to 5 years. Management
evaluates useful lives regularly in order to determine recoverability
taking into consideration current technological conditions.
Maintenance and repairs are charged to expense as incurred; additions
and betterments are capitalized. Upon retirement or disposal of any
item of equipment, the cost is and related accumulated depreciation of
the disposed assets is removed, and any resulting gain or loss is
credited or charged to operations.
22
2. Significant Accounting Polices (continued)
e. Long Lived Assets
In accordance with SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets", the Company tests long-lived assets or
asset groups for recoverability when events or changes in
circumstances indicate that their carrying amount may not be
recoverable. Circumstances which could trigger a review include, but
are not limited to: significant decreases in the market price of the
asset; significant adverse changes in the business climate or legal
factors; accumulation of costs significantly in excess of the amount
originally expected for the acquisition or construction of the asset;
current period cash flow or operating losses combined with a history
of losses or a forecast of continuing losses associated with the use
of the asset; and current expectation that the asset will more likely
than not be sold or disposed significantly before the end of its
estimated useful life.
Recoverability is assessed based on the carrying amount of the asset
and its fair value which is generally determined based on the sum of
the undiscounted cash flows expected to result from the use and the
eventual disposal of the asset, as well as specific appraisal in
certain instances. An impairment loss is recognized when the carrying
amount is not recoverable and exceeds fair value.
f. Income Taxes
Income taxes are provided in accordance with Statement of Financial
Accounting Standards No. 109 (SFAS 109), Accounting for Income Taxes.
A deferred tax asset or liability is recorded for all temporary
differences between financial and tax reporting and net operating loss
carry forwards. Deferred tax expense (benefit) results from the net
change during the year of deferred tax assets and liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion of
the deferred tax assets will be realized. Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws and
rates on the date of enactment.
g. Foreign Currency Translation
The Company's functional and reporting currency is the United States
dollar. Monetary assets and liabilities denominated in foreign
currencies are translated using the exchange rate prevailing at the
balance sheet date. Gains and losses arising on translation or
settlement of foreign currency denominated transactions or balances
are included in the determination of income. Foreign currency
transactions are primarily undertaken in Canadian dollars. The Company
has not, to the date of these financial statements, entered into
derivative instruments to offset the impact of foreign currency
fluctuations.
h. Basic Earnings (Loss) per Share
In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share",
which specifies the computation, presentation and disclosure
requirements for earnings (loss) per share for entities with publicly
held common stock. SFAS No. 128 supersedes the provisions of APB No.
15, and requires the presentation of basic earnings (loss) per share
and diluted earnings (loss) per share. The Company has adopted the
provisions of SFAS No. 128 effective February 25, 2005 (inception).
Basic net earnings (loss) per share amounts are computed by dividing
the net earnings (loss) by the weighted average number of common
shares outstanding. Diluted earnings (loss) per share are the same as
basic earnings (loss) per share due to the lack of dilutive items in
the Company.
i. Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make certain estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the
periods presented. Actual results could differ from those estimates.
Significant estimates made by management are, among others,
realizability of long-lived assets, deferred taxes and stock option
valuation. Management reviews its estimates on a quarterly basis and,
where necessary, makes adjustments prospectively.
23
2. Significant Accounting Polices (continued)
j. Stock-Based Compensation
The Company records stock-based compensation in accordance with SFAS
No. 123R "Share Based Payments", using the fair value method. All
transactions in which goods or services are the consideration received
for the issuance of equity instruments are accounted for based on the
fair value of the consideration received or the fair value of the
equity instrument issued, whichever is more reliably measurable.
Equity instruments issued to employees and the cost of the services
received as consideration are measured and recognized based on the
fair value of the equity instruments issued.
3. Recent Accounting Pronouncements
In February 2007, the Financial Accounting Standards Board (FASB) issued
SFAS No. 159, "THE FAIR VALUE OPTION FOR FINANCIAL ASSETS AND FINANCIAL
LIABILITIES - INCLUDING AN AMENDMENT OF FASB STATEMENT NO. 115". This
statement permits entities to choose to measure many financial instruments
and certain other items at fair value. Most of the provisions of SFAS No.
159 apply only to entities that elect the fair value option. However, the
amendment to SFAS No. 115 "ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND
EQUITY SECURITIES" applies to all entities with available-for-sale and
trading securities. SFAS No. 159 is effective as of the beginning of an
entity's first fiscal year that begins after November 15, 2007. Early
adoption is permitted as of the beginning of a fiscal year that begins on or
before November 15, 2007, provided the entity also elects to apply the
provision of SFAS No. 157, "FAIR VALUE MEASUREMENTS". The adoption of this
statement is not expected to have a material effect on the Company's
financial statements.
In September 2006, the SEC issued Staff Accounting Bulletin ("SAB") No. 108,
"CONSIDERING THE EFFECTS OF PRIOR YEAR MISSTATEMENTS WHEN QUANTIFYING
MISSTATEMENTS IN CURRENT YEAR FINANCIAL STATEMENTS." SAB No. 108 addresses
how the effects of prior year uncorrected misstatements should be considered
when quantifying misstatements in current year financial statements. SAB No.
108 requires companies to quantify misstatements using a balance sheet and
income statement approach and to evaluate whether either approach results in
quantifying an error that is material in light of relevant quantitative and
qualitative factors. SAB No. 108 is effective for fiscal years ending after
November 15, 2006. The Company does not expect that adoption of SAB No. 108
will have a material effect on its financial statements.
In September 2006, the FASB issued SFAS No. 158, "EMPLOYERS' ACCOUNTING FOR
DEFINED BENEFIT PENSION AND OTHER POSTRETIREMENT PLANS - AN AMENDMENT OF
FASB STATEMENTS NO. 87, 88, 106, AND 132(R)". This statement requires
employers to recognize the overfunded or underfunded status of a defined
benefit postretirement plan (other than a multiemployer plan) as an asset or
liability in its statement of financial position and to recognize changes in
that funded status in the year in which the changes occur through
comprehensive income of a business entity or changes in unrestricted net
assets of a not-for-profit organization. This statement also requires an
employer to measure the funded status of a plan as of the date of its
year-end statement of financial position, with limited exceptions. The
provisions of SFAS No. 158 are effective for employers with publicly traded
equity securities as of the end of the fiscal year ending after December 15,
2006. The Company currently has no such employee plans and does not expect
to ever institute such plans. The adoption of this statement is not expected
to have a material effect on the Company's future reported financial
position or results of operations.
In September 2006, the FASB issued SFAS No. 157, "FAIR VALUE MEASUREMENTS".
The objective of SFAS 157 is to increase consistency and comparability in
fair value measurements and to expand disclosures about fair value
measurements. SFAS 157 defines fair value, establishes a framework for
measuring fair value in generally accepted accounting principles, and
expands disclosures about fair value measurements. SFAS 157 applies under
other accounting pronouncements that require or permit fair value
measurements and does not require any new fair value measurements. The
provisions of SFAS No. 157 are effective for fair value measurements made in
fiscal years beginning after November 15, 2007. The adoption of this
statement is not expected to have a material effect on the Company's future
reported financial position or results of operations.
In June 2006, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation No. 48, "ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES, AN
INTERPRETATION OF FASB STATEMENTS NO. 109". FIN 48 clarifies the accounting
for uncertainty in income taxes by prescribing a two-step method of first
evaluating whether a tax position has met a more likely than not recognition
threshold and second, measuring that tax position to determine the amount of
benefit to be recognized in the financial statements. FIN 48 provides
guidance on the presentation of such positions within a classified statement
of financial position as well as on derecognition, interest and penalties,
accounting in interim periods, disclosure, and transition. FIN 48 is
effective for fiscal years beginning after December 15, 2006. The adoption
of this statement is not expected to have a material effect on the Company's
future reported financial position or results of operations.
24
4. Property and equipment
May 31, 2007 May 31, 2006
Accumulated Net carrying Net carrying
Cost depreciation value value
---- ------------ ----- -----
$ $ $ $
Wind tower equipment 20,813 (4,877) 15,936 20,096
------ ------ ------ ------
20,813 (4,877) 15,936 20,096
====== ====== ====== ======
5. Related Party Transactions
a) The Company neither owns nor leases any real or personal property. A
director provides office services without charge. Such costs are
immaterial to the financial statements and accordingly, have not been
reflected therein.
b) Since inception through the period ended May 31, 2007, a director and
principal shareholder of the Company had advanced the Company funds in
the amount of $27,100. The balance was unsecured and interest free
with no specific terms of repayment. During the year ended May 31,
2007, the balance was repaid in full.
c) For the year ended May 31, 2007, a director and principal shareholder
of the Company, pursuant to a management agreement, has incurred
$30,000 in management fees. As at May 31, 2007 the Company owes this
director $45,100 in accrued management fees. There are no specified
terms of repayment on the accrued amount.
These related party transactions are recorded at the exchange amount, being
the amount established and agreed to by the related parties.
6. Common Stock
a) On September 25, 2006 the Company effected a 3:1 forward split of its
share capital such that every one share of common stock issued and
outstanding prior to the split was exchanged for three post-split
shares of common stock. The Company also changed its post-split
authorized capital to 100,000,000 shares of common stock with a par
value of $0.001 per share, and to 10,000,000 shares of preferred stock
with a par value of $0.001 per share. All share amounts have been
retroactively adjusted for all periods presented.
b) During the year ended May 31, 2007, the Company received private
placement subscriptions of $500,500 through an offering of up to
715,000 shares of common stock at $0.70 per share. The Company will
pay a 10% finders' fee consisting of 71,500 shares of common stock. To
date, the common stock has not been issued.
c) On July 27, 2007 the Company completed a private placement consisting
of 1,075,000 shares of common stock at $1.20 per share for cash
proceeds of $1,290,000. Finders' fees of $126,750 cash and 1,000,000
share purchase warrants entitling the holder to acquire an additional
share of common stock for $2.50 were paid related to this placement.
7. Stock Options
During the year ended May 31, 2007, the Company granted stock options to
directors, officers and key advisors to acquire up to 1,000,000 shares of
common stock exercisable at $1.10 per share on or before February 26, 2009.
All options granted were vested at the time of issuance. The fair value for
options granted was estimated at the date of grant to be $365,508 using the
Black-Scholes option pricing model assuming an expected life of 2 years, a
risk-free rate of 4.49%, an expected volatility of 42% and no expected
dividends. The fair value of these stock options granted was approximately
$0.37 per share. During the year ended May 31, 2007, the Company recorded
stock-based compensation of $91,337 as management fees and $274,131 as
general and administrative expenses.
25
A summary of the Company's stock option activity is as follows:
Year ended Year ended
May 31, 2007 May 31, 2006
---------------------- ------------------------
Weighted Weighted
Average Average
Number Exercise Number Exercise
of Options Price of Options Price
---------- ----- ---------- -----
Balance, Beginning of period -- $ -- -- $ --
Granted 1,000,000 1.10 -- --
Cancelled/Forfeited -- -- -- --
Exercised -- -- -- --
--------- ----- ---- ----
Balance, End of period 1,000,000 $1.10 -- $ --
========= ===== ==== ====
As at May 31, 2007, the intrinsic value of the options was $350,000.
8. Income Taxes
The Company accounts for income taxes under SFAS No. 109, "ACCOUNTING FOR
INCOME TAXES." Deferred income tax assets and liabilities are determined
based upon differences between financial reporting and tax bases of assets
and liabilities and are measured using the enacted tax rates and laws that
will be in effect when the differences are expected to reverse. Income tax
expense differs from the amount that would result from applying the U.S
federal and state income tax rates to earnings before income taxes. The
Company has a net operating loss carryforward of approximately $139,783
available to offset taxable income in future years which expires in fiscal
2027. Pursuant to SFAS 109, the potential benefit of the net operating loss
carryforward has not been recognized in the financial statements since the
Company cannot be assured that it is more likely than not that such benefit
will be utilized in future years.
The Company is subject to United States federal and state income taxes at an
approximate rate of 35%. The reconciliation of the provision for income
taxes at the United States federal statutory rate compared to the Company's
income tax expense as reported is as follows:
May 31, May 31,
2007 2006
-------- --------
$ $
Net loss before income taxes per
financial statements 435,426 57,544
Income tax rate 35% 35%
Income tax recovery (152,399) (20,140)
Permanent differences -- --
Temporary differences -- --
Valuation allowance change 152,399 20,140
-------- --------
Provision for income taxes -- --
======== ========
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. Deferred
income taxes arise from temporary differences in the recognition of income
and expenses for financial reporting and tax purposes. The significant
components of deferred income tax assets and liabilities at May 31, 2007 are
as follows:
26
May 31, May 31,
2007 2006
-------- --------
$ $
Net operating loss carryforward 176,852 24,453
Valuation allowance (176,852) (24,453)
-------- --------
Net deferred income tax asset -- --
======== ========
The Company has recognized a valuation allowance for the deferred income tax
asset since the Company cannot be assured that it is more likely than not
that such benefit will be utilized in future years. The valuation allowance
is reviewed annually. When circumstances change and which cause a change in
management's judgment about the realizability of deferred income tax assets,
the impact of the change on the valuation allowance is generally reflected
in current income.
9. Potential Acquisition
The Company entered into a letter agreement dated March 26, 2007 to acquire
100% of the issued and outstanding common shares of Sky Harvest Windpower
Corp. ("Sky Harvest"), a private Canadian company incorporated under the
laws of British Columbia, in consideration for 17,343,516 restricted shares
of the Company's common stock. The directors of the Company are also
directors and principal shareholders of Sky Harvest. Sky Harvest holds the
rights to construct a wind power facility on approximately 8,500 acres of
land located in Southwestern Saskatchewan. The closing of this transaction
is subject to shareholder approval.
10. Subsequent Event
On July 27, 2007 the Company completed a private placement consisting of
1,075,000 shares of common stock at $1.20 per share (cash proceeds of
$1,290,000) and 1,000,000 share purchase warrants entitling the holder to
acquire an additional share of common stock for $2.50. Finders' fees of
$126,750 were paid related to this placement.
27
ITEM 8: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 8A: CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS
The Corporation evaluated the effectiveness of its disclosure controls and
procedures as of the end of the 2007 fiscal year. This evaluation was conducted
with the participation of its chief executive officer and its chief financial
and principal accounting officer.
Disclosure controls are controls and other procedures that are designed to
ensure that information that the Corporation is required to disclose in the
reports filed pursuant to the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported.
LIMITATIONS ON THE EFFECTIVENESS OF CONTROLS
Management does not expect that the Corporation's disclosure controls or its
internal controls over financial reporting will prevent all error and fraud. A
control system, no matter how well conceived and operated, can provide only
reasonable, but no absolute, assurance that the objectives of a control system
are met. Further, any control system reflects limitations on resources, and the
benefits of a control system must be considered relative to its costs. These
limitations also include the realities that judgments in decision-making can be
faulty and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people or by management override of a
control. A design of a control system is also based upon certain assumptions
about potential future conditions; over time, controls may become inadequate
because of changes in conditions, or the degree of compliance with the policies
or procedures may deteriorate. Because of the inherent limitations in a
cost-effective control system, misstatements due to error or fraud may occur and
may not be detected.
CONCLUSIONS
Based upon the evaluation of the Corporation's controls, the chief executive
officer and chief financial and principal accounting officer have concluded
that, subject to the limitations noted above, the disclosure controls are
effective providing reasonable assurance that material information relating to
the Corporation is made known to management on a timely basis during the period
when its reports are being prepared. There were no changes in the Corporation's
internal controls that occurred during the quarter covered by this report that
have materially affected, or are reasonably likely to materially affect its
internal controls.
28
PART III
ITEM 9: DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Served as a Director
Name Age Position with Registrant or Officer Since
---- --- ------------------------ ---------------
Chris Craddock 48 President, C.E.O., Secretary, February 25, 2005
and Director
William Iny 56 Director May 23, 2006
Greg Yanke 36 Director May 23, 2006
Victor S. Dusik 57 Executive Vice-President, June 3, 2007
C.F.O. and Director
The following describes the business experience of the directors and executive
officers, including other directorships held in reporting companies:
MR. CHRIS CRADDOCK has acted as President, Chief Executive Officer, Secretary
and Director since incorporation on February 25, 2005. He has also acted as
Treasurer and Principal Financial and Accounting Officer from February 25, 2005
to June 3, 2007 when Mr. Victor S. Dusik joined the Corporation as Executive
Vice-President, Chief Financial Officer and Director. From November 2001 to
February 2005, Mr. Craddock acted as the President of Westgreen Power
Development Corp., a private Vancouver, British Columbia based company involved
in the development of alternative energy projects in British Columbia and
Saskatchewan.
From March 2000 to August 2003, he acted as a Director of New Market Ventures
Inc., a British Columbia reporting company that acquired and operated Russell
Brewing Company Ltd., a Surrey, British Columbia based microbrewery.
Mr. Craddock currently devotes 100% of his business time to the Corporation's
affairs.
MR. WILLIAM INY has acted as a director since May 23, 2006. Since 1981, Mr. Iny
has acted as the Principal of Abra Management Corporation, a private company
involved in real estate development, franchising and in providing consulting and
financing services to private and public companies. He was also a co-founder and
director of Empire Stock Transfer Inc., a Las Vegas, Nevada based registrar and
transfer agent registered with the United States Securities & Exchange
Commission.
Mr. Iny currently devotes 10% of his business time to the Corporation's affairs.
MR. GREG YANKE has acted as a Director since May 23, 2006. Mr. Yanke has been
self-employed as a securities lawyer and principal of Gregory S. Yanke Law
Corporation since February 2000. He is a graduate of the University of British
Columbia, receiving Bachelor degrees in Political Science (1991) and Law (1994).
He is a member in good standing with the Law Society of British Columbia. Mr.
Yanke has previously acted as a director and officer of various Canadian and
United States reporting companies.
29
Although, Mr. Yanke does not currently act as a director or officer of any other
reporting issuer, he has previously acted as a director or officer of the
following United States, British Columbia and/or Alberta reporting companies in
the past five years: Surforama.com, Inc., Candorado Operating Company Ltd.,
Iciena Ventures Inc., Big Bar Gold Corporation, Mutapa Copper and Cobalt Inc.,
Algorithm Media Inc., Diamcor Mining Inc., Merrex Resources Inc., Arcland
Resources Inc., Alberta Star Development Corp., Goldstrike Inc., Tamarack
Ventures, Inc., Panterra Exploration Corp., Randsburg International Gold Corp.,
Big Star Energy Inc. and Landstar Properties Inc.
Mr. Yanke currently devotes 10% of his business time to the Corporation's
affairs.
MR. VICTOR S. DUSIK joined the Corporation on June 3, 2007 as Executive
Vice-President, Chief Financial Officer, Principal Accounting Officer and
Director and has acted in that capacity since that date.
From August 2002 to June 2007, Mr. Dusik acted as Vice-President Finance and
Chief Financial Officer of Maxim Power Corp., a corporation listed on the
Toronto Stock Exchange under the symbol MXG. Maxim Power Corp is an independent
power producer based in Calgary with operations in North America and France.
Prior to that time, Mr. Dusik was with Ernst & Young LLP for most of his working
career and was a senior partner of that firm since 1981. Mr. Dusik held a
variety of senior roles including managing partner of the Calgary office,
director of the Western Canadian risk management consulting practice and
director of the Western Canadian valuations practice.
Mr. Dusik currently devotes 50% of his business time to the Corporation.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Corporation's executive officers
and directors, and persons who beneficially own more than 10% of the
Corporation's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Officers, directors and
greater than 10% shareholders are required by SEC regulation to furnish copies
of all Section 16(a) forms they file. Based on the Corporation's review of the
copies of such forms received, the Corporation believes that during the fiscal
year ended May 31, 2007 all such filing requirements applicable to its officers
and directors were complied with exception that reports were filed late by the
following persons:
Number Transactions Known Failures
of late Not Timely to File a
Name and Principal Position Reports Reported Required Form
--------------------------- ------- -------- -------------
Chris Craddock 0 0 0
(President and Director)
William Iny 0 0 0
(Director)
Greg Yanke 0 0 0
(Director)
30
ITEM 10: EXECUTIVE COMPENSATION
The table below summarizes all compensation awarded to, earned by, or paid to
the Corporation's executive officers by any person for all services rendered in
all capacities to the Corporation for the fiscal year ended May 31, 2007.
Annual Compensation Long Term Compensation
----------------------------- ---------------------------------
Other Restricted
Annual Stock Options/ LTIP All Other
Name Title Year Salary Bonus Compensation Awarded SARs(#) Payouts($) Compensation
---- ----- ---- ------ ----- ------------ ------- ------- ---------- ------------
Chris President 2007 $30,000 0 0 0 $91,369 0 0
Craddock 2006 $30,000 0 0 0 0 0 0
ITEM 11: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The following table sets forth information regarding the beneficial ownership of
the Corporation's shares of common stock at September 7, 2007 by (i) each person
known by the Corporation to be the beneficial owner of more than 5% of the
outstanding shares of common stock, (ii) each of the Corporation's directors,
(iii) the Corporation's executive officers, and (iv) by all of its directors and
executive officers as a group. Each person named in the table, has sole voting
and investment power with respect to all shares shown as beneficially owned by
such person and can be contacted at the Corporation's executive office address.
Amount of
Title of Name and Address Beneficial Percent
Class of Beneficial Owner Ownership of Class
----- ------------------- --------- --------
COMMON Chris Craddock 2,212,500 16.52%
STOCK President, Chief
Executive Officer
Secretary, Treasurer
and a Director
2159 Greylynn Cr.
North Vancouver, B.C.
Canada
COMMON William Iny 2,250,000 16.80%
STOCK Director
666 Burrard St.
Suite 617
Vancouver, B.C.
Canada
COMMON Greg Yanke 2,250,000 16.90%
STOCK Director
666 Burrard St.
Suite 617
Vancouver, B.C.
Canada
COMMON Victor S. Dusik 250,000 less than 5%
STOCK Executive Vice-President,
Chief Financial Officer
And a Director
666 Burrard Street
Vancouver, B.C.
Canada
COMMON All officers and directors 6,952,500 51.99%
STOCK as a group that consists of
four people
31
The percent of each class is based on 13,391,500 shares of common stock issued
and outstanding, including 1,000,000 stock options issued as of the date of this
annual report as more fully described below.
The Corporation granted stock options to directors, officers and key advisors to
acquire up to 1,000,000 shares of common stock exercisable at $1.10 per share on
or before February 26, 2009. All options granted were vested at the time of
issuance. Each individual noted above was granted 250,000 options under this
award.
ITEM 12: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Corporation is party to a management agreement with its Chief Executive
Office and Director, Chris Craddock, whereby it pays him management fees of
$2,500 per month.
Otherwise, none of the Corporation's directors or officers, nor any proposed
nominee for election as a director, nor any person who beneficially owns,
directly or indirectly, shares carrying more than 10% of the voting rights
attached to all of its outstanding shares, nor any promoter, nor any relative or
spouse of any of the foregoing persons has any material interest, direct or
indirect, in any transaction since incorporation or in any presently proposed
transaction which, in either case, has or will materially affect the
Corporation.
Management is involved in other business activities and may, in the future
become involved in other business opportunities. If a specific business
opportunity becomes available, such persons may face a conflict in selecting
between the Corporation's business and their other business interests. In the
event that a conflict of interest arises at a meeting of the Corporation's
directors, a director who has such a conflict will disclose his interest in a
proposed transaction and will abstain from voting for or against the approval of
such transaction.
ITEM 13: EXHIBITS AND REPORTS
Exhibit Number Description
-------------- -----------
3.1 Articles of Incorporation (filed as an exhibit to
registration statement on Form SB-2 dated July 14, 2005).
3.2 Bylaws (filed as an exhibit to registration statement on
Form SB-2 dated July 14, 2005).
10.1 Management Agreement (filed as an exhibit to registration
statement on Form SB-2 dated July 14, 2005).
10.2 Consent to Entry/Right of Access Agreement (filed as an
exhibit to registration statement on Form SB-2 dated
September 29, 2005).
99.1 Resignation of principal independent accountant, Armando
C. Ibarra, C.P.A. and appointment of current accountant,
Chang G. Park, CPA, Ph.D., on August 25, 2006
(incorporated by reference from Current Report on Form
8-K filed on September 7, 2006).
16.1 Letter from Armando C. Ibarra, C.P.A. and amendments
(incorporated by reference from Current Reports on Form
8-K filed on August 29, 2006, September 7, 2006 and
October 2, 2006).
31.1 Certification pursuant to Rule 13a-14(a) under the
Securities Exchange Act of 1934.
31.2 Certification pursuant to Rule 13a-14(a) under the
Securities Exchange Act of 1934.
32.1 Certification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
32
32.2 Certification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
99.1 Completion of a $500,500 financing consisting of the sale
of 715,000 for $0.70 and also the issuance of 71,500
shares as a finder's fee in connection with the financing
(incorporated by reference from Current Report on Form
8-K filed on November 29, 2006).
99.1 Acquisition Agreement with Sky Harvest Windpower Corp., a
private Canadian company, whereby Keewatin will acquire
all of Sky Harvest issued and outstanding share capital
(incorporated by reference from Current Report on Form
8-K filed on March 31, 2007).
99.1 Completion of $1.29 million financing consisting of the
sale of 1,075,000 restricted shares of common stock at a
price of $1.20 each for gross proceeds of $1,290,000,
including 1,000,000 share purchase warrants and payment
of a finders' fee of $126,750 ((incorporated by reference
from Current Report on Form 8-K filed on July 31, 2007).
Granting of incentive stock options on an aggregate of
1,000,000 shares of common stock to directors, officers
and key advisors. Each option is exercisable at a price
of $1.10 per share for a period of two years from the
date of the grant ((incorporated by reference from
Current Report on Form 8-K filed on February 26, 2007).
The Corporation announced that it is proceeding with the
sale of up to 1,000,000 shares of common stock for $1.20
each for aggregate proceeds of $1,200,000 and the payment
of a finder's fee of 7.5% in stock or cash in connection
with the financing (incorporated by reference from
Current Report on Form 8-K filed on March 14, 2007).
ITEM 14: PRINCIPAL ACCOUNTANT FEES AND SERVICES
Our principal accountants, Chang G. Park, Certified Public Accountants, rendered
invoices to the Corporation during the fiscal periods indicated for the
following fees and services:
Inception (Feb 25, 2005)
Fiscal year ended May 31, 2007 to May 31, 2006
------------------------------ ---------------
Audit fees $6,000 $2,500
Audit-related fees Nil Nil
Tax fees Nil Nil
All other fees Nil Nil
Audit fees consist of fees related to professional services rendered in
connection with the audit of the Corporation's annual financial statements, the
review of the financial statements included in each of its quarterly reports on
Form 10-QSB.
The Corporation's policy is to pre-approve all audit and permissible non-audit
services performed by the independent accountants. These services may include
audit services, audit-related services, tax services and other services. Under
the audit committee's policy, pre-approval is generally provided for particular
services or categories of services, including planned services, project based
services and routine consultations. In addition, the Corporation may also
pre-approve particular services on a case-by-case basis. The Corporation
approved all services that its independent accountants provided to the
Corporation in the past two fiscal years.
33
SIGNATURES
Pursuant to the requirements of Section 13 and 15 (d) 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.
Keewatin Windpower Corp.
By /s/ Chris Craddock
------------------------------------------
Chris Craddock
President, CEO & Director
Date: September 7, 2007
By /s/ Victor S. Dusik
------------------------------------------
Victor S. Dusik
Executive Vice President, CFO & Director
Date: September 7, 2007
In accordance with the Securities Exchange Act, this report has been signed
below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.
By /s/ Chris Craddock
------------------------------------------
Chris Craddock
President, CEO & Director
Date: September 7, 2007
By /s/ William Iny
------------------------------------------
William Iny
Director
Date: September 7, 2007
By /s/ Greg Yanke
------------------------------------------
Greg Yanke
Director
Date: September 7, 2007
By /s/ Victor S. Dusik
------------------------------------------
Victor S. Dusik
Executive Vice President, CFO and Director
Date: September 7, 2007
34