BOPO BioPower Operations Corporation (CE)

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

FORWARD LOOKING STATEMENTS AND ASSOCIATED RISK

The information contained in this Quarterly Report on Form 10-Q (this “Quarterly Report”) is intended to update the information contained in our Annual Report on Form 10-K for the year ended November 30, 2015 (our “2015 Annual Report”) and presumes that readers have access to, and will have read, the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other information contained in our 2014 Annual Report. The following discussion and analysis also should be read together with our consolidated financial statements and the notes to the consolidated financial statements included elsewhere in this Quarterly Report.

This discussion summarizes the significant factors affecting the consolidated operating results, financial condition and liquidity and cash flows of BioPower Operations Corp. for the three months ended February 29, 2015 and February 28, 2014. Except for historical information, the matters discussed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result” and similar expressions. Forward-looking statements involve risks and uncertainties and are based upon judgments concerning various factors that are beyond our control. Forward-looking statements are based on current expectations and assumptions and actual results could differ materially from those projected in the forward-looking statements as a result of, among other things, those factors set forth in “Risk Factors” contained in Item 1A of our 2015 Annual Report.

Throughout this Quarterly Report, the terms “we,” “us” and “our” refers to BioPower Operations Corporation and, Unless the context otherwise requires, The “Company”, “we,” “us,” and “our,” refer to (i) BioPower Operations Corporation.; (ii) BioPower Corporation (“BC”), Green ³ Power Holdings Company and its subsidiaries (“G ³ P”), and FTZ Energy Corporation. Unless otherwise indicated, all monetary amounts are reflected in United States Dollars.

OVERVIEW

From inception (September 13, 2010) to November 30, 2014, the Company focused on growing biomass crops coupled with the project development of processing and/or conversion facilities to produce oils, biofuels, electricity and other biomass products. We also intended to utilize licensed patented technology to convert biomass wastes into products and reduce the amount of waste going to landfills. We are organized as a holding company. On October 24, 2014, the Company executed a Share Exchange Agreement with Green3Power Holdings Company (“G3P”) to acquire G3P and its wholly-owned subsidiaries Green3Power Operations Inc., a Delaware corporation (“G3P OPS”) and Green3Power International Company, a Nevis Corporation (“G3PI”), which are wholly-owned subsidiaries of the Company. This transaction was a stock for stock exchange, (See Share exchange Agreement). We conduct all of our operations through Green3Power Holdings Company and their subsidiaries which are primarily engaged in the development of Renewable Waste-to-Energy (WtE) Facilities using their unique turnkey exclusive global license to the gasification technology to convert wastes into electricity and ultra-low sulfur renewable fuels. G3P intends to design, permit, procure equipment, manage construction and provide operations and maintenance of the intended facilities. We intend to hold equity interests in the waste-to-energy facilities on a global basis.

We will also provide waste remediation services on a global basis. Remediation waste is defined in 40 Code of Federal Regulations (CFR) 260.10 as “all solid and hazardous wastes, and all media (including groundwater, surface water, soils, and sediments) and debris, that are managed for implementing cleanup.”

On August 4, 2015 the St. Lucie County Commissioners approved the contract and its revisions with G3P to build a $175 Million Renewable Energy Facility on the St. Lucie County, Florida landfill using the G3P Gasification Technology. The contract provides for a 20 year waste stream of 1,000 tons per day of municipal solid waste, construction and demolition waste, green waste and tires. The facility will convert the waste into approximately 60,000 gallons per day of ultra-low sulfur renewable synthetic fuel and 20,000 gallons of Naptha. Vanderweil Engineers and G3P have completed the Site Plan and are putting together the necessary documentation for permit applications. There can be no assurance that G3P will successfully fund the $175 Million facility.

Strategy

Our mission is to provide waste and energy solutions on a global basis. We intend to do this through a variety of service offerings, including partially owning and operating and maintaining facilities for the conversion of waste to energy (known as “Waste-to-Energy” or “WtE”). Waste-to-Energy serves two key markets as both an on-going waste management solution that is environmentally superior to landfilling and as a source of clean energy that reduces overall greenhouse gas emissions.

We intend to use the following key strategies:

● Our exclusively licensed gasification technology can convert a variety of wastes into electricity or ultra-low sulfur, renewable synthetic fuel. The technology is modular and built to handle approximately 300 to 400 tons per day of waste per line of equipment. We can only use up to twelve (12) lines of equipment at a facility location because of the constraints of truck traffic per location. Because our licensed gasification is built in a series of lines, we are able to service and maintain the lines and systems while operating the facilities continuously.

● The Company intends to earn revenues from design, engineering, permitting, operations and maintenance fees and may also earn procurement fees from WtE projects.

● We have strategically aligned with Vanderweil Engineers to develop WtE facilities in the United States and internationally. Vanderweil has been in business since 1950 and its Power Engineering group is expert at developing, designing, engineering and permitting power generation facilities worldwide.

● The Company intends to maintain an equity interest of between twenty percent (20%) to one hundred percent (100%) in each of its developed projects.

● We have partnered and will partner with project development groups globally who have been in different stages of development of WtE projects.

● We intend to maximize the long-term value of WtE facilities by adding waste and off-take energy contracts, seeking incremental revenue opportunities and deploying new or improved technologies, systems and processes targeted at increasing revenue and reducing costs.

● We seek to grow primarily through the development of new facilities selected in markets where we believe that the tipping fees and off-take agreements will enable us to secure funding for the projects. We believe that our approach to these opportunities is highly-disciplined, both with regard to our required rates of return, necessary contract elements, regulatory issues and the manner in which potential new projects will be structured and financed.

● We intend to provide waste remediation services on a global basis by working with local contractors.

Our corporate headquarters are located at 1000 Corporate Drive, Suite 200, Fort Lauderdale, Florida 33334 and our phone number is (954) 202-6660. Our website can be found at www.wtepower.com. The information on our website is not incorporated in this report. 

Our Business

Our Waste-to-Energy Business

The WtE facilities we intend to build may earn revenue from the following potential revenue streams:

Prior to the start-up of the facility:

We will always have an Operations and Maintenance Agreement to operate and maintain the facility for a minimum of fifteen years, for each facility using our technology, with or without ownership in the facility.

After the start-up of a facility if we are an equity owner in the facility, we may earn:

In order to finance projects through traditional project finance, long-term contracts (off-take agreements) need to be executed for the sale of electricity or fuels in combination with a waste contract. There can be no assurance we will ever fund a facility, bring the development of a WtE facility into operation, partially own a WtE facility or operate and maintain a WtE facility.

Licensed Technology

Green ³ Power Holdings Company – Licensed gasification technology for Waste-to-Energy Conversion

G ³ P has an exclusive global License for the use of the technologies and processes for building gasification facilities to convert wastes into electricity and ultra-low sulfur renewable synthetic fuels. Once the royalties paid for the use of these technologies equal $10,000,000, G ³ P will then own 100% of the technologies and processes without any further license fees. The initial license fees are paid based on a one-time fee and then a royalty is paid generally based on the gross revenues of the facilities and their waste conversion operations using the gasification technologies and processes.

Critical Accounting Policies

In response to financial reporting release FR-60, Cautionary Advice Regarding Disclosure About Critical Accounting Policies, from the SEC, we have selected our more subjective accounting estimation processes for purposes of explaining the methodology used in calculating the estimate, in addition to the inherent uncertainties pertaining to the estimate and the possible effects on the our financial condition. The accounting estimates involve certain assumptions that, if incorrect, could have a material adverse impact on our results of operations and financial condition. Our more significant accounting policies can be found Note 1 of our unaudited interim consolidated financial statements found elsewhere in this report and in our Annual Report on Form 10-K for the year ended November 30, 2015, as filed with the SEC. There have been no material changes to our critical accounting policies during the period covered by this report.

Results of Operations

Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation. We expect that we will require additional capital to meet our operating requirements. We expect to raise additional capital through, among other things, the sale of equity and/or debt securities.

Three Months Ended February 29, 2016 Compared to the Three Months Ended February 28, 2015

The following tables set forth, for the periods indicated, results of operations information from our unaudited interim consolidated financial statements:

General and Administrative Expenses. Our general and administrative expenses are mainly comprised of compensation expense, corporate overhead, development costs, and financial and administrative contracted services for professional services including legal and accounting, SEC filing fees, and insurance. The increase in our general and administrative expenses is primarily attributable to higher compensation expense including increases in salaries for the two BioPower officers, addition of the four G3P officers, and stock based compensation issued.

Interest Expense. Interest expense for the three months ended February 29, 2016 and February 28, 2015 primarily represents the accretion of debt discount to interest expense on our outstanding debt, as well as contractual interest expense on our notes payable and convertible debt.

Gain on Derivatives. The Company reported a $34,240 gain on derivatives during the three months ended February, 29, 2016.

Cash Flows from Operating Activities

Net cash used in operating activities was $31,066 for the three months ended February 29, 2016, compared with $58,805 for the comparable period in 2015. Net cash used in operating activities for the three months ended February 29, 2016 is mainly attributable to our net loss of $1,019,409, offset by an increase in accounts payable and accrued expenses. Net cash used in operating activities for the three months ended February 28, 2015 is mainly attributable to our net loss of $254,393, offset by the loss on impairment of securities, an increase in accounts payable and accrued expenses due to related parties and an increase inconvertible debt and notes payable

Cash Flows from Financing Activities

We have financed our operations primarily from either advancements or the issuance of equity and debt instruments. For the three months ended February 29, 2016 cash flows provided by financing activities was $30,000, compared to $66,650 for the comparable period in 2015. We received $30,000 in proceeds from convertible debt and notes payable with third parties during the three months ended February 29, 2016, compared to $7,500 in proceeds from convertible debt during the three months ended February 28, 2015. Management is seeking, and expects to continue to seek to raise additional capital through equity and/or debt financings, including through one or more equity or debt financings to fund its operations, and pay amounts due to its creditors and employees. However, there can be no assurance that the Company will be able to raise such additional equity or debt financing or obtain such bank borrowings on terms satisfactory to the Company or at all.

The Company does not currently have sufficient resources to cover on-going expenses and expansion. As of February 29, 2016, the Company had cash of $215 and current liabilities of $4,404,459. Our current liabilities include accounts payable and accrued expenses to related parties of $3,482,387. We have historically financed our operations primarily through private placements of common stock, loans from third parties and loans from our Officer. We plan on raising additional funds from investors to implement our business model. In the event we are unsuccessful, this will have a negative impact on our operations.

As reflected in the accompanying unaudited interim consolidated financial statements, the Company has a net loss of $1,019,409 and net cash used in operations of $31,066 for the three months ended February 29, 2016; and a working capital deficit of $4,401,419 at February 29, 2016. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

The ability of the Company to continue as a going concern is dependent on Management’s plans, which include potential asset acquisitions, mergers or business combinations with other entities, further implementation of its business plan and continuing to raise funds through debt and/or equity financings. The Company will likely rely upon related party debt and/or equity financing in order to ensure the continuing existence of the business. The financial statements have been prepared assuming that we will continue as a going concern, which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business.

Recent Accounting Pronouncements

See Note 3 to our unaudited interim consolidated financial statements regarding recent accounting pronouncements.

Off-Balance Sheet Arrangements

As of the date of this Quarterly Report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.