3Power Energy Group (PSPW) Risk Analysis

The Company may enter into agreements with strategic alliance entities in which Company officers or directors will render services and have a direct or indirect financial interest.  The Company expects to enter into transactions involving significant amounts of capital with these affiliated entities. Prior to the execution of agreements, the Company's Board of Directors must determine that the terms and conditions of these agreements are no less favorable to the Company than what would be negotiated in an arm's length transaction.  The Company officers and directors owe the Company a fiduciary responsibility. If it is determined that Company officers and directors breached their fiduciary obligation, these officers may be required to resign in which case, Company operations will be significantly impaired.  The Company may also face shareholder derivative actions in connection with these activities.

Subject to compliance with applicable laws and legal doctrines of corporate loyalty, officers and directors of the Company may identify new wind projects or choose to otherwise develop wind projects outside of the Company.  Members of the Board or officers who may be subject to conflicts shall not be involved in deliberation or voting by the Board with respect to such projects.

Our common shares trade on the Over-the-Counter-Bulletin-Board quotation system. Trading in our shares has historically been subject to very low volumes and wide disparity in pricing. Investors may not be able to sell or trade their common shares because of thin volume and volatile pricing with the consequence that they may have to hold your shares for an indefinite period of time.

We anticipate that our common stock will continue to be subject to the penny stock rules under the Securities Exchange Act of 1934, as amended. These rules regulate broker/dealer practices for transactions in "penny stocks." Penny stocks are generally equity securities with a price of less than $5.00. The penny stock rules require broker/dealers to deliver a standardized risk disclosure document that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker/dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker/dealer and its salesperson and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations and the broker/dealer and salesperson compensation information must be given to the customer orally or in writing prior to completing the transaction and must be given to the customer in writing before or with the customer's confirmation. In addition, the penny stock rules require that prior to a transaction, the broker and/or dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. The transaction costs associated with penny stocks are high, reducing the number of broker-dealers who may be willing to engage in the trading of our shares. These additional penny stock disclosure requirements are burdensome and may reduce all of the trading activity in the market for our common stock. As long as the common stock is subject to the penny stock rules, our shareholders may find it more difficult to sell their shares.

We plan to attract and retain employees in part by offering stock options and other purchase rights for a significant number of common shares. We have granted stock options to certain officers and directors.  The issuance of common shares pursuant to these options, and options issued in the future, will have the effect of reducing the percentage of ownership in our existing shareholders.

The market price of our stock may fluctuate substantially due to a variety of factors, many of which are beyond our control. The stock markets in general have experienced substantial volatility that has often been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the market price of our stock. Future sales of our common shares by our shareholders could depress the price of our stock.