U.S.
Securities and Exchange Commission


Washington,
D.C. 20549
  
 FORM
10-Q
 
 (Mark
One)
 x
              QUARTERLY REPORT PURSUANT TO
      SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934:For the quarterly
      period ended june 30, 2009.o
              TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT:For the transition
      period from
__________to__________.
  
 Commission
File No.  000-53144
 
 POWERGAE, INC.
 (Name of
small business issuer as specified in its charter)
  Nevada
                State of
      Incorporation
              
              26-1478549
                IRS
      Employer Identification No.
 2 East
Congress St., Suite 900
 Tucson,
AZ  85701 (Address
of principal executive offices)
  (480) 304-5624
 (Issuer’s
telephone number)
  Securities
registered under Section 12(b) of the Exchange Act:
 None
  Securities
registered under Section 12(g) of the Exchange Act:
 Common
Stock, $0.001 par value per share
 (Title
of Class)
  Indicate
by check mark whether the Registrant (1) has filed all reports required 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 x
    No  ̈
 
 Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes o No o
 
 Indicate
by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, or a non–accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b–2 of the Exchange Act. (Check
one):
 
 Large
accelerated filer   ̈                    Accelerated
filer   ̈                    Non–Accelerated
filer   ̈Small Business
Issuer  x
  Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b–2 of the Exchange Act).  Yes  x    No   ̈
 
 Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date.
  Class
              
              Outstanding
      at  August 12, 2009Common
      stock, $0.001 par value
              
              15,225,000
  1
  POWERGAE,
INC.
 INDEX
TO FORM 10-Q FILING
 FOR
THE THREE AND SIX MONTHS ENDED JUNE 30, 2009
 
 TABLE
OF CONTENTS
  PART
      I - FINANCIAL INFORMATION
                Page
                  NumbersItem 1
                Financial
      Statements (unaudited)Balance
      Sheets
                3Statements
      of Operations
                4Statements
      of Cash Flows
                5Notes
      to Financial Statements
                6Item
      2
                Management
      Discussion & Analysis of Financial Condition and Results of
      Operations
                10Item
      3
                Quantitative
      and Qualitative Disclosures About Market Risk
                10Item
      4
                Controls
      and Procedures
                15PART
      II - OTHER INFORMATIONItem
      1.
                Legal
      Proceedings
                15Item 1A
                Risk
      Factors
                15Item 2
                Unregistered
      Sales of Equity Securities and Use of Proceeds
                18Item 3
                Defaults
      Upon Senior Securities
                18Item 4
                Submission
      of Matters to a Vote of Security Holders
                18Item 5
                Other
      informatio
                19Item 6
                Exhibits
                19Signatures
                20CERTIFICATIONSExhibit
      31 – Management certification
                AttachedExhibit
      32 – Sarbanes-Oxley Act
                Attached
 2
 PART
I
  FINANCIAL
INFORMATION PAGE
 POWERGAE,
INC.
 (A
Development Stage Company)
 BALANCE SHEETS
  June
      30,
                2009
              
              
              December
      31,
                2008(unaudited)
              
              
              (audited)ASSETSCurrent
      AssetsCash
              
              $
              161
              
              
              $
              1,662Total
      Assets
              
              $
              161
              
              
              $
              1,662LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilitiesAccounts
      Payable
              
              $
              3,900
              
              
              $
              -Loan
      payable
              
              
              4,100
              
              
              
              1,100Total
      Liabilities
              
              
              8,000
              
              
              
              1,100Stockholders'
      Equity (deficit)Common
      Stock, 75,000,000shares
      authorized$
      0.001 par value, 15,225,000shares
      issued and out standing as ofJune
      30, 2009 and December 31, 2008
              
              $
              15,225
              
              
              $
              15,225Additional
      Paid in Capital
              
              
              46,275
              
              
              
              46,275Deficit
      Accumulated DuringDevelopment
      Stage
              
              
              (69,339
              )
              
              
              (60,938
              )Total
      Stockholders’ equity (deficit)
              
              
              (7,839
              )
              
              
              562Total
      liabilities and stockholders' equity
              
              $
              161
              
              
              $
              1,662
 
 The
accompanying notes are an integral part of these statements
  3
 
 POWERGAE,
INC.
 (A
Development Stage Company)
 STATEMENTS OF OPERATIONS
 (Unaudited)
 
 Three
              
              
              Three
              
              
              Six
              
              
              Six
              
              
              From
      Inceptionmonths
              
              
              months
              
              
              months
              
              
              months
              
              
              September
      6, 2007Ended
      June 30,
              
              
              Ended
      June 30,
              
              
              Ended
      June 30,
              
              
              Ended
      June 30,
              
              
              through2009
              
              
              2008
              
              
              2009
              
              
              2008
              
              
              June
      30, 2009Revenue:Revenue
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -Total
      Revenue
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Expenses:General
      and Administrative
              
              
              897
              
              
              
              2
      568
              
              
              
              1,901
              
              
              
              4,615
              
              
              
              23,339Consulting,
      Legal and Accounting
              
              
              2,000
              
              
              
              4,000
              
              
              
              6,500
              
              
              
              21,000
              
              
              
              46,000Total
      expenses
              
              
              2,897
              
              
              
              6,568
              
              
              
              8,401
              
              
              
              25,615
              
              
              
              69,339Net
      loss
              
              
              (2,897
              )
              
              
              (6,568
              )
              
              
              (8,401
              )
              
              
              (25,615
              )
              
              
              (69,339
              )Basic
      and Diluted Earnings (Loss) per  Common Share
              
              $
              0.00
              
              
              $
              0.00
              
              
              $
              0.00
              
              
              
              0.00Weighted
      Average Number of Common Shares
              
              
              15,225
      000
              
              
              
              15,052
      350
              
              
              
              15,225
      000
              
              
              
              15,052,350
  The
accompanying notes are an integral part of these statements
  4
 
 POWERGAE,
INC.
 (A
Development Stage Company)
 STATEMENTS OF CASH
FLOWS
 (Unaudited)
 
 From
      InceptionSix
      months
              
              
              Six
      months
              
              
              September
      6, 2007Ended
              
              
              Ended
              
              
              throughJune
      30,
              
              
              June
      30,
              
              
              June
      30,2009
              
              
              2008
              
              
              2009Operating
      Activities:Net
      income (loss)
              
              $
              (8,401
              )
              
              $
              (25,615
              )
              
              $
              (69,339
              )Adjustments
      to reconcile net loss to net cash provide by (used in) operating
      activities:Stock
      issued for services
              
              
              -
              
              
              
              -
              
              
              
              11,900Accounts
      payable increase  (decrease)
              
              
              3,900
              
              
              
              -
              
              
              
              3,900Net
      cash provided by (used in) operating activities
              
              
              (4,501
              )
              
              
              (25,615
              )
              
              
              (53,539
              )Investing
      Activities:Cash
      (used) in investing activities
              
              
              -
              
              
              
              -
              
              
              
              -Financing
      Activities:Increase
      in due to related party
              
              
              3,000
              
              
              
              -
              
              
              
              4,100Proceeds
      from the sale of stock
              
              
              -
              
              
              
              15,000
              
              
              
              49,600Net
      cash provided by (used in) financing activities
              
              
              3,000
              
              
              
              15,000
              
              
              
              53,700Net
      increase (decrease) in cash and cash equivalents
              
              
              (1,501
              )
              
              
              (10,615
              )
              
              
              161Cash
      and cash equivalents at beginning of period
              
              
              1,662
              
              
              
              20,100
              
              
              
              -Cash
      and cash equivalents at end of period
              
              
              161
              
              
              
              9,485
              
              
              
              161Supplemental
      Information:Interest
              
              
              -
              
              
              
              -
              
              
              
              -Taxes
              
              
              -
              
              
              
              -
              
              
              
              -
 
 The
accompanying notes are an integral part of these statements
  5
 
 POWERGAE,
INC.
 (A
Development Stage Company)
 NOTES TO FINANCIAL STATEMENTS
(Unaudited)
 June
30, 2009
 
 NOTE
1. GENERAL ORGANIZATION AND BUSINESS
 
 PowerGae,
Inc. (the “Company”) was organized in the State of Nevada on September 6,
2007.  The Company is based in Falls Church,
Virginia.
 
 The
Company is in its development stage and will construct and operate bio-diesel
production facilities and market bio-diesel through existing petroleum
manufacturers and distributors.  The source of the Company’s
production of bio-diesel is algae grown in unique bioreactors allowing for algae
growth under less than ideal natural light or heat and therefore a secure supply
of bio-diesel.  The Company expects that its development of production
and distribution technologies will secure its position as a leader in the
rapidly growing alternative fuel market.
 
 The
Company provides its own Research and Development in algae growth and bio-diesel
production technologies in collaboration with leading authorities in the
Ukraine.
 
 NOTE
2. BASIS OF PRESENTATION
 
 Interim
Financial Statements
  The
accompanying interim unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
8 of Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In our opinion, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three and six months period ended June 30,
2009 and 2008 are not necessarily indicative of the results that may be expected
for the year ending December 31, 2009. For further information, refer to the
financial statements and footnotes thereto included in our Form 10-K Report for
the fiscal year ended December 31, 2008.
  NOTE
3.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 The
relevant accounting policies and procedures are listed below.
 
 Accounting
Basis
 
 The
statements were prepared following generally accepted accounting principles of
the United States of America consistently applied.  The Company uses a
December 31 year end.
 
 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 revenue and expenses during
the reporting period. Actual results could differ from those
estimates.
 
 Cash
and Cash Equivalents
 
 Cash and
cash equivalents include all short-term liquid investments that are readily
convertible to know amounts of cash and have original maturities of three months
or less. As of June 30, 2009 there were no cash equivalents.
  6
 
 Earnings
per Share
 
 The basic
earnings (loss) per share is calculated by dividing the Company’s net income
available to common shareholders by the weighted average number of common shares
during the year. The diluted earnings (loss) per share is calculated by dividing
the Company’s net income (loss) available to common shareholders by the diluted
weighted average number of shares outstanding during the year. The diluted
weighted average number of shares outstanding is the basic weighted number of
shares adjusted for any potentially dilutive debt or equity.
 
 Dividends
 
 The
Company has not yet adopted any policy regarding payment of dividends. No
dividends have been paid during the periods shown.
 
 Stock Based
Compensation
 
 The
Company accounts for its stock based compensation based upon provisions in SFAS
No. 123, Accounting for
Stock-Based Compensation. In this statement stock based compensation is
divided into two general categories, based upon who the stock receiver is,
namely: employees/directors and non-employees/directors.  The
employees/directors category is further divided based upon the particular stock
issuance plan, namely compensatory and non-compensatory. The employee/directors
non-compensatory securities are recorded at the sales price when the stock is
sold. The compensatory stock is calculated and recorded at the securities’ fair
value at the time the stock is given. SFAS 123 also provides that stock
compensation paid to non-employees be recorded with a value which is based upon
the fair value of the services rendered or the value of the stock given,
whichever is more reliable. The Company has selected to utilize the fair value
of the stock issued as the measure of the value of services obtained.
 
 Income
Taxes
 
 The
provision for income taxes is the total of the current taxes payable and the net
of the change in the deferred income taxes. Provision is made for the deferred
income taxes where differences exist between the period in which transactions
affect current taxable income and the period in which they enter into the
determination of net income in the financial statements.
 
 Development Stage
Enterprise
 
 The
Company is a development stage enterprise, as defined in Financial Accounting
Standards Board No. 7.  The Company’s planned principal operations
have not fully commenced.
 
 Management
plans to seek funding from its shareholders and other qualified investors to
pursue its business plan.
 
 NOTE
4.  GOING CONCERN
 
 The
accompanying financial statements have been prepared on a going concern basis,
which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business. The Company has incurred net losses from
inception to June 30, 2009 of $69,339.
 
 Losses
are expected to continue for the immediate future.  In addition, the
Company’s cash flow requirements have been met by the generation of capital
through private placements of the Company’s common stock and
loans.  Assurance cannot be given that this source of financing will
continue to be available to the Company and demand for the Company’s equity
instruments will be sufficient to meet its capital needs. However; the company
is in process of following through with its business plan with sufficient
capital at present to meet its business plan.
  7
 
 The
financial statements do not include any adjustments relating to the
recoverability and classification of liabilities that might be necessary should
the Company be unable to continue as a going concern. The Company’s continuation
as a going concern is dependent upon its ability to generate sufficient cash
flow to meet it’s obligations on a timely basis, to retain its current
financing, to obtain additional financing, and ultimately to generate
revenues.
 
 NOTE
5.  PROVISION FOR INCOME TAXES
 
 Income
taxes are provided in accordance with Statement of Financial Accounting
Standards No. 109 (SFAS 109), Accounting for Income Taxes.  A deferred
tax asset or liability is recorded for all temporary differences between
financial and tax reporting and net operating loss
carryforwards.  Deferred tax expense (benefit) results from the net
change during the year of deferred tax assets and liabilities.
 
 Deferred
tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all of the deferred
tax assets will be not realized.  Deferred tax assets and liabilities
are adjusted for the effects of changes in tax laws and rates on the date of
enactment.
 
 No
provision was made for Federal income tax.  The provision for income
taxes consists of the state minimum tax imposed on corporations.
 
 NOTE
6.  STOCKHOLDERS EQUITY
 
 The
Company is authorized 75,000,000 common shares with a $0.001 par value. As of
June 30, 2009, 15,225,000 shares were issued and outstanding.
 
 On
December 15, 2007, the Company issued 10,000,000 shares of common stock at the
par value of $0.001 per share to Andrew Kovalenko the CEO and a Founder of the
Powergae Inc.
 
 On
December 15, 2007, the Company issued 2,000,000 shares of common stock at the
par value of $0.001 per share to Dmitriy V. Dobroshtan the CTO and a Founder of
the Powergae Inc
 
 On
December 15, 2007, the Company issued 1,625,000 restricted shares of common
stock for $32,500 cash or $0.02 per share.
 
 On
January 30, 2008, the Company issued 1,500,000 restricted shares of common stock
for $15,000 cash or $0.01 per share.
 
 On May 2,
2008, the Company issued 100,000 restricted shares of common stock for $2,000
cash or $0.02 per share.
 
 NOTE
7.  RELATED PARTY TRANSACTIONS
 
 As of
June 30, 2009, the Company owns related party $4,100 for administrative purpose.
The amount due to the related party is unsecured and non
interest-bearing.
 
 The
Company’s administrative office and support are provided by entities controlled
by one of the Company’s stockholders at no charge.  There is no formal
agreement to continue this arrangement.
 
 NOTE
8. THE EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS
 
 Below is
a listing of the most recent Statement of Financial
Accounting Standards (SFAS) and their effect on the Company.
  8
 
 In May
2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 163,
“Accounting for Financial Guarantee Insurance Contracts-and interpretation of
FASB Statement No. 60”.  SFAS No. 163 clarifies how Statement 60
applies to financial guarantee insurance contracts, including the recognition
and measurement of premium revenue and claims liabilities. This statement also
requires expanded disclosures about financial guarantee insurance contracts.
SFAS No. 163 is effective for fiscal years beginning on or after December 15,
2008, and interim periods within those years. SFAS No. 163 has no effect on the
Company’s financial position, statements of operations, or cash flows at this
time.
 
 In June
2009, the Financial Accounting Standards Board issued Statement “FASB” issued
Statement No. 168, “The FASB Accounting Standards Codification and the Hierarchy
of Generally Accepted Accounting Principles” (“SFAS No. 168”).  SFAS
No. 168 will become the single source of authoritative nongovernmental U.S.
generally accepted accounting principles (“GAAP”), superseding existing FASB,
American Institute of Certified Public Accountants (“AICPA”), Emerging Issues
Task Force (“EITF”), and related accounting literature.  SFAS No. 168
reorganizes the thousands of GAAP pronouncements into roughly 90 accounting
topics and displays them using a consistent structure.  Also included
is relevant Securities and Exchange Commission guidance organized using the same
topical structure in separate sections.  SFAS No. 168 will be
effective for financial statements issued for reporting periods that end after
September 15, 2009.  This statement will have an impact on the
Company’s financial statements since all future references to authoritative
accounting literature will be references in accordance with SFAS No. 168.
The Company will adopt the use of the Codification for the quarter ending
September 30, 2009.  The Company is currently evaluating the effect on
its financial statement disclosures since all future references to authoritative
accounting literature will be references in accordance with the
Codification.
 
 In May
2009, the FASB issued SFAS No. 165, “Subsequent Events”.(“SFAS No. 165”)
This Statement establishes general standards of accounting for and disclosures
of events that occur after the balance sheet date but before financial
statements are issued or are available to be issued.  It requires the
disclosure of the date through which an entity has evaluated subsequent events
and the basis for that date and is effective for interim and annual periods
ending after June 15, 2009.  We are currently assessing the impact of
the adoption of SFAS 165, if any, on our financial position, results of
operations or cash flows.
 
 In March
2008, the Financial Accounting Standards Board, or FASB, issued SFAS No. 161,
Disclosures about Derivative Instruments and Hedging Activities—an amendment of
FASB Statement No. 133.  This standard requires companies to provide
enhanced disclosures about (a) how and why an entity uses derivative
instruments, (b) how derivative instruments and related hedged items are
accounted for under Statement 133 and its related interpretations, and (c) how
derivative instruments and related hedged items affect an entity’s financial
position, financial performance, and cash flows. This Statement is effective for
financial statements issued for fiscal years and interim periods beginning after
November 15, 2008, with early application encouraged. The Company has not yet
adopted the provisions of SFAS No. 161, but does not expect it to have a
material impact on its financial position, results of operations or cash
flows.
 
 In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements—an amendment of ARB No. 51.  This
statement amends ARB 51 to establish accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an
ownership interest in the consolidated entity that should be reported as equity
in the consolidated financial statements. Before this statement was issued,
limited guidance existed for reporting noncontrolling interests. As a result,
considerable diversity in practice existed. So-called minority interests were
reported in the consolidated statement of financial position as liabilities or
in the mezzanine section between liabilities and equity. This statement improves
comparability by eliminating that diversity. This statement is effective for
fiscal years, and interim periods within those fiscal years, beginning on or
after December 15, 2008 (that is, January 1, 2009, for entities with calendar
year-ends). Earlier adoption is prohibited. The effective date of this statement
is the same as that of the related Statement 141 (revised 2007). It is not
believed that this will have an impact on the Company’s financial position,
results of operations or cash flows
  In this
Quarterly Report on Form 10-Q, “Company,” “our company,” “us,” and “our” refer
to Powergae, Inc. unless the context requires otherwise.
  9
 
 ITEM
2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 
 Management’s
Discussion and Analysis contains various “forward looking statements” within the
meaning of Section 21E of the Securities Exchange Act of 1934, as amended,
regarding future events or the future financial performance of the Company that
involve risks and uncertainties. Certain statements included in this Form 10-Q,
including, without limitation, statements related to anticipated cash flow
sources and uses, and words including but not limited to “anticipates”,
“believes”, “plans”, “expects”, “future” and similar statements or expressions,
identify forward looking statements. Any forward-looking statements herein are
subject to certain risks and uncertainties in the Company’s business, including
but not limited to, reliance on key customers and competition in its markets,
market demand, product performance, technological developments, maintenance of
relationships with key suppliers, difficulties of hiring or retaining key
personnel and any changes in current accounting rules, all of which may be
beyond the control of the Company. The Company adopted at management’s
discretion, the most conservative recognition of revenue based on the most
astringent guidelines of the SEC in terms of recognition of software licenses
and recurring revenue. Management will elect additional changes to revenue
recognition to comply with the most conservative SEC recognition on a forward
going accrual basis as the model is replicated with other similar markets (i.e.
SBDC). The Company’s actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including those set forth therein.
  Forward-looking
statements involve risks, uncertainties and other factors, which may cause our
actual results, performance or achievements to be materially different from
those expressed or implied by such forward-looking statements. Factors and risks
that could affect our results and achievements and cause them to materially
differ from those contained in the forward-looking statements include those
identified in the section titled “Risk Factors” in the Company’s Annual Report
on Form 10-SB for the year ended September 30, 2006, as well as other factors
that we are currently unable to identify or quantify, but that may exist in the
future.
  In
addition, the foregoing factors may affect generally our business, results of
operations and financial position. Forward-looking statements speak only as of
the date the statement was made. We do not undertake and specifically decline
any obligation to update any forward-looking statements.
 
 Management’s
Discussion and Analysis contains various “forward looking statements” within the
meaning of Section 21E of the Securities Exchange Act of 1934, as amended,
regarding future events or the future financial performance of the Company that
involve risks and uncertainties. Certain statements included in this S-1,
including, without limitation, statements related to anticipated cash flow
sources and uses, and words including but not limited to “anticipates”,
“believes”, “plans”, “expects”, “future” and similar statements or expressions,
identify forward looking statements. Any forward-looking statements herein are
subject to certain risks and uncertainties in the Company’s business, including
but not limited to, reliance on key customers and competition in its markets,
market demand, product performance, technological developments, maintenance of
relationships with key suppliers, difficulties of hiring or retaining key
personnel and any changes in current accounting rules, all of which may be
beyond the control of the Company. Management will elect additional changes to
revenue recognition to comply with the most conservative SEC recognition on a
forward going accrual basis as the model is replicated with other similar
markets (i.e. SBDC). The Company’s actual results could differ materially from
those anticipated in these forward-looking statements as a result of certain
factors, including those set forth therein.
  Management’s
Discussion and Analysis of Results of Financial Condition and Results of
Operations (“MD&A”) should be read in conjunction with the financial
statements included herein.
 
 PowerGae,
Inc. (the “Company”) was organized in the State of Nevada on September 6,
2007.  The Company is based in Falls Church, Virginia.
  10
 
 The
Company is in its development stage and will construct and operate bio-diesel
production facilities and market bio-diesel through existing petroleum
manufacturers and distributors.  The source of the Company’s
production of bio-diesel is algae grown in unique bioreactors allowing for algae
growth under less than ideal natural light or heat and therefore a secure supply
of bio-diesel.  The Company expects that its development of production
and distribution technologies will secure its position as a leader in the
rapidly growing alternative fuel market.
 
 The
Company provides its own Research and Development in algae growth and bio-diesel
production technologies in collaboration with leading authorities in the
Ukraine.
  BUSINESS
MODEL
  1.
              Creating
      a network of algal oil production plants in the vicinity of large
      biodiesel consumers such as Metropolitan Statistical Areas (MSAs) or
      Metropolitan Statistical Areas (CMSAs), etc. by entering into agreements
      with existing CO2 mass producers such as breweries, waste water treatment
      centers, power plants, and similar facilities that tend to be concentrated
      in the same areas. The algae growing plants should be located very close
      to CO2 sources to significantly reduce the transportation cost of main raw
      materials to our plants. Additional revenue can be derived from carbon
      dioxide sequestration and processing of industrial and domestic effluents
      to reduce organic residues.
 
 2.
              The
      first stage of the project involves construction of a pilot Algae
      production Plant. The equipment cost for such a facility is estimated to
      be $850,000 with an additional allowance of $150,000 for site preparation.
      The plant will have annual capacity of 93 000 gallons of algal oil per
      year, thus generating annual revenue of approximately $1,435,000 resulting
      from the sales of both algal oil and press cake. At the later stages of
      the project, the pilot plant will be used as a R&D facility. The
      subsequent production plants will have annual capacities of up to 30
      million gallons of biodiesel.
  We
      held preliminary discussions with several CO2 mass
      producers in the United States to place our pilot plant. A final plant
      placement decision will take about 6 months. Management believes that
      average delivery time from manufacturer of the plant equipment is about
      6-12 months. Construction of a plant will take about 6 months. Ordering
      equipment for the plant will be placed right after receipt of the
      investments.
  Thus,
      the total time from the start of the financing to the launch of production
      estimated at 1.5 to 2 years.
 3.
              At
      the first stage we plan to convert the produced algal oil to biodiesel
      using tolling agreements with existing biodiesel plants (whereby we
      provide algal oil to the Biodiesel Plant to process into biodiesel, and
      pay a fixed price per gallon for such processing). Such processing fee per
      gallon would be significantly lower than the wholesale price: typically,
      the processing fee is comparable to the difference between the price of
      biodiesel and the cost of feedstock oil.) Using tolling agreements will
      reduce investment requirements and mitigate
  risk.
 
 4.
              Concluding
      agreements with existing petroleum distributors that will give the
      distributor the preferential right to use our product in their respective
      distribution area. The product that is sold to the end consumer is usually
      B20, a blend of 20% biodiesel and 80% petroleum
  diesel.
  PLAN
OF OPERATION
 
 We plan
to raise additional funds through joint venture partnerships, project debt
financings or through future sales of our common stock, until such time as our
revenues are sufficient to meet our cost structure, and ultimately achieve
profitable operations. There is no assurance that we will be successful in
raising additional capital or achieving profitable operations. Our financial
statements do not include any adjustments that might result from the outcome of
these uncertainties. We will need financing within 12 months to execute our
business plan.
  11
 
 We have
not developed our own proprietary technology.
 
 Our
business will encompass development activities culminating in the construction
and long-term operation of biofuel production biorefineries. As such, we are
currently in the development-stage of finding suitable locations and deploying
project opportunities for converting cellulose fractions of municipal solid
waste and other opportunistic feedstock into biofuel fuels.
 
 For the
next 12 months, our Plan of Operations is as follows:
  ·
              We
      plan to tap into diesel fuel market by placing our Algae production Plants
      in Metropolitan Statistical Areas (MSAs) or Metropolitan Statistical Areas
      (CMSAs). There are currently 261 MSAs and 19 CMSAs in the United States.
      These have a minimum population of 250,000 residents, with some, such as
      New York, Los Angeles and Chicago, having substantially
    more.
  Main
stages of the project:
  ·
              First
      Stage (first 24 months). Site location for the first Algae production
      Plant according to the aforementioned requirements. Concluding agreements
      with CO2 suppliers and biodiesel
distributors.
 ·
              Second
      stage: Strategic planning based on the experience obtained from the
      deployment of the pilot Algae production
Plant:
 ·
              Improving
      the algae farming and processing
technologies,
 ·
              Starting
      production of additional algae-based
products,
 ·
              Deployment
      of Algae production and Biodiesel Plant
network.
 ·
              The
      second stage will require additional capitalization to provide working
      capital and marketing funds to support our expanding
      operations.
 
 RECENT
DEVELOPMENTS
 
 We have
an agreement with the Institute of the Biology of the Southern Seas (IBSS) from
Ukraine on joint "algae industrial growing" research project. Currently, we
selected the engineering staff for conducting our Research and Development
project.
 Major
ongoing Tasks:  -- seeking for business partners,   -- seeking for
investors,  -- choose the right location for our pilot plant
placement..
  RESULTS
OF OPERATIONS
 
 Results of Operations for
the three and six months ended June 30, 2009
 
 The
Company had zero revenues for the three and six months ended June 30,
2009.
 
 Operating Expenses for the
three and six months ended June 30, 2009
 
 The
Company had operating expenses of $2,897 and $8,401 for the three and six months
ended June 30, 2009, respectively. These expenses consisted of general operating
expenses and professional fee incurred in connection with the day to day
operation of our business and preparation and filing our periodic reports. Our
operating expenses from inception through June 30, 2009 were $
69,339.
  12
  LIQUIDITY
AND CAPITAL RESOURCES
 
 We
believe the proceeds from private placements and the reserves will generate
sufficient cash in assisting with the operating needs of the Company. The
Company is continuing to inquire into new investments to provide for further
research and development capital and assisting further acquisitions over the
next twelve months.
  Historically,
we have funded our operations through financing activities consisting primarily
of private placements of debt and equity securities with existing shareholders
and outside investors. Our principal use of funds has been for the further
development of our Biorefinery Projects, for capital expenditures and general
corporate expenses.
 
 CRITICAL
ACCOUNTING POLICIES AND ESTIMATES
  The
preparation of our financial statements requires us to make estimates and
assumptions that affect the reported amount 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. A critical accounting policy is one that is both very important to the
portrayal of our financial condition and results, and requires management’s most
difficult, subjective or complex judgments. Typically, the circumstances that
make these judgments difficult, subjective and/or complex have to do with the
need to make estimates about the effect of matters that are inherently
uncertain.
 
 RECENTACCOUNTING PRONOUNCEMENTS
 
 In
June 2008, the FASB issued FASB Staff Position EITF 03-6-1, Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating Securities,
(“FSP EITF 03-6-1”). FSP EITF 03-6-1 addresses whether instruments granted in
share-based payment transactions are participating securities prior to vesting,
and therefore need to be included in the computation of earnings per share under
the two-class method as described in FASB Statement of Financial Accounting
Standards No. 128, “Earnings per Share.” FSP EITF 03-6-1 is effective for
financial statements issued for fiscal years beginning on or after
December 15, 2008 and earlier adoption is prohibited. We are not required
to adopt FSP EITF 03-6-1; neither do we believe that FSP EITF 03-6-1 would have
material effect on our financial positionand results of
operations if adopted.
 
 In
May 2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 163,
“Accounting for Financial Guarantee Insurance Contracts-and interpretation of
FASB Statement No. 60”.  SFAS No. 163 clarifies how Statement 60
applies to financial guarantee insurance contracts, including the recognition
and measurement of premium revenue and claims liabilities. This statement also
requires expanded disclosures about financial guarantee insurance contracts.
SFAS No. 163 is effective for fiscal years beginning on or after December 15,
2008, and interim periods within those years. SFAS No. 163 has no effect on the
Company’s financial position, statements of operations, or cash flows at this
time.
 
 In June
2009, the Financial Accounting Standards Board issued Statement “FASB” issued
Statement No. 168, “The FASB Accounting Standards Codification and the Hierarchy
of Generally Accepted Accounting Principles” (“SFAS No. 168”).  SFAS
No. 168 will become the single source of authoritative nongovernmental U.S.
generally accepted accounting principles (“GAAP”), superseding existing FASB,
American Institute of Certified Public Accountants (“AICPA”), Emerging Issues
Task Force (“EITF”), and related accounting literature.  SFAS No. 168
reorganizes the thousands of GAAP pronouncements into roughly 90 accounting
topics and displays them using a consistent structure.  Also included
is relevant Securities and Exchange Commission guidance organized using the same
topical structure in separate sections.  SFAS No. 168 will be
effective for financial statements issued for reporting periods that end after
September 15, 2009.  This statement will have an impact on the
Company’s financial statements since all future references to authoritative
accounting literature will be references in accordance with SFAS No. 168.
The Company will adopt the use of the Codification for the quarter ending
September 30, 2009.  The Company is currently evaluating the effect on
its financial statement disclosures since all future references to authoritative
accounting literature will be references in accordance with the
Codification.
  13
 
 In March
2008, the Financial Accounting Standards Board, or FASB, issued SFAS No. 161,
Disclosures about Derivative Instruments and Hedging Activities—an amendment of
FASB Statement No. 133.  This standard requires companies to provide
enhanced disclosures about (a) how and why an entity uses derivative
instruments, (b) how derivative instruments and related hedged items are
accounted for under Statement 133 and its related interpretations, and (c) how
derivative instruments and related hedged items affect an entity’s financial
position, financial performance, and cash flows. This Statement is effective for
financial statements issued for fiscal years and interim periods beginning after
November 15, 2008, with early application encouraged. The Company has not yet
adopted the provisions of SFAS No. 161, but does not expect it to have a
material impact on its financial position, results of operations or cash
flows.
 
 In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements—an amendment of ARB No. 51.  This
statement amends ARB 51 to establish accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an
ownership interest in the consolidated entity that should be reported as equity
in the consolidated financial statements. Before this statement was issued,
limited guidance existed for reporting noncontrolling interests. As a result,
considerable diversity in practice existed. So-called minority interests were
reported in the consolidated statement of financial position as liabilities or
in the mezzanine section between liabilities and equity. This statement improves
comparability by eliminating that diversity. This statement is effective for
fiscal years, and interim periods within those fiscal years, beginning on or
after December 15, 2008 (that is, January 1, 2009, for entities with calendar
year-ends). Earlier adoption is prohibited. The effective date of this statement
is the same as that of the related Statement 141 (revised 2007).. It is not
believed that this will have an impact on the Company’s financial position,
results of operations or cash flows.
 
 OFF-BALANCE
SHEET ARRANGEMENTS
 
 We have
not entered into 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 and would be considered material to
investors. Certain officers and directors of the Company have provided personal
guarantees to our various lenders as required for the extension of credit to the
Company.
  ACCOUNTING
POLICIES SUBJECT TO ESTIMATION AND JUDGMENT
 
 Management's
Discussion and Analysis of Financial Condition and Results of Operations are
based upon our financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States. When preparing
our financial statements, we make estimates and judgments that affect the
reported amounts on our balance sheets and income statements, and our related
disclosure about contingent assets and liabilities. We continually evaluate our
estimates, including those related to revenue, allowance for doubtful accounts,
reserves for income taxes, and litigation. We base our estimates on historical
experience and on various other assumptions, which we believe to be reasonable
in order to form the basis for making judgments about the carrying values of
assets and liabilities that are not readily ascertained from other sources.
Actual results may deviate from these estimates if alternative assumptions or
condition are used.
  ADDITIONAL
INFORMATION
 
 We file
reports and other materials with the Securities and Exchange
Commission.  These documents may be inspected and copied at the
Commission’s Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.,
20549.  You can obtain information on the operation of the Public
Reference Room by calling the Commission at 1-800-SEC-0330.  You can
also get copies of documents that the Company files with the Commission through
the Commission’s Internet site at www.sec.gov.






We do not
hold any derivative instruments and do not engage in any hedging
activities.




14





ITEM 4.  CONTROLS AND
PROCEDURES




a)
Evaluation of Disclosure Controls and Procedures





Our Chief
Executive Officer and Chief Financial Officer, evaluated the effectiveness of
our disclosure controls and procedures as of the end of the period covered by
this report. Based on that evaluation, Chief Executive Officer and Chief
Financial Officer concluded that our disclosure controls and procedures as of
the end of the period covered by this report were effective such that the
information required to be disclosed by us in reports filed under the Securities
Exchange Act of 1934 is (i) recorded, processed, summarized and reported within
the time periods specified in the SEC's rules and forms and (ii) accumulated and
communicated to the Chief Executive Officer and Chief Financial Officer, as
appropriate to allow timely decisions regarding disclosure. A controls system
cannot provide absolute assurance, however, that the objectives of the controls
system are met, and no evaluation of controls can provide absolute assurance
that all control issues and instances of fraud, if any, within a company have
been detected.





Our Chief
Executive Officer and Chief Financial Officer is responsible for establishing
and maintaining adequate internal control over financial reporting (as defined
in Rule 13a-15(f) under the Exchange Act). Our internal control over financial
reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with accounting principles generally
accepted in the United States.





Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Therefore, even those systems determined to be
effective can provide only reasonable assurance of achieving their control
objectives. Furthermore, smaller reporting companies face additional
limitations. Smaller reporting companies employ fewer individuals and find it
difficult to properly segregate duties. Often, one or two individuals control
every aspect of the Company's operation and are in a position to override any
system of internal control. Additionally, smaller reporting companies tend to
utilize general accounting software packages that lack a rigorous set of
software controls.





Our Chief
Executive Officer and Chief Financial Officer evaluated the effectiveness of the
Company's internal control over financial reporting as of June 30, 2009. In
making this assessment, our Chief Executive Officer and Chief Financial Officer
used the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO) in Internal Control -- Integrated Framework. Based on
this evaluation, our Chief Executive Officer and Chief Financial Officer
concluded that, as of June 30, 2009, our internal control over financial
reporting was effective.





b) Changes in
Internal Control over Financial Reporting.





During
the Quarter ended June 30, 2009, there was no change in our internal control
over financial reporting (as such term is defined in Rule 13a-15(f) under the
Exchange Act) that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.





PART
II – OTHER INFORMATION





ITEM
1. LEGAL PROCEEDINGS





The
Company is not a party to any litigation and, to its knowledge, no action, suit
or proceeding has been threatened against the Company except with threatened
litigation in regard to unpaid debt obligations, and one employee claiming
unlawful termination. No actions regarding the unpaid debt have been initiated
as of this date.   The Company also believes that the wrongful
termination suit has no merit.  There are no material proceedings to
which any director, officer or affiliate of the Company or security holder is a
party adverse to the Company or has a material interest adverse to the
Company.





ITEM 1A
- Risk Factors




WE
ARE A “SHELL” COMPANY AND OUR SHARES WILL SUBJECT TO RESTRICTIONS ON
RESALE.




15




As we
currently have nominal operations and our assets consist of cash, and/or cash
equivalents, we are deemed a “shell company” as defined in Rule 12b-2 of the
Securities Exchange Act of 1934. Accordingly, until we are no longer a “shell
company,” we will file a Form 10 level disclosure, and continue to be a
reporting company pursuant to the Securities Exchange Act of 1934, as amended,
and for twelve months, shareholders holding restricted, non-registered shares
will not be able to use the exemptions provided under Rule 144 for the resale of
their shares of common stock. Preclusion from any prospective investor using the
exemptions provided by Rule 144 may be more difficult for us to sell equity
securities or equity-related securities in the future to investors that require
a shorter period before liquidity or may require us to expend limited funds to
register their shares for resale in a future prospectus.




VOLATILITY
IN OUR COMMON SHARE PRICE MAY SUBJECT US TO SECURITIES LITIGATION, THEREBY
DIVERTING OUR RESOURCES THAT MAY HAVE A MATERIAL EFFECT ON OUR PROFITABILITY AND
RESULTS OF OPERATIONS.




As
discussed in the preceding risk factors, the market for our common shares is
characterized by significant price volatility when compared to seasoned issuers,
and we expect that our share price will continue to be more volatile than a
seasoned issuer for the indefinite future. In the past, plaintiffs have often
initiated securities class action litigation against a company following periods
of volatility in the market price of its securities. We may in the future be the
target of similar litigation. Securities litigation could result in substantial
costs and liabilities and could divert management’s attention and
resources.




WE
WILL INCUR INCREASED COSTS AS A RESULT OF BEING A PUBLIC COMPANY, WHICH COULD
AFFECT OUR PROFITABILITY AND OPERATING RESULTS.




The
Sarbanes-Oxley Act of 2002 and the new rules subsequently implemented by the
Securities and Exchange Commissions, the Nasdaq National Market and the Public
Company Accounting Oversight Board have imposed various new requirements on
public companies, including requiring changes in corporate governance practices.
We expect these rules and regulations to increase our legal and financial
compliance costs and to make some activities more time-consuming and costly. We
expect to spend between $50,000 to $100,000 in legal and accounting expenses
annually to comply with Sarbanes-Oxley. These costs could affect profitability
and our results of operations. The cost of these activities will be paid out of
this offering.




OUR
BUSINESS PLAN CALLS FOR EXTENSIVE AMOUNTS OF FUNDING TO CONSTRUCT AND OPERATE
OUR BIOREFINERY PROJECTS AND WE MAY NOT BE ABLE TO OBTAIN SUCH FUNDING WHICH
COULD ADVERSELY AFFECT OUR BUSINESS, OPERATIONS AND FINANCIAL
CONDITION.




We will
be relying on additional financing and funding from such sources as The Energy
Policy Act grants and loan guarantee programs. We are currently in discussions
with potential sources of financing but no definitive agreements are in place.
If we cannot achieve the requisite financing or complete the projects as
anticipated, this could adversely affect our business, the results of our
operations, prospects and financial condition.




OUR
ALGAE-TO-BIOFUEL TECHNOLOGIES ARE UNPROVEN ON A LARGE-SCALE COMMERCIAL BASIS AND
PERFORMANCE COULD FAIL TO MEET PROJECTIONS, WHICH COULD RENDER US
WORTHLESS.




While
production of biofuel from corn, sugars and starches is a mature technology,
newer technologies for production of biofuel from Algae have not been built at
large commercial scales The technologies being pursued by us for biofuel
production from algae have not been demonstrated on a commercial scale. All of
the tests conducted to date by us with respect to our technologies have been
performed on limited quantities of algae, and we cannot assure you that the same
or similar results could be obtained at competitive costs on a large-scale
commercial basis. We have never utilized these technologies under the conditions
or in the volumes that will be required to be profitable and cannot predict all
of the difficulties that may arise. It is possible that the technologies, when
used, may require further research, development, design and testing prior to
larger-scale commercialization, if that is possible. Accordingly, we cannot
assure you that these technologies will perform successfully on a large-scale
commercial basis or at all.




16




THE
COMPANY CURRENTLY RELIES UPON TRADE SECRET LAWS TO PROTECT PROPRIETARY RIGHTS IN
ITS TECHNOLOGIES.




Despite
the precautions, under trade secret laws, it may be possible for a third party
to copy or otherwise obtain and use the Company’s biofuel technology without
authorization. In addition, the laws of various countries in which the Company’s
biofuel may be sold may not protect the Company’s intellectual property rights
to the same extent as the laws of the United States. Because the biofuel
industry is characterized by rapid technological change, the Company believes
that factors such as the technological and creative skills of its personnel, new
biofuel product developments, frequent biofuel product enhancements, and
recognition are more important to establishing and maintaining a technology
leadership position than the various legal protections of its technology. There
can be no assurance that the Company’s competitors will not independently
develop technologies that are substantially equivalent or superior to the
Company’s technology. There can also be no assurance that the measures taken by
the Company to protect its proprietary rights will be adequate to prevent
misappropriation of the technology or independent development by others of
similar technology.




INFRINGEMENT
CLAIMS REGARDING OUR INTELLECTUAL PROPERTY MAY HARM OUR BUSINESS.




The
technology may unintentionally infringe upon the intellectual property rights of
others despite our best efforts to ensure that this does not occur. It is
therefore possible that others will bring lawsuits against us claiming that we
have infringed on their rights. Such lawsuits could be expensive to defend and
cause us to stop publishing certain games or require us to license the
proprietary rights of third parties.




OUR
SUCCESS DEPENDS UPON OUR CHAIRMAN AND CHIEF EXECUTIVE OFFICER, MR. KOVALENKO AND
OUR CHIEF TECHNOLOGY OFFICER , MR. DOBROSHTAN .




We
believe that our success will depend to a significant extent upon the
efforts and abilities of (i) Mr. Kovalenko, our Chairman and Chief
Executive Officer, due to his contacts in the biodiesel and algae production
industries and his overall insight into our business, and
(ii) Mr. Dobroshtan, our Chief Technology Officer for his technical
and engineering expertise, including his familiarity with technology behind
biodiesel industry. Our failure to retain Mr. Kovalenko or
Mr. Dobroshtan, or to attract and retain additional qualified personnel,
could adversely affect our operations. We do not currently carry key-man life
insurance on any of our officers.




FAILURE
TO ACHIEVE AND MAINTAIN EFFECTIVE INTERNAL CONTROLS IN ACCORDANCE
WITH SECTION 404 OF THE SARBANES-OXLEY ACT COULD HAVE A MATERIAL
ADVERSE EFFECT ON OUR BUSINESS AND OPERATING RESULTS.




It may be
time consuming, difficult and costly for us to develop and implement the
additional internal controls, processes and reporting procedures required by the
Sarbanes-Oxley Act. We may need to hire additional financial reporting, internal
auditing and other finance staff in order to develop and implement appropriate
additional internal controls, processes and reporting procedures. If we are
unable to comply with these requirements of the Sarbanes-Oxley Act, we may not
be able to obtain the independent accountant certifications that the
Sarbanes-Oxley Act requires of publicly traded companies.




If we
fail to comply in a timely manner with the requirements of Section 404 of
the Sarbanes-Oxley Act regarding internal control over financial reporting or to
remedy any material weaknesses in our internal controls that we may identify,
such failure could result in material misstatements in our financial statements,
cause investors to lose confidence in our reported financial information and
have a negative effect on the trading price of our common stock.




17




Pursuant
to Section 404 of the Sarbanes-Oxley Act and current SEC regulations,
beginning with our annual report on Form 10-K for our fiscal period ending
December 31, 2007, we will be required to prepare assessments regarding
internal controls over financial reporting and beginning with our annual report
on Form 10-K for our fiscal period ending December 31, 2008, furnish a
report by our management on our internal control over financial reporting. We
have begun the process of documenting and testing our internal control
procedures in order to satisfy these requirements, which is likely to result in
increased general and administrative expenses and may shift management time and
attention from revenue-generating activities to compliance activities. While our
management is expending significant resources in an effort to complete this
important project, there can be no assurance that we will be able to achieve our
objective on a timely basis. There also can be no assurance that our auditors
will be able to issue an unqualified opinion on management’s assessment of the
effectiveness of our internal control over financial reporting. Failure to
achieve and maintain an effective internal control environment or complete our
Section 404 certifications could have a material adverse effect on our
stock price.




In
addition, in connection with our on-going assessment of the effectiveness of our
internal control over financial reporting, we may discover “material weaknesses”
in our internal controls as defined in standards established by the Public
Company Accounting Oversight Board, or the PCAOB. A material weakness is a
significant deficiency, or combination of significant deficiencies, that results
in more than a remote likelihood that a material misstatement of the annual or
interim financial statements will not be prevented or detected. The PCAOB
defines “significant deficiency” as a deficiency that results in more
than a remote likelihood that a misstatement of the financial statements
that is more than inconsequential will not be prevented or
detected.




In the
event that a material weakness is identified, we will employ qualified personnel
and adopt and implement policies and procedures to address any material
weaknesses that we identify. However, the process of designing and implementing
effective internal controls is a continuous effort that requires us to
anticipate and react to changes in our business and the economic and regulatory
environments and to expend significant resources to maintain a system of
internal controls that is adequate to satisfy our reporting obligations as a
public company. We cannot assure you that the measures we will take will
remediate any material weaknesses that we may identify or that we will implement
and maintain adequate controls over our financial process and reporting in the
future.




Any
failure to complete our assessment of our internal control over financial
reporting, to remediate any material weaknesses that we may identify or to
implement new or improved controls, or difficulties encountered in their
implementation, could harm our operating results, cause us to fail to meet our
reporting obligations or result in material misstatements in our financial
statements. Any such failure could also adversely affect the results of the
periodic management evaluations of our internal controls and, in the case of a
failure to remediate any material weaknesses that we may identify, would
adversely affect the annual auditor attestation reports regarding the
effectiveness of our internal control over financial reporting that are required
under Section 404 of the Sarbanes-Oxley Act. Inadequate internal controls
could also cause investors to lose confidence in our reported financial
information, which could have a negative effect on the trading price of our
common stock.





ITEM
2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
SECURITIES





On
January 30, 2008, the Company issued 1,500,000 restricted shares of common stock
for $15,000 cash or $0.01 per share.





On May 2,
2008, the Company issued 100,000 restricted shares of common stock for $2,000
cash or $0.02 per share.





There
were no other changes in securities and small business issuer purchase of equity
securities during the period ended June 30, 2009.





ITEM
3.  DEFAULTS UPON SENIOR SECURITIES





There
were no defaults upon senior securities during the period ended June 30,
2009.





ITEM
4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS





There
were no matters submitted to the vote of securities holders during the period
ended June 30, 2009.




18





ITEM
5.  OTHER INFORMATION





None.




ITEM
6. EXHIBITS





Exhibit
            Description31.1
            Certification
      of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
      Act31.2
            Certification
      of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
      Act.32.1
            Certification
      of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley
      Act.32.2
            Certification
      of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley
      Act.




19




SIGNATURES





Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934 the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.




POWERGAE,
      INC.Date:
      August 12, 2009
              By:
              /s/ Andrew
    KovalenkoAndrew
      Kovalenko
                Chairman,
      President Chief Executive Officer
                  (Principle
      Executive Officer), Chief Financial Officer








20