UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, DC 20549





FORM 10-Q





[X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended June 30, 2011.


OR





[   ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from  to ______.




Commission file number 333-143352
  Atlantic Green Power Holding Company
 (Exact name of registrant as specified in its charter)
  Delaware
22-3757709(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
 
 Bayport One, Suite 455, 8025 Black Horse Pike, West Atlantic City, New Jersey 08232
 (Address of principal executive offices, including zip code)
 (609) 241-6027
 (Registrant’s telephone number, including area code)
  (Former name, former address and former fiscal year, if changed since last report)







Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 o                 No x


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).


Yes o                 No o


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


Large accelerated filer
 ̈
Accelerated filer
 ̈Non-accelerated filer
 ̈
Smaller reporting company
x(Do not check if a smaller reporting company)


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).


Yes o                 No x
 
 As of August 13, 2011, there were 43,527,248shares of the registrant’s common stock, par value $.000001 per share, outstanding.


Atlantic Green Power Holding Company





INDEX TO FORM 10-Q


PAGE


PART I.                      FINANCIAL INFORMATION




Item 1.
Financial StatementsConsolidated Balance Sheets as of June 30, 2011 and December 31, 2010 (Unaudited)
1Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2011 and

2010 and for the Period from September 17, 2009 (Inception) through June 30, 2011 (Unaudited)
2Consolidated Statement of Stockholders’ Equity for the Period from September 17, 2009

(Inception) through June 30, 2011 (Unaudited)
3Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2011 and

2010 and for the Period from September 17, 2009 (Inception) through June 30, 2011 (Unaudited)
4Notes to the Consolidated Financial Statements (Unaudited)
5Item 2.
Management's Discussion and Analysisof Financial Condition and Results of Operations
23Item 3.
Quantitative and Qualitative Disclosures about Market Risk
26Item 4.
Controls and Procedures
26PART II.
OTHER INFORMATIONItem 1.
Legal Proceedings
27Item 1A.
Risk Factors
27Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
27Item 3.
Defaults upon Senior Securities
27Item 4.
(Removed and Reserved)
27Item 5.
Other Information
27Item 6.
Exhibits
27Signatures

28Index of Exhibits

E-1




i








Forward-Looking Statements





Certain information included in this quarterly report on Form 10-Q and other filings of the registrant under the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as well as information communicated orally or in writing between the dates of such filings, contains or may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act.  Forward-looking statements in this quarterly report on Form 10-Q may include, without limitation, statements related to our plans, strategies, objectives, expectations, intentions and adequacy of resources.  Such statements are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from expected results.  Among these risks, trends and uncertainties are the availability of working capital to fund our operations, the competitive market in which we operate, the efficient and uninterrupted operation of our computer and communications systems, our ability to generate a profit and execute our business plan, the retention of key personnel, the effects of governmental regulation and other risks identified in the registrant’s filings with the Securities and Exchange Commission from time to time. The safe harbor provisions of the Private Securities Litigation Reform Act of 1995 most likely do not apply to our forward-looking statements because we are currently considered a penny stock issuer.


21E of the Exchange Act.  Such statements are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from expected results.




In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “should,” “could,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of such terms or other comparable terminology.  Although the registrant believes that the expectations reflected in the forward-looking statements contained herein are reasonable, the registrant cannot guarantee future results, levels of activity, performance or achievements.  Moreover, neither the registrant, nor any other person, assumes responsibility for the accuracy and completeness of such statements.  The registrant is under no duty to update any of the forward-looking statements contained herein after the date of this quarterly report on Form 10-Q.




ii





PART I.  FINANCIAL INFORMATION




Item 1.                                Financial Statements




Atlantic Green Power Holding Company(A Development Stage Company)Consolidated Balance Sheets(Unaudited)June 30, 2011


December 31, 2010AssetsCurrent AssetsCash

$
134,011


$
135,325Prepaid expenses and other current assets


21,707



21,147Total Current Assets


155,718



156,472Deposits


223,644



701,091Construction in Progress


-



341,700Total Assets

$
379,362


$
1,199,263Liabilities and Stockholders' DeficitCurrent Liabilities:Accounts payable and accrued liabilites

$
18,253


$
74,743Note payable, net of discount of $41,667 and $0, respectively


208,333



1,210Total Current Liabilities


226,586



75,953Convertible notes payable, net of debt discount


175,288



45,776Derivative liability -convertible notes payable


1,107,143



960,668Derivative liability - warrants


669,642



725,683Total Liabilities


2,178,659



1,808,080Stockholders' DeficitPreferred stock, $0.000001 par value; 20,000,000 shares authorized;no shares issued and outstanding


-



-Common stock, $0.000001 par value; 1,000,000,000 shares authorized;  43,527,250and 43,199,750 shares issued and outstanding, respectively


44



43Additional paid in capital


1,518,465



1,265,315Deficit accumulated during the development stage


(3,317,806
)


(1,874,175
)Total Stockholders' Deficit


(1,799,297
)


(608,817
)Total Liabilities and Stockholders' Deficit

$
379,362


$
1,199,263
  See accompanying notes to financial statements





1





Atlantic Green Power Holding Company

(A Development Stage Company)

Consolidated Statements of Operations

(Unaudited)Period from September 17, 2009Inception ThroughThree Months Ended June 30,


Six Months Ended June 30, 2011


June 30,2011


2010


2011


2010


2011Revenue

$
-


$
-


$
-


$
-


$
-Operating ExpensesProfessional fees


14,144



83,551



58,725



199,365



298,712Compensation


55,447



-



110,558



-



289,955General and administrative


4,608



98,340



49,128



166,291



227,640Expense of project development costs


797,615



-



797,615



-



797,615Total Operating Expenses


871,814



181,891



1,016,026



365,656



1,663,041Loss from operations


(871,814
)


(181,891
)


(1,016,026
)


(365,656
)


(1,663,041
)Other income (expenses)Interest income


313



1,645



680



3,991



5,922Interest expense


(187,256
)


(53
)


(337,851
)


(53
)


(2,152,431
)Change in fair value of derivative liabilities


(65,784
)


-



(90,434
)


-



492,344Total other income (expenses)


(252,727
)


1,592



(427,605
)


3,938



(1,654,165
)Loss before income taxes


(1,124,541
)


(180,299
)


(1,443,631
)


(361,718
)


(3,317,206
)Income taxes


-



-



-



-



-Net loss

$
(1,124,541
)

$
(180,299
)

$
(1,443,631
)

$
(361,718
)

$
(3,317,206
)Net loss per common share- basic and diluted

$
(0.03
)

$
(0.00
)

$
(0.03
)

$
(0.01
)Weighted average number of common shares outstandingduring the period- basic and diluted


43,527,250



43,199,750



43,470,583



43,100,750  See accompanying notes to financial statements





2




Atlantic Green Power Holding Company(A Development Stage Company)Consolidated Statement of Changes in Stockholders' Equity (Deficit)For the Period from September 17, 2009 (Inception) to June 30, 2011Deficit AccumulatedCommon Stock


Additional Paid-In


during the


Stockholders'Shares


Amount


Capital


Development Stage


Equity (Deficit)Balance, September 17, 2009


38,099,250


$
38


$
1,476,541


$
-


$
1,476,579Reverse acquisition adjustment


5,100,500



5



(289,895
)






(289,890
)Net loss














(53,910
)


(53,910
)Balance, December 31, 2009


43,199,750



43



1,186,646



(53,910
)


1,132,779Common stock issued for services


27,500







44,000







44,000Stock options issued for services










37,820







37,820Stock options issue for services










(37,820
)






(37,820
)Amortization of deferred compensation










34,669







34,669Net loss














(1,820,265
)


(1,820,265
)Balance, December 31, 2010


43,227,250



43



1,265,315



(1,874,175
)


(608,817
)Common stock issued with convertible note


300,000



1



249,999







250,000Amortization of deferred compensation










3,151







3,151Net loss














(1,443,631
)


(1,443,631
)Balance, June 30, 2011


43,527,250


$
44


$
1,518,465


$
(3,317,806
)

$
(1,799,297
)




See accompanying notes to financial statements






3




Atlantic Green Power Holding Company

Consolidated Statements of Cash Flows

(Unaudited)Period from September 17, 2009InceptionSix Months Ended June 30,


Through June 30,2011


2010


2011Cash Flows From Operating Activities:Net loss

$
(1,443,631
)

$
(361,718
)

$
(3,317,206
)Adjustments to reconcile net loss to net cash used in operating activitiesStock based compensation


3,151



15,761



83,820Amortization of debt discount


337,845







383,621Derivative liability recognized as interest expense


-



-



1,769,129Change in fair value of derivative liabilities


90,434







(492,344
)Changes in operating assets and liabilities:Prepaid and other


(560
)


(21,283
)


(21,707
)Accounts payable and accrued liabilities


(56,490
)


25,795



18,253Net Cash Used In Operating Activities


(1,069,251
)


(341,445
)


(1,576,434
)Cash Flows From Investing Activities:Deposits


477,447



(394,550
)


(223,644
)Construction in progress


341,700



-



-Net Cash Provided by (Used In) Investing Activities


819,147



(394,550
)


(223,644
)Cash Flows From Financing Activities:Proceeds from sale of common stock


-



-



1,184,684Proceeds from convertible notes


-



-



500,000Proceeds from notes payable


250,000



10,681



260,681repayment of note payable


(1,210
)


(1,163
)


(11,276
)Net Cash Provided By Financing Activities


248,790



9,518



1,934,089Net change  in cash


(1,314
)


(726,477
)


134,011Cash at beginning of period


135,325



1,088,522



-Cash at end of period

$
134,011


$
362,045


$
134,011Supplemental disclosures of cash flow information:Cash paid for interest

$
-


$
53Cash paid for taxes

$
-


$
650




See accompanying notes to financial statements


4





ATLANTIC GREEN POWER HOLDING COMPANY


(A Development Stage Company)


June 30, 2011 and 2010


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)




NOTE 1 – ORGANIZATION





Atlantic Green Power Holding Company (the “Company”)  was incorporated as “Lodestar Mining, Incorporated” on October 31, 2006 under the laws of the state of Delaware.  On February 4, 2010, the Company changed its name to Atlantic Green Power Holding Company.





Atlantic Green Power Corporation (“Atlantic”) (a development stage company) was incorporated on September 17, 2009 under the laws of the State of New Jersey.  Atlantic was formed to develop renewable energy systems and related activities. Prior to October 1, 2009, Atlantic was inactive.


On March 7, 2011 and March 8, 2011, Atlantic formed six limited liability companies (the “LLCs”), through which Atlantic will seek to develop solar projects in southern New Jersey. As of June 30, 2011, five of the LLCs were inactive.





On April 26, 2011, Atlantic closed on a sale of an eighty-five percent (85%) interest in a Delaware limited liability company (the “Project Company”) to Invenergy Solar Development LLC (“Invenergy”).  Atlantic received a cash payment of $78,000, as reimbursement of project costs, and will receive future consideration based on the development of an up to 18 Mega Watt solar projects in southern New Jersey. The Project Company is the holder of one of the queue positions to connect to the PJM Interconnection, LLC (“PJM”) interconnection grid that was previously assigned to Atlantic. Through the Project Company, Atlantic and Invenergy will jointly pursue the development of a solar project on several parcels of land located in southern New Jersey, the rights to which have been assigned to the Project Company by Invenergy.





In addition to the cash payment of $78,000, Atlantic will receive a success fee for each Mega Watt of installed solar energy capacity with respect to the solar project, up to a maximum of 18 Mega Watts. Once the facilities are placed in operation, Atlantic also will receive a percentage of the distributions from the Project Company after a preferred distribution of twice the success fee is paid to Invenergy.





Merger of Atlantic Green Power Corporation





On January 29, 2010, Lodestar entered into an Agreement and Plan of Exchange (the “Share Exchange Agreement”) with Atlantic and Ian McKinnon (“McKinnon”), the majority stockholder of Lodestar.




5





Pursuant to the terms of the Share Exchange Agreement, Lodestar agreed to issue an aggregate of 38,099,250 shares of Lodestar's common stock to the Atlantic shareholders in exchange for all of the issued and outstanding shares of Atlantic (the “Share Exchange”). In addition, in accordance with the terms of a Stock Purchase Agreement between Lodestar and McKinnon, Lodestar purchased 15,150,000 shares of its common stock owned by Ian McKinnon for $250,000, using funds received from Atlantic, and retired the purchased common stock. The shares of common stock issued by the Company in the Share Exchange represented approximately 88.2% of the issued and outstanding shares of common stock immediately after the retirement of the 15,150,000 shares purchased from McKinnon.





As a result of the ownership interests of the former shareholders of Atlantic, for financial statement reporting purposes, the Share Exchange between the Company and Atlantic has been treated as a reverse acquisition with Atlantic deemed the accounting acquirer and the Company deemed the accounting acquiree under the purchase method of accounting in accordance with Section 805-10-55 of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (the “Codification”). The reverse merger is deemed a capital transaction and the net assets of Atlantic (the accounting acquirer) are carried forward to the Company (the legal acquirer and the reporting entity) at their carrying value before the combination.  The acquisition process utilizes the capital structure of the Company and the assets and liabilities of Atlantic which are recorded at historical cost.  The equity of the Company is the historical equity of Atlantic retroactively restated to reflect the number of shares issued by the Company in the transaction.





NOTE 2 – SUMMARY OF ACCOUNTING POLICIES





Basis of presentation – unaudited interim consolidated financial information





The accompanying unaudited interim consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and in accordance with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) with respect to Form 10-Q and Article 8 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements.  The unaudited interim consolidated financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented.  Interim results are not necessarily indicative of the results for the full year.  These financial statements should be read in conjunction with the consolidated financial statements of the Company for the year ended December 31, 2010 and notes thereto contained in the Company’s annual report on Form 10-K for the year ended December 31, 2010, as filed with the SEC on March 31, 2011.





Development stage company





The Company is a development stage company as defined bySection 810-10-20 of the Codification. The Company is still devoting substantially all of its efforts toward establishing the business and its planned principal operations have not commenced.  All losses accumulated since inception have been considered as part of the Company’s development stage activities.




6




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 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 revenues and expenses during the reported period.  Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.





The Company’s significant estimates include the fair value of financial instruments; the carrying value and recoverability of long-lived assets, including the values assigned to deposits, construction in progress, income tax provision, allowance of deferred tax assets and the assumption that the Company will continue as a going concern.  Those significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to those estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.





Management regularly reviews its estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such reviews, and if deemed appropriate, those estimates are adjusted accordingly. Actual results could differ from those estimates.





Fair value of financial instruments





The Company follows paragraph 825-10-50-10 of the Codification for disclosures about fair value of its financial instruments and has adopted paragraph 820-10-35-37 of the Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in U.S. GAAP, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels.  The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:




Level 1

Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.Level 2

Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.Level 3

Pricing inputs that are generally observable inputs and not corroborated by market data.








7





Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.  Level 3 financial liabilities consist of the derivative warrant issued in October 2010 for which there is no current market for this security such that the determination of fair value requires significant judgment or estimation.  The Company valued the reset adjustments in the warrant on subsequent potential equity offerings using a lattice model, with the assistance of a valuation specialist, for which management understands the methodologies. These models incorporate transaction details such as the Company’s stock price, contractual terms, maturity, risk free rates, as well as assumptions about future financings, volatility, and holder behavior as of the date of issuance and each balance sheet date.


sheet date.





The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.  If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.





The carrying amounts of the Company’s financial assets and liabilities, such as cash, prepaid expenses and other current assets and accounts payable and accrued liabilities, approximate their fair values because of the short maturity of these instruments.





The Company’s note payable and convertible notes payable approximate the fair value of such instruments based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangements at June 30, 2011 and 2010.





Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.





It is not however, practical to determine the fair value of advances from stockholders due to their related party nature.





Fair value of financial assets and liabilities measured on a recurring basis





The Company uses Level 3 of the fair value hierarchy to measure the fair value of the derivative liabilities and revalues its derivative warrant liability at every reporting period and recognizes gains or losses in the consolidated statements of operations and comprehensive income (loss) that are attributable to the change in the fair value of the derivative warrant liability.





Financial assets and liabilities measured at fair value on a recurring basis are summarized below and disclosed on the consolidated balance sheets:





Fair Value Measurement UsingCarrying Value
Level 1
Level 2

Level 3
TotalDerivative conversion features and warrant liabilities

$
1,776,785


$
--


$
-


$
1,776,785


$
1,776,785








8





The table below provides a summary of the changes in fair value, including net transfers in and/or out, of all financial assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the interim period ended June 30, 2011:





Fair Value Measurement Using Level 3 InputsDerivative warrants
TotalBalance, December 31, 2010

$
1,686,351


$
1,686,351Total gains or losses (realized/unrealized)included in net loss


(90,434
)


(90,434
)Purchases, issuances and settlements


-



-Transfers in and/or out of Level 3


-



-Balance, June 30, 2011

$
1,776,785


$
1,776,785





Carrying value, recoverability and impairment of long-lived assets





The Company has adopted paragraph 360-10-35-17 of the Codification for its long-lived assets. The Company’s long-lived assets, which include deposits and construction in progress are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.





The Company assesses the recoverability of its long-lived assets by comparing the projected undiscounted net cash flows associated with the related long-lived asset or group of long-lived assets over their remaining estimated useful lives against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets.  Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable.  If long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives.





The Company considers the following to be some examples of important indicators that may trigger an impairment review: (i) significant under-performance or losses of assets relative to expected historical or projected future operating results; (ii) significant changes in the manner or use of assets or in the Company’s overall strategy with respect to the manner or use of the acquired assets or changes in the Company’s overall business strategy; (iii) significant negative industry or economic trends; (iv) increased competitive pressures; (v) a significant decline in the Company’s stock price for a sustained period of time; and (vi) regulatory changes.  The Company evaluates acquired assets for potential impairment indicators at least annually and more frequently upon the occurrence of such events.





The impairment charges, if any, is included in operating expenses in the accompanying consolidated statements of income and comprehensive income (loss).




9




Cash equivalents





The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.





Discount on debt





The Company allocated the proceeds received from convertible debt instruments between the underlying debt instruments and has recorded the conversion feature as a liability in accordance with Paragraph 815-15-25-1 of the Codification. The conversion feature and certain other features that are considered embedded derivative instruments, such as a conversion reset provision have been recorded at their fair value within the terms of Paragraph 815-15-25-1 of the Codification as its fair value can be separated from the convertible note and its conversion is independent of the underlying note value. The conversion liability is marked to market each reporting period with the resulting gains or losses shown in the consolidated statements of operations.





Derivative instruments





The Company evaluates its convertible debt, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with Paragraph 810-10-05-4 of the Codification and Paragraph 815-40-25 of the Codification. The result of this accounting treatment is that the fair value of the embedded derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the consolidated statements of operations as other income or expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity.





In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.





The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to liability at the fair value of the instrument on the reclassification date. Derivative instrument liabilities will be classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument is expected within 12 months of the balance sheet date.





Related parties





The Company follows subtopic 850-10 of the Codification for the identification of related parties and disclosure of related party transactions.




10


Pursuant to Section 850-10-20 the related parties include (a) affiliates of the Company; (b)  entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; (c)  trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; (d)  principal owners of the Company; (e)  management of the Company; (f)  other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and (g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.





The financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include:  (a) the nature of the relationship(s) involved; (b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; (c) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and (d) amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.




Commitment and contingencies





The Company follows subtopic 450-20 of the Codification to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur.  The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment.  In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.





If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements.  If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.




11




Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.  Management does not believe, based upon information available at this time, that these matters will have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.





Revenue recognition





The Company applies Paragraph 605-10-S99-1 of the Codification for revenue recognition.  The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when it has persuasive evidence of an arrangement that the services have been rendered to the customer, the sales price is fixed or determinable, and collectability is reasonably assured.





Stock-based compensationfor obtaining employee servicesand equity instruments issued to parties other than employees for acquiring goods or services





The Company accounts for its stock based compensation in which the Company obtains employee services in share-based payment transactions under the recognition and measurement principles of the fair value recognition provisions of Section 718-10-30 of the Codification and accounts forequity instruments issued toparties other than employees for acquiring goods or services under the guidance of Section 505-50-30 of the Codification.  Pursuant to Paragraph 718-10-30-6 of the Codification, 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.  The measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on which the third-party performance is complete or the date on which it is probable that performance will occur.  The fair value of each option grant estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:





December 31, 2010Risk-free interest rate
3.0%Dividend yield
0.00%Expected volatility
100%Expected option life
5 years





The expected life of the options has been determined using the simplified method as prescribed in Paragraph 718-10-S99-1 FN77 of the Codification.  The Company’s policy is to recognize compensation cost for awards with only service conditions and a graded vesting schedule on a straight-line basis over the requisite service period for the entire award.  Additionally, the Company’s policy is to issue new shares of common stock to satisfy stock option exercises.






12




The fair value of each option award is estimated on the date of grant using a Black-Scholes option-pricing valuation model. The ranges of assumptions for inputs shown in the table above for 2010 are as follows:





(a)   The expected volatility is based on a combination of the historical volatility of the Company’s and comparable companies’ stock over the contractual life of the options.





(b)   The Company uses historical data to estimate employee termination behavior. The expected life of options granted is derived from Paragraph 718-10-S99-1 of the Codification and represents the period of time the options are expected to be outstanding.





(c)   The risk-free interest rate is based on the U.S. Department of the Treasury yield curve in effect at the time of grant for periods within the contractual life of the option.





(d)   The expected dividend yield is based on the Company’s current dividend yield as the best estimate of projected dividend yield for periods within the contractual life of the option.





Income taxes





The Company accounts for income taxes under Section 740-10-30 of the Codification.  Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax basis 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.  Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the consolidated statements of operations in the period that includes the enactment date.





The Company adoptedSection 740-10-25 of the Codification.Section 740-10-25addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements.  UnderSection 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.  The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement.  Section 740-10-25also provides guidance on de-recognition, classification, interest and penalties on income taxes, and accounting in interim periods, and requires increased disclosures.  The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions ofSection 740-10-25.




13




The estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying consolidated balance sheets, as well as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its consolidated balance sheets and provides valuation allowances as management deems necessary.





Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.





Net loss per common share





Net loss per common share is computed pursuant to Section 260-10-45 of the Codification.  Basic net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period.Diluted net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through stock options, warrants, and convertible debt.





The following table shows the potentially outstanding dilutive shares excluded from the diluted net loss per share calculation for the interim period ended June 30, 2011 as they were anti-dilutive:





June 30, 2011Stock options issued on February 5, 2010 to Rania Pontikos,

Director of Technology and Strategic Planning
200,000Convertible notes issued on October 12, 2010
714,286Warrants issued with the convertible notes
535,714Total
1,450,000





Cash flows reporting





The Company adopted Paragraph 230-10-45-24 of the Codification for cash flows reporting, which requires classification of cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category. The Company also uses the indirect or reconciliation method  as defined byParagraph 230-10-45-25 of the Codificationto report net cash flow from operating activities. Pursuant to Paragraph 230-10-45-25, net cash flow from operating activities is determined by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments.  The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents. The Company separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant toParagraph 830-230-45-1 of the Codification.




14




Subsequent events





The Company follows the guidance in Section 855-10-50 of the Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements are issued.  Pursuant to Accounting Standards Update (“ASU”) No. 2010-09, the Company, as a reporting company under the Exchange Act, considers its financial statements issued when they are widely distributed to users, such as through filing them on EDGAR.





Recently issued accounting pronouncements





In January 2010, the FASB issued the FASB ASU No. 2010-06 “Fair Value Measurements and Disclosures (Topic 820) Improving Disclosures about Fair Value Measurements,” which provides amendments to Subtopic 820-10 of the Codification that require new disclosures as follows:




(a)
Transfers in and out of Levels 1 and 2. A reporting entity should disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers.





(b)
Activity in Level 3 fair value measurements. In the reconciliation for fair value measurements using significant unobservable inputs (Level 3), a reporting entity should present separately information about purchases, sales, issuances, and settlements (that is, on a gross basis rather than as one net number).





This update provides amendments to Subtopic 820-10 that clarifies existing disclosures as follows:




(a)
Level of disaggregation. A reporting entity should provide fair value measurement disclosures for each class of assets and liabilities. A class is often a subset of assets or liabilities within a line item in the statement of financial position. A reporting entity needs to use judgment in determining the appropriate classes of assets and liabilities.





(b)
Disclosures about inputs and valuation techniques. A reporting entity should provide disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements. Those disclosures are required for fair value measurements that fall in either Level 2 or Level 3.






15




This update also includes conforming amendments to the guidance on employers' disclosures about postretirement benefit plan assets (Subtopic 715-20 of the Codification). The conforming amendments to Subtopic 715-20 change the terminology from major categoriesof assets to classesof assets and provide a cross reference to the guidance in Subtopic 820-10 on how to determine appropriate classes to present fair value disclosures. The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years.  The adoption of this update did not have a material impact on the Company’s consolidated financial position, results of operations or cash flows.





In December 2010, the FASB issued the FASB ASU No. 2010-29 “Business Combinations (Topic 805): Disclosure of Supplementary Pro Forma Information for Business Combinations.”  ASU No. 2010-29 specifies that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. The amendments in this update also expand the supplemental pro forma disclosures under Topic 805 of the Codification to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. The amended guidance is effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. Early adoption is permitted. The Company does not anticipate that the adoption of this update will have a material impact on the Company’s consolidated financial position, results of operations or cash flows.





Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements.





NOTE 3 – GOING CONCERN





The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.  As reflected in the accompanying consolidated financial statements, the Company had a deficit accumulated during the development stage of $3,317,806 at June 30, 2011, a net loss of $1,443,631 and net cash used in operating activities of $1,069,251 for the interim period then ended. In addition, the Company has no lending relationships with commercial banks and is dependent upon the completion of one or more financings and/or strategic partnerships to fund its continuing operations and development of solar projects. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.




16




The Company continues to seek equity and/or debt investors and strategic partners.  While the Company is aggressively pursuing financing and strategic partnerships, there can be no assurance that the Company will be successful in its capital raising and project development efforts.  Any additional equity financing may result in substantial dilution to the Company’s stockholders.





The consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence.





NOTE 4 – DEPOSITS





Deposits reflect the costs incurred by the Company to obtain the local zoning board approvals and other permits necessary for the construction of a solar farm on property leased by Atlantic in Upper Pittsgrove Township, New Jersey, consulting fees related to the development of the Upper Pittsgrove Township solar farm and payments to PJM related to the obtainment of queue positions to interconnect to the PJM interconnection grid with respect to the Upper Pittsgrove Township solar farm and other potential solar projects to be developed by the Company.  Deposits were $223,644 and $701,091 at June 30, 2011 and December 31, 2010, respectively.  Deposits of $477,447 were expensed during the quarter ended June 30, 2011 primarily as a result of the Company’s decision not to pursue the development of the 422-acre “western site” at its Upper Pittsgrove Township property.





NOTE 5 – CONSTRUCTION IN PROCESS





Construction in progress is the shift of costs from deposits of $0 and $341,700 at June 30, 2011 and December 31, 2010, respectively.  These costs were incurred in obtaining the local zoning board approvals and other permits necessary for the construction of a solar farm on  its leased property in Upper Pittsgrove Township, New Jersey. On July 15, 2010, Atlantic received final site plan approval for the development of a solar farm on the 90-acre “eastern site” of the property it leases in Upper Pittsgrove Township.  On May 10, 2011, Atlantic’s appeal of the Upper Pittsgrove Township Board’s denial of a use variance for the development of a solar farm on Atlantic’s 422-acre “western site” in Upper Pittsgrove Township was denied.  Shortly thereafter, the Company decided not to pursue the development of the “western site.”  As a result, the Company determined to expense on construction in progress as of June 30, 2011 relating to the development of the leased property in Upper Pittsgrove Township.





NOTE 6 – NOTES PAYABLE





Promissory Note Payable





On February 4, 2011, the Company entered into a Subscription Agreement with Whalehaven Capital Fund Limited (“Whalvehaven”), pursuant to which Whalehaven loaned to the Company $250,000, evidenced by a promissory note which has a term of six months and accrues interest at a rate of 6% annually.  In addition, pursuant to the terms of the Subscription Agreement, the Company issued to Whalehaven 300,000 shares of the Company’s common stock in reliance upon an exemption from registration for a private transaction not involving a public distribution provided by Section 4(2) of the Securities Act.





The relative fair value of the common stock issued, estimated on the date of grant, was $480,000, which was recorded as a discount up to the value of the short-term note of $250,000. The company credited $250,000 to additional paid-in capital and debited the same amount to the discount to the short-term note payable. The discount is being amortized over the term of the note of six months. For the quarter ended June 30, 2011, five months or $208,333 has been amortized and included in interest expense.




17




Note Payable – Insurance





On May 6, 2010, the Company entered into a finance agreement with AFCO.  Pursuant to the terms of the agreement, AFCO loaned the Company the principal amount of $10,681, which would accrue interest at 6% per annum, to partially fund the payment of the premium of the Company’s Director and Officer liability insurance.  The agreement requires the Company to make nine monthly payments of $1,216.63, including interest.  The first payment was made by the Company on June 6, 2010.  As of June 30, 2011 and December 31, 2010, the outstanding balance related to this finance agreement was $0 and $1,210, respectively.





NOTE 7 – CONVERTIBLE NOTES PAYABLE





On October 12, 2010, the Company entered into a Stock Subscription Agreement with Alpha Capital Anstalt and Adventure Ventures LLC (collectively, the “Subscribers”), pursuant to which the Subscribers purchased convertible promissory notes in the aggregate principal amount of $500,000, which are convertible into shares of the Company’s common stock, and warrants to purchase 535,714 shares of common stock with an exercise price of $1.00 per share.





Each promissory note has a term of eighteen months and accrues interest at 8% per annum.  The holder of a promissory note has the right from and after the issuance thereof until such time as the promissory note is fully paid, to convert any outstanding and unpaid principal portion thereof into shares of common stock at $0.70 per share.  The conversion price and number and kind of shares to be issued upon conversion of the promissory notes are subject to adjustment from time to time as more fully described in the notes.





Due to the fact that these notes have full reset adjustments based upon the issuance of equity securities by the Company in the future, they are subject to derivative liability treatment under Section 815-40-15 of the Codification (formerly FASB Emerging Issues Task Force 07-5). The promissory notes have been measured at fair value using a lattice model at year end with gains and losses from the change in fair value of derivative liabilities recognized on the consolidated statements of operations.





The promissory notes, when issued, gave rise to a derivative liability which was recorded as a discount to the notes of $500,000 and interest expense of $831,765.





The embedded derivative of the promissory notes was re-measured atJune 30, 2011 yielding a loss on change in fair value of the derivatives of $90,434, for the interim period endedJune 30, 2011.  The derivative value of the notes atJune 30, 2011 and December 31, 2010, yielded a derivative liability at fair value of $1,107,143 and $960,668, respectively.





NOTE 8 – STOCKHOLDERS’ DEFICIT





Common Stock




18




On August 23, 2010, the Company entered in to a consulting agreement for advisory services, which provided for payments of $6,000 per month together with the issuance of up to a total of 50,000 shares of the Company’s common stock.  The consulting agreement was terminated on September 17, 2010.  For this termination, the Company issued the consultant 25,000 shares of common stock and paid the consultant $6,000 pursuant to the consulting agreement, resulting in consulting expense of $46,000 for the year ended December 31, 2010.  The shares were issued by the Company in reliance upon the exemption from registration provided under Section 4(2) of the Securities Act.





In September 2010, the Company settled a $4,000 outstanding balance with a vendor for certain public relations services by issuing the vendor 2,500 shares of the Company’s common stock.  The shares were issued by the Company in reliance upon the exemption from registration provided under Section 4(2) of the Securities Act.





Warrants





On October 12, 2010, the Company entered into a Stock Subscription Agreement with the Subscribers pursuant to which the Subscribers purchased convertible promissory notes in the aggregate principal amount of $500,000, which are convertible into shares of the Company’s common stock, and warrants to purchase an aggregate of up to 535,714 shares of the Company’s common stock.




In connection with the issuance of the warrants, the Company relied on an exemption from registration for a private transaction not involving a public distribution provided by Section 4(2) of the Securities Act.  Each of the warrants issued to the Subscribers has a term of five years from October 12, 2010 and was fully vested on the date of issuance.  The warrants are exercisable at $1.00 per share.  The number of shares of common stock underlying each warrant and the exercise price are subject to certain adjustments as more particularly described in the warrants.




The warrants, when issued, gave rise to a derivative liability which was recorded as interest expense of $937,364. The embedded derivative of the warrants was re-measured at June 30, 2011 yielding a loss on change in fair value of the derivative of $90,434, for the quarter ended June 30, 2011.  The derivative value of these warrants at June 30, 2011 and December 31, 2010, yielded a derivative liability at fair value of $669,642and $725,683, respectively.





Stock Options





In February 2010, the Company’s stockholders approved the Atlantic Green Power Holding Company Equity Incentive Plan (the “Incentive Plan”).  The Incentive Plan went into effect on February 3, 2010.  Ten million shares of the Company’s common stock were reserved for issuance under the Incentive Plan.




19




On February 5, 2010, the Company granted under the Incentive Plan a nonqualified option to purchase 200,000 shares of its common stock to Rania Pontikos, Director of Technology and Strategic Planning of the Company.  The nonqualified option was granted as compensation for services to the Company in reliance upon the exemption from registration provided under Section 4(2) of the Securities Act.  The nonqualified option granted to Ms. Pontikos has an exercise price of $.25 per share and expires on February 4, 2015.  The shares underlying the nonqualified option vested as follows:  16,674 shares vested on February 5, 2010; and 16,666 shares vested on each of March 1, 2010, April 1, 2010, May 1, 2010, June 1, 2010, July 1, 2010, August 1, 2010, September 1, 2010, October 1, 2010, November 1, 2010, December 1, 2010 and January 1, 2011.




On March 8, 2010, the Company granted under the Incentive Plan a nonqualified option to purchase 20,000 shares of its common stock to Daniel Schohl.  The nonqualified option was granted as compensation for services to the Company in reliance upon the exemption from registration provided under Section 4(2) of the Securities Act.  The nonqualified option granted to Mr. Schohl had an exercise price of $.25 per share and was scheduled to expire on March 7, 2015.  On August 20, 2010, Mr. Schohl’s employment with the Company terminated and the entire nonqualified option granted to him was cancelled as of the date of termination.




The aggregate fair value of the nonqualified stock options granted in February and March 2010 under the Incentive Plan using the Black-Scholes Option Pricing Model was $41,602 at the dates of grant.  For the quarter ended June 30, 2011, the Company recorded stock-based compensation of $3,151 for shares vested.





The table below summarizes the Company’s Incentive Plan stock option activities through June 30, 2011:


Number of

Option Shares
Exercise Price

Range

Per Share
Weighted Average Exercise Price
Weighted

Average

Remaining

(in years)

Contractual

Term

Intrinsic

Value

(in thousands)Balance, January 1, 2010


---


$
---


$
---





$
---Granted


220,000


$
0.25


$
0.25



.33

$
41,602Cancelled


(20,000)


$
---


$
---





$
(3,782)Balance, December 31, 2010


200,000


$
0.25



0.25





$
37,820Granted


-Cancelled


-Vested and Exercisable

June 30, 2011


200,000


$
0.25


$
0.25





$

37,820








The following table summarizes information concerning outstanding and exercisable stock options as of June 30, 2011:





Options Outstanding

Options ExercisableRange of Exercise Prices

Number Outstanding

Average Remaining Contractual Life  (in years)

Weighted Average Exercise Price

Number Exercisable

Average Remaining Contractual Life  (in years)

Weighted Average Exercise Price$0.25


200,000


0.25

$
0.25


183,334


0.25

$
0.25$0.25


200,000


0.25

$
0.25


183,334


0.25

$
0.25





20





At June 30, 2011, 9,800,000 shares of common stock remained available for issuance under the Incentive Plan.





NOTE 9 – RELATED PARTY TRANSACTIONS





Effective November 30, 2009, Atlantic entered into a Ground Lease Agreement (the “Ground Lease”) with  respect to property in Upper Pittsgrove Township, New Jersey with Edward Stella, Jr., a director of Atlantic and the Company and the Vice President of Project Development of the Company.  The Ground Lease was restructured into two separate lease agreements on August 6, 2010.  See “NOTE 10 – COMMITMENTS AND CONTINGENCIES – Ground Lease.”





Rania K. Pontikos, Director of Technology and Strategic Planning for the Company, is also a principal in Millennium Power, Inc. (“Millennium Power”), an engineering consulting firm that provides strategic planning and engineering services for the Company.





On July 2, 2010, the Company entered into a Finder’s Agreement with Millennium Power, pursuant to which Millennium Power is to identify prospective candidates interested in making an investment in, or pursuing a strategic initiative with, the Company.  Millennium Power is engaged by the Company under the Finder’s Agreement as a non-exclusive independent contractor and is compensated at a rate equal to a maximum of 2% of the investment amount in the Company made by any investor introduced to the Company by Millennium Power.





The Company did not pay any amounts to Millenium Power under the Finder’s Agreement during the six months ended June 30, 2011.





NOTE 10 – COMMITMENTS AND CONTINGENCIES





Ground Lease





Effective November 30, 2009, Atlantic entered into the Ground Lease with Edward Stella, Jr., a director of Atlantic and who was subsequently elected as a director and appointed as Vice President of Project Development of the Company upon the consummation of the Share Exchange on February 3, 2010.  The Ground Lease was negotiated between the parties at arms’ length.  The Ground Lease permitted Atlantic to construct and operate a solar farm on the leased premises located in Upper Pittsgrove Township, New Jersey.





On August 6, 2010, Atlantic and Mr. Stella restructured the Ground Lease into two separate lease agreements, each relating to one of the two tracts of property leased by Atlantic pursuant to the original Ground Lease: the East Tract Ground Lease Agreement relating to the 130-acre eastern tract, of which approximately 90 acres are suitable for development of a solar farm, and the West Tract Ground Lease Agreement relating to the 520-acre western tract, of which approximately 422 acres are suitable for development of a solar farm.  Each of these restructured lease agreements has an initial term of 25 years.




21




NOTE 11 – CREDIT RISK





Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash and cash equivalents.  As ofJune 30, 2011, a majority of the Company’s cash and cash equivalents was held by two major financial institutions located in the United States, the balance of those accounts may at times exceed the amount insured by the Federal Deposit Insurance Corp.  However, the Company has not experienced losses on these accounts and management believes that the Company is not exposed to significant risks on such accounts.





NOTE 12 – SUBSEQUENT EVENTS





The Company has evaluated all events that occurred after the balance sheet date through the date when the consolidated financial statements were issued. The management of the Company determined that there were reportable subsequent events to be disclosed as follows:




On July 22, 2011, Atlantic closed on a sale of an eighty percent (80%) interest in a second Delaware limited liability company (the “Second Project Company”) to Invenergy.  As discussed in Note 1 above, Atlantic had previously sold an eighty-five percent (85%) interest in the Project Company to Invenergy on April 26, 2011.  In exchange for the eighty percent (80%) interest in the Second Project Company, Atlantic received a cash payment of $90,000, as reimbursement of project costs, and will receive future consideration based on the development of an up to 10 Mega Watt solar project in southern New Jersey.  The Second Project Company is one of several limited liability companies formed by Atlantic to develop solar projects in southern New Jersey, and is the holder of one of the queue positions to connect to the PJM interconnection grid that was previously assigned to Atlantic.  Through the Second Project Company, Atlantic and Invenergy will jointly pursue the development of a solar project on a parcel of land located in southern New Jersey, the rights to which have been assigned to the Second Project Company by Invenergy




In addition to the cash payment of $90,000, Atlantic will receive a success fee for each Mega Watt of installed solar energy capacity with respect to the solar project, up to a maximum of 10 Mega Watts.  Once the facilities are placed in operation, Atlantic also will receive a percentage of the distributions from the Second Project Company after a preferred distribution of twice the success fee is paid to Invenergy.




22







Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations




The following discussion and analysis is intended to provide information about the Company’s financial condition and results of operations for the three months ended March 31, 2011.  The following information should be read together with the Company’s unaudited financial statements for the three months ended March 31, 2011 and related notes appearing elsewhere in this report.




Overview




The Company was incorporated in the state of Delaware on October 31, 2006 under the name “Lodestar Mining, Incorporated.”  From its inception until January 28, 2010, the Company was an exploration stage company with plans to search for mineral deposits or reserves.




On February 3, 2010, the Company acquired all of the issued and outstanding shares of common stock of Atlantic pursuant to the Share Exchange, and Atlantic became a wholly-owned subsidiary of the Company.  The Company issued an aggregate of 38,099,250 shares of common stock to the former shareholders of Atlantic, and the Company changed its corporate name to “Atlantic Green Power Holding Company.”  As a result of the Share Exchange, the Company ceased its prior operations and commenced the operation of Atlantic as its sole line of business.  Atlantic is a renewable energy company primarily focused on the location and development of utility-scale solar energy generation projects in the Mid-Atlantic United States, with a particular focus on the development of solar projects in southern New Jersey.




Atlantic’s primary business activities to date have focused on locating and acquiring rights to one or more suitable parcels of land for solar projects, including approximately 700 acres in Upper Pittsgrove Township, New Jersey, securing the necessary regulatory and land use approvals for the construction and operation of a solar farm on the two tracts of land comprising the Upper Pittsgrove Township property, and securing interconnection rights to the regional electrical grid.  Atlantic has been assigned eight queue positions by PJM to connect to the PJM electrical grid.  PJM is the regional transmission organization that operates the electrical grid serving states located in the Mid-Atlantic region of the United States and the District of Columbia.




In addition to utilizing certain of its PJM queue positions in connection with the planned development of a solar farm on the “eastern site” of theUpper Pittsgrove Township property, Atlantic will seek to utilize its contractual rights to its other PJM queue positions by identifying potential opportunities to develop solar projects on sites located in southern New Jersey.  Atlantic will either acquire the rights to develop a site as a solar farm outright or enter into a joint venture with one or more strategic partners to develop a solar project.




Development Stage Company




From inception until the consummation of the Share Exchange, the Company was an exploration stage company.  Since February 4, 2010, the effective date of the Share Exchange, the Company is considered a development stage company in accordance with the guidance contained in theCodification Topic No. 915, “Development Stage Entities.”The Company is still devoting substantially all of its efforts toward establishing the business and its planned principal operations have not commenced.  All losses accumulated since inception have been considered as part of the Company’s development stage activities.




23




Results of Operations




For the six months ended June 30, 2011 and 2010





Net Income (Loss).  For the six months ended June 30, 2011, net loss from operations was $1,443,631, as compared to a net loss from operations of $361,718 for the six months ended June 30, 2010.  The $1,081,113 increase in net loss from operations was primarily attributable to aggregate expenses of $797,615 associated with the expense of project development costs and deposits that were previously capitalized on various projects, including the project development costs and deposits relating to the planned Upper Pittsgrove Township solar farm.  The Company has decided not to pursue the development of a solar farm on the 422-acre “western site” of its Upper Pittsgrove Township property, and therefore concluded that it was necessary to expense the project development costs and deposits associated therewith as well as certain other related project development costs and deposits.  In addition, the increase in loss was also attributable to the increase in interest expense on the Company’s debt.  The Company recorded an increase of $227,798 in interest expense for the six months ended June 30, 2011.




Revenues.  We did not have any revenues for the six months ended June 30, 2011, nor did we have any revenues for the six months ended June 30, 2010.




Expenses.  Total operating expenses for the six months ended June 30, 2011 were $1,016,026, which consisted of $58,725 in professional fees, $110,558 in compensation and $49,128 in general and administrative expenses, as compared to total operating expenses of $365,656 for the six months ended June 30, 2010, which consisted of $199,365 in professional fees and $166,291 in general and administrative expenses.  In addition, the Company expensed project development costs and deposits in the amount of $797,615 relating to its planned Upper Pittsgrove Township solar farm and certain other projects during the six months ended June 30, 2011.




Other Income (Expenses)  Other income (expenses) decreased by $431,543 during the six months ended June 30, 2011 as compared to the six months ended June 30, 2010.  The decrease is primarily attributable to interest expense associated with the amortization of debt discount on the company’s convertible notes and promissory notes.  Interest expense increased by $337,798 for the six months ended June 30, 2011.  In addition, the Company recorded a $90,434 change in fair value on the Company’s derivative liabilities during the six months ended June 30, 2011.




Income Taxes.  No income tax provision has been made for the six months ended June 30, 2011 or for the six months ended June 30, 2010.




For the three months ended June 30, 2011 and 2010





Net Income (Loss).  For the three months ended June 30, 2011, net loss from operations was $1,124,531, as compared to a net loss from operations of $180,299 for the three months ended June 30, 2010.  The $944,242 increase in net loss from operations was primarily attributable to aggregate expenses of $797,615 associated with the expense of project development costs and deposits which were previously capitalized on various projects, including the project development costs and deposits relating to the planned Upper Pittsgrove Township solar farm. The Company has decided not to pursue the development of the 422-acre “western site” of its Upper Pittsgrove Township property, and therefore concluded that it was necessary to expense the project development costs and deposits associated therewith as well as certain other related project costs and deposits.  In addition, the increase in loss was also attributable to the increase in interest expense on the Company’s debt.  The Company recorded and an increase of $187,203 in interest expense for the three months ended June 30, 2011.




24




Revenues.  We did not have any revenues for the three months ended June 30, 2011, nor did we have any revenues for the three months ended June 30, 2010.




Expenses.  Total operating expenses for the three months ended June 30, 2011 were $871,814, which consisted of $14,144 in professional fees, $55,447 in compensation and $4,608 in general and administrative expenses, as compared to total operating expenses of $181,891 for the three months ended June 30, 2010, which consisted of $83,551 in professional fees and $98,340 in general and administrative expenses.  In addition, the Company expensed project development costs and deposits in the amount of $797,615 relating to its planned Upper Pittsgrove Township solar farm and certain other projects during the three months ended June 30, 2011.




Other Income (Expenses)  Other income (expenses) decreased by $254,319 during the three months ended June 30, 2011 as compared to the three months ended June 30, 2010.  The decrease was primarily attributable to interest expense associated with the amortization of debt discount on the Company’s convertible notes and promissory notes.  Interest expense increased by $187,203 for the three months ended June 30, 2011.  In addition, the Company recorded a $65,784 change in fair value on the Company’s derivative liabilities during the three months ended June 30, 2011.




Income Taxes.  No income tax provision has been made for the three months ended June 30, 2011 or for the three months ended June 30, 2010.




Liquidity and Capital Resources




On February 3, 2010, the Company consummated the Share Exchange with Atlantic.  As a result of the Share Exchange, the Company changed its business focus from the acquisition and exploration of mineral resources to the location and development of utility-scale solar energy generation projects in the Mid-Atlantic United States, including the development of a utility-scale solar farm in Upper Pittsgrove Township, New Jersey.




As of August 8, 2011, the Company’s cash position was approximately $164,000.  The Company anticipates that its cash position is not sufficient to fund current operations through December 31, 2011.  The Company has no lending relationships with commercial banks and is dependent upon the completion of one or more financings and/or strategic partnerships to fund its continuing operations and the development of solar projects.  The Company estimates expenditures related to the development and construction of the solar farm on the 90-acre “eastern site” in Upper Pittsgrove Township, New Jersey will be in the range of $60 million, and, therefore, without any additional financing, the Company will not be able to commence construction of the solar farm on the “eastern site.”  The Company anticipates that it will seek additional capital through debt or equity financings or that it will enter into one or more joint ventures with strategic partner(s), such as another energy supplier, to fund the development of the Upper Pittsgrove Township solar farm and/or to develop other solar projects.  While the Company is aggressively pursuing financing and strategic partnerships, there can be no assurance that the Company will be successful in its capital raising and project development efforts.  Any additional equity financing may result in substantial dilution to the Company’s stockholders.




25




The Company’s financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities and commitments in the normal course of business for the foreseeable future. Since inception, the Company has not generated any revenue and accumulated operating losses aggregating to $3,317,806.  In addition, the Company does not have sufficient working capital to meet current operating needs for the next twelve months as described above.  All of these factors raise substantial doubt about the Company’s ability to continue as a going concern.




The officers and directors of the Company have not, as of the date of this filing, loaned any funds to the Company.  There are no formal commitments or arrangements to advance or loan funds to the Company or repay any such advances or loans.




Item 3.
Quantitative and Qualitative Disclosures About Market Risk




The Company is a smaller reporting company and is therefore not required to provide the information required by this item.




Item 4.
Controls and Procedures




As required by Rule 13a-15 under the Exchange Act, as of the end of the period covered by this quarterly report on Form 10-Q, the Company carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures.  This evaluation was carried out under the supervision and with the participation of the Company’s management, including the Company’s President and Chief Executive Officer and the Company’s Chief Financial Officer and Director of Business Development, who concluded that the Company’s disclosure controls and procedures are effective to provide reasonable assurance that:  (i) information required to be disclosed by the Company in reports filed or submitted under the Exchange Act is accumulated and communicated to management to allow timely decisions regarding required disclosure by the Company; and (ii) information required to be disclosed in reports that filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC’s rules and forms.




Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in the Company’s reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the SEC.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the Company’s reports filed under the Exchange Act is accumulated and communicated to management, including the Company’s President and Chief Executive Officer and Chief Financial Officer and Director of Business Development, to allow timely decisions regarding required disclosure.




There were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.






26




PART II. OTHER INFORMATION







Item 1.
Legal Proceedings




None.




Item 1A.
Risk Factors




The Company is a smaller reporting company and is therefore not required to provide the information required by this item.




Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds




None




Item 3.
Defaults Upon Senior Securities




None.




Item 4.
(Removed and Reserved.)




Item 5.
Other Information




On July 22, 2011, Atlantic closed on a sale of an eighty percent (80%) interest in the Second Project Company to Invenergy.  Atlantic received a cash payment of $90,000, as reimbursement of project costs, and will receive future consideration based on the development of an up to 10 Mega Watt solar project in southern New Jersey.  The Second Project Company is one of several limited liability companies formed by Atlantic to develop solar projects in southern New Jersey, and is the holder of one of the queue positions to connect to the PJM interconnection grid that was previously assigned to Atlantic.  Through the Second Project Company, Atlantic and Invenergy will jointly pursue the development of a solar project on a parcel of land located in southern New Jersey, the rights to which have been assigned to the Second Project Company by Invenergy.




In addition to the cash payment of $90,000, Atlantic will receive a success fee for each Mega Watt of installed solar energy capacity with respect to the solar project, up to a maximum of 10 Mega Watts.  Once the facilities are placed in operation, Atlantic also will receive a percentage of the distributions from the Second Project Company after a preferred distribution of twice the success fee is paid to Invenergy.





On May 10, 2011, Atlantic’s appeal of the Upper Pittsgrove Township Board’s denial of a use variance for the development of a solar farm on Atlantic’s 422-acre “western site” in Upper Pittsgrove Township, New Jersey was denied.  The western site is the second of two tracts of land leased by Atlantic in Upper Pittsgrove Township on which Atlantic planned to develop a solar farm.  After further evaluating the development options for the “western site,” the Company has decided not to pursue the development of the “western site” and, as a result, has expended in the quarter ended June 30, 2011 the project development costs and deposits associated with the project.  The Company is continuing to evaluate the development of the 90-acre “eastern site” with respect to which Atlantic had previously received final site plan approval for the development of a solar farm on such site.






Item 6.
Exhibits




Reference is made to the Index of Exhibits beginning on page E-1 herein.







27









SIGNATURES





Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.






Atlantic Green Power Holding Company

RegistrantDate:   August 15, 2011
By:
/s/ Robert Demos, Jr.Robert Demos, Jr.President and Chief Executive Officer

(Principal Executive Officer)





Date:   August 15, 2011
By:
/s/ Frank D’Agostino, Jr.Frank D’Agostino, Jr.Chief Financial Officer and

Director of  Business Development(Principal Financial Officer)











28







EXHIBIT INDEX




Exhibit No.
Description2.1
Agreement and Plan of Exchange by and among the Company, Atlantic Green Power Corporation and Ian McKinnon, dated January 29, 2010 (Incorporated by reference to Exhibit 2.1 to the Company’s Form 8-K filed with the SEC on February 4, 2010).2.2
Stock Purchase Agreement by and between the Company and Ian McKinnon, dated January 29, 2010 (Incorporated by reference to Exhibit 2.2 to the Company’s Form 8-K filed with the SEC on February 4, 2010).3.1
Amended and Restated Certificate of Incorporation of the Company (Incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed with the SEC on February 4, 2010).3.2
Amended and Restated By-laws of the Company (Incorporated by reference to Exhibit 3.2 to the Company’s Form 8-K filed with the SEC on February 4, 2010).4.1
Form of Convertible Promissory Note, dated October 12, 2010, issued to the following subscribers and in the following amounts:  Alpha Capital Anstalt ($350,000); and Adventure Ventures LLC ($150,000) (Incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K filed with the SEC on October 15, 2010).10.1
Atlantic Green Power Holding Company Equity Incentive Plan (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the SEC on February 4, 2010).10.2
Ground Lease Agreement between Edward Stella, Jr. and Atlantic Green Power Corporation, effective November 30, 2009 (Incorporated by reference to Exhibit 10.5 to the Company’s Form 10-K filed with the SEC on March 31, 2010).10.3
East Tract Ground Lease Agreement between Edward J. Stella, Jr. and Atlantic Green Power Corporation dated August 6, 2010 (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the SEC on August 12, 2010).10.4
West Tract Ground Lease Agreement between Edward J. Stella, Jr. and Atlantic Green Power Corporation dated August 6, 2010 (Incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed with the SEC on August 12, 2010).10.5
Subscription Agreement, dated as of October 12, 2010, by and among Atlantic Green Power Holding Company (the “Company”) and Alpha Capital Anstalt and Adventure Ventures LLC, including Exhibit B – Form of Common Stock Purchase Warrant.  Upon the request of the Securities and Exchange Commission, the Company agrees to furnish copies of each of the following schedules and exhibits:  Schedule 5(a) – Subsidiaries; Schedule 5(d) – Capitalization and Additional Issuances; Schedule 5(l) – Defaults; Schedule 5(p) – No Undisclosed Events or Circumstances; Schedule 5(q) – Banking; Schedule 5(x) – Transfer Agent; Schedule 9(e) – Use of Proceeds; Exhibit A – Form of Convertible Note (included as Exhibit 4.1); Exhibit C – Form of Escrow Agreement (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the SEC on October 15, 2010).10.6
Subscription Agreement, dated as of February 4, 2011, by and between the Company and Whalehaven Capital Fund Limited (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the SEC on February 8, 2011).   E-1
   10.7
Sale and Purchase Agreement, dated as of April 20, 2011, by and between Atlantic Green Power Corporation and Invenergy Solar Development LLC.  Upon the request of the SEC, the Company agrees to furnish copies of each of the following schedules and exhibits:  Schedule 3.10 – Seller Contracts; Schedule 3.11 – Company Assets; Schedule 4.8 – Purchaser Contracts; Exhibit A – Operating Agreement; Exhibit B – Membership Interest Transfer Instrument; Exhibit C – Seller Officer’s Certificate; Exhibit D – Letter of Resignation; and Exhibit E – Purchaser Officer’s Certificate (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the SEC on May 2, 2011).10.8
Sale and Purchase Agreement, dated as of July 20, 2011, by and between Atlantic Green Power Corporation and Invenergy Solar Development LLC.  Upon the request of the SEC, the Company agrees to furnish copies of each of the following schedules and exhibits:  Schedule 3.09 – Seller Contracts; Schedule 3.10 – Company Assets; Schedule 4.8 – Purchaser Contracts; Exhibit A – Operating Agreement; Exhibit B – Membership Interest Transfer Instrument; Exhibit C – Seller Officer’s Certificate; Exhibit D – Letter of Resignation; and Exhibit E – Purchaser Officer’s Certificate (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the SEC on July 28, 2011).31.1
Section 302 Certification of Principal Executive Officer.31.2
Section 302 Certification of Principal Financial Officer.32.1
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350.32.2
Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350.