NEW WORLD POWER CORPORATION, 10-K, 1996-07-01

NEW WORLD POWER CORPORATION
10-K, 1996-07-01
ENGINES & TURBINES

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM 10-K

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

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995 COMMISSION FILE NUMBER 0-18260

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THE NEW WORLD POWER CORPORATION
(Exact name of registrant as specified in its charter)

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DELAWARE 52-1659436
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)

558 LIME ROCK ROAD
LIME ROCK, CONNECTICUT 06039

(860) 435-4000

(Address and telephone number of principal executive offices)

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended December 31, 1995

[ ] 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 0-18260

The New World Power Corporation
(Exact name of registrant as specified in its charter)

Delaware 52-1659436
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

558 Lime Rock Road, Lime Rock, CT 06039
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code (860) 435-4000

Securities registered pursuant to Section 12(b) of the Act:

<TABLE>
<CAPTION>
Name of each exchange
Title of each class on which registered
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<S> <C>
None Not Applicable
</TABLE>

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $.01 par value
(Title of class)

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 X No .
--- ---

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.[ ]

The aggregate market value of the voting stock held by non-affiliates
of the registrant on June 13, 1996 was $4,700,648 based on the closing price of
$.75 per share. The number of shares outstanding of the registrant's Common
Stock as of June 13, 1996 was 11,606,835.

DOCUMENTS INCORPORATED BY REFERENCE:
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THE NEW WORLD POWER CORPORATION
ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995

Table of Contents

<TABLE>
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Page
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<S> <C>
PART I

Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . 18

PART II

Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters . . . . . . . . . . . . . . . . . . . . 18

Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . 19

Item 7. Management's Discussion and Analysis
of Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Item 8. Financial Statements and Supplementary
Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Item 9. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . 34

PART III

Item 10. Directors and Executive Officers of the
Registrant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . 38

Item 12. Security Ownership of Certain
Beneficial Owners and Management . . . . . . . . . . . . . . . . . . . 44

Item 13. Certain Relationships and Related
Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
</TABLE>
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PART IV

<TABLE>
<S> <C>
Item 14. Exhibits, Financial Statement
Schedules and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . 50

Index to Consolidated Financial Statements and Financial Statement Schedule . . . . . . . . . F-1

Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1
</TABLE>
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PART I

ITEM 1. BUSINESS

INTRODUCTION

The New World Power Corporation (the "Company") produces and sells
electric power generated from renewable resources, including wind, sun and
water, and develops renewable power generating projects. The Company also
assembles and sells renewable power generating systems, including stand-alone
systems for individuals, villages, and industrial and scientific applications.

The Company's operations are conducted through subsidiaries which are
organized into four segments: grid power production, grid power services,
wireless power sales and other products and services. The grid power production
division develops, owns and operates wind farms and hydroelectric facilities
which produce electricity (kilowatt hours) for sale to electric utilities. The
grid power services division was discontinued and sold during 1995. The wireless
power division assembles, distributes and sells integrated renewable power
generating systems for commercial and industrial use where no service from an
electric utility is available or in areas where purchasing electricity is not
economical. In addition, the wireless power division includes village power
which develops, owns and operates integrated renewable power generating systems
which produce kilowatt hours for sale to small, electric utilities which are
generally diesel-powered and removed from the main grid The other products and
services division manufactures and develops wind turbines and related products.
Supplementary industry segment information may be found in the notes and
schedules to the Company's Consolidated Financial Statements.

Due to cash used in operating and investing activities as well as
unforeseen delays in two of its major projects (China and Texas), in late 1995,
the Company experienced severe liquidity and cash flow problems. This
necessitated, in early 1996, a revision of the business plan for the Company
calling for certain core and non-core asset sales, significant overhead and
other cost reductions, and a restructuring of the Company's secured debt with
its two principal lenders after events of default.

In the first quarter of 1996, the Board of Directors thoroughly
evaluated the Company's business, projects and personnel to refocus the Company
in areas which would solve short and long term liquidity problems and optimize
economic return. As a result of this evaluation, significant changes where made
in terms of project priority. In concert with its revised and focused business
plan, and to further alleviate cash flow pressure, the Company substantially
reduced administrative and overhead expenses through downsizing of its corporate
staff and international offices to bare minimums necessary to sustain project
operations and development.

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The Company is proceeding with its primary course of action of asset
sales in full compliance of its covenants under the restructured loan agreements
with its principal secured lenders. Short-term capital needs to fund the
Company's operations are being made available from an escrow account held by one
of the principal lenders, under the restructuring, thereby sustaining the
Company in meeting its obligations. Accordingly, the Company will focus on those
core grid and wireless power activities that demonstrate the best and most
timely economic return potential. The Company will actively market units that
are developed and operating to pay down the restructured debt and provide
capital to fund new development activities. The Company will seek in 1996 to
sell its wireless assets, in a potentially less than favorable market
environment given the time constraints put on those sales by the secured
lenders.

Although the Company's primary intent is to seek buyers for a number of
projects/investments in order to raise funds for the payment of debt
obligations, as required in 1996, management continues to review its options
with respect to other business opportunities. These opportunities would include
potential joint ventures, partnerships or agreements with equity investors which
would provide the required capital infusions.

As a cautionary note it must be stressed that this report contains
"forward looking statements" within the purview of the federal securities laws,
with respect to both the timing and anticipated proceeds from the sale of
certain assets and projects. There are numerous risks and uncertainties
surrounding management's plans, principally the risk that management will not be
able to sell the assets identified in its business plan within the time frame
required by the restructured loan agreements, or for the amounts estimated by
management. There can no assurance that the Company will be successful in
implementing this plan, nor can it be determined with certainty whether the
Company will have sufficient available short-term capital to fund operations in
the time necessary to effect such sales.

Nonetheless, the financial statements for December 31, 1995 have been
prepared assuming that the Company will continue as a going concern. However,
the uncertainty associated with the above events raises substantial doubts about
the Company's abilities to continue as a going concern.

For a discussion of the development of the Company see Item 7
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Overview."

GRID POWER PRODUCTION DIVISION

Power Production

The following tables set forth the projects, greater than 1 MW in
generating capacity, acquired or developed by the Company and currently in
operation, those under construction, and those in development. Projects in
operation are those where construction and financing have been completed and are
operational. Projects under construction are those that have been financed in
whole or in part and are in the process of construction, or where the Company
has expended significant funds for preliminary construction work. Projects in
development are those in which the Company has a letter of intent or other firm
understanding with the site owner or the joint venture partners, or has been
awarded a bid and is in the process of negotiating the basic contracts.

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The Company generally develops new generating capacity only when it has
a commitment from a specific power purchaser, and, therefore, the capacity of
each project is usually committed only to a specified power purchaser.
Completion of projects under construction, any pending acquisition or project in
development is subject to the Company's obtaining suitable financing. There can
be no assurance that such financing will be obtained or that the Company will be
able to fund any project development activities in 1996.

<TABLE>
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Approximate Power
Name Location Type Capacity Purchaser Status
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<S> <C> <C> <C> <C> <C>
Projects in Operation:

Painted Hills San Gorgonio Pass, California Wind 1.00 MW SCE (Sold 1996)
Los Vaqueros Altamont Pass, California Wind 2.90 MW PG&E (Pending Sale)
Wolverine Midland, Michigan Hydro 10.50 MW Consumers (Operating)
Altamont Altamont Pass, California Wind 20.00 MW PG&E (Held for Sale)
Makani Uwila Oahu, Hawaii Wind 10.30 MW HECO (Held for Sale)
San Jacinto San Gorgonio Pass, California Wind 9.30 MW SCE (Pending Sale)
Dyffryn Brodyn Dyfed, Wales Wind 5.60 MW SWALEC (Held for Sale)
Caton Moor Lancashire, England Wind 3.00 MW NORWEB (Held for Sale)
Bellacorick Bellacorick, Ireland Wind 6.40 MW ESB (Held for Sale)
Four Burrows Cornwall, England Wind 4.50 MW SWEB (Held for Sale)

Projects under Construction:

Andersen Falls Rio Negro, Argentina Hydro 7.00 MW ERSE (Held for Sale)
Dona Julia Heredia, Costa Rica Hydro 16.00 MW ICE (Pending Sale)
Fujian I Fujian, People's Republic of China Hydro 39.00 MW State Utility (Under Development)

Projects in Development:*

<CAPTION>
Approximate Power
Name Location Type Capacity Purchaser
---- -------- ---- ----------- ---------
<S> <C> <C> <C> <C> <C>
Eolos I Mexico Wind 20.0 MW Government (Under Development)
Lerma Mexico City, Mexico Hydro 8.5 MW DGCOH (Under Development)
Big Spring Big Spring, Texas Wind 40.0 MW TU (Under Development)
Tierras Morenas Arenal, Costa Rica Wind 20.0 MW ICE (Held for Sale)
Carrickabrock Tipperary, Ireland Wind 15.0 MW ESB (Under Development)
Drumlough Hill Donegal, Ireland Wind 5.0 MW ESB (Under Development)
Manatoulin Canada Wind 5.0 MW Ontario Hydro (Under Development)
Woodstock Minnesota Wind 10.0 MW Northern (Under Development)
Bozcaada Turkey Wind 5.0 MW TEAS (Under Development)
</TABLE>

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*The "approximate capacity" of projects in development reflects the estimated
total capacity of the sites which is capable of being completed within the next
four years.

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Projects in Operation

General. The Company currently owns or leases the following renewable
energy generating facilities. Each facility is located on a site which is owned
or leased on a long-term basis by a project subsidiary. The facilities produce
electricity which is sold to utilities and other power consumers under long-term
power sales contracts, which usually provide for a specified price to be paid
for electrical energy and capacity delivered, which prices are typically based
upon two components: energy payments and capacity payments. Energy payments are
based on the facility's net electrical output with the payment rates usually
indexed to the fuel cost of the utility or consumer or to general inflation
indices. Capacity payments are based on either the facility's net electrical
output or its available capacity. Capacity payment rates vary over the term of
the power sales contract according to various schedules. In general, the Company
has the right, but not the obligation, to provide the maximum capacity set forth
in each contract. The Company plans to sell its interests in most of these
facilities by year-end 1996.

U.S. Facilities

Painted Hills Wind Farm. The Company's eight wind turbines aggregating
approximately 1.0 megawatt ("MW") of capacity at the Painted Hills Wind Farm in
the San Gorgonio Pass near Palm Springs, California were all sold in February
1996.

Los Vaqueros Wind Farm. The Company owns and operates 38 wind turbines
and the related electrical infrastructure and leases 101 acres at its Los
Vaqueros Wind Farm in the Altamont Pass in California. The wind farm has a total
capacity of approximately 2.9 MW, which is available under a subcontract with
the owner of the power purchase contract. The power produced at the wind farm is
sold to Pacific Gas & Electric ("PG&E") pursuant to the Company's Standard Offer
No. 4 ("SO4") power purchase agreement which expires in March 2015. The Company
currently has this project held for sale and received a purchase offer of
approximately $92,500, which was accepted by the Board of Directors at its
June 17, 1996 meeting.

Wolverine Hydroelectric Facilities. The Company owns four hydroelectric
facilities on the Tittabawassee River near Midland, Michigan. The facilities
were constructed between 1923 and 1925. One of the facilities was substantially
rebuilt in 1945. The others contain original turbine-generators and power plant
equipment. The facilities have a combined generating capacity of approximately
10.5 MW. The power is sold to Consumers Power Company ("Consumers") pursuant to
a power purchase agreement which expires in May 2013, but provides for
renegotiation of the energy and capacity prices every ten years commencing in
1996. The Company's current ten-year moving average hydroelectric production
rate for these facilities is approximately 37.7 million kilowatt hours ("kW")
per year. License applications for the facilities are currently pending before
the Federal Energy Regulatory Commission (the "FERC"), and the Company does not
know when the licenses will be granted. Although it is not possible to predict
what conditions will be imposed by the FERC, the Company believes that the FERC
will require a change in the method of operation within the next three to five
years so as to release a minimum daily flow of water.

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Altamont Wind Farm. The Company is currently operating approximately
250 first generation wind turbines at the Altamont Wind Farm. The Company is
operating the site to mitigate some of the fixed costs at the wind farm. The
power generated by these turbines is sold to PG&E pursuant to the Company's
Standard Offer No. 1 ("SO1") Contract pursuant to which PG&E is obligated to
purchase annually 150 MW of electricity. The SO1 Contracts provide for a price
which is based upon the utility's short-term avoided cost of energy and the
avoided capital cost (the cost of generating equipment). The Company had plans
to retrofit the site as soon as the rate based on avoided cost of energy
increased. Due to increase competition as well as other external factors coupled
with the Company's liquidity problems, the retrofit was abandoned and the Wind
Farm was placed for sale.

Makani Uwila Wind Farm. The Company owns the Makani Uwila Wind Farm
located at Kahuku on the north shore of Oahu in Hawaii. The wind farm includes
the MOD-5B wind turbine, the world's largest operating wind turbine of the
traditional horizontal axis type, which has a capacity of approximately 3.2 MW.
In addition, the wind farm includes eight, 600 kilowatt Westinghouse wind
turbines. The electricity from this wind farm is sold to The Hawaiian Electric
Company, Inc. ("HECO") pursuant to an existing power purchase contract. The
Company was negotiating an amendment to its power purchase contract with HECO.
Soon after the negotiations had commenced, the Company's cash flow shortages as
well as other external factors, resulted in the Wind Farm being offered for
sale. The Company has received two offers on the site and expects to complete
the sale during 1996. The Company's Board of Directors accepted one of the two
offers at its June 17, 1996 meeting for approximately $1 million which is
subject to several conditions precedent.

San Jacinto Wind Farm. The Company owns an approximately 50% interest
in San Jacinto Power Company, Inc. ("San Jacinto Power"), a joint venture
between the Company and Nevada Energy Company, Inc. San Jacinto Power owns and
operates a 9.3 MW wind farm in the San Gorgonio Pass near Palm Springs,
California, which consists of 69 installed wind turbines and the related
electrical infrastructure. San Jacinto Power sells power under an existing
19.0 MW SO4 power purchase contract which expires in July 2015. Nevada Energy
Company, Inc. has made the Company an offer to purchase the remaining 50% of the
Wind Farm. The Company's Board of Directors accepted the offer, for
approximately $120,000, at its June 17, 1996 meeting.

U.K. Facilities

The following three wind farms represent the entire portfolio of sites
located in the United Kingdom. All three projects are currently offered for
sale. The Company has not received any bonafide offers acceptable to management.
The Company is continuing to operate these sites while seeking a buyer at terms
beneficial to the Company and its shareholders.

Dyffryn Brodyn Wind Farm. The Company owns and operates a 5.6 MW wind
farm on a 166 acre site near Whitland, Dyfed, Wales. The power generated at the
wind farm is sold pursuant to a 1991 renewable non-fossil fuel obligation power
purchase agreement with the Non-Fossil Fuel Purchasing Agency Limited ("NFPA")
and South Wales Electricity plc ("SWALEC"). The fixed, premium price period of
the contract expires in December 1998.

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Caton Moor Wind Farm. The Company owns and operates a 3 MW wind farm at
Caton Moor, Lancashire in northwest England. The power generated at the wind
farm is sold pursuant to a 1991 renewable non-fossil fuel obligation power
purchase agreement with NFPA and NORWEB plc. The fixed, premium price period of
the contract expires in December 1998.

Four Burrows Wind Farm. The Company owns and operates a 4.5 MW wind
farm located at Four Burrows, near Truro, Cornwall, England. The power generated
at the wind farm will be sold pursuant to a 1991 renewable non-fossil fuel
obligation power purchase agreement with NFPA and South West Electricity plc.
The fixed, premium price period of the contract expires in December 1998.

Other Facilities

Bellacorick Wind Farm. The Company owns approximately 87.5% of the
ordinary shares of Renewable Energy Ireland Limited, the owner and operator of
Ireland's first wind farm, which is located in Bellacorick, Ireland. The wind
farm was completed in November 1992 and consists of 21 wind turbines having an
aggregate capacity of 6.45 MW. Electrical power produced by the wind farm is
sold to the Electricity Supply Board ("ESB"), the government-owned electric
utility of Ireland at a subsidized rate, indexed for inflation, until the
expiration of the contract in June 2012. The Company has received a written
offer to buy a portion of its interest in this Wind Farm. The offer is currently
being reviewed by management.

Projects Under Construction

Andersen Falls Hydroelectric Facility. The Company owns 60% of Andersen
("Project Company") which has entered into a concession contract with Energia
Rio Negro Socieded del Estado ("ERSE"), the state utility of the State of Rio
Negro, Argentina, to design, reconstruct, operate and maintain a hydroelectric
facility to be located at Andersen Falls, State of Rio Negro, Argentina. In
connection with the proposal to construct this facility, the Project Company
posted a performance bond for $1 million, which was guaranteed on a joint and
several basis by the Project partners and the Company. Because of the Company's
limited capital resources, which limit its ability to perform capital projects,
there is a risk that the Company will have to pay under the terms of this
performance bond. The Company is seeking a buyer for its interest, or a portion
thereof, in this project.

Dona Julia Hydroelectric Facility. The Company, on behalf of a Costa
Rican company in which it has a minority interest, is developing a hydroelectric
facility located in Heredia, Costa Rica which will use water from the Quebradon
Creek and the Puerto Viejo River to generate electricity. The project is
expected to have a capacity of 16 MW of electricity, all of which is to be sold
to the Costa Rican state utility ICE under a 15-year power purchase contract.
The estimated cost of the project is $28 million. The Company has entered into a
letter of intent to sell its interest in the project for approximately $1.4
million subject to a definitive stock purchase agreement that is anticipated to
close by June 30, 1996.

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Fujian I, China. In May 1995, the Company signed an agreement with
China Chang Jiang Energy Corporation ("CCJEC") to acquire an interest in Fujian
Chang Ping Hydro Project Company. Fujian Chang Ping Hydro Project Company is
constructing the 39 MW Fujian Nan Ping Xiayang Hydro Power Plant on the upper
Ming River in Xiayang, Fujian Province, People's Republic of China. The project
was originally expected to be operational by September 1997, but as a result of
significant flooding at the construction site, the operating date has been
postponed until the end of 1998. See Note 4 to the Consolidated Financial
Statements of the Company.

Projects In Development

The Company is currently undertaking to develop the following projects.
Unless otherwise stated below, development of each of these projects is subject
to obtaining suitable financing. There can be no assurance that such financing
will be obtained. See Item 7 "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital Resources" for a
discussion of the financing of development projects.

Eolos I. The Company has secured the development rights to
approximately 37,500 acres of land for the development of a wind farm in the La
Ventosa region of the State of Oaxaca, Mexico. Power from this first phase 20 MW
development will be sold to, CFE, the Mexican federal electric utility. The
power purchase agreements are in the preliminary stages of negotiation and are
subject to approval by the federal Ministry of Energy. This project is expected
to be developed through a Mexican company in which the Company will have a
minority interest.

Lerma Hydroelectric Facility. The Company, through Entec S.A. de C.V.,
has a contract with the Mexican Federal District Water Commission to develop an
8.5 MW hydroelectric facility powered by the flow of water from an aqueduct
which supplies part of the drinking water needs of Mexico City. Entec will be
paid for the electricity generated by the project by the Federal District Water
Commission under a long-term power purchase agreement. The Company believes that
modifications to the existing power purchase agreement must be made to make the
project financeable and economically feasible. Development of the facility has
been postponed and Entec is actively seeking a buyer for its interest in this
facility.

Big Spring Wind Farm. The Company, through its limited partnership New
World Power Texas Renewable Energy Limited Partnership, has entered into a
15-year power purchase agreement with Texas Utilities Electric Company ("TU
Electric") to purchase power from a 40 MW wind farm which is to be built near
Big Spring, Texas. The agreement has been approved by the Public Utility
Commission of Texas. Financing for the project is scheduled to be completed in
the fourth quarter of 1996. Completion of the project is subject to the
Company's obtaining acceptable site leases as well as obtaining the necessary
project financing. There can be no assurance that the Company will be able close
such financing or be able to enter into such leases.

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Tierras Morenas Wind Farm. The Company had been undertaking, through a
Costa Rican subsidiary in which it has a 35% minority interest, to develop a
wind farm to be located in Tierras Morenas near Lake Arenal, Costa Rica. The
project is expected to have a capacity of 20 MW of electricity, all of which is
to be sold to the Costa Rican state utility ICE under a 15-year power purchase
contract. In May, 1996 the Company's Costa Rican 65% majority partner in the
project entered into negotiations with a U.S. alternative energy development
company to sell its majority interest and take over development of the project.

Carrickabrock Wind Farm. The Company, through a joint venture with Bord
Na Mona, is seeking to develop a 15 MW wind farm in the County of Tipperary,
Ireland, to be owned and operated by the joint venture. The joint venture, in
which the Company will have a 50% interest, will sell electricity to the ESB,
the government-owned electric utility of Ireland, under a 15-year power purchase
agreement. The joint venture has been attempting to resite the project nearby.
An unfavorable outcome to these resiting efforts could force the joint venture
to abandon the project.

Drumlough Hill Wind Farm. The Company has entered into a joint venture
with Bord Na Mona to develop a 5 MW wind farm at Drumlough Hill, Innishowen,
County Donegal, Ireland. The joint venture, in which the Company will have a 50%
interest, will sell electricity to the ESB, the government-owned electric
utility of Ireland, under a 15-year power purchase agreement awarded through an
Irish AER bid process. The joint venture has been unable to secure the essential
site rights from a third party that are necessary to complete the project.
Inability to obtain these rights could force the joint venture to abandon the
project.

Other Projects. The Company is currently in the preliminary stages of
developing additional wind farms. These are Woodstock, MN, Bozcaada, Turkey, and
Manatoulin Island. The Company can not predict whether any of these will ever be
further developed or constructed.

Seasonality of Revenues

Wind farm revenues are seasonal, with the wind season in North American
locations typically running from March to November. The European wind season
typically runs from October to March. Hydroelectric production is also seasonal
with spring, fall and winter providing proportionally higher revenues than the
summer. Both wind power and hydroelectric production can also vary from year to
year based on variations in meteorological conditions.

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Strategic Alliances

In June 1994, the Company entered into a 15-year business alliance
agreement with Westinghouse Electric Corporation ("Westinghouse") to jointly
develop, market, construct and own renewable power projects, such as
utility-scale wind farms, off-grid generating systems and wireless photovoltaic
systems. Under the agreement, the Company and Westinghouse will jointly market
the Company's renewable power projects and products and Westinghouse will have
the option to participate with the Company in renewable power projects. In
consideration of Westinghouse's obligations under the agreement, the Company was
to issue to Westinghouse up to 459,770 shares of the Company's Common Stock, in
installments, and has issued an incentive warrant which will enable Westinghouse
to purchase up to 819,778 shares of the Company's Common Stock, based upon
certain operating revenue targets for the Company. Westinghouse owns 790,000
shares (7.6%) of the Company's Common Stock. The alliance has not been as
beneficial as both parties originally envisioned and, accordingly, the Company
and Westinghouse are discussing the mutual cessation of the business
relationship.

In October 1994, the Company entered into a joint venture contract with
China Chang Jiang Energy Corporation (Group) ("CCJEC") and Metropolitan
Enterprise Corporation ("MEC"). CCJEC is a manufacturer of electric generating
equipment and owns and operates numerous hydroelectric facilities, not only in
China but in the Philippines and other countries in Asia. The joint venture
contract is for a period of twenty-five years after the date of issuance of the
business license for the joint venture company. The parties have agreed to deal
exclusively with one another during the term of such contract in connection with
the development of wind, solar and hydroelectric power generating projects in
the PRC, and in the manufacturing and distribution in the PRC of renewable power
generating products developed by the Company. The Company is attempting to amend
the joint venture contract in 1996, enhancing the opportunities under the
agreement.

GRID POWER SERVICES DIVISION

During 1995, as a result of continued losses and erosion of its
customer base, the Company discontinued its production services operations in
California. The operations, which constituted the Grid Power Services segment,
were sold in December 1995.

WIRELESS POWER DIVISION

The Company's Wireless Power Division sells and assembles solar
systems. These solar systems are powered by photovoltaic panels. Photovoltaic
panels are composed of silicon, semi conductor material applied in various forms
including wafers or films, to a flat panel. The photovoltaic panel directly
converts sunlight to electric current.

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The Company is involved in assembling and selling two basic types of
systems using photovoltaic panels. "Photovoltaic Systems" are those in which the
sole form of power production is solar energy; these systems range from a basic
panel and controller to varied applications involving lighting, water pumping
and more sophisticated packages. Integrated Renewable Power Generating Systems
are those which also use photovoltaic power for a portion of their power
generation, but additionally incorporate other forms of renewable generation
like wind and battery power. These systems are typically complex and much more
expensive than the Company's Photovoltaic Systems.

The Company distributes its Photovoltaic Systems through three
partially-owned subsidiaries and distributes its Integrated Renewable Power
Generating Systems through a wholly-owned subsidiary.

Photovoltaic Systems

Photovoltaic Systems are solar power systems assembled and sold by the
Company through its partially-owned subsidiaries. Photovoltaic Systems use
photovoltaic power to produce electricity, and range from simple panel
applications to more sophisticated, expensive packages.

The Company distributes its Photovoltaic Systems through Photocomm,
Inc. ("Photocomm"), Solartec, Inc. ("Solartec") and Entec ("Entec"), all
partially-owned subsidiaries.

At December 31, 1995, the Company owns 6,612,447 shares (representing
approximately 48.8%) of the issued and outstanding voting stock of Photocomm
which is a publicly traded company engaged in the development, manufacture and
marketing of photovoltaic systems and related products. The Company has an
option to purchase an additional 1,500,000 shares at $3.00 per share that
expires by December 31, 1996. As of June 18, 1996, the closing price of these
shares was $ 2.56 per share. The Company is also a party to an agreement with
other shareholders of Photocomm under which, the Company is assured of the
election of three of Photocomm's seven directors. The Company also owns 51% of
the issued and outstanding capital stock of Solartec, an Argentine corporation
which is a fabricator and distributor of photovoltaic products in Argentina, and
50% of the issued and outstanding stock of Entec, a power developer in Mexico.
The Company is considering the sale of both Photocomm and Solartec in 1996 on
favorable terms in order to fulfill its obligations to its lenders and
concentrate on its core development business. The Company is reviewing its
options regarding liquidation or abandonment of its investment in Entec, which
is experiencing significant financial hardship, during 1996.

Integrated Renewable Power Generating Systems

The Company designs, manufactures, assembles and installs Integrated
Renewable Power Generating Systems, including remote site and stand-alone
electric generating systems, for a wide variety of applications. Remote site and
stand-alone generating systems are generally complex, integrate many forms of
available power generation including not only photovoltaic power but also wind
is utilized for electric power generation at remote locations that are not
connected to an electric power grid.

10
<PAGE> 15
The Company's Integrated Renewable Power Generating Systems are
distributed through its 100%-owned subsidiary New World Vermont, located in
Waitsfield, Vermont.

The Company has installed remote site and stand-alone generating
systems for commercial and residential customers in over 30 countries and on all
7 continents. These systems provide power where reliability is crucial and power
is a necessary commodity that was not previously available. The primary
applications in the commercial sector are telecommunications, navigational aids,
offshore platforms, area lighting and SCADA power equipment. In addition, the
Company provides larger systems where renewable energy sources augment the
energy provided through the utility grid which would normally be purchased from
local utilities.

Village Power

The Company develops, owns and operates integrated generating systems,
powered by renewable and traditional sources, which produce kilowatt hours for
sale to small electric utilities removed from the main grid. These systems use
proprietary software for integration and control and utilize indigenous
renewable resources, augmented by batteries, to replace existing base-load
diesel generators, which are then converted into backup power sources.

Wireless Backlog

As of December 31, 1995, the Company had a backlog of existing purchase
orders and government contracts, which it believes to be firm, for products and
development services representing approximately $4,688,000 in revenues. This
compares to a backlog of approximately $919,000 and $975,000 as of December 31,
1994 and 1993. Management expects that all of the current backlog will be filled
in fiscal 1996 and 1997. The current backlog is not necessarily indicative of
the backlog, if any, in future periods.

Concentration

Sales of the Company's generating systems to customers outside of the
continental United States accounted for approximately 15% of product sales for
the last fiscal year. These sales are accomplished through the Company's own
sales force. In view of the diverse locations of the Company's foreign
customers, the Company does not believe there are any special risks attributable
to foreign sales beyond the normal business risks of sales abroad.

Key Suppliers

The Company's manufacturing operations require a number of mechanical,
electrical and electronic components and raw materials. The Company has multiple
commercial sources of supplies for most components and raw materials that it
uses.

11
<PAGE> 16
On January 14, 1991, one of the Company's subsidiaries entered into an
informal photovoltaic module distribution arrangement with Kyocera America, Inc.
("Kyocera"). The Company was appointed to represent Kyocera solar electric
modules in the United States and Canada. Kyocera, the world's second largest
manufacturer of solar electric modules, offered the Company competitive supply
terms and the opportunity to develop and establish a national program for its
existing dealer organization. The arrangement is informal, but intended to be
renewed annually by mutual agreement. On January 15, 1993, the Kyocera
arrangement was renewed with an expanded distribution agreement to also include
the remainder of the Western Hemisphere with the exception of Mexico.

Manufacturing Regulation

The Company's manufacturing facilities are subject to numerous laws and
regulations designed to protect the environment. In management's opinion,
compliance with these laws and regulations has not had and will not have a
material effect on the capital expenditures, earnings or competitive position of
the Company.

OTHER PRODUCTS AND SERVICES DIVISION

The Company currently manufactures a full line of wind turbines
including 1 kW, 3 kW, 12 kW and 100 kW machines, all in limited quantities, and
is developing a prototype for a 250 kW turbine. The Company maintains a
continuing development program for new turbines and related products and for
continued engineering of its existing products to improve efficiency and
reliability. Development has been concentrated on wind turbine machine design
(including blade design) and electronic system design. The Company's predecessor
began developing wind turbine technology in the mid-1970s.

Pursuant to government contracts and initiatives issued by the
Department of Energy ("DOE"), and through various agencies via the Small
Business Innovative Research Program, the Company and its predecessor have
engaged in advanced turbine design studies since the late 1970s. These
conceptual design studies involve practical improvements, including advancing
the state-of-the-art for wind farms and the development of a 100 kW polar
turbine for extremely cold temperature applications.

The Company is currently a sub-contractor with the National Renewable
Energy Laboratory ("NREL") to develop "Advanced Wind Turbines" under a series of
contracts. The first contract calls for development of the "Near Term Turbine,"
and is designed to produce hardware for sales and distribution in 1996. This
contract is aimed at the development of an advanced, commercial-scale wind
turbine to be manufactured in the United States. This turbine is designed for
use in large-scale wind farm developments and other similar applications. The
first Advanced Wind Turbine which the Company is developing will have a
nameplate capacity of 250 kW with blades of 82 feet in diameter. The first
prototype began operation in the San Gorgonio Pass in the spring of 1994.
Continued improvements and redesign aimed at cost cutting is ongoing at this
time. The information and technology advances developed by the Company in
connection with the 250 kW Advanced Wind Turbine will be available for use by
the Company in all of its products. Three patents related to the aileron control
system were issued by the U.S. Patent and Trademark Office during late 1995 and
early 1996.

12
<PAGE> 17
The Company owns several patents and patent applications relating to
wind turbine technology. Although these patents and patent applications have
value to the Company, they are not considered to be of material importance to
its business as a whole. The Company's patents will expire during the period
from 1996 to 2014.

The Technology Company is also involved with the development and
deployment of large tracking PV array structures, grid connected PV applications
and standalone wind/PV village power systems. Multiple projects are on-going at
this time and the technology and experience can be used by the Company in the
pursuit of it's business objectives.

DOMESTIC GOVERNMENT INCENTIVES

Federal Incentives. The Federal government encourages the use of
renewable energy resources through various financial and other incentives. The
most recent incentives at the Federal level were included in the Energy Policy
Act of 1992. The purposes of the Act include the promotion of (i) increases in
the production and utilization of energy from renewable energy resources; (ii)
further advances of renewable energy technologies; and (iii) exports of
renewable energy technologies and services.

The Federal Energy Regulatory Commission ("FERC") has authority under
the Energy Policy Act, in certain circumstances, to order any transmitting
utility to provide transmission service to independent power producers for the
purpose of selling electricity at wholesale. If adequate transmission capacity
is unavailable, the transmitting utility may be required to enlarge its
facilities. The FERC may not issue such an order if providing transmission
service would impair the reliability of the interconnected system, or if the
utility cannot obtain approval for new facilities that are necessary to provide
the service. These provisions could benefit the Company and other independent
(non-utility) power producers by facilitating access to utility transmission
systems and thus the transmission and sale of electrical power to purchasers
other than the local electric utility. With improved transmission access, the
number of potential customers for power produced by the Company's facilities
will be significantly increased.

Under the Clean Air Act Amendments of 1991, the Environmental
Protection Agency ("EPA") has established sulfur dioxide ("SO2") emission levels
for each utility system that must be met by the year 2000, as well as specific
emission levels for certain coal-fired plants that must be met by 1995. In order
to facilitate the transition to these new emission levels, a trading mechanism
has been created so that SO2 allowances can be traded. The result of these
regulatory initiatives is that wind energy is valuable to utilities since wind
generated electricity reduces fossil fuel generation by the utilities and
increases emission allowances which can be sold in the market.

State Incentives. Under the Energy Policy Act, states must work with
regulated public utilities to develop an integrated resource plan which
implicitly includes development of renewable energy resources, such as wind and
solar power. Even prior to enactment of the Energy Policy Act, a number of
States had undertaken to develop renewable energy policies and initiatives in
response to increasing pressure from environmental groups which have focused on
the air and water pollution associated with the development of new fossil fuel
generating facilities.

13
<PAGE> 18
REGULATION

The Company is subject to federal and state energy laws and regulations
and federal, state and local environmental laws and regulations in connection
with the development and operation of its generating facilities.

Domestic Regulation

Federal Regulation. Pursuant to authority granted to the FERC under
PURPA, the FERC has promulgated regulations which generally exempt small power
production facilities with capacities of less than 30 MW from the provisions of
the Federal Power Act ("FPA") (except for licensing requirements applicable to
hydroelectric projects and certain other matters), the Public Utility Holding
Company Act ("PUHCA"), and state laws respecting rates and financial and
organizational regulation of electric utilities. All of the Company's
hydroelectric and wind power generating facilities are believed to be entitled
to the full range of regulatory exemptions available under PURPA. The Wolverine
Hydroelectric Facilities are subject to licensing regulation pursuant to the
Federal Power Act.

The Energy Policy Act amended PUHCA to allow independent power
producers, under certain circumstances, to own and operate eligible facilities
not exempted by PURPA in the United States or foreign countries without
subjecting these producers to registration or regulation under PUHCA and without
jeopardizing the qualifying status of their existing exempt projects. A company
exclusively in the business of owning or operating generating facilities and
selling electricity at wholesale or retail in a foreign country is also eligible
for this exemption, as long as neither the company nor its subsidiaries sell
electricity retail within the United States. These provisions are expected to
enhance the development of facilities not exempted by PURPA in the United States
which do not have to meet the fuel, production and ownership requirements of
PURPA, as well as the development of foreign generating companies. The Energy
Policy Act could benefit the Company by expanding its ability to own and operate
facilities not exempted by PURPA but may also result in increased competition by
allowing utilities and other independent power producers to develop such
facilities which are not subject to the constraints of PUHCA.

In the absence of exemptions from the regulations discussed above, the
activities of the Company would be subject to a pervasive framework of federal
and state regulation applicable to public utilities, including regulation of
power sales prices, encumbrances of property, accounting practices and all other
activities deemed necessary and convenient in the regulation of public
utilities. Should this occur, the Company could be subject to regulation as a
public utility holding company under PUHCA, which would have a material adverse
effect on the Company's business. The Company intends to conduct its operations
so that it continues to qualify for the applicable exemptions under PUHCA and
has no reason to believe that these exemptions will be changed by legislative or
regulatory action. Congress now has under consideration legislation that would
reduce or eliminate the PUCHA restrictions.

14
<PAGE> 19
State Regulation. State public utility commissions ("PUCs") have broad
authority to regulate both the price and financial performance of electric
utilities. Since a power sales contract will become a part of a utility's cost
structure (and therefore is generally reflected in its rates), power sales
contracts between an independent power producer, such as the Company, and a
regulated utility, some PUC's assert and exercise the right to approve these
contracts at the outset.

Local Permits. County governments in California and other states require
wind farm operators to apply for and obtain permits before erecting and
installing wind turbine generators. Applications may be considered at a public
hearing. The permits generally terminate after a fixed period of time, twenty
years from the date of approval in California, although the permits are
revocable for cause. Permits frequently contain numerous conditions, including
safety setback requirements, noise setback requirements, environmental
requirements and annual reporting requirements. The Company believes that it has
or will be able to obtain and renew all necessary permits subject to any
requirements relating to the siting and operation of each individual wind farm.

Environmental Regulation. The Company is subject to environmental laws and
regulation at the federal, state and local levels in connection with the
development, ownership and operation of its electrical generating facilities.
The laws and regulations applicable to the Company primarily involve
environmental concerns associated with the siting of wind power generating
facilities such as noise, visibility of wind turbines and threats to endangered
or migratory birds or wildlife. Many of such laws and regulations require that
wind turbines be located in remote areas or shielded from view, that turbines
not be located in flyways or in areas where endangered species might be
threatened, or that other mitigating actions be implemented. The Company
believes that its existing electric generating facilities are in compliance with
such environmental laws and regulations. If such laws and regulations are
altered, however, and the Company's facilities are not grandfathered, the
Company may be required to incur significant expenses to comply with such laws
and regulations. Furthermore, the existence of certain environmental laws and
regulations may have an adverse effect on the Company's ability to find suitable
sites for new renewable energy generating facilities, although generally
speaking suitable wind resource areas are not near residential areas.

International Regulation

The Company only engages in business in countries that have statutes which
permit the private production and sale of electricity. All the countries in
which the Company is currently doing business have such laws. Certain countries
have restrictions on the percentage of a stock a foreign corporation may own of
a domestic corporation and certain countries require permission of the
government to own more than a designated percentage of stock in a domestic
corporation. The Company complies with all such requirements.

15
<PAGE> 20
The Company believes that the countries in which it is seeking to do
business are encouraging independent power producers to supply the electrical
power needs their growing economies face. The relatively short time periods for
construction as well as the modular nature of wind farms permit the Company to
comply with construction and environmental regulations in a more expeditious
fashion and with lower construction risks than power produced through
traditional thermal methodologies.

COMPETITION

Revenue derived from the Company's existing electrical generating
facilities is sold under long-term power contracts, therefore competition is not
a significant business risk. New utility power sales contracts are, however,
generally subject to an arduous, expensive and competitive process. Many states
require power sales contracts to be awarded by competitive bidding, and the
Company competes with other independent power producers, subsidiaries of fuel
supply companies, engineering companies, equipment manufacturers and affiliates
of other industrial companies in the process. In addition, a number of regulated
utilities have created subsidiaries, utility affiliates, which compete with
independents such as the Company.

Competition for acquisitions of existing wind farms and development of new
ones may significantly reduce the Company's opportunity to acquire or develop
any such wind farms. There are other companies in the wind power generation
industry that are larger and have more financial resources than the Company.
Furthermore, other large, well-capitalized entities from outside the wind power
generation industry may choose to enter the industry, creating the potential for
significant additional competition.

The markets for the Company's wireless power products are highly
competitive. The Company faces a number of competitors in this market, some of
which may have significantly greater financial resources than the Company.

EMPLOYEES

As of December 31, 1995, the Company employed approximately 125 people.

ITEM 2. PROPERTIES

ADMINISTRATIVE

The Company leases office space for executive and administrative functions
at various locations around the country.

GRID POWER

Wolverine. The Company owns approximately 4,000 acres of land, most of
which is under water, in Gladwin and Midland counties in Michigan. The Company's
dikes, dams, spillways and power plants are located on this property. Operating
and maintenance personnel are based in a 1,000 square foot Company-owned
building and a 5,000 square foot maintenance and storage facility in Edenville,
Michigan.

16
<PAGE> 21
Altamont Wind Farm. The Altamont Wind Farm is located on approximately
4,000 acres of leased land in the Altamont Pass, California. The Company owns
approximately 305 miles of power lines, one substation and a 5,000 square foot
maintenance building on the property.

Makani Uwila Wind Farm. The Makani Uwila Wind Farm is located on
approximately 65 acres of leased land on Oahu, Hawaii.

Los Vaqueros Wind Farm. The Los Vaqueros Wind Farm is located on
approximately 101 acres of leased land in the Altamont Pass, California.

San Jacinto Wind Farm. The San Jacinto Wind Farm is located on
approximately 165 acres of leased land in the San Gorgonio Pass, California.

Dyffryn Brodyn Wind Farm. The Dyffryn Brodyn Wind Farm is located on
approximately 166 acres of leased land near Whitland, Dyfed, Wales.

Caton Moor Wind Farm. The Caton Moor Wind Farm is located on approximately
100 acres of leased land in Caton Moor, Lancashire, England.

Bellacorick Wind Farm. The Bellacorick Wind Farm is located on
approximately 300 acres of leased land in Bellacorick, Ireland.

Four Burrows Wind Farm. The Four Burrows Wind Farm is located on
approximately 500 acres of leased land in Truro, Cornwall, England.

Production (Wind Farm) Services. The Company's production (wind farm)
services facilities are located in a 28,000 square foot leased facility in North
Palm Springs, California. The facility includes offices, warehouse space and a
machine shop. The Company terminated this lease in early 1996.

OTHER PRODUCTS AND SERVICES

The Company's manufacturing facilities for renewable power generating
systems, including its design and system assembly departments, are housed in a
7,200 square foot Company-owned facility in Waitsfield, Vermont.

ITEM 3. LEGAL PROCEEDINGS

On January 30, 1995, Kenetech Windpower, Inc. ("Kenetech") filed a patent
infringement suit in the United States District Court for the Northern District
of California against the Company and Enercon GmbH ("Enercon") relating to the
proposed use of Enercon E-40 wind turbines at the Company's planned wind power
generating facility in Big Spring, Texas. The suit alleges that the use of the
Enercon turbines in the United States would violate certain Kenetech patents and
seeks an injunction and unspecified damages. The Company reviewed the Kenetech
patents in detail and thoroughly investigated the Enercon technology well before
the suit was filed and, based on such reviews and investigations, believes that
neither the Enercon turbine nor its mode of operation infringes on any claim of
any of Kenetech's patents. In January 1996 the Court granted the Company's
motion and dismissed Kenetech's claim for relief based on actual patent
infringement.

17
<PAGE> 22
Kenentech has also initiated proceedings against the Company and
Enercon before the International Trade Commission. On May 31, 1996, an
Administrative Law Judge of the U.S. International Trade Commission rendered an
Initial Determination decision in which he held that the Commission has subject
matter jurisdiction over the Company and its co-respondent, Enercon, in
Investigation No. 337-TA-376 because the Company has purchased for importation,
and Enercon has sold to the Company for importation, certain wind turbines, the
use of which in the United States would infringe one claim of one Kenetech
patent. This Initial Determination is subject to review by the Commission, which
must be requested on or before June 13, 1996, and to further appeal thereafter.
The Company and Enercon have requested review by the Commission. The Company
believes that both Kenetech suits are without merit. The Company intends to
vigorously contest them. There can be no assurance, however, that the Company
will prevail in its defense

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

No matter was submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the fourth quarter of the fiscal
year ended December 31, 1995.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

There was no established public trading market for the Company's Common
Stock prior to October 23, 1992. Since that date, the Common Stock has been
quoted on the National Association of Securities Dealers Automated Quotation
("NASDAQ") System under the symbol NWPC. On March 23, 1994, the Common Stock was
approved for listing on the NASDAQ National Market System. The following table
sets forth the high and low closing prices for the Common Stock as reported by
NASDAQ during the periods shown below.

<TABLE>
<CAPTION>
High Low
---- ---
<S> <C> <C>
Quarter ended December 31, 1993 12 3/4 9
Quarter ended March 31, 1994 13 3/4 10 1/4
Quarter ended June 30, 1994 11 3/4 9
Quarter ended September 30, 1994 11 1/4 9 1/8
Quarter ended December 31, 1994 10 1/2 6
Quarter ended March 31, 1995 7 1/2 4 1/2
Quarter ended June 30, 1995 6 1/2 4 3/8
Quarter ended September 30, 1995 6 1/4 2 3/8
Quarter ended December 31, 1995 3 7/8 1 1/2
Quarter ended March 31, 1996 2 3/8 1
</TABLE>

The foregoing represents inter-dealer prices, without retail mark-up,
mark-down or commission and may not necessarily represent actual transactions.
As of May 31, 1996, there were approximately 497 holders of record of Common
Stock.

18
<PAGE> 23
The Company has not paid any cash dividends on its Common Stock since
its incorporation in June 1989. The Company is currently prohibited from
declaring or paying any cash dividends on the Common Stock under the Company's
loan restructuring agreements entered into early 1996. In addition, the
Company's United Kingdom project subsidiaries including Bellacorick and
Wolverine subsidiary are prohibited from declaring or paying dividends and
making cash advances or loans to the parent Company pursuant to loan documents
entered into by the Company.

ITEM 6. SELECTED FINANCIAL DATA

The following selected consolidated financial data with respect to the
Company's statements of operations for the year ended December 31, 1995 and
1994, the three month period ended December 31, 1993 and each of the years in
the three-year period ended September 30, 1993, and its balance sheets as of
December 31, 1995 and 1994 and September 30, 1993, 1992, and 1991 are derived
from the Company's audited Consolidated Financial Statements. The Company's
statements of operations for the year ended December 31, 1995 and 1994, the
three month period ended December 31, 1993 and the year ended September 30,
1993, and such balance sheets as of December 31, 1995 and 1994, and the
auditors' report thereon, are included elsewhere in this report. Such data
should be read in conjunction with the Company's Consolidated Financial
Statements, the related notes and the independent auditors' reports and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere herein.

19
<PAGE> 24
<TABLE>
<CAPTION>
Three Months
Year Ended December 31, Ended Year Ended September 30,
1995 1994 December 31, 1993 1993 1992 1991
-------- --------- ----------------- ------- ------- -------
STATEMENT OF OPERATIONS DATA: (In thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C>
Operating revenue:
Grid Power Production $ 7,735 $ 3,129 $ 275 $ 1,730 $ 1,955 $ 2,675
Wireless Power Sales 8,647 18,878 430 1,432 1,785 --
Corporate eliminations and others (9) 901 (15) 810 -- --
-------- -------- ------- ------- ------- -------
Total operating revenue 16,373 22,908 690 3,972 3,740 2,675
-------- -------- ------- ------- ------- -------

Operating expenses:
Cost of operations 13,102 17,237 689 2,516 2,488 1,212
Research and development 426 339 165 52 -- --
Project development 4,361 2,052 259 779 -- --
Selling, general and administrative expenses 7,627 9,222 1,023 2,841 3,332 2,782
Equity loss of non-consolidated affiliates 4,199 912 112 -- -- --
Impairment charge 24,431 -- -- -- -- --
-------- -------- ------- ------- ------- -------

Operating loss $(37,773) $ (6,854) $(1,558) $(2,216) $(2,080) $(1,319)
======== ======== ======= ======= ======= =======
Net (loss) income from continuing operations
before extraordinary items $(39,851) $ (6,240) $(1,464) $ 67 $ 1,153 $(1,178)
======== ======== ======= ======= ======= =======

Net (loss) income attributable to common shares $(41,751) $ (7,793) $(1,576) $ 537 $ 1,153 $(1,178)
======== ======== ======= ======= ======= =======
</TABLE>

20
<PAGE> 25
<TABLE>
<CAPTION>
Three Months
Year Ended December 31, Ended Year Ended September 30,
1995 1994 December 31, 1993 1993 1992 1991
------- ---------- ----------------- ------ ------ -------
STATEMENT OF OPERATIONS DATA (CONTINUED): (In thousand, except per share data)
<S> <C> <C> <C> <C> <C> <C>
Earnings (loss) per common and
common equivalent share:
Net loss from Continuing operations attributable $ (3.83) $ (0.76) $(0.27) $ 0.04 $ 0.63 $ (0.85)
to common shares
(Loss) income from discontinued operations (0.14) (0.14) (0.01) 0.09 -- --
------- -------- ------ ------ ------ -------
Primary and fully diluted $ (3.97) $ (0.90) $(0.28) $ 0.13 $ 0.63 $ (0.85)
======= ======== ====== ====== ====== =======
Weighted average number of shares 10,523 8,648 5,710 4,258 1,676 1,400
======= ======== ====== ====== ====== =======

As of December 31, As of September 30,
1995 1994 1993 1992 1991
-------- ------- ------- -------- --------
BALANCE SHEET DATA: (In thousands)

<S> <C> <C> <C> <C> <C>
Cash $ 861 $ 3,889 $ 1,985 $ 210 $ 292
Cash restricted in use 4,670 -- -- -- --
Working capital (deficiency) (16,762) 2,535 3,386 (8,946) (10,069)
Plant, property & equipment, net 29,375 35,730 9,018 5,983 5,815
Deferred Series B preferred stock offering costs -- 121 171 1,014 --
Total assets 65,396 74,174 22,978 19,054 20,916
Current portion of long-term debt 17,966 187 250 5,247 4,493
Due to related parties 4,628 3,585 -- -- --
Current portion of capital lease obligations 84 12 3,182 4,307 6,267
Long-term portion of long-term debt 7,650 7,905 451 1,343 649
Long-term portion of capital lease obligations 76 17 118 3,379 8,366
Redeemable preferred stock -- 3,184 2,827 -- --
Stockholders' equity (deficiency) 21,023 46,366 12,063 (2,877) (5,836)
</TABLE>

21
<PAGE> 26
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

OVERVIEW

The Company is engaged in the production and sale of electric power
generated from renewable sources and, to a lesser extent, the sale of products
related to the renewable energy industry. The Company focuses on the acquisition
and development of renewable power generating facilities from wind, solar and
hydroelectric sources.

Business Environment

The Company faced many challenges in 1995, which culminated in a new
business strategy and plan which was approved by the Board of Directors in
January of 1996. During most of 1995 the Company continued its prior strategy of
aggressively expanding the Company through the acquisition of existing renewable
energy projects and the development of new projects throughout the world. As
part of this strategy, the Corporation acquired Renewable Energy Ireland, Ltd in
February of 1995 for $1.7 million in cash and 104,082 of the Company's shares.
Additionally, the Company signed an agreement with China Chang Jiang Energy
Company, Ltd, in May of 1995 to acquire a 40% interest in the Fujian
hydroelectric project in the Fujian Province of China for approximately $15
million payable half in cash and half in common shares of the Company's stock.
Partly in connection with these acquisitions, the Company issued approximately
$15 million of debt.

In the latter part of 1995, liquidity became extremely constrained and
it became apparent to management that operating cash flow would not be
sufficient for the Company to meet its debt service payments due in the early
part of 1996. As a result, the Board of Directors appointed a new Interim Chief
Executive Officer and management developed a revised business strategy with the
objectives to reduce debt, increase equity and alleviate the Company's
short-term liquidity problems and improve long-term liquidity. Key elements of
the revised business plan include:

- The Company intends to focus on a selected, limited number of
development projects and does not intend to acquire or expand
into any new business ventures until the Company improves its
financial position.

- The Company intends to sell down or sell off its existing
hydroelectric projects currently under development or
construction, with the exception of its investment in China
which the Company views to be a strategic geographic location.

- The Company intends to reduce, where possible, its ownership
interest in operating wind farms, as well as its wind farms
under development.

- The Company intends to use the proceeds from the sale of these
investments to meet its current and near term debt service
requirements.

- The Company does not intend to pursue any new wind farm
development projects in the United States. This element of the
business plan does not affect projects for which the Company
has completed the bidding process or has been selected through
a competitive process to operate a wind farm.

- The Company intends to focus future developments on large
scale wind farm projects in countries where the Company has an
established presence, such as Mexico, Ireland and China, and
will not pursue competitively bid wind farm projects unless
the individual circumstances are uniquely compelling.

22
<PAGE> 27
- The Company intends to simultaneously seek to integrate its
wireless business or sell its Photocomm subsidiary.

- The Company intends to reduce administrative staff.

Shortly after management approved the revised business plan, the
Company defaulted on several of its debt obligations and restructured those
obligations with its lenders. Part of the terms of the restructured loans
include additional collateral, additional finance charges and the requirement
that the Company raise $10 million in net proceeds from the sale of assets or
securities by July 31, 1996 and raise an additional $17 million in net proceeds
from the sale of assets or securities by November 30, 1996. Further, a
significant portion of the proceeds from the sale of assets or securities will
be placed in a sinking fund for the purpose of debt retirement.

Management believes that its revised business plan will achieve the
Company's objectives of reducing debt, increasing equity and improving both
short-term and long-term liquidity. However there are numerous risks and
uncertainties surrounding management plans, principally the risk that management
will not be able to sell investments identified in its business plan within the
time frame required by the restructured loan agreement, or for the amounts
estimated by management. If management is not successful in implementing this
plan, it is possible that the Company will not continue as a going concern.

Management also believes that the Company will be able to comply with
the terms of the restructured debt agreements. However, if management is not
able to meet these requirements, the Company will be in default on these
obligations and the creditors could foreclose on the collateral and
possibly compel the Company to seek protection from its creditors in
bankruptcy proceedings.

Brief History

The Company was formed in 1989 through the acquisition of hydroelectric
facilities in Michigan and a wind farm in the Altamont Pass in California. The
Company expanded into renewable energy technology through its 1991 acquisition
of Northern Power Systems, Inc., a manufacturer of wind turbines and remote site
and stand-alone renewable power generating systems. In 1992, the Company
acquired Field Service Maintenance & Supply, Inc. in Palm Springs, California
(subsequently renamed "Grid Power Services Division"), which provides
engineering, installation and operation services to owners of wind turbines and
related equipment. See "Discontinued Operations" in Notes to Financial
Statements.

The Company continued to expand in 1993 through the acquisition and
development of several wind farms; the acquisition of 49% of Entec S.A. de C.V.,
a Mexican corporation engaged in the rural electrification industry; and the
acquisition of 29% of Photocomm, Inc., a manufacturer and distributor of solar
electric systems and related products. In 1994, the Company increased its
ownership in Photocomm to a majority of its voting stock and increased its
ownership in Entec to approximately 50%, while also purchasing 51% of Solartec
S.A., the solar products distributor in Argentina. During 1995, the Company's
ownership in Photocomm decreased to below 50% of the outstanding stock.

23
<PAGE> 28
In 1994 the Company signed a business alliance with Westinghouse
to jointly develop, market, construct and own renewable power projects, such as
utility-scale wind farms, off-grid generating systems and wireless photovoltaic
systems as well as jointly market the Company's renewable power projects and
products. Westinghouse will also have the option to participate with the Company
in renewable power projects. The alliance has not been as beneficial as both
parties originally visioned and, accordingly, the Company and Westinghouse are
discussing the mutual cessation of the business relationship.. During 1994, the
Company entered into a joint venture with China Chang Jiang Energy Company Ltd.
to develop renewable energy projects in China.

The Company completed construction in December 1994 of the Dyffryn
Brodyn and Caton Moor wind farms in the United Kingdom which have a combined
capacity of 8.6 MW, and completed in March 1995 the Four Burrows wind farm in
the United Kingdom which has a capacity of 4.5 MW. Also, the Company was
selected in 1994 by Texas Utilities to develop a 40 MW wind power facility in
Big Spring, Texas, and commenced the development of a 16 MW hydroelectric
facility in Costa Rica.

In January 1995, the Company acquired approximately 87% of the stock of
an Irish wind farm having a capacity of 6.4 MW. Also, during 1995, the Company
commenced development of a 16 MW hydroelectric facility and commenced
development of a 22 MW wind power facility both in Costa Rica. In addition, the
Company purchased a 12% equity interest in the 39 MW hydroelectric facility
located in the Fujian province of China. In early 1996, the Company entered into
an agreement to sell its interest in the 16 MW hydroelectric facility in Costa
Rica. The sale is expected to close in July 1996.

OTHER RISKS

Increasing Competition and Regulatory Developments Affecting the
Domestic Electric Utility Industry

The electric utility industry in the United States is in the midst of a
transition to a more competitive wholesale power market in which numerous states
are considering granting independent power producers direct access to retail
customers. This transition is being implemented by changes in regulations and
policies of the FERC and state utility commissions. Congress is considering the
termination of power purchase mandates under PURPA and FERC has acted to negate
some state approved power contracts. Due to the increasing competition and
regulatory uncertainty in the domestic markets coupled with the downward
pressure on the price utilities will pay for electric power based upon their
avoided cost, management believes that the most attractive opportunities for
independent power development in the immediate future are outside of the United
States.

24
<PAGE> 29
Risks of International Project Development Activities

Participation in the development and acquisition of foreign facilities
may expose the Company to the effects of potentially adverse economic, political
and labor developments, including political instability, nationalization of
assets, local inflation, and currency fluctuations and restrictions. The Company
will attempt to minimize these risks through various measures but there can be
no assurance that it will be able to successfully reduce or eliminate them. In
addition, the application of foreign environmental, tax and labor laws to the
operations of foreign facilities may adversely affect any foreign facility
earnings of the Company.

General Risks of Project Acquisition and Development

The Company's acquisition and development projects are subject to
normal development risks, including locating suitable sites, negotiation of
definitive agreements, obtaining favorable power purchase contracts, final
permitting, the availability of financing on acceptable terms, and construction
risks. The Company is currently engaged in the process of developing and
acquiring renewable power generating facilities in foreign countries.

The Company expects that many of its power production projects will be
outside the United States, and will be subject to all of the factors above.

Resource Variability

The Company's wind and hydroelectric generating facilities are located
at sites where, based on the average wind speed and water flow gathered over an
extended period, the Company has determined that there are favorable energy
resources available. Operating results, however, can vary significantly from
year to year and from the historical average.

Renewable energy resources also vary from place to place during the
same season of each year. The Company's existing domestic wind farms are located
primarily in California where the strongest winds occur during the spring and
summer. The Company began operation of its wind farms in the United Kingdom in
December 1994. The wind is generally strongest in the United Kingdom during the
fall and winter. As a result of the increasing geographic diversity of the
Company's power production operations, power production revenue of the Company
is more balanced throughout the year than in prior years.

Inflation

The electricity produced by the Company's power production facilities
is sold under long-term fixed rate power sales contracts. The effects of
inflation on the Company's income are partially offset by periodic adjustments
to the rates set forth in the contracts which give effect, in part, to changes
in operating and capital costs incurred by the utilities as a result of
inflation. Because the majority of operating expenses related to power
production are relatively stable, management does not feel any special concern
about the long-term impact of inflation in the United States or the United
Kingdom. Local inflation in countries the Company does business can vary widely,
in particular Mexico and Costa Rica have experienced historical high inflation.

25
<PAGE> 30
RESULTS OF OPERATIONS

General

The results of operations for 1995 compared to 1994 reflect significant
fluctuations resulting from the methods of accounting used for the Company's
investment in Photocomm. During the year ended December 31, 1994, the Company
acquired additional shares of common stock and other securities of Photocomm
and the Company had control of over 51% of Photocomm's voting stock at
December 31, 1994. Accordingly, the Company consolidated Photocomm into its
financial statements for the year ended December 31, 1994.

At December 31, 1995, the Company owns 6,612,447 shares of Photocomm,
representing less than 50% of the voting shares of Photocomm. The decrease in
the Company's ownership percentage from December 31, 1994 results principally
from various Photocomm equity transactions in which the Company did not
participate. As a result of the Company no longer having a controlling interest
in Photocomm, the investment in Photocomm is accounted for under the equity
method for the year ended December 31, 1995. The summarized balance sheet and
statement of operations information for Photocomm of December 31, 1995 and 1994
is as follows:

<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Balance sheet:
Current assets $ 7,334,984 $5,556,770
Total assets 10,361,409 8,081,819
Current liabilities 2,676,483 1,985,526
Total liabilities 3,069,579 2,787,397

Statement of operations:
Sales $21,765,765 15,691,847
Cost of Sales 16,527,670 11,868,453
Selling, general & administrative 4,377,383 3,278,093
Net income 839,889 491,068
</TABLE>

1995

Revenues

Revenues decreased $6.5 million (29%) during 1995 compared to 1994. The
de-consolidation of Photocomm was attributable for $15.7 million of the
decrease. This decrease was partially offset by a $3.0 million increase in
Solartec revenues resulting from the first full year of consolidation of
Solartec. Additionally, Grid Power reported a $4.6 million increase in revenues,
resulting primarily from the acquisition of REIL (Bellacorick Wind Farm) and
the first full year of operations for the U.K. windfarms. See further
discussion under Item 1 and Segment Analysis.

26
<PAGE> 31
Cost of Operations

Cost of operations decreased $4.1 million (24%) during 1995 as
compared to 1994. De-consolidation of Photocomm was attributable for $11.9
million of the fluctuation. This decrease was partially offset by an increase of
$2 million reported by Solartec resulting from the first full year of
consolidation. Additionally, the acquisition of Bellacorick and the first full
year of operations for the Company's U.K wind farms resulted in increased cost
of operations during 1995.

Research and Development Expense

Research and development expenses increased $88,000 during 1995 over
1994 related primarily to the Company's research into developing a new high
capacity advanced wind turbine.

Project Development Expenses

Development of a power production facility requires extensive
preparatory work that includes identifying and acquiring the rights to suitable
wind or hydroelectric sites, obtaining an economically viable power purchase
contract, fulfilling all legal requirements and obtaining financing for the
project on favorable terms. All of this precedes equipment selection, contract
negotiation and actual construction.

Project development expenses increased by $2.3 million (113%) during
1995 over 1994 which was primarily attributable to the Company's investigation
into potential projects in China and, to a lesser extent, various domestic
projects and Chile and Argentina.

Selling, general and administrative

Selling, general and administrative expenses decreased $1.6 million
(17%) primarily due to the deconsolidation of Photocomm ($3.3 million). This
decrease was partially offset by Solartec which reported an increase of $.6
million and the acquisition of Bellacorick and the first full year of
operations for the U.K. wind farms which will attribute for $.3 million
in aggregate. Corporate selling, general and administrative expenses decreased
$.4 million while Other Products and Services increased $.3 million.

Impairment Charge

In 1995, the Company recorded an impairment charge of $24.4 million.
The impairment charge was reflected as a reduction of the following financial
statement captions:

<TABLE>
<S> <C>
Property, plant and equipment, net $ 13.4 million
Goodwill, net 4.1 million
Investments 5.9 million
Inventories and other non-current assets 1.0 million
--------------
$ 24.4 million
==============
</TABLE>

27
<PAGE> 32
As previously described, the Company has undertaken a business plan to
sell certain of its assets and investments and to abandon various development
projects. The following investments have been written-down, as applicable, to
their estimated fair value at December 31, 1995. The aggregate carrying value of
assets held for sale as of December 31, 1995 is approximately $25.6 million and
includes:

Photocomm Makani Uwila Wind Farm
United Kingdom Wind Farms Arcadian Wind Farm
Tierras Morenas, Development Project Los Vaqueros
Solartec S.A. San Jacinto
Dona Julia, Development Project Bellacorick
Andersen Falls Painted Hills Wind Farm

In determining the amount of impairment charge for assets held for
sale, the Company's policy is to compared the carrying value of its assets and
investments to the estimated fair value. In determining fair value, the Company
used market values for publicly traded investments (i.e., Photocomm), or
correspondence with potential buyers as an indication of market value. In
circumstances where the Company's negotiations to sell assets and investments
have not included correspondence with potential buyers in sufficient detail to
indicate a market value, the Company has used the projected future cash flows
from these investments and assets. These projected cash flows have been
discounted at rates commensurate with the risk of the respective investment, and
generally range from rates of 16% to 21%.

The Company has estimated the December 31, 1995 impairment charge based
upon the best information available to management. It is at least reasonably
possible that actual losses may be materially higher or lower than the amounts
recognized following execution of management's plans, based on the actual
agreements the Company negotiates with potential buyers, etc.

Equity loss of non-consolidated affiliates. The increase of $3,287,441
to $4,199,184 relates primarily to the equity loss of $4,331,000 related to the
Company's New World Entec S.A. investment. See further discussion in Item 1
and Segment Analysis.

Operating Loss

Operating loss increased $30.9 million to $37.8 million including an
impairment charge of approximately $24.4 million. Exclusive of the impairment
charge, the 1995 operating loss increased $6.5 million. The increase in equity
loss of non-consolidated affiliates of $3.3 million was primarily attributable
to the equity loss in Entec and increased project development expense.

Other Income (Expense)

Interest expense increased by $2.0 million during 1995 which was
attributable to approximately $15 million of debt the Company issued during the
year as well as to the first full year of consolidation of the U.K. windfarms
and the acquisition of Bellacorick.

28
<PAGE> 33
1994

Revenues

Revenues increased $18.9 million during 1994 compared to fiscal 1993.
The Wireless segment contributed $17.4 million of the increase with the
remainder coming substantially from Grid Power. See further discussion under
Segment Analysis.

Cost of Operations

The cost of operations increased $14.7 million during 1994 over fiscal
1993. The increase resulted principally from the consolidation of Photocomm and
Solartec for the first time in 1994.

Research and Development expense

Research and development expense increased approximately $286,000
during 1994 compared to fiscal 1993. The increase is primarily attributable to
research and development project to improve the wind turbine's blade
performance. This project has a net cost of $115,701 in 1994. The remainder of
the increase in research and development expense in 1994 was attributable to
costs relating to the completion of the Advanced Wind Turbine prototype by the
Technology Company.

Project Development expense

Project development expense increased $1.3 million during 1994 over
fiscal 1993 which is related to (a) compensation and travel expenses of
employees who are directly involved in project development, which totaled
$1,038,199; (b) expenses of operating offices in Canada and Brazil, totaling
$351,744; (c) amounts written off for previously deferred project costs for
projects that were abandoned during the year, which totaled $562,439; (d)
expenses incurred in connection with projects that more likely than not will be
abandoned; and (e) amounts for employee termination costs.

Selling, general and administrative

Selling, general and administrative expenses increased $6.4 million
during 1994 in comparison to fiscal 1993. The increase results principally from
the consolidation of Photocomm and Solartec for the first time in 1994,
including an increase of $3,278,093 due to the consolidation of Photocomm, and
$530,848 due to the consolidation of Solartec. The remaining $3,743,912 of the
increase in 1994 came from existing operations, of which $2,144,231 was
attributable to general corporate activities other than direct project
development, including a reserve of $189,000 for staff reductions and other
personnel matters.

Operating Loss

Operating loss increased $4.6 million during 1994 from fiscal 1993.
Corporate items, eliminations and other was attributable for $3.1 million of the
increase, while Grid Power contributed $1.1 million of the increase. These
increases were partially offset by Wireless which reported an increase in
operating profit of $564,000. See further discussion under Segment Analysis.

29
<PAGE> 34
Other Income (Expense)

Due to the consolidation of Photocomm and Solartec in 1994, the
minority shareholders of each of these companies has been allocated their
proportionate share of their net income, which aggregated $328,375 in 1994. This
corresponds to the amount added to minority interest on the Company's
consolidated balance sheet.

Equity loss on non-consolidated affiliates were as follows: (i) the
Company's portion of the losses at Entec in 1994 was $950,258 and (ii) $38,515
for the Company's interest in the 1994 net income of San Jacinto Power
Corporation. Neither of these categories existed in fiscal 1993.

Other income decreased by $1,625,646 in 1994, primarily due to the
inclusion in fiscal 1993 of $1,330,859 from a settlement of litigation.

Impact of Foreign Operations Currency Translation

The Company continues to pursue overseas development opportunities, and
is affected by changes to the net investment value of its activities as the
functional currency denominated financial statements of its foreign subsidiaries
are translated into U.S. dollars for purposes of consolidation.

In the year ended December 31, 1995 and 1994, the Company recognized in
the stockholders' equity section of the balance sheet currency translation
adjustments of approximately $778,838 and $646,580, respectively, related
primarily to the United Kingdom and Mexico. The currency has remained stable in
those other countries where the Company has significant local currency
denominated investments.

Segment Analysis

Grid Power Production

Revenue. Power production revenue is dependent upon the Company's
installed capacity, the availability of the renewable resources used to produce
the power, and the rate at which the produced electricity is sold.

Grid Power Production revenue increased by $4.6 million (147%) during
1995 over 1994. The increase in revenues is attributed to the first full year of
operation of the U.K. wind farms as well as the acquisition of the Bellacorick.

Power production revenue increased in 1994 by $742,000 (31%) compared
to Fiscal 1993. Wind speeds at the Company's wind farms increased to more normal
levels during 1994, while water flow at its Michigan hydroelectric facilities
was much lower in 1994 than in the prior fiscal year. This increase principally
reflect the increase in revenue attributable to the increase from one wind farm
in service in fiscal 1993 to six in service in 1994.

30
<PAGE> 35
Operating (Loss) Profits. Segment operating loss increased $25.6
million including a $20.9 million impairment charge. Additionally, in 1995, the
Company recorded approximately $4.5 million related to the Company's Mexican
operation. The change is further impacted by $2.0 million of project
development expenses related to China, the U.K. and Chile, partially offset by
operating profits of the Company's U.K. and Irish wind farms. See geographic
discussion below.

Segment operating profits decreased $1.1 million during 1994 from 1993,
primarily attributable to the operating results of the Arcadian wind farm and
Makani wind farm.

Wireless Power Sales

Revenue. Revenue from Wireless power decreased by $10.2 million (54%)
from 1994. The decrease in revenues is attributable primarily to the
de-consolidation of Photocomm ($15.7 million). This decrease was partially
offset by Solartec which reported an increase of $3.0 million due to the first
full year of operation under the Company's control for both subsidiaries. An
additional $900,000 was generated by the Company's new Santa Fe Argentina
project.

The Company increased revenues in 1994 over fiscal 1993 by $17.4
million, which included $11.9 million from Photocomm, which was consolidated for
the first time.

Operating Income (Loss). Operating income (loss) decreased $1.8 million
during 1995 including an impairment charge of $2.3 million. Excluding the
impairment charge, the operating income increased $500,000. The increase was
primarily attributable to Solartec ($383,000). The remaining increase was
primarily attributable to the Company's NPS subsidiary.

Operating income increased $564,000 during 1994 over fiscal 1993 which
was substantially attributable to the inclusion of Photocomm in the Company's
results for the first time

Geographic

Due to poor business conditions in Mexico and the poor financial
performance of Entec, the Company recorded a loss of $4.3 million and
approximately $950,000 for Entec in 1995 and 1994, respectively. Prior to 1994,
$113,385 in losses were recorded. The Company, in late 1995, recognized that
Entec would not generate profits and began negotiations for a new partner which
would provide the Company with the capability to retain its rights and develop
wind projects in Mexico. In early 1996, a preliminary agreement was reached
providing for the formation of a new company which will be owned 42% by the
Company. As part of their agreement, the new company assumed a $1.5 million loan
(repayment contingent on future profits) from New World to Entec in exchange for
the rights to develop wind projects. The new company will be managed by the
Mexican partners. As a result of the above , in 1995, the Company wrote off its
remaining investment in Entec ($131,000) as well as the remaining balance of its
loan receivable from Entec ($3,700,000) during 1995. Management believes that
there is significant long term potential for development of independent power
production facilities in Mexico. Demand for electrical power is substantially in
excess of the current capacity in Mexico, and that country's need for clean
power is especially pressing.

31
<PAGE> 36
In May of 1995, the Company entered into a Share Transfer Agreement
with China Chang Jiang Electric Company (CCJEC) which provided for CCJEC to
transfer 40% of its shares in the Fujian Chang Ping Hydro Project Company Ltd.
to the Company in exchange for Rmb 120,720,000 (approximately $15 million). This
transfer would represent 40% ownership of Fujian by the Company. The total
consideration is payable in three trauches of 30%, 30% and 40% and the Company
may contribute 50% of its consideration in the form of New World Power
Corporation shares of common stock. In August 1995, the Company contributed $8.4
million (the first two trauches), half in cash and half in New World Power
Corporation stock. The final trauch of cash and shares was held in escrow, the
cash included in the balance sheet as "Restricted Cash.".

Late in the fourth quarter of 1995, the Company was experiencing cash
flow problems and, at the same time, the Fujian project was experiencing delays
in construction resulting from unusual flooding of the construction area. At the
Board of Directors of CCJEC meeting held January 31, 1996, a formal plan was
adopted to complete the project in early 1998. As a result of the delay in
completion and other events, the Company has recorded a charge against the
Company's investment in China. The impairment charge, included within the grid
power production, approximately $6,400,000, was recorded in December 1995.
See Note 4 to the Consolidated Financial Statements.

LIQUIDITY AND CAPITAL RESOURCES

In December 1995, The New World Power Company Ltd. sold 0% Senior
Secured Note due March 31, 1996 in the original amount of $550,000 to Sundial
International Fund LTD., a significant stockholder in the Company. The proceeds
of the Note were used as working capital. Subsequent to December 31, 1995, the
due date of the Note was extended and the Note was exchanged for a new Note due
on or before December 1, 1996.

On December 1, 1995, in accordance with the terms of Series B
Preferred, the Company transferred and endorsed to Sundial International Fund
Ltd. a First Mortgage Note collateralized by the property of Wolverine Power
Company in the principal amount of $3,615,370 along with the Mortgage and
Security Agreements in exchange for its Class B Preferred Stock. The Note is
payable together with interest at the LIBOR+2% points in full on December 31,
1997. Principal and interest are due in seven quarterly installments of
principal (each equal to five percent of the principal balance). The Note was
restructured subsequent to December 31, 1995 and is now due in four payments due
December 1, 1996, March 1, 1997, June 1, 1997 and July 31, 1997.

On August 15, 1995, the Company entered into an agreement to issue
$15,750,000 of its 8% Convertible Subordinated Notes due July 31, 2000 and
warrants to purchase up to 787,500 shares of its common stock pursuant to the
terms of the Note and Warrant Purchase Agreement. The notes are payable
semi-annually on January 31 and July 31 of each year commencing on January 31,
1996. The proceeds of the notes were used as follows: $6,500,000 for a 24%
interest in the Fujian Chang Ping Hydro Power Company, Ltd. (of which $3,300,000
was held in escrow and later (1996) used for working capital), $2,200,000 for
loan repayment to Sundial International Fund Ltd., $1,000,000 to repay loan to
stockholder, $397,490 to pay construction costs in Costa Rica, $128,665 for
legal fees and $5,523,845 for general working capital.

In February 1995, the Company completed the sale of 1,500,000 units of
common stock and 3,000,000 common stock purchase warrants and received net
proceeds of $8,259,279.

32
<PAGE> 37
In 1995 and 1994, the Company completed project financings for the
Dyffryn Brodyn, Caton Moor and Four Burrows wind farms in the United Kingdom.
The net proceeds from these loans was $3,440,221 in 1995 and $6,150,450 in 1994
which was used to complete the construction of those wind farms. The loan
agreements for these loans require repayment over a four year period and contain
various covenants restricting the use of project revenue during this period.
This revenue must be applied first to fund a reserve account in an amount equal
to debt service payable during the next six months. Amounts available after the
payment of debt service and normal operating expenses of the respective wind
farms and other costs, provided in the loan agreement are available for
semi-annual distributions to the Company, subject to certain restrictions.
During 1996, the Company restructured its debt agreements with two lenders that
restrict upstreaming of available amount to the parent Company.

The Company received net proceeds of $27,198,146 in 1994 from the sale
of common stock and common stock purchase warrants and options, and received an
additional $5,880,400 during the three-month transition period following the end
of the Company's prior fiscal year on September 30, 1993. In December 1994, the
Company received net proceeds of $2,037,200 from the sale by its English
subsidiary of a $2.2 million exchangeable guaranteed secured promissory note.

During fiscal 1993, the Company completed a public offering and several
additional rounds of equity financing resulting in net proceeds of $16.5
million. These funds were used to settle liabilities associated with the
Company's initial acquisitions and begin pursuing domestic and international
renewable resource development opportunities.

At December 31, 1995, the Company had a working capital deficit of
$16,762,000. The deficit in working capital is the result of inclusion of
certain debt obligations on which the Company defaulted subsequent to December
31, 1995 and for which the Company's restructured debt agreements require
certain levels of assets sales to be completed by certain dates. Uncertainties
exist as to whether the aforementioned provisions can be met. Net working
capital at December 31, 1994, was $2,535,034, giving a current ratio of 1.20. As
of September 30, 1993, net working capital was $3,386,343 yielding a current
ratio of 1.48.

During 1995, net cash flows used in operating activities was
$4,794,191 compared to net cash flows used in operating activities of
$2,940,379 during 1994.

In 1995 and 1994, $16,679,309 and $31,971,650 was used in investing
activities, principally for property plant and equipment, and the acquisition of
the interest in Solartec and the additional stock in Photocomm. These amounts
were significant increases over the previous years.

In 1995, $18,027,183 was provided by financing activities primarily
from the net proceeds from the issuance of common stock and the net increase in
long-term debt. In 1994, $35,726,352 was provided by financing activities. In
addition to the proceeds from the equity offerings, the Company received net
proceeds of $6,150,450 in 1994 from project financings of its two United Kingdom
wind farms. Lesser amounts were provided in the two previous fiscal years.

33
<PAGE> 38
The data for 1995 is affected by the consolidation of Solartec and 1994
is affected by the consolidation of Photocomm and Solartec, which significantly
increased inventory, accounts receivable and accounts payable over 1993
financial information. Entec, which is 50% owned by the Company is reducing the
size of its rural electrification business and focusing on project development,
and the production services group is moving to a support role for the Company's
project development. Losses experienced by Entec exceeded management's
expectations, and the Company reduced its project development efforts at Entec
during 1995. Entec continues to experience significant financial hardship, which
results in concerns as to its ability to continue as a going concern. As the
Company has no ability to continue to fund the operating losses of Entec,
management wrote-off its remaining investment in, and advances to, Entec as of
December 31, 1995.

The Company expects to need financing for the construction of wind farm
and hydroelectric facilities in 1996, which will require project equity and debt
financing. The Company plans to raise substantially all of the financing for
these projects from external sources, through equity syndications and
non-recourse debt financing based at the operating subsidiary level. There can
be no assurance, however, that the Company will succeed in obtaining such
financing. If the Company's operating subsidiaries do not have access to capital
markets on a substantially non-recourse basis, the Company itself may have to
make larger equity investments in or provide more financial support for its
projects, however, there is uncertainty as to the ability of the Company to make
such investments, if needed. If the Company was unable to finance a project on a
non-recourse basis, its ability to obtain other types of debt financing may be
adversely affected by the Company's history of operating losses. If adequate
financing were not available it would be likely to adversely affect the future
of the Company.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Report of Independent Accountants, consolidated financial
statements and financial statement schedules that are listed in the Index to
Consolidated Financial Statements and Financial Statements Schedule on page F-1
hereof are incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

There have been no changes in or disagreements with accountants
required to be reported herein, except as set forth below:

On October 30, 1995, The Company notified the firm of KPMG Peat Marwick
LLP ("Peat Marwick") that they were being dismissed as the Company's independent
accountants. The Company engaged Price Waterhouse LLP ("Price Waterhouse") as
its new independent accountants as of October 30, 1995. The Company's Audit
Committee and its Board of Directors participated in and approved the decision
to change independent accountants.

34
<PAGE> 39
The report of Peat Marwick on the Company's financial statements for
the fiscal years ended December 31, 1994 and September 30, 1993 and the three
month period ended December 31, 1993 did not contain an adverse opinion or
disclaimer of opinion and was not qualified or modified as to uncertainty, audit
scope or accounting principles. In connection with the audits of the Company's
financial statements for each of its two most recent fiscal years and in the
fiscal period subsequent to the Company's most recent fiscal year and through
November 3, 1995, there were no disagreements with Peat Marwick on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure which, if not resolved to the satisfaction of Peat Marwick,
would have caused Peat Marwick to make reference to the matter in their reports
with respect to such periods, other than the following:

During the fiscal year ended December 31, 1995, the Company discussed
with Peat Marwick an accounting matter which as of the date of Peat Marwick's
termination remained unresolved.

The particular matter discussed related to certain wind farm facilities
("Facilities") owned by the Company in the UK. These facilities are currently
operating under contract with the Non-Fossil Purchasing Agency, Limited, as
agent for and on behalf of the Public Electricity Suppliers of England and Wales
("PESs"), which purchases the power generated by the Facilities. The contractual
rate per Kwh through December 1998 is benefited by certain UK government
incentive payments, which promote the operation of renewable power projects in
the UK. Incentive payments are currently scheduled to expire in December of
1998. If the incentive payments are not renewed by the UK government, the
contracts will continue with the Public Electricity Suppliers at avoided cost
rates unless terminated at the option of either the Company or the PESs due to
the occurrence of certain specified events.

The Company consulted with Peat Marwick regarding the accounting for
the Facilities, and the related power purchase contracts. This consultation
concluded the Facilities should either use an "accelerated" method of
depreciation for the underlying wind farm assets or defer some portion of the
contractual revenues received during the portion of the contracts in which
incentive payments are received, with a related amortization of those deferred
revenues over the estimated useful life of the Facilities.

The Company agreed with the successor accountant as to the appropriate
accounting practices to be applied , which resulted in recording accelerated
depreciation for the Facilities. The Company had recorded an adjustment in its
financial statements at the quarter ended September 30, 1995.

During the Company's two most recent fiscal years and in the fiscal
period subsequent to the Company's most recent fiscal year end, there were no
"reportable events" as defined in subparagraph (a)(1)(v) of Item 304 of
Regulation S-K.

During the Company's two most recent fiscal years and through October
30, 1995, the Company has not consulted with Price Waterhouse on items which (1)
were or should have been subject to SAS 50 or (2) concerned the subject matter
of a disagreement or reportable event with the former auditors, as described in
Regulation S-K, Item 304(a)(2).

35
<PAGE> 40
PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

DIRECTORS

The following sets forth certain information with respect to the
Directors of the Company:

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
FOR THE PAST FIVE YEARS FIRST YEAR BECAME A
NAME AND CURRENT PUBLIC DIRECTORSHIPS AGE DIRECTOR
---- -------------------------------- --- --------
<S> <C> <C> <C>
John D. Kuhns DIRECTOR AND CHAIRMAN OF THE BOARD. Mr. Kuhns 46 1989
was Chairman and Chief Executive Officer of
Wolverine Power Corporation, now a subsidiary
of the Company, from October 1986 through April
1989. Mr. Kuhns was a founder of Catalyst
Energy Corporation ("Catalyst"), an independent
power and steam producer. He served as the
President, Chief Executive Officer and a
director of Catalyst until 1988. Mr. Kuhns is
also Co-Chairman of East Rock Partners, Inc.
("East Rock"), an investment and management
company, and in connection therewith has been a
director or officer of several privately-held
companies. From October 1986 through June
1988, Mr. Kuhns was also Chairman of Kuhns
Brothers & Laidlaw, Inc., a New York Stock
Exchange member firm. Mr. Kuhns had previously
been employed at Salomon Brothers, Inc., where
he specialized in energy project financing.
Mr. Kuhns is also a director of Photocomm, Inc.
("Photocomm"), which is engaged in the
development, manufacture and marketing of
photovoltaic or solar electric power systems
and related products. Mr. Kuhns received a
bachelor's degree from Georgetown University, a
Master of Fine Arts from the University of
Chicago and an M.B.A. from Harvard University.

Robert W. MacDonald DIRECTOR AND VICE CHAIRMAN OF THE BOARD. Mr. 48 1990
MacDonald was a founder of Catalyst, and served
as a director, Executive Vice President and
Chief Operating Officer of Catalyst until 1988.
He is currently a Managing Director of William
E. Simon & Sons, a merchant banking firm
located in Los Angeles, California. He is also
currently Chairman of WestFed Holdings, Inc., a
holding company for Western Federal Savings and
Loan Association located in Marina Del Ray,
California, which made a general assignment for
the benefit of creditors in September 1993.
Mr. MacDonald is also a
</TABLE>

36
<PAGE> 41
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
FOR THE PAST FIVE YEARS FIRST YEAR BECAME A
NAME AND CURRENT PUBLIC DIRECTORSHIPS AGE DIRECTOR
---- -------------------------------- --- --------
<S> <C> <C> <C>
director of Southern California Savings and Loan
Association located in Beverly Hills, California,
a director of Laboratories located in El Segundo,
California and a director of Photocomm. Mr.
MacDonald was the Co-Chairman of East Rock from
January 1988 until September 1992. Mr. MacDonald
had previously been employed as a Vice President
of Salomon Brothers, Inc. where he was involved in
tax-exempt mortgage financing. Mr. MacDonald
received a bachelor's degree from Fairfield
University.

Gerald R. Cummins DIRECTOR. Mr. Cummins has been a director 69 1990
since October 1990 and a private investor and
independent business consultant for more than
five years. He is a political strategist who
has served as chairman of The New York State
Thruway Authority. He was the campaign manager
for the Honorable Hugh L. Carey, the former
Governor of New York. Mr. Cummins is also a
director of Photocomm. Mr. Cummins received a
bachelor's degree from Manhattan College.

Nazir Memon, M.D. DIRECTOR. Dr. Memon has been a practicing 50 1992
physician for more than the last five years.
He is a pulmonologist on the medical staff of
Shore Memorial Hospital in Somers Point, New
Jersey; Bettry Bacharach Rehabilitation
Hospital, Popmona, New Jersey; and Kessler
Memorial Hospital, Hammonton, New Jersey. Dr.
Memon is also the President of the Atlantic
Pulmonary Critical Care Association. Dr. Memon
is a graduate of Liaquat Medical College in
Pakistan and the Government Science College,
Pakistan.

Herbert L. Oakes, Jr. DIRECTOR. Mr. Oakes has served as Managing 49 1993
Director of Oakes, Fitzwilliams & Co. Limited,
a member of the Securities and Future Authority
Limited and the London Stock Exchange, since
1988. Mr. Oakes is also President of H.L.
Oakes & Co., Inc., a corporate advisor and
dealer in securities which he founded in 1982.
He also serves on the board of directors of
Shared Technologies, Inc. and Harcor Energy,
Inc. Mr. Oakes received a B.A. in Economics
from the University of the South.
</TABLE>

37
<PAGE> 42
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
FOR THE PAST FIVE YEARS FIRST YEAR BECAME A
NAME AND CURRENT PUBLIC DIRECTORSHIPS AGE DIRECTOR
---- -------------------------------- --- --------
<S> <C> <C> <C>
Lucien Ruby DIRECTOR. Since 1985, Mr. Ruby has been the 52 1990
Managing General Partner of Quest Ventures, a
San Francisco-based venture capital firm.
Currently, Mr. Ruby serves on the board of
directors of various privately held
corporations including RESNA Industries, an
environmental services company, and Aqua Air
Environmental, Inc., a manufacturer of
pollution control systems. Mr. Ruby received a
B.S.C.E. from Duke University and an M.B.A.
from Harvard University.
</TABLE>

EXECUTIVE OFFICERS

The following table contains the name, position and age of the
executive officer of the Company who is not director.

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION FOR THE PAST
NAME FIVE YEARS AND CURRENT PUBLIC DIRECTORSHIPS AGE
---- ------------------------------------------- ---

<S> <C> <C>
George P. Petrenko Interim Chief Executive Officer. 44
Since 1994, Mr. Petrenko has been an Associate with Glass &
Associates, Inc. Management Consultants, providing specialized
advisory and support services for under-performing and
transitional companies. Prior to 1994, Mr. Petrenko was Sole
Owner and Managing Director of the Corporate Renaissance Group, a
turnaround consulting and mergers and acquisitions advisory firm.
Mr. Petrenko received a Bachelor of Arts degree in History from
Case Western Reserve University and a Juris Doctor from Cleveland
State University, and is an Attorney at Law and Certified Public
Accountant.
</TABLE>

ITEM 11. EXECUTIVE COMPENSATION

Summary Compensation Table. The following table sets forth, for the
fiscal years indicated, all compensation awarded to, earned by or paid to (i)
the former chief executive officer ("CEO") of the Company (Mr. John D. Kuhns,
the Chairman of the Board of the Company) and (ii) the four most highly
compensated executive officers of the Company other than the CEO whose salary
and bonus exceeded $100,000 with respect to the fiscal year ended December 31,
1995 and who were employed by the Company during the fiscal year ended December
31, 1995 (together with the CEO, the "Named Executive Officers").

38
<PAGE> 43
Summary Compensation Table

<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
---------------------------------------------------- ------------
Name and Other Annual Securities Underlying All other
Principal Position Year Salary Bonus Compensation Options (#)(1) Compensation
------------------ ---- ------ ----- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
John D. Kuhns
Chairman of the Board(3) 1995 $476,000(2) $0 $0 1,000,000 $ 0
1994 480,000(2) 0 0 0 0
1993 480,000(2) 0 0 0 0

Anthony J. Baratta, Jr.
Executive Vice President
and Chief Financial Officer(7) 1995 116,440 0 0 0 110,000(6)

Dwight C. Kuhns
Former President(4) 1995 172,809 0 0 125,000 0
1994 175,000 0 0 0 0
1993 112,500 0 0 0 37,500(5)
Michael H. Best
Former Executive 1995 172,809 0 0 125,000 0
Vice President(8) 1994 175,000 0 0 0 0
1993 150,000 0 0 0 0
</TABLE>

(1) The options listed expired unexercised upon the named individual's
termination of employment with the Company.

(2) All of Mr. John Kuhns' compensation from the Company was paid in the
form of management fees to a company controlled by Mr. John Kuhns. This
arrangement was established prior to the Company's first underwritten
public offering. Effective August 1, 1995, the Company terminated the
related management agreements and entered into an employment agreement
with Mr. Kuhns. See "John D. Kuhns Employment Agreement."

(3) Mr. John Kuhns resigned as Chief Executive Officer of the Company on
April 11, 1996.

(4) Mr. Dwight Kuhns resigned as President of the Company effective on
December 31, 1995.

(5) Represents consulting fees paid to Mr. Dwight Kuhns prior to this
employment by the Company which commenced in January 1993.

(6) Consists of a relocation expense.

(7) Mr. Baratta was appointed Executive Vice President and Chief Financial
Officer as of May 31, 1995. Mr. Baratta's ceased to be employed by the
Company on March 29, 1996.

(8) Mr. Best resigned his position with the Company in December 1995.

39
<PAGE> 44
Option Grants Table. The following table sets forth certain information
regarding stock option grants made to each of the Named Executive Officers
during the fiscal year ended December 31, 1995.

<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year
---------------------------------

Individual Grants Potential
--------------------------------------------------------- Realizable Value at
Number of % of Total Assumed Annual
Securities Options Rates of Stock
Underlying Granted to Price Appreciation
Options Employees Exercise Expiration for Option Term
Name Granted (#) Fiscal Year Price ($/sh) Date 5%($) 10%($)
---- ----------- ----------- ------------ ---- ----- ------
<S> <C> <C> <C> <C> <C> <C>
John D. Kuhns 1,000,000 69% 12.00 6/22/05
Dwight C. Kuhns 125,000(1) 9% N/A N/A
Anthony J Baratta, Jr 0 -- -- -- -- --
Michael H. Best(1) 125,000 -- N/A N/A- -- --
</TABLE>

(1) The options listed expired unexercised upon the named individual's
termination of employment with the Company.

Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values

The following table sets forth certain information concerning
unexercised stock options held by the Named Executive Officers as of December
31, 1995.

<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the Money Options
Acquired Options at 1995 FY-End (#) at 1995 FY-End ($)(1)
On Value ---------------------------- ---------------------
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John D. Kuhns -- -- 308,519 981,481
Dwight C. Kuhns -- -- 318,900 125,000
Anthony J. Baratta, Jr. -- --
Michael H. Best -- -- 250,000
</TABLE>

(1) On December 29, 1995, the last reported sales price of the Company's
Common Stock as reported on the NASDAQ Small Cap was $6.75

Long-Term Incentive and Pension Plans.

40
<PAGE> 45
In April 1993, the Company adopted the 1993 Stock Incentive Plan (the
"1993 Plan") which was approved by the Company's stockholders in May 1993. The
1993 Plan replaced the Company's previous stock option plan, the 1989 Stock
Incentive Plan (the "1989 Plan"), except as to options outstanding under the
1989 Plan. Under the 1993 Plan, the Company may reward to employees, directors
and consultants of the Company and its subsidiaries incentive and non-qualified
stock options, stock appreciation rights, restricted stock grants, performance
awards and any combination of any or all of such awards. The Board of Directors
has delegated its powers under the 1993 Plan to the Company's Compensation
Committee. Awards may not be granted under the 1993 Plan after December 31,
2003. An aggregate of 500,000 shares of Common Stock may be issued under the
1993 Plan, except that any shares as to which awards granted under the 1989 Plan
may lapse, expire or be canceled be available for issuance under the 1993 Plan.
If any awards expire or terminate for any reason, the shares subject to such
awards are again available for future awards under the 1993 Plan. Awards are not
transferable except by will or the laws of descent and distribution. Whether an
award may be exercised after termination of employment is determined by such
Committee, subject to certain limitations.

Employment Agreements.

Mr. John D. Kuhns was employed as Chief Executive Officer of the
Company and Chairman of the Board prior to April 11, 1996 and since then has
served only as Chairman of the Board.

Mr. Kuhns is compensated for his services as Chairman pursuant to an
employment agreement dated as of August 1, 1995 which has been amended on two
occasions. The initial Employment Agreement hired Mr. Kuhns to serve as Chief
Executive Officer for a five year term continuing through July 31, 2000, subject
to renewal unless terminated by either party. The Employment Agreement provided
Mr. Kuhns customary benefits and expense reimbursements and contained customary
confidentiality and noncompetition covenants. The initial Employment Agreement
further provided that as a "severance benefit" Mr. Kuhns might receive, upon
certain conditions, three years base salary and that, upon termination, Mr.
Kuhns had an option to purchase, and the Company had an option to sell to him,
the building and improvements that comprise its executive offices in Lime Rock,
Connecticut (the "Farmhouse Property") at a purchase price equal to the
Company's then depreciated cost basis. Effective March 1, 1996, Mr. Kuhns
entered into Amendment No. 1 to the Employment Agreement ("Amendment No. 1")
which provided that until such time as the Company paid in full its 8%
Convertible Subordinated Notes, his base salary would be at the annual rate of
$220,000 and that the Company would use its best efforts to sell shares of
common stock to provide additional compensation, not to exceed $12,000 per
month. Amendment No. 1 further provided that Mr. Kuhns would receive a bonus
based upon a percentage of value received from the Company from the sale of a
certain of its assets, provided that his annual compensation from all sources
shall not exceed $480,000. In this amendment Mr. Kuhns also agreed to accept in
lieu of any severance benefit or other unpaid compensation due upon termination,
the Farmhouse Property. The amendment further provided that the Company shall
set aside 16,250 shares of common stock per month for Mr. Kuhns, for twelve
months, commencing March 1, 1996, for delivery on January 31, 1997, or, for
shares accruing after that date, on January 31, 1998. Effective March 1, 1996
Mr. Kuhns entered into Amendment No. 2 to his Employment Agreement with the
Company ("Amendment No. 2"), which superseded and replaced Amendment No. 1.
Pursuant to Amendment No. 2, Mr. Kuhns

41
<PAGE> 46
resigned as Chief Executive Officer and agreed to serve as Chairman of the
Company through January 31, 1997. Mr. Kuhns' base compensation under Amendment
No. 2 is at the rate of $18,000 per month with additional compensation at
$12,000 per month and a bonus derived from the sale of certain assets. The other
compensation and severance benefits remain substantially the same as in
Amendment No. 1.

Compensation Committee Interlock and Insider Participation.

During fiscal 1995, John D. Kuhns, Chairman of the Board of the
Company, and Dwight C. Kuhns, former President of the Company, served on the
board of directors of Photocomm, whose President, Chief Executive Officer and
director, Robert R. Kauffman, was a director of the Company until November 8,
1995.

Board of Directors Report on Executive Compensation.

This report, prepared by the Company's Board of Directors, addresses
the Company's compensation policies with respect to its executive officers for
the fiscal year ended December 31, 1995.

Salary. The Compensation Committee is responsible for determining the
salaries of all executive officers of the Company. Salaries paid to executive
officers reflect their responsibilities, diligence and determination in working
toward the achievement of established corporate objectives. Management
compensation guidelines were established by the Compensation Committee in
consultation with independent advisors with experience in the field.

Stock Incentives. The Compensation Committee has full power, discretion
and authority in administering the Company's 1993 Stock Incentive Plan. The
Committee believes that stock ownership by employees, including officers, of the
Company, is important as a means of rewarding outstanding performance and
promoting the achievement of long-term corporate goals by giving those persons a
greater proprietary interest in the Company. 1,457,665 options were granted to
officers or employees of the Company in 1995.

42
<PAGE> 47
Comparative Stock Performance Graph

The graph shown below sets forth the cumulative stockholder return of
the Company's Common Stock from October 23, 1992, through the last trading day
of 1995. Although the Company's Common Stock was first registered under Section
12 of the Securities Exchange Act of 1934, as amended, on January 25, 1990,
there was no established public trading market for the Common Stock prior to
October 23, 1992. This graph assumes an investment of $100 on October 23, 1992,
in (i) the Company's Common Stock, (ii) the Center for Research in Security
Prices ("CRSP") Total Return Index for the NASDAQ Stock Market (U.S.) and (iii)
a composite peer group composed of the following companies in the independent
power business: AES Corporation, Destec Energy, Inc., Magma Power Company
(acquired by California Energy Company March 20, 1995), O'Brien Environmental
Energy Inc., OESI Power Corporation, Ogden Projects, Inc. (acquired by Ogden
Corp. January 16, 1995), and Thermo Power Corporation (collectively, the "Peer
Group"). The graph assumes dividends, if any, were reinvested. The comparisons
in this graph are required by the Securities and Exchange Commission and
therefore are not intended to forecast or be indicative of possible future
performance of the Company's Common Stock.

TOTAL SHAREHOLDER RETURNS - DIVIDENDS REINVESTED

[Graphic Deleted]

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

43
<PAGE> 48
The following table sets forth information concerning ownership of the Common
Stock of the Company outstanding as at June 13, 1996, by (i) each person known
by the Company to be the beneficial owner of more than five percent of the
Common Stock, (ii) each director, (iii) each of the Named Executive Officers and
(iv) by all directors and executive officers of the Company as a group. Unless
otherwise indicated, each stockholder has sole voting power and sole dispositive
power with respect to the indicated shares.

<TABLE>
<CAPTION>
NAME AND ADDRESS PERCENTAGE OF
OF BENEFICIAL OWNER(1) SHARES BENEFICIALLY OWNED CLASS(2)
- ---------------------- ------------------------- --------
<S> <C> <C>
Foreign & Colonial Management Limited(3) 1,989,000 16.7%
Exchange House
Primrose Street
London EC2A 2NY, England

Sundial International Fund Limited (4) 1,969,925 15.4
c/o Euro Canadian Trust Company Limited
P.O. Box 393750, Shirley Street
Nassau, Bahamas

Gartmore Investment Limited(5) 1,347,960 11.6
Gartmore House
P.O. Box 65, 16-18 Monument Street
London EC5R 8QQ, England

Westinghouse Electric Corporation(6) 790,794 6.8
11 Stanwix Street
Pittsburgh, Pennsylvania 15222

China Chang Jiang Energy Corp. 715,000 6.2
No 124 Guangshang YI Road
Hong Shang, District
Whuban Hubei Province
China

Herbert L. Oakes, Jr.(7) 1,642,013 11.0

John D. Kuhns(8) 942,408 7.9

Robert W. MacDonald(9) 302,997 2.5

Gerald R. Cummins(10) 9,984 *

Nazir Memon, M.D.(11) 13,364 *

Lucien Ruby(12) 323,416 2.8

Dwight C. Kuhns(13) 0 *

George P. Petrenko(14) 0 *

Anthony J. Baratta, Jr.(15) 0 *

Michael H. Best(16) 0 *

All Directors and Executive Officers as a Group 3,250,807 22.2%
(10 persons)(17)
</TABLE>

* less than one percent.

(1) Each director and executive officer has sole voting power and sole
investment power with respect to all shares beneficially owned by him,
unless otherwise indicated.

(2) Based upon 11,606,835 shares of Common Stock outstanding on June 13,
1996.

44
<PAGE> 49
(3) Based upon a Statement on Schedule 13D Amendment No. 1 filed with the
Securities and Exchange Commission ("SEC") on February 6, 1996 by
Foreign & Colonial Management Limited ("F&C"). Includes 272,000 shares
issuable upon exercise of currently exercisable warrants.

(4) Based upon a Statement on Schedule 13D Amendment No. 1 filed with the
SEC on February 21, 1995 by Sundial International Fund Limited
("Sundial"). Includes 989,918 shares issuable upon exercise of
currently exercisable warrants and 583,000 shares plus 200,000 warrants
issuable upon the exchange of a promissory note issued by a subsidiary
of the Company. Does not give effect to the Restructuring Agreement
discussed under Item 13 "Certain Relationships and Related
Transactions."

(5) Based upon a Statement on Schedule 13D Amendment No. 1 filed with the
SEC by Gartmore Investment Limited ("GIL") on November 14, 1994.

(6) Based upon a Statement on Schedule 13D Amendment No. 1 filed with the
SEC on September 14, 1994 by Westinghouse Electric Corp.
("Westinghouse").

(7) Consists of: (i) 7,197 shares issuable upon exercise of currently
exercisable options; (ii) 17,500 shares held in and 41,847 shares
issuable upon exercise of currently exercisable options held in Oakes,
Fitzwilliams & Co. Executive Death Benefit & Retirement Scheme No.2
(HLO) Mr. Oakes' personal pension fund ("OFHLO"); (iii) 20,000 shares
owned by and 183,316 shares issuable upon exercise of currently
exercisable options held by H.L. Oakes & Co., Inc. ("HLO"); (iv) 14,000
shares owned by and 2,000 shares issuable upon exercise of currently
exercisable options held by Oakes, Fitzwilliams & Co. Limited ("OFL");
(v) 17,500 shares owned by and 1,046,953 shares issuable upon exercise
of currently exercisable options held by Oakes, Fitzwilliams & Co. S.A.
("OFLSA"); and (vi) 7,100 shares owned by and 44,600 shares issuable
upon exercise of currently exercisable options held by Purbrook
Corporation ("Purbrook"). Mr. Oakes is the Managing Director of, and
owns a controlling interest in, OFL and OFLSA. He is also President of
HLO, a company owned 100% by his wife. Purbrook is owned by HLO. Also
includes 240,000 shares of Common Stock issued to Oakes,
Fitzwilliams & Co. pursuant to that Financial Advisory Services Letter
Agreement dated June 11, 1996. Mr. Oakes disclaims any beneficial
ownership in the shares described in (ii) through (vi).

(8) Includes 284,400 shares issuable upon exercise of currently exercisable
options. Also includes 178,845 shares owned by third parties for which
he holds voting power pursuant to irrevocable proxies and certain
rights of first refusal, purchase options and come-along-rights of
which shares Mr. John Kuhns disclaims beneficial ownership. Does not
include 65,000 shares to be issued to Mr. Kuhns on January 31, 1997,
pursuant to Mr. Kuhns employment agreement.

(9) Consists of shares issuable upon exercise of currently exercisable
options. Does not include an option to purchase 61,611 shares of Common
Stock granted by Mr. John Kuhns to Mr. MacDonald pursuant to an
agreement between the two parties which shares are included in the
shares beneficially owned by Mr. John Kuhns.

(10) Includes 9,864 shares issuable upon exercise of currently exercisable
options.

(11) Consists of shares issuable upon exercise of currently exercisable
options and warrants.

(12) Includes 3,844 shares issuable upon exercise of currently exercisable
options. Also includes 189,220 shares of Common Stock owned by Quest
Ventures II and 129,332 shares of Common Stock owned by Quest Ventures
International, two investment partnerships of which Mr. Ruby is a
general partner, all of shares which Mr. Ruby disclaims beneficial
ownership.

(13) Mr. Dwight Kuhns resigned his position with the Company in December
1995.

(14) Mr. Petrenko was appointed interim Chief Executive Officer on April 11,
1996.

(15) Mr. Baratta ceased to be employed by the Company on March 29, 1996.

(16) Mr. Best resigned his position with the Company in December 1995.

(17) Includes a total of 2,041,507 shares issuable upon the exercise of
currently exercisable warrants.

45
<PAGE> 50
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The following sets forth the transactions involving the Company and its
subsidiaries and its executive officers and/or directors from January 1, 1995.
Specific descriptions of these transactions are provided below.

In 1989, two subsidiaries of the Company, Arcadian Power Corporation
("Arcadian") and Wolverine Power Corporation ("Wolverine"), entered into
management agreements (collectively, the "Management Agreements") with East
Rock, an investment and management company which was providing management
services to a number of companies involved in financial restructurings. East
Rock is controlled by John D. Kuhns and Robert W. MacDonald, both of whom are
directors of the Company. Pursuant to the terms of the Management Agreements,
John D. Kuhns has agreed to fulfill the duties and responsibilities of the
offices of the Chairman of the Board and Chief Executive Officer of those
subsidiaries. Each of these subsidiaries paid East Rock fees of $20,000 per
month for management and administrative services. Under the terms of the
Management Agreements, East Rock is responsible for providing these subsidiaries
with management advice and strategic planning, negotiating and structuring the
refinancing of existing debts and leases, negotiating and settling lawsuits,
negotiating and structuring fixed asset sales, and other specific projects. In
each of the last three fiscal years, these subsidiaries paid East Rock annual
management fees of $480,000, which were primarily for the purpose of
compensating Mr. John D. Kuhns for his services to the subsidiaries on behalf of
East Rock. The management fees also cover the other salaries and business
expenses of East Rock. Mr. Kuhns' services on behalf of East Rock under the
Management Agreements are in addition to his responsibilities as the Chairman of
the Board of the Company and its other subsidiaries. The Company terminated the
Management Agreements and established a direct compensation arrangement with Mr.
Kuhns as of August 1, 1995.

In 1993, the Company contracted with White Hollow Construction, a
company wholly-owned by John D. Kuhns, to act as the construction manager for
leasehold improvements at cost (to effect a savings) to the Company's new
corporate headquarters at 558 Lime Rock Road, Lime Rock, Connecticut. Through
1994, $875,170 of construction payments were made under this agreement and were
applied to construction costs and the costs of the on-site supervision. None of
the funds were paid to Mr. Kuhns. The 1995 construction payments made under this
agreement were $467,371. The office is located on land owned by a corporation
controlled by Mr. Kuhns.

In March 1994, Sundial International Fund Limited ("Sundial"), a
beneficial owner of more than five percent of the Company's Common Stock,
purchased 135,000 units of the Company at $11.50 per unit in connection with the
sale of 1,500,000 units in an offering to offshore investors. Each unit consists
of one share of Common Stock and a warrant to purchase one share of Common Stock
at an initial exercise price of $15.00 per share. In August 1994, Sundial
purchased an additional 108,000 units of the Company at $11.00 per unit in
connection with the sale of 1,150,000 units in an offering to offshore
investors.

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<PAGE> 51
In December 1995, The New World Power Company Ltd. sold 0% Senior
Secured Note due March 31, 1996 in the original amount of $550,000 to Sundial
International Fund LTD., a significant stockholder in the Company. The proceeds
of the Note were used as working capital. Subsequent to December 31, 1995, the
due date of the Note was extended to December 31, 1996.

On December 1, 1995, the Company transferred and endorsed to Sundial
International Fund Ltd. a First Mortgage Note in the principal amount of
$3,615,370 along with the Mortgage and Security Agreements in exchange for its
Class B Preferred Stock. The Note is payable together with interest at the
LIBOR+2% points in full on December 31, 1997. Principal and interest are due in
seven quarterly installments of principal (each equal to five percent of the
principal balance). The Note was restructured subsequent to December 31, 1995
and is now due in four payments due December 1, 1996, March 1, 1997, June 1,
1997 and July 31, 1997.

In June 1994, the Company entered into a 15-year business alliance
agreement with Westinghouse Electric Corporation ("Westinghouse"), a beneficial
owner of more than five percent of the Company's Common Stock, jointly to
develop, market, construct and own renewable power projects, such as
utility-scale wind farms, off-grid generating systems and wireless photovoltaic
systems. Under the agreement, the Company and Westinghouse will have the option
to participate with the Company in renewable power projects. In consideration of
Westinghouse's obligations under the agreement, the Company agreed to issue to
Westinghouse up to 459,770 shares of the Company's Common Stock, in
installments, over a four-year period (of which shares were to be but have not
been issued) and an Incentive Warrant which will enable Westinghouse to purchase
up to 819,778 shares of the Company's Common Stock, based upon certain operating
revenue targets for the Company. The Company and Westinghouse are currently
discussing the mutual cessation of the business relationship.

In October 1994, the Company and Robert R. Kauffman, then a director of
the Company, entered into a short-term voting agreement pursuant to which Mr.
Kauffman agreed to vote certain shares of Photocomm preferred stock owned by him
in the same manner as the Company votes its shares of Photocomm common stock.
The voting rights of Photocomm preferred stock subject to the agreement were
equivalent to the voting rights of 503,052 shares of Photocomm common stock and
represented approximately 3.8% of the total voting power of Photocomm's capital
stock. The voting agreement terminated by its terms in 1995.

In February 1995, the Company issued a warrant to purchase 150,000
units of the Company to Oakes, Fitzwilliams & Co. S.A. ("OFLSA"), a company
controlled by Herbert L. Oakes, Jr., in its capacity as the placement agent in
connection with the placement of 1,500,000 units in an offering to offshore
investors. Each unit consists of one share of Common Stock and two warrants,
each to purchase one share of Common Stock at an initial exercise price of $7.50
per share. The warrant entitles OFLSA to purchase the units at $7.20 per unit
and expires on January 14, 2000. The Company also paid to OFLSA a fee of
$720,000 in connection with the offering which was subsequently used by OFLSA to
purchase an additional 120,000 units from the Company.

In connection with this offering, certain entities affiliated with F&C
purchased an aggregate of 325,000 units at $6.00 per unit plus the surrender of
a prior warrant to purchase one

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<PAGE> 52
share of Common Stock at an initial exercise price of $15.00 per share. In
addition, certain entities affiliated with GIL purchased an aggregate of 255,000
units of $6.00 per unit plus the surrender of a prior warrant to purchase one
share of Common Stock at an initial exercise price of $15.00 per share.

The directors of the Company entered into an agreement to vote the
shares issued to them by the Company for services rendered to the Company,
including shares purchased under options granted under the 1993 Stock Incentive
Plan. The agreement provides that the shares will be voted in the manner that
John D. Kuhns directs and have granted Mr. Kuhns an irrevocable proxy in
connection with such voting agreement. In addition, the agreement grants to the
Company a right of first refusal and a purchase option prior to any transfer of
such shares and upon termination of employment or service on the Board.

As previously discussed under Liquidity and Capital Resources, the
Company entered into an agreement (the "Fleming Agreement") to issue
$15,750,000 of its 8% Convertible Subordinated Notes due July 31, 2000 and
warrants to purchase up to 787,500 shares of its common stock pursuant to the
terms of the Note and Warrant Purchase Agreement. In connection therewith, the
Company granted a security interest in all the shares of common stock (both
owned beneficially or of record) of New World China Company Limited and
Photocomm. The Company also granted certain demand and registration rights.
Approximately $2,622,000 of the 8% Convertible Subordinated Notes were issued
to OFLSA.

On December 28, 1995, the Company repaid its obligations to Sundial
International under its 0% Exchangeable Senior Secured Guaranteed Notes due
December 28, 1995 in the original principal amount of $2.2 million. Upon
repayment of this note, Sundial International released from escrow 2.9 million
shares of pledged Photocomm common stock which shares were then pledged and
delivered to Robert Fleming & Co., Ltd. as agent for the Fleming Purchasers.

On May 31, 1996, the Company entered into a Forbearance, Warrant
Exchange, Note Conversion and Amendatory Agreement (the "Sundial Amendment
Agreement"), dated as of March 1, 1996, among the Sundial International Fund
Limited ("Sundial"), the Company, The New World Power Company Limited ("NWP
Ltd."), and Wolverine Power Corporation ("Wolverine") regarding the Company's
0% Senior Secured Note in the amount of $550,000, dated December 20, 1995 and
due March 31, 1996 issued by NWP Ltd. to Sundial (the "Senior Secured Note")
and the Wolverine Power Corporation First Mortgage Note in the outstanding
principal amount as of March 1, 1996 of $3,434,692, dated December 31, 1992,
issued by Wolverine to the Company and assigned by the Company to Sundial (the
"Wolverine Note" and together with the Senior Secured Note, the "Notes").
Pursuant to the terms of the Sundial Amendment Agreement, the maturity of the
Senior Secured Note was extended to December 1, 1996 and the maturities of
certain installments of the Wolverine Note were extended. Also pursuant to the
Sundial Amendment Agreement certain warrants of which Sundial is the owner or
the agent for the owners have been re-priced from exercise prices ranging from
$7.50 to $15.00 per share to an exercise of $1.75 per share. Also pursuant to
the Sundial Amendment Agreement, Sundial has been given an option to exchange
the Notes for certain Exchange Notes to be issued by the Company. The company
is required also to effect certain asset sales and offer to redeem the Notes
with the proceeds from such sales. Sundial also received additional security
from the Company and the right to nominate one member of the Board of Directors
in connection with the Sundial Amendment Agreement.

The Company also entered into Amendment No. 3 to Note and Warrant
Purchase Agreement, and Modification of Letter Agreement, dated as of March 1,
1996 by and between NWP Corp. and each of the Purchasers thereto whereby the
Company and the Purchasers agreed to modify certain of the terms of the Note and
Warrant Purchase Agreement, dated as August 15, 1995, amended by Amendment No. 1
to Note and Warrant Purchase Agreement dated as of October 13, 1995 by and
between the Company and the Purchasers and by Amendment No. 2 to Note and
Warrant Purchase Agreement ("Amendment No. 2") dated as February 29, 1996 by and
between the Company and the Purchasers.

On June 11, 1996, the Company and Oakes, Fitzwilliams & Co. S.A.
("OFLSA") executed a financial advisory services letter agreement ("Financial
Advisory Services Agreement") pursuant to which the Company agreed that for (1)
services rendered during 1995 and 1996 relating to the restructuring of the
Company's management and capitalization ("Restructuring Services") and (2)
services to be rendered in connection with the anticipated negotiations with
Cedar Group, Inc. ("Cedar") or other entity ("Financial Advisory Services")
that: (a) OFLSA is be issued 240,000 shares of the Company's Common Stock (in
lieu of $125,000 in cash), (b) OFLSA would be paid its expenses already
incurred, some of which have been submitted to the Company but not paid, in the
approximate amount of $85,000 and (c) the warrants to purchase shares of Common
Stock of the Company received in the past of OFLSA as compensation would be
exchanged for New Warrants, and (d) at the closing of a transaction with Cedar,
the Company will pay to OFLSA a cash fee in an amount equal to 2.5% of the value
of the total consideration of the Transaction and reimburse OFLSA its reasonable
out-of-pocket expenses not incurred in the normal course of business.

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<PAGE> 53
Effective as of February 29, 1996, the Company entered into Amendment
No. Two (the "Amendment") to the Fleming Agreement. Pursuant to the terms of the
Amendment, the maturity of the 8% Notes was accelerated to July 31, 1997, with
interest payments permitted in pay-in-kind securities prior to the interest
payment due January 31, 1997. Also pursuant to the Amendment the warrants
originally issued under the Fleming Agreement were repriced from an exercise
price of $7.50 per share to an exercise of $1.75 per share. Also pursuant to the
Amendment, the Company is required to effect certain asset sales and offer to
redeem the 8% Notes with the proceeds from such sales. The Noteholders
also received additional security from the Company in connection with the
Amendment in exchange for allowing the Company to access the $3.3 million held
in escrow, subject to certain restrictions.

George P. Petrenko is an employee of Glass & Associates, Inc.
("Glass"). The Company has entered into a Consulting Agreement with Glass dated
February 7, 1996, pursuant to which Glass provides management consultation
services at an hourly rate for George Petrenko and one or more additional Glass
employees. The Consulting Agreement was amended effective April 15, 1996 to
provided for the services of Mr. Petrenko and another Glass employee at the rate
of $10,000 a week, plus out-of-pocket expenses. Under the revised agreement,
Glass may receive a bonus based upon the percentage of the net proceeds that the
Company receives from the sale of certain assets. The Company has paid Glass the
sum of $244,399 through June 15, 1996.

Effective January 1, 1996, the Company entered into a Consulting
Agreement with Condor Management Associates, Inc. ("Condor"), a corporation
owned by Dwight Kuhns, the brother of John D. Kuhns. The Consulting Agreement
provides for monthly compensation to Condor to supervise the shutdown and sale
of the Company's wind farms in California and Hawaii. The Consulting Agreement
further provides for commissions upon the sale of certain assets and upon the
favorable conclusion of negotiations with creditors of the Company's California
and Hawaii operations. Certain of these commissions may be paid in shares of the
Company's stock. The Consulting Agreement is terminable on thirty days notice.
The Company has paid Condor $81,000 through June 15, 1996.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

Section 16(a) of the Securities Exchange Act of 1934 and regulations of
the Securities Exchange Commission thereunder require the Company's executive
officers and directors and persons who own more than ten percent of the
Company's stock, as well as certain affiliates of such persons, to file initial
reports of ownership and changes in ownership with the Securities and Exchange
Commission and the National Association of Securities Dealers. Executive
officers, directors and persons owning more than ten percent of the Company's
stock are required by the Securities and Exchange Commission regulations to
furnish he Company with copies of all Section 16(a) forms they file. Based
solely on its review of the copies of Forms 3, 4 and 5 and amendments thereto
received by the Company and written representations that no other reports were
required for those persons, the company believes that, during the fiscal year
ended December 31, 1995, all filing requirements applicable to its executive
officers, directors and owners or more than ten percent of the Company's stock
were complied with.

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PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)(1) and (2) Financial Statements and Schedules

The Report of Independent Accountants and consolidated financial
statements listed in the Index to Consolidated Financial Statements and
Financial Statement Schedule on page F-1 hereof are filed as part of this
report, commencing on page F-2 hereof.

(a)(3) Exhibits

Exhibit
Number Description
- ------ -----------

2.1 Agreement and Plan of Merger by and among Arcadian Power Corporation,
an Utah corporation, The New World Power Corporation and Arcadian Power
Corporation, a Delaware corporation, dated as of January 13, 1994.
(Incorporated herein by reference to Exhibit 2.01 to the Company's Form
10-K for the year ended September 30, 1993 (the "1993 10- K")).

2.2 Purchase Agreement, dated as of July 29, 1994, by and between The New
World Power Corporation and Westinghouse Electric Corporation
(Incorporated herein by reference to Exhibit 2.1 to Form 8-K dated
August 30, 1994 (the "August 30, 1994 8-K")).

2.3 Exchange Agreement and Consent, dated as of July 29, 1994, by and
between The New World Power Corporation and Photocomm, Inc.
(Incorporated herein by reference to Exhibit 2.2 to the August 30, 1994
8-K).

2.4 Stock Purchase Agreement, dated as of June 27, 1994, by and among The
New World Power Corporation and Solartec S.A., Jose Emilo Salgado,
Nilda Raquel Filoso de Salgado, Fernando J. Salgado and Juan Esteban
Zellner (Incorporated herein by reference to Exhibit 2.1 to the August
30, 1994 8-K).

2.5 Amendment to Stock Purchase Agreement, dated as of July 1, 1994
(Incorporated herein by reference to Exhibit 2.2 to the dated August
30, 1994 8-K).

2.6 Share Purchase Agreement, dated as of June 9, 1994, by and among
Nordtank af 1987 A/S, The New World Power Company Limited and The New
World Power Corporation. (Incorporated herein by reference to Exhibit
2.04(a) to the Company's Form 10-K for the year ended December 31, 1994
(the "1994 10-K")).

2.7 Deed of Variation, dated as of November 3, 1994, by and among Nordtank
af 1987 A/S, The New World Power Company Limited and The New World
Power Corporation. (Incorporated herein by reference to Exhibit 2.04(b)
to the 1994 10- K).

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3.1 Third Amended and Restated Certificate of Incorporation of The New
World Power Corporation. (Incorporated herein by reference to Exhibit
3.01 to the Company's Form 10-Q for the quarter ended June 30, 1995
(the "June 30, 1995 10-Q")).

3.2 Amended and Restated By-laws of The New World Power Corporation.
(Incorporated by reference herein to the 1994 10-K.)

4.1 Specimen certificate for Common Stock of the Company. (Incorporated
herein by reference to Exhibit No. 4.01 to the Company's Form S-1,
Registration Statement No. 33-49576 ("Form S-1")).

4.2 Preferred Stock and Warrant Purchase Agreement by and among The New
World Power Corporation, Wolverine Power Corporation and Sundial
International Fund Limited dated as of December 31, 1992. (Incorporated
herein by reference to Exhibit 4.01 to the Company's Form 10-Q for the
quarter ended March 31, 1993 (the "March 31, 1993 10-Q")).

4.3 Form of Wolverine Power Corporation Fourteen Year Variable Rate
Subordinated Debenture Due 2000 and Schedule of Debenture Holders.
(Incorporated herein by reference to Exhibit No. 19.1 to the Company's
Form 10-Q for the quarter ended June 30, 1989 (the "June 30, 1989
10-Q").

4.4 Facility Agreement by and between The New World Power Company (Dyffryn
Brodyn) Limited and Hambros Bank Limited, et. al., dated October 14,
1994. (Incorporated herein by reference to Exhibit 4.04(a) to the 1994
10-K).

4.5 Debenture granted by The New World Power Company (Dyffryn Brodyn)
Limited to Hambros Bank Limited, dated October 14, 1994. (Incorporated
herein by reference to Exhibit 4.04(b) to the 1994 10-K).

4.6 Security Coordination Agreement by and among The New World Power
Company (Dyffryn Brodyn) Limited, The New World Power Company (Caton
Moor) Limited, The New World Power Company (Four Burrows) Limited, The
New World Power Company Limited and Hambros Bank Limited, et. al.,
dated October 14, 1994. (Incorporated herein by reference to Exhibit
4.04(c) to the 1994 10-K).

4.7 Mortgage of Shares by and between The New World Power Company Limited
and Hambros Bank Limited, dated October 14, 1994. (Incorporated herein
by reference to Exhibit 4.04(d) to the 1994 10-K).

4.8 Inter-Creditor Deed by and among The New World Power Company (Dyffryn
Brodyn) Limited, The New World Power Corporation, The New World Power
Company Limited and Hambros Bank Limited, et. al., dated October 14,
1994. (Incorporated herein by reference to Exhibit 4.04(d) to the 1994
10-K).

4.9 Cross Guarantee and Debenture by and among The New World Power Company
(Dyffryn Brodyn) Limited, The New World Power Company (Caton Moor)
Limited, The New World Power Company (Four Burrows) Limited and Hambros
Bank

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<PAGE> 56
Limited, dated October 14, 1994. (Incorporated herein by reference to
Exhibit 4.04(f) to the 1994 10-K).

4.10 Shortfall Undertaking by and between The New World Power Corporation
and The New World Power Company (Dyffryn Brodyn) Limited, dated October
14, 1994. (Incorporated herein by reference to Exhibit 4.04(g) to the
1994 10-K).

4.11 Acknowledgment of Notice of Assignment re: Shortfall Undertaking by The
New World Power Corporation, dated October 14, 1994. (Incorporated
herein by reference to Exhibit 4.04(h) to the 1994 10-K).

4.12 Additional Funding Agreement by and between The New World Power
Corporation and The New World Power Company (Dyffryn Brodyn) Limited,
dated October 14, 1994. (Incorporated herein by reference to Exhibit
4.04(i) to the 1994 10-K).

4.13 Acknowledgment of Notice of Assignment re: Additional Funding Agreement
by The New World Power Corporation, dated October 14, 1994.
(Incorporated herein by reference to Exhibit 4.04(j) to the 1994 10-K).

4.14 Facility Agreement by and between The New World Power Company (Caton
Moor) Limited and Hambros Bank Limited, et. al., dated November 11,
1994. (Incorporated herein by reference to Exhibit 4.05(a) to the 1994
10-K).

4.15 Debenture granted by The New World Power Company (Caton Moor) Limited
to Hambros Bank Limited, dated November 11, 1994. (Incorporated herein
by reference to Exhibit 4.05(b) to the 1994 10-K).

4.16 Mortgage of Shares by and between The New World Power Company Limited
and Hambros Bank Limited, dated November 11, 1994. (Incorporated herein
by reference to Exhibit 4.05(c) to the 1994 10-K).

4.17 Inter-Creditor Deed by and among The New World Power Company (Caton
Moor) Limited, The New World Power Corporation, The New World Power
Company Limited and Hambros Bank Limited, et. al., dated November 11,
1994. (Incorporated herein by reference to Exhibit 4.05(d) to the 1994
10-K).

4.18 Cross Guarantee and Debenture by and among The New World Power Company
(Caton Moor) Limited, The New World Power Company (Dyffryn Brodyn)
Limited, The New World Power Company (Four Burrows) Limited and Hambros
Bank Limited, dated November 11, 1994. (Incorporated herein by
reference to Exhibit 4.05(e) to the 1994 10-K).

4.19 Additional Funding Agreement by and between The New World Power
Corporation and The New World Power Company (Caton Moor) Limited, dated
November 11, 1994. (Incorporated herein by reference to Exhibit 4.05(f)
to the 1994 10-K).

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<PAGE> 57
4.20 Acknowledgment of Notice of Assignment re: Additional Funding Agreement
by The New World Power Corporation, dated November 11, 1994.
(Incorporated herein by reference to Exhibit 4.05(g) to the 1994 10-K).

4.21 Facility Agreement by and between The New World Power Company (Four
Burrows) Limited and Hambros Bank Limited, et. al., dated March 21,
1995. (Incorporated herein by to Exhibit 4.06(a) reference to the 1994
10-K).

4.22 Debenture granted by The New World Power Company (Four Burrows) Limited
and Hambros Bank Limited, dated March 17, 1995. (Incorporated herein by
reference to Exhibit 4.06(b) to the 1994 10-K).

4.23 Side Letter, dated March 17, 1995, to Security Coordination Agreement
by and among The New World Power Company (Dyffryn Brodyn) Limited, The
New World Power Company (Caton Moor) Limited, The New World Power
Company (Four Burrows) Limited, The New World Power Company Limited and
Hambros Bank Limited, et. al., dated October 14,1994. (Incorporated
herein by reference to Exhibit 4.06(c) to the 1994 10-K).

4.24 Mortgage of Shares by and between The New World Power Company Limited
and Hambros Bank Limited, dated March 17, 1995. (Incorporated herein by
reference to Exhibit 4.06(d) to the 1994 10-K).

4.25 Inter-Creditor Deed by and among The New World Power Company (Four
Burrows) Limited, The New World Power Corporation, The New World Power
Company Limited and Hambros Bank Limited, et. al., dated March 17,
1995. (Incorporated herein by reference to Exhibit 4.06(e) to the 1994
10-K).

4.26 Cross Guarantee and Debenture by and among The New World Power Company
(Four Burrows) Limited, The New World Power Company (Dyffryn Brodyn)
Limited, The New World Power Company (Caton Moor) Limited and Hambros
Bank Limited, dated March 17, 1995. (Incorporated herein by reference
to Exhibit 4.06(f) to the 1994 10-K).

4.27 Additional Funding Agreement by and between The New World Power
Corporation and The New World Power Company (Four Burrows) Limited,
dated March 17, 1995. (Incorporated herein by reference to Exhibit
4.06(g) to the 1994 10-K).

4.28 Acknowledgment of Notice of Assignment re: Additional Funding Agreement
by The New World Power Corporation, dated March 17, 1995. (Incorporated
herein by reference to Exhibit 4.06(h) to the 1994 10-K).

10.1 Management Agreement between Fayette Energy Corporation and East Rock
Partners, Inc. dated December 1, 1989. (Incorporated herein by
reference to Exhibit No. 10.05(b) to the Company's Form 10-K for the
year ended September 30, 1991 (the "1991 10-K")).

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<PAGE> 58
10.2 Management Agreement between Wolverine Hydroelectric Corporation and
East Rock Partners, Inc. dated December 1, 1989. (Incorporated herein
by reference to Exhibit No. 10.05(d) to the 1991 Form 10-K).

10.3 The New World Power Corporation's 1989 Stock Incentive Plan.
(Incorporated herein by reference to Exhibit No. 10.09 to the Company's
Form 10-K for the year ended September 30, 1990 (the "1990 10-K")).

10.4 The New World Power Corporation's 1993 Stock Incentive Plan.
(Incorporated herein by reference to Exhibit 10.1 to the Company's Form
10-Q for the quarter ended June 30, 1993 (the "June 30, 1993 10-Q")).

10.5 Lease between White Hollow Farms, Inc. and The New World Power
Corporation, dated as of December 1, 1992. (Incorporated herein by
reference to Exhibit 10.33 to the 1993 10-K).

10.6 Stock Purchase Agreement among The New World Power Corporation,
Photocomm, Inc., Westinghouse Electric Corporation, Programmed Land,
Inc. and Robert R. Kauffman dated as of October 15, 1993. (Incorporated
herein by reference Exhibit A to the Company's Form 8-K dated November
23, 1993 (the "November 12, 1993 8-K")).

10.7 Placement Agent Agreement by and between The New World Power
Corporation and Oakes, Fitzwilliams & Co. Limited, dated November 8,
1993. (Incorporated herein by reference to Exhibit 10.35(a) to the 1993
10-K).

10.8 Warrant issued to Oakes, Fitzwilliams & Co. Limited. (Incorporated
herein by reference to Exhibit 10.35(b) to the 1993 10-K).

10.9 Form of Purchase Agreement by and between The New World Power
Corporation and Purchaser. (Incorporated herein by reference to Exhibit
10.35(c) to the 1993 10-K).

10.10 Form of Warrant issued to Purchaser. (Incorporated herein by reference
to Exhibit 10.35(d)) to the 1993 10-K).

10.11 Schedule of Purchasers. (Incorporated herein by reference to Exhibit
10.35(e) to the 1993 10-K).

10.12 Form of Management Shareholders' Agreement by and among The New World
Power Corporation; John D. Kuhns; Dwight C. Kuhns; Robert W. MacDonald;
Lucien Ruby; Herbert L. Oakes, Jr.; Michael H. Best; Nazir Memon;
Gerald R. Cummins and any other person who agrees to be bound by the
terms of the Agreement, dated as of November 12, 1993. (Incorporated
herein by reference to Exhibit 10.38 to the 1993 10-K).

10.13 Placement Agent Agreement by and between The New World Power
Corporation and Oakes, Fitzwilliams & Co., Limited, dated February 28,
1994. (Incorporated herein by

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<PAGE> 59
reference to Exhibit 10.01(a) to the Company's Form 10-Q for the
quarter ended March 31, 1994 (the "March 31, 1994 10-Q")).

10.14 Warrant issued to Oakes, Fitzwilliams & Co., Limited. (Incorporated
herein by reference to Exhibit 10.01(b) to the March 31, 1994 10-Q).

10.15 Form of Purchase Agreement by and between The New World Power
Corporation and Purchaser. (Incorporated herein by reference to Exhibit
10.01(c) to the March 31, 1994 10-Q).

10.16 Form of Warrant issued to Purchaser. (Incorporated herein by reference
to Exhibit 10.01(d) to the March 31, 1994 10-Q).

10.17 Schedule of Purchasers. (Incorporated herein by reference to Exhibit
10.01(e) to the March 31, 1994 10-Q).

10.18 Business Alliance Agreement between The New World Power Corporation and
Westinghouse Electric Corporation dated as of June 15, 1994.
(Incorporated herein by reference to Exhibit 10.01 to the Company's
Form 10-Q for the quarter ended June 30, 1994 (the "June 30, 1994
10-Q")).

10.19 Placement Agent Agreement by and between The New World Power
Corporation and Oakes, Fitzwilliams & Co. Limited, dated August 22,
1994. (Incorporated herein by reference to Exhibit 10.01(a) to the
Company's Form 10-Q for the quarter ended September 30, 1994 (the
"September 30, 1994 10-Q")).

10.20 Amendment to Placement Agent Agreement dated August 30, 1994.
(Incorporated herein by reference to Exhibit 10.01(b) to the September
30, 1994 10-Q).

10.21 Warrant issued to Oakes, Fitzwilliams & Co., Limited. (Incorporated
herein by reference to Exhibit 10.01(c) to the September 30, 1994
10-Q).

10.22 Form of Purchase Agreement by and between The New World Power
Corporation and Purchaser. (Incorporated herein by reference to Exhibit
10.01(d) to the September 30, 1994 10-Q).

10.23 Form of Warrant issued to Purchaser. (Incorporated herein by reference
to Exhibit 10.01(e) to the September 30, 1994 10-Q).

10.24 Schedule of Purchasers. (Incorporated herein by reference to Exhibit
10.01(f) to the September 30, 1994 10-Q).

10.25 Option Agreement by and between The New World Power Corporation and
Robert R. Kauffman, dated as of October 7, 1994. (3)

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10.26 0% Exchangeable Senior Secured Guaranteed Note due 29 December 1995 in
the original principal amount of Two Million Two Hundred Thousand and
No/100 U.S. Dollars issued by The New World Power Company Limited. (3)

10.27 Option Agreement by and among The New World Power Company Limited,
Sundial International Fund Limited and Oakes, Fitzwilliams & Co.,
Limited, dated December 30, 1994. (3)

10.28 Guaranty Agreement by The New World Power Corporation in favor of
Sundial International Fund Limited, dated December 30, 1994. (3)

10.29 Stock Pledge Agreement by and among The New World Power Corporation,
Sundial International Fund Limited and Gilmartin, Poster & Shafto,
dated December 30, 1994. (3)

10.30 Exchange Agreement by and between The New World Power Corporation and
Sundial International Fund Limited, dated December 30, 1994. (3)

10.31 Warrant issued to Sundial International Fund Limited. (3)

10.32 Placement Agent Agreement by and between The New World Power
Corporation and Oakes, Fitzwilliams & Co. S.A., dated February 10,
1995. (3)

10.33 Warrant issued to Oakes, Fitzwilliams & Co. S.A. (3)

10.34 Form of Purchase Agreement by and between The New World Power
Corporation and Purchaser, dated February 10, 1995. (3)

10.35 Form of Amendment to Purchase Agreement by and between The New World
Power Corporation and Purchaser, dated February 10, 1995. (3)

10.36 Form of Warrant issued to Purchaser. (3)

10.37 Schedule of Purchasers. (3)

10.38 Subscription Agreement by and between The New World Power Corporation
and Oakes, Fitzwilliams & Co. S.A., dated February 10, 1995. (3)

10.39 Warrant issued to Oakes, Fitzwilliams & Co. S.A. (3)

*10.40 Employment Agreement, dated as of August 1, 1995, by and between the
Company and John D. Kuhns.

*10.41 Amendment No. 1 to Employment Agreement, dated as of March 1, 1996, by
and between the Company and John D. Kuhns.

*10.42 Amendment No. 2 to Employment Agreement, dated as of March 31, 1996, by
and between the Company and John D. Kuhns.

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*10.43 Amendment Agreement, dated August 3, 1995, between China Chang Jiang
Energy (Group) and the Company.

*10.44 Share Transfer Agreement between China Chang Jiang Energy Corporation
(Group) and the Company for the Fujian Chang Ping Hydro Power Company.

*10.45 Consulting Agreement, dated as of February 7, 1996, between the Company
and Glass & Associates, Inc.

*10.46 Agreement Engaging the Services of Glass & Associates, Inc. As Interim
Manager, dated April 18, 1996, between the Company and Glass &
Associates, Inc.

*10.47 Financial Advisory Services Agreement, dated June 11, 1996, between the
Company and Oakes Fitzwilliams & Co.

22.1 Subsidiaries of the registrant. (3)

*23.01 Consent of Price Waterhouse LLP

*23.02 Consent of KPMG Peat Marwick LLP

*23.03 Consent of KPMG Peat Marwick LLP

*27 Financial Data Schedule

(3) Incorporation by reference herein to the 1994 10-K
- -------------------
* Filed herewith.

(b) Reports on Form 8-K

One current report on Form 8-K dated October 30, 1995 was filed during
the quarter ended December 31, 1995.

57
<PAGE> 62
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND

FINANCIAL STATEMENT SCHEDULE
FORM 10-K

FOR YEARS ENDED DECEMBER 31, 1995, 1994
THE THREE MONTH PERIOD ENDED DECEMBER 31, 1993

AND THE YEAR ENDED SEPTEMBER 30, 1993

THE NEW WORLD POWER CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL
STATEMENTS:

<TABLE>
<S> <C>
Report of Independent Accountants on the financial statements for the year
ended December 31, 1995, Price Waterhouse LLP F - 2

Independent Auditor's Report on the financial statements for the
year Ended December 31, 1994, the three-month period ended
December 31, 1993 and the year ended September 30, 1993,
KPMG Peat Marwick LLP F - 3

Independent Auditor's Report on financial statements of
Photocomm, Inc. for the year ended December 31, 1995,
KPMG Peat Marwick LLP F - 4

Consolidated Balance Sheets at December 31, 1995 and 1994 F - 4a

Consolidated Statements of Operations for the Years
Ended December 31, 1995 and 1994, the three-month Period
Ended December 31, 1993 and the Year Ended September 30, 1993 F - 5

Consolidated Statements of Stockholders' Equity for the Year Ended
December 31, 1995 and 1994, the three-month Period
Ended December 31, 1993 and the Year Ended September 30, 1993 F - 6

Consolidated Statements of Cash Flows for the Years Ended December
31, 1995 and 1994, the three-month Period
Ended December 31, 1993 and the Year Ended September 30, 1993 F - 7

Notes to Consolidated Financial Statements F - 9

Report of Independent Accountants on Financial Statement Schedule F - 43

Financial Statement Schedule I - Condensed Financial Statement
Information of Registrant F - 44
</TABLE>

F - 1
<PAGE> 63
REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of
The New World Power Corporation:

In our opinion, based upon our audit and the report of other auditors, the
consolidated financial statements listed in the accompanying index present
fairly, in all material respects, the financial position of The New World Power
Corporation and its subsidiaries at December 31, 1995, and the results of their
operations and their cash flows for the year, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audit. We did not audit the
financial statements of Photocomm, Inc., a minority owned equity investment,
which statements reflect total assets of $10,361,409 at December 31, 1995 and
net income applicable to common shareholders of $687,966 for the year ended
December 31, 1995. Those statements were audited by other auditors whose report
thereon has been furnished to us, and our opinion expressed herein, insofar as
it relates to the amounts included for Photocomm Inc., is based solely on the
report of the other auditors. We conducted our audit of these statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audit and the report of other auditors provides a reasonable
basis for our opinion.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has suffered recurring losses from operations
and has limited capital resources which severely constrain liquidity and raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 2. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

Price Waterhouse LLP

Hartford, CT
June 27, 1996

F - 2
<PAGE> 64
INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
The New World Power Corporation

We have audited the consolidated financial statements of The New World Power
Corporation and subsidiaries as listed in the accompanying index. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits. We did not audit the financial
statements of Northern Power Systems, Inc., a wholly-owned subsidiary for the
year ended September 30, 1993, which statements reflect total revenue
constituting 20.7 percent for the year ended September 30, 1993. Those
statements were audited by other auditors whose report has been furnished to us,
and our opinion, insofar as it relates to the amounts included for Northern
Power Systems, Inc., is based solely on the report of the other auditors.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, based on our audits, and the report of the other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of The New World Power Corporation
and subsidiaries as of December 31, 1994, and the results of their operations
and their cash flows for the year ended December 31, 1994, the three-month
period ended December 31, 1993, and the year ended September 30, 1993, in
conformity with generally accepted accounting principles.

/s/ KPMG Peat Marwick LLP

New York, New York
March 15, 1995

F-3
<PAGE> 65
[KPMG PEAT MARWICK LLP LOGO]

INDEPENDENT AUDITOR'S REPORT

The Board of Directors and Stockholders
Photocomm, Inc.:

We have audited the accompanying consolidated balance sheet of Photocomm, Inc.
and subsidiaries as of December 31, 1995, and the related consolidated
statements of operations, stockholders' equity, and cash flows for the year then
ended. These consolidated financial statements (not presented separately
herein) are the responsibility of the Company's management. Our responsibility
is to express an opinion on these consolidated financial statements based on
our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Photocomm, Inc. and
subsidiaries as of December 31, 1995, and the results of their operations and
their cash flows for the year then ended in conformity with generally accepted
accounting principles.

/s/ KPMG Peat Marwick LLP

Phoenix, Arizona
February 23, 1996

F-4
<PAGE> 66
<TABLE>
<CAPTION>
December 31, December 31,
ASSETS Notes 1995 1994
----- ---- ----
<S> <C> <C> <C>
Current assets:
Cash and equivalents $ 681,369 $ 3,889,333
Cash restricted in use 5 4,669,554 --
Accounts receivable 6 4,269,360 5,320,109
Inventories 7 1,871,170 4,130,747
Other current assets 1,572,490 1,898,905
----------- -----------
Total current assets 13,063,943 15,239,094

Notes receivable 185,600 310,000
Property, plant and equipment, net 8 29,374,876 35,729,781
Deferred Series B preferred stock offering costs -- 120,752
Investments 10 16,495,495 4,719,902
Goodwill, net of accumulated amortization 9 1,549,234 13,626,839
Other non-current assets 11 4,726,555 4,426,809
----------- -----------

Total assets $65,395,703 $74,173,177
=========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities 12 $ 7,148,616 $ 8,919,995
Current portion of long term debt 14 17,965,610 187,300
Due to related parties 13 4,627,870 3,584,759
Current portion of capital lease obligations 15 83,537 12,006
----------- -----------
Total current liabilities 29,825,633 12,704,060

Long-term portion of long-term debt 14 7,649,979 7,905,368
Long-term portion of capital lease obligations 15 76,014 17,029
Other non-current liabilities 5,497,644 550,638
----------- -----------
Total liabilities 43,049,270 21,177,095
----------- -----------
Minority interests in consolidated subsidiaries 18 1,323,183 3,445,847
----------- -----------

Commitments and contingencies 16 and 17

Series B preferred Stock:
Cumulative redeemable exchangeable preferred stock
(liquidity preference $8.00 per share), $.01 par value,
5,000,000 and 1,000,000 shares authorized, respectively,
375,000 shares issued and outstanding at December 31, 1994 20 -- 2,775,000
Accrued Series B preferred stock dividend 20 -- 409,429
----------- -----------
Total Series B preferred stock -- 3,184,429
----------- -----------

Stockholders' equity:
Common stock $.01 par value, 40,000,000 shares authorized,
11,134,147 and 8,691,319 shares issued and outstanding,
respectively 21 111,341 86,915
Currency translation adjustments 778,838 646,580
Additional paid-in capital 79,857,172 63,745,571
Accumulated deficit (59,724,101) (18,113,260)
----------- -----------
Total stockholders' equity 21,023,250 46,365,806
----------- -----------

Total liabilities and stockholders' equity $65,395,703 $74,173,177
=========== ===========
</TABLE>

See accompanying notes to consolidated financial statements.

F - 4A
<PAGE> 67
THE NEW WORLD POWER CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Operations

<TABLE>
<CAPTION>
Three months
Year ended Year ended ended Year ended
December 31, December 31, December 31, September 30,
Notes 1995 1994 1993 1993
----- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Operating revenue 24 $ 16,373,598 $ 22,908,160 $ 690,470 $ 3,972,206

Cost of operations 24 13,101,547 17,237,477 688,902 2,515,961
------------ ------------ ----------- -----------

3,272,051 5,670,683 1,568 1,456,245

Research and development expenses 426,447 338,879 164,528 52,541

Project development expenses 4,361,325 2,052,382 259,550 778,649

Selling, general and administrative expenses 7,627,217 9,222,098 1,023,445 2,840,745

Equity loss of non-consolidated affiliates 10 4,199,184 911,743 112,227 --

Impairment Charge 3 24,431,410 -- -- --
------------ ------------ ----------- -----------

Operating loss (37,773,532) (6,854,419) (1,558,182) (2,215,690)
------------ ------------ ----------- -----------

Other income (expense):
Interest expense (2,442,540) (401,401) (18,181) (493,006)
Interest income 210,588 527,857 37,959 415,935
Minority interests in consolidated subsidiaries 18 283,665 (328,375) -- --
Other (106,961) 920,482 77,489 2,720,763
------------ ------------ ----------- -----------
Total other (expense) income (2,055,248) 718,563 97,267 2,643,692
------------ ------------ ----------- -----------

(Loss) income before taxes (39,828,780) (6,135,856) (1,460,915) 428,002

Provision for income taxes 19 22,596 104,427 3,186 494,945
------------ ------------ ----------- -----------

Loss from continuing operations before
extraordinary items (39,851,376) (6,240,283) (1,464,101) (66,943)

Discontinued operations:
(Income) loss from operations of discontinued Grid Power
Services 555,971 1,263,408 44,831 (399,477)
Loss on disposal of Grid Power Services 912,609 -- -- --
------------ ------------ ----------- -----------
Loss (income) from discontinued operations 1,468,580 1,263,408 44,831 (399,477)

(Loss) income before extraordinary items (41,319,956) (7,503,691) (1,508,932) 332,534

Extraordinary item:
Reduction of income taxes arising from deduction of
prior years' operating losses -- -- -- 324,524
Gain on early extinguishment of debt
(less income taxes of $42,229) -- -- -- 81,973
------------ ------------ ----------- -----------
Net (loss) income (41,319,956) (7,503,691) (1,508,932) 739,031
------------ ------------ ----------- -----------

Series B preferred stock dividend 20 227,282 214,429 48,750 146,250
Series B preferred discount amortization 20 203,659 75,000 18,750 56,250
------------ ------------ ----------- -----------

Net (loss) income attributable to common shares $(41,750,897) $ (7,793,120) $(1,576,432) $ 536,531
============ ============ =========== ===========

Primary and fully diluted earnings (loss)
per common and common equivalent share:
Net loss from continuing operations before (3.83) (0.76) (0.27) (0.06)
extraordinary items attributable to common shares
(Loss) income from discontinued operations (0.14) (0.14) (0.01) 0.09
Extraordinary items -- -- -- 0.10
------------ ------------ ----------- -----------
Net (loss) income attributable to common shares $ (3.97) $ (0.90) $ (0.28) $ 0.13
============ ============ =========== ===========

Weighted average number of common shares 10,522,911 8,647,833 5,710,127 4,257,733
============ ============ =========== ===========
</TABLE>

See accompanying notes to consolidated financial statements

F - 5
<PAGE> 68
THE NEW WORLD POWER CORPORATION
AND SUBSIDIARIES

Consolidated Statement of Stockholders' Equity
Years ended December 31, 1995 and 1994, the three-month period
ended December 31, 1993
and the year ended September 30, 1993

<TABLE>
<CAPTION>
Common Stock Preferred Stock
------------------------ ----------------------- Currency
Number Amount of Number Amount of translation
of shares par value of shares par value adjustments
------------------------ ----------------------- -----------
<S> <C> <C> <C> <C> <C>
Balance September 30, 1992 1,847,373 $ 18,474 392,667 $ 3,927 $ 0
Issuance of common stock 2,147,017 21,470 -- -- --
Conversion of Series A preferred stock
to common stock 392,667 3,927 (392,667) (3,927) --
Adjustment for fractional shares (86) -- -- -- --
Issuance of common stock warrants -- -- -- -- --
Dividends accrued on Series B preferred stock -- -- -- -- --
Series B preferred stock discount amortization -- -- -- -- --
Stock options exercised 20,000 200 -- -- --
Wolverine Power Corp. minority
stockholder dividend -- -- -- -- --
Net income -- -- -- -- --
---------- -------- -------- ------- --------
Balance September 30, 1993 4,406,971 44,071 -- -- --
---------- -------- -------- ------- --------
Issuance of common stock 907,022 9,070 -- -- --
Issuance of common stock warrants -- -- -- -- --
Stock options exercised 6,667 67 -- -- --
Dividends accrued on Series B preferred stock -- -- -- -- --
Series B preferred stock discount amortization -- -- -- -- --
Wolverine Power Corp. minority
stockholder dividend -- -- -- -- --
Net loss -- -- -- -- --
---------- -------- -------- ------- --------
Balance December 31, 1993 5,320,660 53,208 -- -- --
---------- -------- -------- ------- --------
Issuance of common stock 3,370,659 33,707 -- -- --
Issuance of common stock warrants -- -- -- -- --
Dividends accrued on Series B preferred stock -- -- -- -- --
Series B preferred stock discount amortization -- -- -- -- --
Wolverine Power Corp minority
shareholder dividend -- -- -- -- --
Currency translation adjustments on
international subsidiaries consolidation -- -- -- -- 646,580
Net loss -- -- -- -- --
---------- -------- -------- ------- --------
Balance December 31, 1994 8,691,319 86,915 -- -- 646,580
---------- -------- -------- ------- --------
Issuance of common stock 2,442,828 24,426 -- -- --
Issuance of common stock warrants -- -- -- -- --
Change in Minority Interest due to sale of
subsidiarys' stock -- -- -- -- --
Dividends accrued on Series B preferred stock -- -- -- -- --
Series B preferred stock discount amortization -- -- -- -- --
Renewable Energy Ireland Limited minority
shareholder dividend -- -- -- -- --
Currency translation adjustments on
international subsidiaries consolidation -- -- -- -- 132,258
Net loss -- -- -- -- --
========== ======== ======== ======= ========
Balance December 31, 1995 11,134,147 $111,341 0 $ 0 $778,838
========== ======== ======== ======= ========

<CAPTION>
Additional Retained
paid-in earnings
capital (deficit) Total
------------ ------------ ------------
<S> <C> <C> <C>
Balance September 30, 1992 $ 6,471,029 $ (9,370,239) $ (2,876,809)
Issuance of common stock 14,007,522 -- 14,028,992
Conversion of Series A preferred stock
to common stock -- -- --
Adjustment for fractional shares -- -- --
Issuance of common stock warrants 346,250 -- 346,250
Dividends accrued on Series B preferred stock -- (146,250) (146,250)
Series B preferred stock discount amortization (56,250) -- (56,250)
Stock options exercised 59,800 -- 60,000
Wolverine Power Corp. minority
stockholder dividend -- (31,765) (31,765)
Net income -- 739,031 739,031
------------ ------------ ------------
Balance September 30, 1993 20,828,351 (8,809,223) 12,063,199
------------ ------------ ------------
Issuance of common stock 8,502,523 -- 8,511,593
Issuance of common stock warrants -- -- --
Stock options exercised 19,934 -- 20,001
Dividends accrued on Series B preferred stock -- (48,750) (48,750)
Series B preferred stock discount amortization (18,750) -- (18,750)
Wolverine Power Corp. minority
stockholder dividend -- (10,588) (10,588)
Net loss -- (1,508,932) (1,508,932)
------------ ------------ ------------
Balance December 31, 1993 29,332,058 (10,377,493) 19,007,773
------------ ------------ ------------
Issuance of common stock 34,488,513 -- 34,522,220
Issuance of common stock warrants -- -- --
Dividends accrued on Series B preferred stock -- (214,429) (214,429)
Series B preferred stock discount amortization (75,000) -- (75,000)
Wolverine Power Corp minority
shareholder dividend -- (17,647) (17,647)
Currency translation adjustments on
international subsidiaries consolidation -- -- 646,580
Net loss -- (7,503,691) (7,503,691)
------------ ------------ ------------
Balance December 31, 1994 63,745,571 (18,113,260) 46,365,806
------------ ------------ ------------
Issuance of common stock 14,029,780 -- 14,054,206
Issuance of common stock warrants 2,039,625 -- 2,039,625
Change in Minority Interest due to sale of
subsidiarys' stock 245,855 -- 245,855
Dividends accrued on Series B preferred stock -- (227,282) (227,282)
Series B preferred stock discount amortization (203,659) -- (203,659)
Renewable Energy Ireland Limited minority
shareholder dividend -- (63,604) (63,604)
Currency translation adjustments on
international subsidiaries consolidation -- -- 132,258
Net loss -- (41,319,955) (41,319,955)
============ ============ ============
Balance December 31, 1995 $ 79,857,172 $(59,724,101) $ 21,023,250
============ ============ ============
</TABLE>

See accompanying notes to consolidated financial statements

F - 6
<PAGE> 69
THE NEW WORLD POWER CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
Three months
Year Ended Year ended ended Year ended
December 31, December 31, December 31, September 30,
1995 1994 1993 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net (loss) income before extraordinary items $(41,319,955) $ (7,503,691) $ (1,508,932) $ 332,534
Adjustments to reconcile net earnings to net cash used in
operating activities:
Extraordinary gain resulting from early extinguishment of debt -- -- -- 81,973
Extraordinary credit resulting from reduction of income taxes -- -- -- 324,524
Depreciation and amortization 3,980,408 955,722 132,078 537,789
Amortization of goodwill 216,013 180,000 40,000 26,000
Amortization of Series B preferred stock offering costs 120,752 40,248 10,062 30,188
Minority interest in net income of consolidated subsidiaries (283,665) 328,375 -- --
Net equity loss in non-consolidated affiliates 4,199,184 911,743 112,227 --
Amortization of debt discount 152,972 -- -- --
Loss on disposal of discontinued operations 912,609 -- -- --
Impairment charges 24,431,410 -- -- --
Write-offs of deferred project costs and fixed assets 3,800,000
Changes in assets and liabilities, net of effect of
acquisitions:
(Increase) decrease in accounts receivable (780,819) (1,127,662) 1,866,631 268,555
Decrease in interest receivable -- 28,192 273,351 571,789
Increase in inventories (860,972) (542,555) -- --
(Increase) decrease in other current assets 44,488 (656,722) 318,247 (743,110)
Increase (decrease) in accounts payable and accrued
liabilities 786,425 4,445,971 (1,415,671) (3,113,064)
Decrease in non-current liabilities (925,793)
PG&E settlement -- -- -- (1,330,859)
Elimination of obligations no longer due -- -- -- (915,474)
Other 732,752 732,752 -- (188,721)
------------ ------------ ----------- ------------

Cash flows used in operating activities (4,794,191) (2,940,379) (172,007) (4,117,876)
------------ ------------ ----------- ------------

Cash flows from investing activities:
Capital expenditures (6,834,530) (24,339,779) (952,272) (3,030,109)
Acquisition of subsidiaries, net of cash acquired (2,120,764) (2,920,470) (2,625,000) (550,000)
Purchase price premium in consolidated acquisitions -- -- -- (420,080)
Organization and purchase costs in consolidated acquisitions -- -- (84,018) (177,911)
Capital stock acquired in consolidated acquisitions -- -- -- 956,703
Investments in and advances to affiliates (4,823,645) (3,432,289) -- (1,590,157)
Decrease in notes receivable 188,416 (230,197) (65,113) (230,093)
Deferred development expenditures (3,088,786) (1,048,915) (1,199,680) (111,881)
------------ ------------ ----------- ------------

Cash flows used in investing activities (16,679,309) (31,971,650) (4,926,083) (5,153,528)
------------ ------------ ----------- ------------

Cash flows from financing activities:
Increase in due to related parties 1,056,304 3,200,006 -- --
(Decrease) in due to related parties (3,337,506) -- -- --
Increase in long-term debt 20,669,190 5,402,642 318,122 --
Deferred debt issue costs (980,079)
Repayment of long-term debt (3,565,537) (114,295) -- (5,440,137)
(Increase) in restricted cash (4,669,554) -- -- --
Net proceeds from issuance of Series B preferred stock units -- -- -- 2,770,000
Net proceeds from issuance of common stock 8,917,969 27,198,146 5,860,400 13,688,639
Proceeds from exercise of stock options and warrants -- 57,500 20,001 60,000
Renewable Energy Ireland Limited minority dividend (63,604)
Wolverine Power Corporation minority dividend -- (17,647) (10,588) (31,765)
------------ ------------ ----------- ------------

Cash flows provided by financing activities 18,027,183 35,726,352 6,187,935 11,046,737
------------ ------------ ----------- ------------

Effect of exchange rate changes on cash and equivalents 238,353 -- -- --

Net change in cash and equivalents (3,207,964) 814,323 1,089,845 1,775,333
Cash and equivalents at beginning of period 3,889,333 3,075,010 1,985,165 209,832
------------ ------------ ----------- ------------

Cash and equivalents at end of period $ 681,369 $ 3,889,333 $ 3,075,010 $ 1,985,165
============ ============ =========== ============

Continued
</TABLE>
F - 7

<PAGE> 70
THE NEW WORLD POWER CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Cash Flows

Continued from prior page

<TABLE>
<CAPTION>
Three months
Year Ended Year ended ended Year ended
December 31, December 31, December 31, September 30,
1995 1994 1993 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Non-cash investing and financing transactions:
Common stock issued for majority interest in Photocomm Inc. $ -- $5,198,939 $2,132,354 $ --
Common stock issued for majority interest in Solartec S.A -- 281,253 -- --
Common stock issued for minority interest in San Jacinto Power Company -- -- 516,000 --
Common stock issued for Westinghouse alliance -- 896,552 -- --
Common stock issued for portion of minority interest in Arcadian
Power Corp. -- 941,050 -- --
Common stock exchanged for Wolverine Power Corp. subordinated debentures -- 6,280 -- 447,688
Common stock issued for acquisition of Northern Power Systems, Inc -- -- -- 456,703
Common stock issued for conversion of Series A preferred stock -- -- -- 3,927
Common stock issued for acquisition of Makani Uwila (stock portion) -- -- -- 450,000
Common stock issued for majority interest in Bellacorick 637,500 -- -- --
Common stock issued for Fujian I Hydroelectric Project 4,498,742 -- -- --
Common stock warrants issued 2,039,625 -- -- --
Change in minority interest due to sale of subsidiarys' stock 245,855 -- -- --
Conversion of preferred stock to mortgage payable for Wolverine
Power Corp. 3,615,370 -- -- --
Series B preferred stock dividend accrual 227,282 214,429 48,750 146,250
Series B preferred stock discount amortization 203,659 75,000 18,750 56,250
Decrease in notes receivable relating to capital lease obligations -- -- 3,156,870 4,385,764

Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest expense $1,800,814 $ 534,869 $ 154,725 $ 159,292
Income taxes 30,936 58,345 63,500 63,500
</TABLE>

See accompanying notes to consolidated financial statements.

F - 8
<PAGE> 71
THE NEW WORLD POWER CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The New World Power Corporation ("the Company") was incorporated in the
State of Delaware in 1989. The New World Power Corporation is a global developer
and producer of electricity generated from wind energy, solar energy and
hydropower. The Company also develops, manufactures and markets electrical
gathering systems powered by renewable resources and provides related services.

Basis of Presentation

The financial statements are prepared in accordance with generally
accepted accounting principles ("GAAP"). The preparation of financial
statements in accordance with GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses. Actual results could differ from
those estimates.

Principles of Consolidation

The consolidated financial statements include the accounts of The New
World Power Corporation and its subsidiaries. All intercompany balances
and transactions have been eliminated. The Company's policy is to
consolidate all companies over which it exercises control. Investments
over which the Company has significant influence, but does not control,
are reported under the equity method.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, demand deposits and
short-term cash investments which are highly liquid in nature and have
original maturities of three months or less (see Note 5).

Inventories

Inventories are stated at the lower of cost or market. Cost is
determined principally by the first-in, first-out method.

Property, Plant and Equipment

Property, plant and equipment are carried at cost. Depreciation is
computed using accelerated methods for the Company's operations in the
United Kingdom, and the straight-line method for all other property,
plant and equipment, based upon the estimated useful lives of the
assets. Significant renewals and betterments are capitalized.
Maintenance and repair costs are expensed.

F - 9
<PAGE> 72
THE NEW WORLD POWER CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Facility Development

The Company develops new power production facilities and acquires
existing power production facilities for both operation and
development. Accounting for costs incurred in the development phase is
as follows:

New power production facilities. All costs (including financing, legal
and other professional costs, development period interest on any
financing, development period labor and supply costs, and development
period operating costs) attributed to facilities developed by the
Company are deferred, until the facility is completed and placed in
productive service. At that time, deferred costs are amortized on a
straight line basis over the expected useful life of the facility,
usually 25- 40 years.

Facilities acquired for operation. These facilities are substantially
ready to be placed in productive service when acquired. The purchase
price, along with other acquisition costs, including financing, legal
and other professional fees are principally assigned to the facility
and depreciated over the expected useful life of the facility. Any
goodwill recorded is amortized on a straight line basis over a period
consistent with the period used for the related facility depreciation,
usually 10-40 years.

Facilities acquired for development. These facilities require
substantial investment in additional or retrofitted turbines, equipment
or infrastructure refurbishment before they can be placed in productive
service. The initial acquisition cost, as well as subsequent
development costs (including directly related and incremental
financing, legal and other professional fees, development period
interest on any financing, land rents and property taxes, and
development period labor and supply costs) are deferred. Receipts for
any power sales during the development period are recorded as an offset
to development costs. After the facility is placed in service, any
goodwill, representing the amount of the initial acquisition cost in
excess of the fair value of assets along with all facility development
costs, is amortized on a straight line basis over the expected useful
life of the facility, usually 10-40 years.

Redeveloped facilities. Redevelopment costs of owned facilities are
deferred and included in the asset value of the refurbished facility.
These deferred costs may include financing, legal and other
professional costs, and development period interest on any financing.
Land rents, property taxes and labor directly attributable to the
facility or portion of the facility which is redeveloped are also
deferred. Once the facility is placed in service, the asset is
amortized on a straight line basis over the expected useful life of the
facility, usually 25-40 years.

Other project deferrals. The Company defers costs, including
professional services and direct labor, incurred for site inspections,
site permits and deposits related to specific project activities.

F - 10
<PAGE> 73
THE NEW WORLD POWER CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During the development phase, these capitalized costs are included in
other non-current assets (see Note 11). When it is probable that future
projects will not be completed or cost may not be recovered, such costs
are written-off.

Accounting for Long-Lived Assets

The Company evaluates the recoverability of its carrying value of
long-lived assets and identifiable intangibles whenever events or
changes in circumstances occur which warrant such an evaluation. The
Company reports its long-lived assets at the lower of cost (less
depreciation) or fair value (see Note 3 for further discussion of this
accounting policy).

Goodwill

Goodwill is the difference between the purchase price and the fair
value of net assets acquired in business combinations treated as
purchases. Goodwill is amortized on a straight-line basis over the
periods benefited, generally in the range of 10 to 40 years. On a
periodic basis or whenever events or changes in circumstances warrant,
the Company estimates the future undiscounted cash flows of the
businesses to which goodwill relates to determine whether the carrying
value of goodwill has been impaired.

Revenue & Sales Recognition

The Company records revenue from the sale of electric power generated
upon the delivery of the electric power to the purchasing utility.
Revenue earned from the sale of manufactured products is recorded upon
the shipment of the products or acceptance by the customer, depending
on contract terms. Service revenues are recognized as services are
rendered. Provisions for doubtful accounts are made when losses are
anticipated.

Included within other non-current liabilities are deferred revenues of
$4.6 million at December 31, 1996 relating to certain grant proceeds,
which are recognized as revenue over the life of the grant.

Research and Development

Expenditures for research and development costs are expensed as
incurred.

Foreign Currency Translation

Financial statements of international subsidiaries are translated into
U.S. dollars using the exchange rate at each balance sheet date for
assets and liabilities and an average exchange rate for each period for
revenues, expenses and gains and losses. Where the local currency is
the functional currency, translation adjustments are recorded as a
separate component of shareholders' equity.

F - 11
<PAGE> 74
THE NEW WORLD POWER CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Income Taxes

Effective October 1, 1993, the Company adopted the Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes"
("FAS 109"). There was no cumulative effect of that change in the
method of accounting for income taxes. FAS 109 requires the asset and
liability method of accounting for income taxes rather than the
deferred method previously used under APB Opinion No. 11.

Earnings per share

Primary earnings (loss) per share is computed using the weighted
average number of shares of common stock and dilutive common stock
equivalents outstanding, if any. Fully diluted earnings (loss) per
share is computed using the weighted average number of shares of common
stock and all dilutive convertible securities, stock options and
warrants, if any. The effect of common stock equivalents, including
dilutive stock options and warrants, is computed using the treasury
stock method.

Reclassifications

Certain reclassifications have been made to prior year amounts to
conform with current year presentation.

Recent Pronouncements

In March of 1995, the Financial Accounting Standard Board ("FASB")
issued Statement of Financial Accounting Standards No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of" ("FAS 121"). This standard requires that the Company
compare estimated expected future cash flows (undiscounted and without
interest charges) identified with each asset to the carrying amount of
such asset whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable.

For those assets to be disposed of whose estimated fair values are less
than the carrying amount, an impairment would be recorded, based on the
amount by which the carrying values exceed the estimated fair values
less cost to sell. The estimated fair values are determined based upon
market values, where available, or on the basis of estimated expected
future cash flows discounted at a rate commensurate with the risks
involved. The Company will adopt FAS 121 in the first quarter of 1996.
Management does not expect the adoption of this statement to have a
material impact on the financial position or results of operations of
the Company.

F - 12
<PAGE> 75
THE NEW WORLD POWER CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In October 1995, the FASB issued Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation" ("FAS
123"). This standard is effective for fiscal years beginning after
December 15, 1995. The Company will implement the statement as required
and intends to adopt FAS 123 using the pro forma disclosure method
described in the pronouncement.

NOTE 2. GOING CONCERN

The consolidated financial statements as of, and for the year ended
December 31, 1995 have been prepared assuming that the Company will continue as
a going concern. During the year ended December 31, 1995, the Company incurred a
net loss of $41.3 million (including a $24.4 million impairment charge - Note
3), had negative cash flows from operations of $6.3 million and had negative
working capital. Subsequent to December 31, 1995, due to severe liquidity
constraints, the Company defaulted on two of its principal loan agreements and
as a result, was required to restructure those loans (Note 28). The Company has
amounts owed trade creditors that are past due, and certain creditors have
threatened to petition the Company into involuntary bankruptcy proceedings.
Further, in 1996 the Company did not file in a timely manner certain reports
required by the Securities and Exchange Act of 1934, which if not filed, could
jeopardize its status as a public company. As part of the agreement to
restructure its debt, management has agreed to sell certain assets by specified
dates in 1996 and use a portion of the proceeds to repay the debt. Further, the
Company anticipates having negative operating cash flows during 1996, and as a
result, will require additional capital through financing or equity transactions
in order to sustain operations. The above matters raise substantial doubts about
the Company's ability to continue as a going concern.

In January, 1996, the Company adopted a new business plan. Key elements
of the business plan include:

- The Company intends to reduce, where possible, its ownership
interest in operating wind farms, as well as its wind farms
under development.

- The Company intends to use the proceeds from the sale of these
investments to meet its current and near term debt service
requirements.

F - 13
<PAGE> 76
THE NEW WORLD POWER CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

- The Company intends to focus future development on large scale
wind farm projects in countries where the Company has an
established presence, such as Mexico, Ireland and China, and
will not pursue competitively bid wind farm projects unless
the individual circumstances are uniquely compelling.

- The Company intends to simultaneously seek to integrate its
wireless business or sell its Photocomm subsidiary.

- The Company intends to reduce its administrative staff.

There are numerous risks and uncertainties surrounding management's
plans, principally the risk that management will not be able to sell the
investments (or subsidiaries) identified in its business plan within the time
frame, or for the amounts, required by the restructured loan agreement. There
can be no assurance that the Company will be successful in implementing this
plan and that the Company will continue as a going concern.

NOTE 3. IMPAIRMENT CHARGE

In 1995, the Company recorded an impairment charge of $24.4 million.
The impairment charge was reflected as a reduction of the following financial
statement captions:

<TABLE>
<S> <C>
Property, plant and equipment, net $ 13.4 million
Goodwill, net 4.1 million
Investments 5.9 million
Other 1.0 million
--------------
$ 24.4 million
==============
</TABLE>

As described in Note 2, the Company has a business plan to sell certain
of its assets and investments and to abandon various development projects. The
following investments have been written-down, as applicable, to their estimated
fair value at December 31, 1995. The aggregate carrying value of assets held for
sale as of December 31, 1995 is approximately $25.6 million and includes:

F - 14
<PAGE> 77
THE NEW WORLD POWER CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Assets and liabilities held for sale together with the results of
operations to which they relate are included within the following consolidated
financial statement captions as of and for the year ended December 31, 1995
(000):

<TABLE>
<CAPTION>
Balance Sheet Statement of Operations
------------- -----------------------
<S> <C> <C> <C>
Current assets $ 7,221 Revenue $11,759
Investments 12,996 Operating income, excluding
Total assets 48,834 any impairment charge 3,115
Total liabilities 23,282
</TABLE>

In determining the amount of impairment charge for assets held for
sale, the Company's policy is to compare the carrying value of its assets and
investments to the estimated fair value. In determining fair value, the Company
used market values for publicly traded investments (i.e. Photocomm), or
correspondence with potential buyers as an indication of market value. In
circumstances where the Company's negotiations to sell assets and investments
have not included correspondence with potential buyers in sufficient detail to
indicate a market value, the Company has used the projected future cash flows
from these investments and assets. These projected cash flows have been
discounted at rates commensurate with the risk of the respective investment, and
generally range from rates of 16% to 21%.

NOTE 4. SIGNIFICANT BUSINESS CHANGES

ACQUISITIONS

Fujian

In May of 1995, the Company signed an agreement with China Chang Jiang
Energy Corporation ("CCJEC") to acquire a 40% interest in the Fujian
Chang Ping Hydro Company, Ltd. ("Fujian"), a 39 MW hydroelectric
project under development in The Fujian Province of China, for
approximately $15 million. In August of 1995, the Company made payments
totaling approximately $8.7 million representing approximately 24%
interest in Fujian. This consideration was comprised of approximately
$4.2 million in cash and the remainder in common stock of New World
Power Corporation (715,000 shares at the valuation date).

F - 15
<PAGE> 78
THE NEW WORLD POWER CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Subsequent to the Company's initial investment, concern arose as to
whether adequate approvals had been obtained, under Chinese law, for
the acceptance of New World Power Corporation shares as payment for the
Company's interest in Fujian. The Company and CCJEC are currently
negotiating an agreement whereby the Company would reacquire (as
treasury stock) all shares previously issued to CCJEC. This agreement
will result in a 12% reduction of New World Power Corporation's
ownership in Fujian. Due to uncertainties involving, among other
things, significant project construction delays and Fujian's lack of
liquidity, as well as the planned reaquistion of the stock originally
issued, the Company has recorded an other than temporary decline at
December 31, 1995, to adjust the carrying value of its investment to
the estimated net realizable value of the Company's continuing 12%
interest in Fujian. The impact of this writedown is included as part of
the impairment charge in the accompanying Consolidated Statement of
Operations (see Note 3 and 10).

Due to the Company's current liquidity problems, as described in Note
2, the Company is not presently capable of further investment in Fujian
as required by the original contract with CCJEC. If the Company is able
to obtain sufficient funds from the sale of assets to retire its
restructured debt, the Company may use any excess proceeds for
additional Fujian investments.

Renewable Energy Ireland Limited

In February 1995 the Company, through its wholly-owned subsidiary, New
World Power Company Limited, purchased approximately 87.5% of Renewable
Energy Ireland Limited ("REIL"), the owner and operator of a 6.45 MW
wind farm in Bellacorick, Ireland in exchange for $1.7 million and
104,082 shares of the Company's common stock. The Company incurred
approximately $400,000 in transaction costs relating to the acquisition
of REIL relating to legal and other professional fees. The acquisition
has been accounted for under the purchase method. As of the
acquisition, REIL had total assets of approximately $9.4 million, and
total liabilities of $7.5 million.

Results of operations after the acquisition date are included in the
1995 consolidated Statement of Operations.

The following unaudited pro forma information has been prepared
assuming that this acquisition had taken place at the beginning of
1994. The unaudited pro forma information includes adjustments for
interest expense that would have been incurred to finance the purchase
and the amortization of goodwill arising from the transaction. The
unaudited pro forma financial information is not necessarily indicative
of the results of operations as would have been reported had the
transaction been effected on the assumed dates (000 except per share
data).

F - 16
<PAGE> 79
THE NEW WORLD POWER CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
Year ended December 31 1994
---------------------- ----
<S> <C>
Operating revenue $ 8,399
Loss from continuing operations (6,062)
Net loss attributable to common shares (7,615)
Loss per common share from continuing operations (.74)
Net loss per common share (.88)
</TABLE>

Photocomm

On November 8, 1993, the Company acquired 3,412,221, or 29%, of the
outstanding common shares of Photocomm. The Company also acquired
options to purchase 4.1 million additional common shares and obtained
rights of first refusal to purchase additional shares of Photocomm
common stock from three of Photocomm's principal shareholders. The cost
to the Company was 218,703 shares of its common stock and approximately
$2.6 million in cash. As described below, some of the common shares and
options were purchased from Photocomm and three of its principal
shareholders, one of which is Westinghouse Electric Corporation
("Westinghouse"). Options to purchase approximately 2.6 million shares
expired on December 31, 1995. The remaining options to purchase 1.5
million shares are exercisable at $3.00 per share and expire on
December 31, 1996.

On August 30, 1994, the Company acquired an additional 1,800,000 shares
of common stock of Photocomm and other Photocomm securities,
principally from Westinghouse, in exchange for 495,137 shares of the
Company's common stock. The Company immediately converted these
Photocomm securities into an aggregate of 360,226 shares of Photocomm
common stock. The Company subsequently purchased an additional 40,000
shares of Photocomm common stock on the open market and purchased
600,000 shares pursuant to a partial option exercise. As a result of
these transactions, the Company, after consideration of the short-term
voting agreement pursuant to which Photocomm's Chief Executive Officer
agreed to vote certain of his shares in the same manner as the Company
votes its shares, had control of over 51% of Photocomm's issued and
outstanding common stock as of December 31, 1994. The Company recorded
the above described transactions under the purchase method of
accounting, and as a result of obtaining control, began consolidation
of Photocomm into its financial statements.

F - 17
<PAGE> 80
THE NEW WORLD POWER CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On February 10, 1995, the Company purchased 400,000 additional shares
of Photocomm common stock. At December 31, 1995, the Company owns
6,612,447 shares of Photocomm, representing 48.8% of the issued and
outstanding voting shares of Photocomm. The decrease in the Company's
ownership percentage from December 31, 1994 results from various
Photocomm equity transactions in which the Company did not participate.
Additionally, the short-term voting agreement with Photocomm's Chief
Executive Officer expired during 1995.

As a result of the Company no longer having a controlling interest in
Photocomm, the investment in Photocomm is being accounted for on an
equity basis, effective January 1, 1995. The summarized balance sheet
and statement of operations information for Photocomm at December 31,
1995 is as follows (000):

<TABLE>
<CAPTION>
Balance Sheet Statement of Operations
------------- -----------------------
<S> <C> <C> <C>
Current assets $ 7,334 Sales $21,765
Total assets 10,361 Net income 839
Current liabilities 2,676 Net income applicable
Total liabilities 3,069 to common shareholders 689
</TABLE>

Solartec

On August 30, 1994, the Company acquired 51% of the issued and
outstanding capital stock of Solartec S.A. ("Solartec"). Solartec is a
fabricator and distributor of photovoltaic products in Argentina. The
Company purchased the Solartec stock in exchange for approximately $1.7
million in cash and 26,786 shares of the Company's common stock. The
Company also has an option to purchase the remaining 49% of Solartec's
issued and outstanding capital stock at a price equal to three times
the tangible net worth per share of Solartec on December 31, 1996 (see
Note 3).

San Jacinto

On December 15, 1993, the Company purchased a 49.99% interest in the
common stock of San Jacinto Company ("San Jacinto"). On the same date,
the Company contributed 48,000 shares of New World Power Corporation
common stock and on June 29, 1994, the Company contributed $274,945 in
cash for its ownership interest. San Jacinto was formed for the purpose
of acquiring the operating assets and liabilities of the Smith Wind
Energy Company ("Smith") and six affiliated limited partnerships
operated by Smith and Six Limited Partnerships known as Triad A, Triad
B, Triad C, Triad D, Triad E, and Triad F Limited Partnerships
("Triad"). Smith and Triad operated a Wind Turbine Energy Park in North
Palm Springs, California. The Company accounts for this investment
under the equity method (see Note 3).

F - 18
<PAGE> 81
THE NEW WORLD POWER CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Entec

In June 1993, the Company acquired 49% of the outstanding capital stock
of Entec S.A. de C.V. ("Entec") for approximately $1.5 million. In
October 1995, the Company contributed an additional $415,000 to
purchase an additional 1% interest in Entec. The Company accounts for
its investment under the equity method. Entec, located in Mexico, is
engaged in project development and rural electrification. During 1995,
Entec continued to experience significant financial hardships and as a
result the Company wrote-down its remaining investment in Entec.

Los Vaqueros

In June 1993, the Company purchased the assets of Los Vaqueros, an
operating wind farm located in the state of California for $380,000.
The acquisition has been accounted for Company accounts for this
investment under the purchase method (see Note 3).

Makani Uwila

In March 1993, the Company acquired all of the outstanding capital
stock of the Makani Uwila Power Corporation in exchange for 48,000
shares of the Company's common stock and $50,000. The acquisition has
been accounted for under the purchase method (see Note 3).

DISCONTINUED OPERATIONS

New World Grid Power Company

During December 1995, the Company announced its intention to
discontinue operations at the New World Grid Power Company ("NWGPC")
due to adverse industry trends in the service segment of the wind power
business. The NWGPC included all operations relating to the Company's
Grid Power Services segment. NWGPC provided installation, operation,
maintenance, repair and retrofit services to various companies in the
wind power industry. The results of NWGPC are reported as discontinued
operations in the accompanying Consolidated Financial Statements.
During December 1995, the Company reached an agreement to sell the
remaining assets of NWGPC for approximately $200,000. The Company
recorded a $913,000 loss on the disposal of this segment in 1995.

NOTE 5. CASH RESTRICTED IN USE

The United Kingdom and Ireland wind farms are required to accumulate
cash in escrow accounts to pay the next principal and interest payments before
cash flow from the wind farms is available for general corporate purposes. Cash
balances aggregating $857,046 are on deposit for these purposes, and are not
currently available for general corporate purposes. Because this cash will be
used to pay the current portion of debt and accrued interest the cash is
reported as a current asset.

F - 19
<PAGE> 82
At December 31, 1995, the Company had $512,508 of restricted cash
representing collateral for outstanding letters of credit. In addition, an
amount of $3.3 million was held in escrow by the Company at December 31, 1995
pursuant to a debt agreement (see Note 28).

NOTE 6. ACCOUNTS RECEIVABLE

The components of accounts receivable as of December 31, 1995 and 1994
are as follows (000):

<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Due from customers $ 3,713 $ 5,328
Due from Entec, S.A. de C.V. - 18
Due from employees 22 139
Due from others 681 311
------- -------
4,416 5,796
Allowance for doubtful accounts 147 476
------- -------
Total $ 4,269 $ 5,320
======= =======
</TABLE>

NOTE 7. INVENTORIES

Inventory consists of the following as of December 31, 1995 and 1994
(000):

<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Raw materials $ 414 $ 506
Work-in-progress 164 456
Finished goods 1,138 3,041
Supplies 228 195
------- -------
1,944 4,198
Less reserve for obsolescence 73 68
------- -------
Total $ 1,871 $ 4,130
======= =======
</TABLE>

F - 20
<PAGE> 83
THE NEW WORLD POWER CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8. PLANT, PROPERTY AND EQUIPMENT

Property, plant and equipment consists of the following as of December
31, 1995 and 1994 (000):

<TABLE>
<CAPTION>
Useful Life
1995 1994 (Years)
---- ---- -------
<S> <C> <C> <C>
Power generation facilities and equipment:

Hydroelectric $ 3,077 $ 3,077 40
Wind:
Owned 30,775 25,955 25
Leased 82 92 10 to 20
Leasehold improvements 1,661 224 shorter of term of
lease or useful life
Buildings and improvements -- 827 15 to 40 years

Office furniture and equipment 2,075 4,867 3 to 5
Land 445 745
Construction work-in-progress -- 1,123
Facility development 89 3,638 25 to 40
------- -------
Total 38,204 40,548

Less accumulated depreciation
and amortization 8,829 4,818
------- -------
$29,375 $35,730
======= =======
</TABLE>

Depreciation and amortization expense, including amortization of assets
held under capital leases, for years ended December 31, 1995 and 1994, the
three-month period ended December 31, 1993, and for the year ended September 30,
1993 was $3,980,408, $955,722, $132,078, and $494,793, respectively.

Maintenance and repair expense for the year ended December 31, 1995 and
1994, the three-month period ended December 31, 1993, and for the year ended
September 30, 1993, was $603,971, $774,071, $97,845 and $365,000, respectively.

F - 21
<PAGE> 84
THE NEW WORLD POWER CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9. GOODWILL

Goodwill at December 31, 1994 relates principally to the Company's
Renewable Energy Ireland Limited and Wolverine operations and consists of the
following as of December 31, 1995 and 1994 (in thousands):

<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Subject to 40 yr. straight-line amortization $ 402 $12,457
Subject to 20 yr. straight-line amortization 1,167 --
Subject to 5 - 15 yr. straight-line amortization -- 1,416
------- -------
1,569 13,873
Less accumulated amortization 20 246
------- -------
Total $ 1,549 $13,627
======= =======
</TABLE>

NOTE 10. INVESTMENTS

The Company's investments in, and advances to, unconsolidated
affiliates consists of the following as of December 31, 1995 and 1994 (in
thousands):

<TABLE>
<CAPTION>
1995 1994
---- ----

<S> <C> <C> <C>
Photocomm, Inc. 48% $12,895 $ --
Fujian Hydro Project 12% 3,500
New World Entec S.A 50% -- 3,905
San Jacinto Power Company 50% 100 815
------- ------
$16,495 $4,720
======= ======
</TABLE>

The equity earnings in unconsolidated affiliates is as follows (in
thousands):

<TABLE>
<CAPTION>
Three month
Year ended Year ended period ended Year ended
December 31, 1995 December 31, 1994 December 31, 1993 September 30, 1993
----------------- ----------------- ----------------- ------------------
<S> <C> <C> <C> <C>
Photocomm, Inc. $ 156 $-- $-- $--
New World Entec S.A (4,331) (950) (112) --
San Jacinto Power Company (24) 39 -- --
Fujian Hydro Project -- -- -- --
------- ----- ----- ----
$(4,199) $(911) $(112) $--
======= ===== ===== ====
</TABLE>

During 1995, the Company recorded impairment charges related to its
equity investments as follows (in thousands):

<TABLE>
<CAPTION>
Amount
------
<S> <C>
Fujian Hydro Project $5,342
San Jacinto Power Company 646
</TABLE>

F - 22
<PAGE> 85
THE NEW WORLD POWER CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11. OTHER NON-CURRENT ASSETS

At December 31, 1995 and December 31, 1994, other non-current assets
consists of the following (in thousands):

<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Deferred project costs $3,080 $2,589
Debt issue costs 980 --
Other 667 1,838
------ ------
$4,727 $4,427
====== ======
</TABLE>

NOTE 12. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities consist of the following as of
December 31, 1995 and 1994 (in thousands):

<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Accounts payable $4,387 $6,384
Accrued interest expense 599 124
Accrued warranty liabilities 102 145
Accrued property taxes -- 133
Commissions payable -- 24
Accrued liabilities 1,028 1,091
Other current liabilities 1,033 1,019
------ ------
Total $7,149 $8,920
====== ======
</TABLE>

NOTE 13. DUE TO RELATED PARTIES

Amounts due to related parties consist of the following at December 31,
1995 and 1994 (in thousands):

<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Sundial International Fund Ltd. (a) $3,615 $ --
Sundial International Fund Ltd. (b) 550 --
Sundial International Fund Ltd. (c) -- 2,200
Due to Solartec stockholders (d) 463 275
Due to NWP stockholders (e) -- 1,000
Other related party notes -- 110
------ ------
Total $4,628 $3,585
====== ======
</TABLE>

F - 23
<PAGE> 86
THE NEW WORLD POWER CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(a) On December 1, 1995, Sundial International Fund Limited ("Sundial"), a
significant stockholder, exchanged its Class B Preferred Stock for a First
Mortgage Note in the principal amount of $3,615,370 on the hydroelectric
facilities of the Company's subsidiary, Wolverine Power Corp., located in
Michigan. The Company also pledged 200 shares of Wolverine Power Corp.,
constituting all of the issued and outstanding stock of Wolverine. The note is
payable, together with accrued interest at the LIBOR plus two percentage points
on December 31, 1997. Notwithstanding the foregoing, principal and interest
shall be due and payable upon written request ("Request Date") by the holder in
seven equal quarterly installments of principal, each equal to five percent of
the principal balance and a final installment in the amount of the unpaid
principal, payable on each three-month anniversary of the Request Date. The
Company received the written demand in accordance with the foregoing on December
1, 1995. Subsequent to December 31, 1995, the Company defaulted on this note and
the loan was restructured (see Note 28). Because of uncertainties surrounding
the Company's ability to comply with all of the revised loan provisions, the
entire balance has been classified as current at December 31, 1995.

(b) On December 20, 1995, The New World Power Company Limited ("NWPCL"), an
English subsidiary of the Company, sold its 0% Senior Secured Note due March 31,
1996 in the original amount of $550,000 to Sundial (see Note 21). The note is
secured by substantially all of the assets of Wolverine Power Corporation. The
Company has also pledged 700,000 common stock shares of REIL, a subsidiary of
NWPCL, as collateral. Subsequent to December 31, 1995, the due date of the Note
was extended (see Note 28).

(c) On December 30, 1994, NWPCL, sold its Exchangeable Senior Secured Guaranteed
Note due December 29, 1995 in the original principal amount $2,200,000 and
warrants to purchase 200,000 shares of the Company's common stock at an initial
exercise price of $7.50 per share expiring January 14, 2000 to Sundial for
$2,037,200 (as part of the transaction, Sundial surrendered warrants to purchase
125,000 shares of the Company's common stock at an initial exercise price of
$15.00 per share expiring November 8, 1998). The effective interest rate on this
loan is 8%. The loan was guaranteed by the Company, and secured by 2,900,000
shares of common stock (subject to adjustment) of Photocomm, a subsidiary of the
Company. The loan was exchangeable at any time prior to December 29, 1995, for
325,925 shares (subject to adjustment) of the Company's common stock. Upon
exchange of the loan, Sundial would also have the right to exchange warrants to
purchase 200,000 shares of the Company's common stock at an initial exercise
price of $15.00 per share expiring November 8, 1998 for warrants to purchase
400,000 shares of the Company's common stock at an initial exercise price of
$7.50 per share expiring January 14, 2004. The Company used the majority of the
net proceeds of the loan to purchase 87.5% of the outstanding stock of REIL, the
owner of a 6.45 MW wind farm in Bellacorick, Ireland. This note was paid in full
in December 1995 with concurrent release of the pledged Photocomm shares.

F - 24
<PAGE> 87
THE NEW WORLD POWER CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(d) Relates to two unsecured notes payable to an officer and stockholders of
Solartec in the amount of $462,500 and $275,000 at December 31, 1995 and 1994,
respectively, bearing interest at an annual rate of 12% per annum.

(e) On December 30, 1994, the Company borrowed $1,000,000 from certain
stockholders at an annual interest rate of 8% per annum. This amount, plus
accrued interest, was repaid on February 10, 1995 out of the proceeds of the
February 1995, Regulation S offering.

NOTE 14. LONG-TERM DEBT

Long-term debt consists of the following at December 31, 1995 and 1994
(in thousands):

<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
8% convertible subordinated notes of $15,750,000 due July 31, 2000, issued
with warrants to purchase 787,500 common shares, net of unamortized debt
discount of $1,887,000 at December 31, 1995. Effective interest rate 9.19%.
Note is secured by, among other assets, the Company's investment in New World
China, including the Fujian Hydroelectric Project and Photocomm $ 13,863 $ -

Notes payable due June 30, 1999, interest at LIBOR plus 1.75%, secured by
assets of the Company's U.K. wind farms. 8,422 6,150

Notes payable due November 30, 2002, interest at Dublin Interbank Market plus
1.75%, secured by substantially all of the assets of Renewable Energy
Ireland, LTD. 1,846 -

Short term notes payable to banks by Solartec. 549 -

Notes payable due November 30, 1997, interest at 10.63%, secured by land and
buildings of Photocomm. - 494

Notes payable due 1999, interest at 5%, collateralized by land and buildings
of Photocomm. - 323

Various notes payable due from 1996 to 1998, interest rates of 8-10%. 774 1,125

Other 161 -
-------- -------
Total 25,615 8,092

Less current portion 17,966 187
-------- -------
Long-term portion $ 7,649 $ 7,905
======== =======
</TABLE>

F - 25
<PAGE> 88
THE NEW WORLD POWER CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Subsequent to December 31, 1995, the Company defaulted on its 8%
convertible subordinated notes, and the debt was restructured (see Note 28). As
described in Note 28, the Company must comply with certain debt covenants under
the restructured agreement, and due to uncertainties surrounding the Company's
ability to comply with certain of these covenants during 1996, the entire
balance has been classified as current. Additionally, various of the Company's
long-term debt agreements contain numerous restrictive covenants including in
addition to others, the inability to upstream to the Company revenue generated
by the U.K. wind farms and others.

The aggregate scheduled maturities and sinking fund requirements of
long-term debt as of December 31, 1995 for each of the next five years, after
adjustment for certain mandatory prepayments as required by the restructured
lending agreements, are as follows (in thousands):

<TABLE>
<CAPTION>
Year Amount
---- ------
<S> <C>
1996 $17,966
1997 3,091
1998 3,347
1999 257
Thereafter 954
-------
Total $25,615
=======
</TABLE>

NOTE 15. LEASES

Capital Lease Obligations

The Company is obligated under capital leases related to wind turbines
and other wind power generation and transmission equipment. These
leases expire on various dates through 1998. The accompanying
consolidated balance sheet includes equipment leases aggregating
$29,035 and $121,035 as of December 31, 1995 and 1994, respectively.

The present value of future minimum capital lease payments as of
December 31, 1995:

<TABLE>
<CAPTION>
Year ending December 31: Amount
------
<S> <C>
1996 $ 91,593
1997 74,609
1998 8,389
Thereafter -
--------
Total minimum rent payments 174,591
Less amount representing interest 15,040
--------
Present value of future minimum capital lease payment 159,551
Less current installments 83,537
--------
Obligations under capital leases, excluding current installments $ 76,014
========
</TABLE>

Operating Leases

F - 26
<PAGE> 89
THE NEW WORLD POWER CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

All of the Company's wind power generation facilities are located on
land leased by the Company under various non-cancelable operating lease
agreements that expire through 2019. Such leases generally contain
renewal options which give the Company the right to extend the leases
at lease rates to be negotiated at the time of lease renewal. The
leases provide for the Company to pay rent based on wind power
generation revenues but not less than a fixed base rental payment. In
addition, the Company has certain equipment and buildings under
non-cancelable operating leases. Rental expense for the year ended
December 31, 1995 and 1994, the three-month period ended December 31,
1993 and the year ended September 30, 1993, was $529,147, $566,039,
$92,571 and $363,314, respectively.

Future minimum rental payments under non-cancelable operating leases
are as follows (in thousands):

<TABLE>
<CAPTION>
Year ending December 31: Amount
------
<S> <C>
1996 $ 379
1997 379
1998 351
1999 339
2000 327
Thereafter 3,242
---------
Total minimum rent payment $ 5,017
=========
</TABLE>

NOTE 16. LITIGATION

Kenetech Windpower, Inc.

On January 30, 1995, Kenetech Windpower, Inc. ("Kenetech") filed a
patent infringement suit in the United States federal court for the
Northern District of California against the Company and Enercon GmbH
("Enercon") relating to the proposed use of Enercon E-40 wind turbines
at the Company's planned wind power generating facility in Big Springs,
Texas. The suit alleges that the use of the Enercon turbines in the
United States would violate certain Kenetech patents and seeks an
injunction and unspecified damages. The Company reviewed the Kenetech
patents in detail and investigated the Enercon technology well before
the suit was filed and, based on such reviews and investigations,
believes that neither the Enercon turbine nor its mode of operation
infringes on any claims of any of Kenetech's patents. Accordingly, the
Company believes that the Kenetech suit is without merit and therefore,
the ultimate resolution will not have a material adverse effect on the
Company's financial position. The Company intends to vigorously contest
the suit. There can be no assurance, however, that the Company will
prevail in its defense of the suit and that an injunction and/or
monetary damages will not be imposed against the Company (see Note 28).

Energy Unlimited

F - 27
<PAGE> 90
THE NEW WORLD POWER CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company has brought an arbitration proceeding against Energy
Unlimited, Inc. and its affiliates seeking damages for breach of a
settlement agreement entered into in 1993. The respondents have
asserted claims for recision of the settlement agreement and breach of
contract. The Company intends to pursue vigorously its claims in the
arbitration proceeding and believes that the defendants' claims and
defenses lack substantial merit (see Note 28).

Wolverine License Applications

The Federal Power Act requires that all hydroelectric facilities
operating on navigable streams obtain a license from the Federal Energy
Regulatory Commission ("FERC"). The Company's applications for licenses
for its Michigan hydroelectric facilities have been accepted and are
pending final action. In connection with the licensing process, the
Michigan Department of Natural Resources ("MDNR") recommended that the
Company be required to modify its existing method of operation to the
run-of-the-river method. Although it is not possible to predict what
conditions will be imposed by the FERC, the Company believes that the
FERC will require a change in the method of operation within the next
three to five years so as to release a minimum daily flow of water. If
the FERC were to require a change to the run-of-the-river method of
operation, it would adversely affect the Company's power production
from these facilities and materially reduce power production revenue
unless the Company retrofits these facilities. Minimum flow operation
would not affect power production at the three upstream facilities but
would reduce peak-period energy capacity and revenue at the downstream
facility unless the Company retrofitted the facility for minimum flow
operation. Retrofitting the downstream facility for minimum flow
operation would cost approximately $300,000 and take approximately one
year to complete.

Pacific Gas & Electric Company

The Company was a member of the plaintiff class in a suit against
Pacific Gas & Electric Company ("PG&E") based on PG&E's refusal to
offer higher rates under its power purchase contracts in the early
1980s. In January 1992, the Company and other members of the class
entered into a settlement agreement which was approved by the
California Supreme Court in November 1992. The Company recognized
approximately $1,331,000 in other income in September 1993 upon
confirmation of the specific settlement amount.

The Company is also subject to certain other legal proceedings and
claims, including a threatened suit by certain alleged creditors to
commence an involuntary bankruptcy against the Company unless the
creditors are paid in full. It is management's opinion that the
ultimate resolution of the aforementioned claims will not have a
material adverse effect on the Company's consolidated financial
position.

F - 28
<PAGE> 91
THE NEW WORLD POWER CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 17. OTHER COMMITMENTS AND CONTINGENCIES

Performance Bond

In connection with the Company's proposal to construct a hydroelectric
facility at Anderson Falls, Argentina, the Company was required to post
a $1 million performance bond. The Company's liquidity problems have
halted the construction of this facility and therefore the Company
faces the risk that this bond may be called. Management is currently
seeking a buyer for this development project who would assume the
Company's obligations under the performance bond. The Company has
recorded a reserve for its estimated exposure with respect to this
project.

Asset Sales

As discussed in Note 28 to the financial statements, in order to
satisfy the terms of the restructured 8% convertible subordinate note,
the Company must sell certain assets or securities for specified
minimum amounts during 1996. Under the restructured agreement, the
Company must sell assets for minimum proceeds of $10 million on or
before July 31, 1996, with cumulative proceeds from the sale of assets
increasing to $27 million by November 30, 1996. A portion of the
proceeds from the sale of these assets is to be used to reduce the
obligations outstanding under the agreement. Failure to obtain
sufficient proceeds and make the related debt payments would constitute
a breach of the amended agreement and result in the debt becoming
callable by the lender.

Capital Expenditures

Under the power purchase contract with Consumers Power Company
("Consumers"), the Company is required to expend approximately $2.5
million for the rehabilitation of its Wolverine hydroelectric
facilities prior to December 31, 1995. Through December 31, 1995, the
Company had made qualifying capital expenditures of approximately
$2.115 million. In addition, the Company is currently re-negotiating
the terms of the Consumers' power purchase contract, as the established
contract rates expired December 31, 1995. Management anticipates
resolving the current non-compliance regarding the rehabilitation
funding requirement and reaching agreement on a new power purchase
contract. Failure to reach agreement regarding these matters may result
in the termination of the relationship by Consumers. To date, Consumers
has not sought to terminate the contract or suggest that it may seek
other relief.

NOTE 18. MINORITY INTERESTS

In May 1994, the Company acquired all of the common stock held by the
minority shareholders of two of the Company's majority-owned subsidiaries,
Arcadian and Wolverine, eliminating the previous minority interest. Due to
cumulative losses at these companies prior to September 30, 1993, there was no
minority interest shown on the consolidated balance sheet.

F - 29
<PAGE> 92
THE NEW WORLD POWER CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The minority interest in consolidated subsidiary companies is as
follows (in thousands):

<TABLE>
<CAPTION>
Minority Share
Minority December 31, of 1995 Net
Interest % 1995 Income (Loss)
---------- ---- -------------
<S> <C> <C> <C>
REIL (Bellacorick) 12-1/2% 634 14
Solartec S.A. 49% 689 (298)
------- ---------
Total $ 1,323 $ (284)
======= =========
</TABLE>

NOTE 19. INCOME TAXES

As discussed in Note 1, the Company adopted FAS 109 as of October 1,
1993. There was no cumulative effect of this change in accounting for income
taxes as of October 1, 1993 and, therefore, the prior years' financial
statements have not been restated to apply the provisions of FAS 109.

Income tax expense (benefit) attributable to income from continuing
operations consists of:

<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
------- -------- -----
<S> <C> <C> <C>
Year ended December 31, 1995:
U.S. federal $ -- $ -- $ --
State and local (1,315) -- (1,315)
Foreign 23,911 -- 23,911
-------- -------- --------
22,596 $ -- 22,596
======== ======== ========

Year ended December 31, 1994:
U.S. federal $ -- $ -- $ --
State and local 44,427 -- 44,427
Foreign 60,000 -- 60,000
-------- -------- --------
$104,427 $ -- $104,427
======== ======== ========

Three months ended December 31, 1993:
U.S. federal $ -- $ -- $ --
State and local 3,186 -- 3,186
-------- -------- --------
3,186 $ -- 3,186
======== ======== ========

Year ended September 30, 1993:
U.S. federal $321,723 $ -- $321,723
State and local 173,222 -- 173,222
-------- -------- --------
$494,945 $ -- $494,945
======== ======== ========
</TABLE>

F - 30
<PAGE> 93
THE NEW WORLD POWER CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Differences between the effective income tax rate and the statutory U.S. federal
income tax rate for the year ended December 31, 1995 are as follows:

<TABLE>
<CAPTION>
Percentage
----------
<S> <C>
Statutory U.S. Federal Income Tax benefit (34.0%)
Loss without benefit 7.0%
Temporary difference without benefit 27.3%
Other (0.3%)
-----
0%
=====
</TABLE>

No current or deferred U.S. federal tax expense or benefit has been
recorded due to the significant consolidated tax loss and the less than likely
realization of deferred tax benefits. The state, local and foreign tax expense
relates to tax expense in certain jurisdictions where one or more of a Company's
subsidiaries have generated net taxable income on a separate company basis.

The Company and subsidiaries have previously incurred net operating
losses for financial reporting purposes, some of which may be available as
carryforwards to offset future taxable income. The tax effects of temporary
differences and carryforwards which give rise to future income tax benefits and
payables at December 31, 1995 are as follows:

<TABLE>
<S> <C>
Non-current assets:
Net operating loss carryforwards $ 10,798,304
,904
Loss on impairment 11,592,838
Tax credit carryforwards 595,000
Discontinued operations 221,742
Other 111,766
Valuation allowance (23,185,187)
------------
Net non-current asset 134,463
------------
Non-current liabilities:
Depreciation 134,463
------------
Net non-current liability 134,463
------------
Net deferred tax $ --
============
</TABLE>

The tax credit carryforwards of $595,000 expire by 2002. At December
31, 1995 the Company has net operating loss carryforwards which expire as
follows:

<TABLE>
<CAPTION>
Expiring Federal State Foreign Total
- -------- ------- ----- ------- -----
<S> <C> <C> <C> <C>
1996-2002 $ 2,368,476 $13,143,154 $ 830,000 $16,341,630
2003-2010 24,947,874 5,718,021 -- 30,665,895
----------- ----------- ----------- -----------
Total $27,316,350 $18,861,175 $ 830,000 $47,007,525
=========== =========== =========== ===========
</TABLE>

A full valuation allowance has been recorded against the deferred taxes
as realization is considered not more likely than not as of December 31, 1995
and 1994.

F - 31
<PAGE> 94
THE NEW WORLD POWER CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Due in part to the transactions described in Note 4, where stock of the
Company was transferred, ownership changes have occurred which will result in a
limitation on the utilization of net operating losses under Section 382 and 383
of the Internal Revenue Code. These Sections provide that any future realization
will be subject to annual limitation based on the value of the Company at the
time an ownership change occurred. In addition, $2,296,398 of the federal net
operating loss carryforward relate to losses of Northern Power Systems Inc.
which was acquired in 1993. These acquired losses can only be utilized to offset
future income of Northern Power Systems. The federal net operating loss
carryforward may further be subject to limitation based upon the consolidated
tax return loss disallowance rules which provide that any loss incurred with
respect to the sale or worthlessness of stock of a subsidiary may be limited or
disallowed.

NOTE 20. SERIES B PREFERRED STOCK

On December 31, 1992, the Company issued and sold 375,000 shares of the
Company's Series B Cumulative Redeemable Exchangeable Preferred Stock and
warrants to purchase 375,000 shares of the Company's common stock. The warrants
entitle the holder to purchase common stock for $8.00 per share (subject to
anti-dilution adjustment) until December 31, 1997. The Series B Preferred Stock
is exchangeable after January 1, 1996 into Wolverine's First Mortgage Notes (at
a rate of $8.00 in principal amount for each share exchanged plus accrued
dividends), and is exchangeable prior to that date only in the event of a
material adverse change in the business or financial condition of the Company or
Wolverine. The Series B Preferred Stock is redeemable by the Company at $8.00
per share, plus accrued dividends, after January 1, 1996. Dividends on the
Series B Preferred Stock are cumulative at the annual rate of 6.5% and payable
through the issuance of units (one unit for each $8.00 in accrued but unpaid
dividends) each consisting of one share of Series B Preferred Stock and a
warrant for one share of common stock having the same terms as the warrant
issued in connection with the purchase of the Series B Preferred Stock. As of
December 31, 1994, the Company accrued $214,429 of Series B Preferred Stock
dividends. The transaction was valued so as to allocate $2,625,000 to the Series
B Preferred Stock and $375,000 to the warrants. The resulting discount to the
$3,000,000 face value of the stock will be amortized over five years.

On December 1, 1995, the holder of the Series B Preferred Stock
exercised its option to exchange the Series B Preferred Stock for a Wolverine
First Mortgage Note in the amount of $3,615,370 and 76,921 warrants, expiring on
December 31, 1997, with interest at the LIBOR + 2% points to purchase common
stock at an exercise price of $8.00 per share. At the date of the transaction,
the Company charged the remaining unamortized discount associated with the
Series B Preferred Stock issuance to additional paid-in-capital. The value of
the warrants issued with the transaction were determined to be de minimus.

F - 32
<PAGE> 95
THE NEW WORLD POWER CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 21. CAPITAL STOCK

Common Stock

At the annual meeting of stockholders held on June 22, 1995, the
shareholders approved an increase of authorized shares from 20,000,000 to
40,000,000.

On January 11, 1994, the Company agreed to acquire all stock held by
Fayette Manufacturing Corporation in Arcadian Power Corporation and Wolverine.
The acquisition of the Arcadian stock took place in connection with the merger
of Arcadian into a wholly-owned subsidiary of the Company. In connection with
the merger, the minority shareholders of Arcadian received 93,504 shares of
common stock issued by the Company. The acquisition of the Wolverine shares
occurred upon closing of the Arcadian merger required the payment of $400,000 to
Fayette and the issuance of warrants for 25,000 shares of common stock.

In March 1994, the Company sold 1,500,000 units, at $11.50 per unit, in
an offshore offering pursuant to Regulation S under the Securities Act of 1933.
Each unit consists of one share of common stock and a warrant to purchase one
share of common stock at an initial exercise price of $15.00 per share expiring
November 8, 1998. The Company has the right to redeem the warrants at $.01 per
warrant upon not less than 30 days notice, if the closing price of the common
stock for the 20 consecutive trading days immediately preceding the date of such
notice equals or exceeds 150% of the initial exercise price of the warrants. The
Company received approximately $15,744,460 in net proceeds after deducting fees
for the placement agent, legal fees and other expenses of approximately
$1,504,540. The placement agent also received warrants to purchase up to 150,000
units at an initial exercise price of $13.80 per unit expiring March 3, 1999.

In June 1994, the Company entered into a 15-year business alliance
agreement with Westinghouse jointly to develop, market, construct and own
renewable power projects, such as utility-scale wind farms, off-grid generating
systems and wireless photovoltaic systems. Under the agreement, the Company and
Westinghouse will jointly market the Company's renewable power projects and
products and Westinghouse will have the option to participate with the Company
in renewable power projects. In consideration of Westinghouse's obligations
under the agreement, the Company agreed to issue to Westinghouse up to 459,770
shares of the Company's common stock, in installments, over a four-year period
(of which 93,504 shares were issued in 1994) and Incentive Warrants which will
enable Westinghouse to purchase up to 819,778 shares of the Company's common
stock, based upon certain operating revenue targets for the Company. At December
31, 1995, management was uncertain as to the future benefits to be derived from
this business alliance. As a result, previously recorded goodwill of
approximately $800,000 was written-off and included within the 1995 impairment
charge. Additionally, the Company had not issued approximately 90,000 shares of
common stock and other securities issuable pursuant to this agreement pending
future discussions with Westinghouse.

In July 1994, Westinghouse and the Company entered into a purchase
agreement pursuant to which the Company issued 465,780 shares of common stock to
Westinghouse in exchange for (i) 1,800,000 shares of common stock of Photocomm,
(ii) 8,690 shares of Series B Convertible Preferred Stock of Photocomm, and
(iii) a Subordinated Convertible Debenture in the original principal amount of
$250,000. In addition, the Company issued 29,357 shares for an account
receivable in the amount of $304,000 which was owed to Westinghouse by
Photocomm.

F - 33
<PAGE> 96
THE NEW WORLD POWER CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In August 1994, the Company sold 1,150,000 units, at $11.00 per unit,
in an offshore offering pursuant to Regulation S under the Securities Act of
1993. Each unit consists of one share of common stock and a warrant to purchase
one share of Common Stock at an initial exercise price of $15.00 per share
expiring November 8, 1998. The Company has the right to redeem the warrants at
$.01 per warrant upon not less than 30 days notice, if the closing price of the
common stock for the 20 consecutive trading days immediately preceding the date
of such notice equals or exceeds 150% of the initial exercise price of the
warrants. The Company received approximately $11,453,686 in net proceeds after
deducting the placement agent, legal fees and other expenses of approximately
$1,196,314. The placement agent also received warrants to purchase up to 115,000
units at an initial exercise price of $13.20 per unit expiring August 30, 1999.

In February 1995, The New World Power Company Limited, a wholly owned
subsidiary of the Company, acquired 87.5% of REIL, the owner and operator of a
6.45 MW wind farm in Bellacorick, Ireland, in exchange for $1,700,000 and
104,082 shares of the Company's common stock valued at $637,500.

In February 1995, the Company sold 1,500,000 units, at $6.00 per unit,
plus the surrender of prior warrants to purchase one share of common stock at an
initial exercise price of $15.00 per share expiring November 8, 1998 in an
offshore offering pursuant to Regulation S under the Securities Act of 1933.
Each unit consists of one share of common stock and two warrants, each to
purchase one share of common stock at an initial exercise price of $7.50
expiring January 14, 2000. The Company has the right to redeem the warrants at
$.01 per warrant upon not less than 30 days notice, if the closing price of the
common stock for the twenty consecutive trading days immediately preceding the
date of such notice equals or exceeds $15.00. The Company received approximately
$8.2 million in net proceeds after deducting fees for the placement agent of
approximately $720,000 and legal fees and other expenses of approximately
$80,000. The placement agent also received warrants to purchase 150,000 units at
an initial exercise price of $7.20 per unit expiring January 14, 2000 as part of
the placement agent fee. The placement agent subsequently purchased 120,000
units for $720,000 from the Company.

On August 15, 1995, in connection with its investment in the Fujian
Chang Ping Hydro Company, Ltd., the Company issued 715,000 shares of common
stock (see Note 4).

F - 34
<PAGE> 97
THE NEW WORLD POWER CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

At December 31, 1995 and December 31, 1994, the Company had outstanding
warrants of 8,046,949 and 5,223,528, respectively, of which 819,778 were not
exercisable at both dates. The outstanding warrants' exercise price range from
$3.00 to $15.00 at both dates. Subsequent to December 31, 1995, the exercise
price of certain of the warrants were adjusted (see Note 28).

NOTE 22. STOCK OPTION PLAN

In May 1993, the Company adopted the 1993 Stock Incentive Plan (the
"Plan") pursuant to which it may issue awards and options to purchase up to
500,000 shares of common stock to its employees, directors and consultants. On
January 31, 1995, the Plan was amended, increasing the number of shares
authorized for options under the Plan to 2,000,000 shares. The 1993 Stock
Incentive Plan replaced the Company's 1989 Stock Incentive Plan, except as to
options for 584,067 shares which were then outstanding under the 1989 Plan.
Options to purchase Common Stock at December 31, 1995 and 1994, and September
30, 1993, are shown below.

<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Options outstanding, beginning of year 578,422 568,210 577,400
Exercised during the year (at $3.00 per share) -- -- 20,000
Forfeitures during the year -- -- --
Granted during the year 1,457,665 10,212 10,810
--------- ------- -------
Outstanding, end of year
(at prices ranging from $3.00 to $12.00) 2,036,087 578,422 568,210
========= ======= =======
Eligible for exercise, end of year 613,606 578,422 568,210
========= ======= =======
</TABLE>

The Company also issued to directors and officers of the Company
583,350 other options to purchase common stock at prices ranging from $3.30 to
$9.375. Of these options, 83,350 are currently exercisable, 250,000 are
exercisable after November 1998 and 250,000 have been forfeited.

NOTE 23. RELATED PARTY TRANSACTIONS

In addition to the related party transactions described in Note 13, the
Company had the following related party transactions:

In fiscal 1989, Arcadian and Wolverine entered into management
agreements with a corporation controlled by a major stockholder and principal
officer of the Company to provide certain management services. The Company and
its subsidiaries incurred management fees under these agreements of $476,000,
$480,000, $120,000 and $480,000 during the years ended December 31, 1995 and
1994, the three-month period ended December 31, 1993 and the year ended
September 30, 1993, respectively.

F - 35
<PAGE> 98
THE NEW WORLD POWER CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In May 1995, the Company entered into a ten year lease agreement with
the same stockholder for it's new corporate headquarters. The lease requires
annual payments of $42,000 with annual increases based on the Consumer Price
Index. In 1995, the Company satisfied the annual rent payment, for the new
corporate headquarters, through the forgiveness of a receivable from the same
major stockholder and principal officer.

Since March 1991, the Company's former corporate headquarters have been
subleased from this same stockholder. Lease payments of $14,400, $14,400, $3,600
and $14,400 were made during the years ended December 31, 1995 and 1994, the
three-month period ended December 31, 1993 and the year ended September 30,
1993, respectively.

In fiscal 1993, the Company contracted with a construction company
owned by the same stockholder for leasehold improvements to the Company's new
corporate headquarters. Through fiscal 1995, $1,515,532 of construction payments
were made under this agreement.

A company controlled by another major stockholder and director of the
Company acted as placement agent in the offshore offerings completed by the
Company in May 1993, November 1993, March 1994, August 1994 and February 1995
(see Note 20). The Company paid the placement agent fees totaling $4,236,000 in
connection with these offerings. In connection with the May 1993 offering, the
placement agent received warrants to purchase 85,000 shares of common stock at
an initial exercise price of $10.80 per share expiring May 24, 1998. In
connection with the November 1993 offering, the placement agent received
warrants to purchase 64,000 units at an initial exercise price of $12.00 per
unit expiring November 8, 1998. In connection with the March 1994 offering, the
placement agent received warrants to purchase 150,000 units at an initial
exercise price of $13.80 per unit expiring March 3, 1999. In connection with the
August 1994 offering, the placement agent received warrants to purchase 115,000
units at an initial exercise price of $13.20 per unit expiring August 30, 1999.
In connection with the February 1995 offering, the placement agent received
warrants to purchase up to 150,000 units at $7.20 per unit expiring January 14,
2000. The placement agent fee related to this offering was paid by the Company
through the issuance of 120,000 shares of common stock. In addition, during 1994
the Company paid the placement agent a $61,116 fee in connection with the
placement of the $2.2 million promissory note (see Note 13). Further, during
1995, the placement agent purchased $2,622,000 of the 8% convertible
subordinated notes.

Subsequent to December 31, 1995, the Company entered into consulting
agreements with certain stockholders to perform services in connection with the
Company's restructuring plans as described in Note 2.

F - 36
<PAGE> 99
THE NEW WORLD POWER CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 24. SEGMENT INFORMATION

The Company's operations are classified into four segments: grid power
production, grid power services, wireless power sales and other products and
services. Facilities within the grid power production segment sell electricity
generated by wind farms and hydroelectric plants to customers under long-term
power sales contracts. The grid power services segment provide installation,
operation, maintenance, repair and retrofit services to the wind farm power
industry, which was discounted during 1995 (Note 13). Operations within the
wireless power segment include the manufacture, assembly and installation of
renewable power generating systems. The other products and services segment
designs, develops, manufactures and installs wind turbines, and are included
within corporate, eliminations and others.

The following table shows assets and other financial information by
segment and geographical area for the year ended December 31, 1995 and 1994, the
three-month period ended December 31, 1993 and the year ended September 30, 1993
(in thousands).

<TABLE>
<CAPTION>
Year Three Months
Ended Year Ended Ended Year Ended
December 31, December 31, December 31, September 30,
1995 1994 1993 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Operating revenue:
Grid Power Production $ 7,735 $ 3,129 $ 275 $ 1,730
Wireless Power Sales 8,647 18,878 430 1,432
Corporate, Eliminations and others (9) 901 (15) 810
-------- -------- -------- --------
Total operating revenue $ 16,373 $ 22,908 $ 690 $ 3,972
======== ======== ======== ========
Operating (loss) profit:
Grid Power Production $(26,562) (946) (431) 206
Wireless Power Sales (1,472) 332 (281) (232)
Corporate, Eliminations and others (9,739) (5,644) 846 (2,190)
-------- -------- -------- --------
Total operating (loss) profit $(37,773) $ (6,258) $ 134 $ (2,216)
======== ======== ======== ========

Assets at December 31:
Grid Power Production $ 31,791 $ 31,654 $ 8,724 $ 15,865
Wireless Power Sales 17,840 12,607 2,022 2,193
Corporate, Eliminations and others 15,765 29,912 19,222 4,920
-------- -------- -------- --------
Consolidated assets $ 65,396 $ 74,173 $ 29,968 $ 22,978
======== ======== ======== ========
Capital expenditures:
Grid Power Production $ 5,281 $ 22,543 $ 315 $ 1,678
Wireless Power Sales 5 2,773 128 1,010
Corporate, Eliminations and others 1,392 (227) 509 342
-------- -------- -------- --------
Consolidated capital expenditures $ 6,678 $ 25,089 $ 952 $ 3,030
======== ======== ======== ========
Depreciation and amortization
Grid Power Production $ 3,434 $ 389 $ 58 $ 403
Wireless Power Sales 18 124 16 49
Corporate, Eliminations and others 528 442 58 85
-------- -------- -------- --------
Consolidated depreciation
and amortization expense $ 3,980 $ 955 $ 132 $ 537
======== ======== ======== ========
</TABLE>

F - 37
<PAGE> 100
THE NEW WORLD POWER CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
Three Months
Year Ended Year Ended Ended Year Ended
December 31, December 31, December 31, September 30,
1995 1994 1993 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Impairment Charge:
Grid Power Production $20,905 $ -- $ -- $ --
Wireless Power Sales 2,277 -- -- --
Corporate, Eliminations and others 1,249 -- -- --
------- ------- ------- -------
Consolidated impairment charge $24,431 $ -- $ -- $ --
======= ======= ======= =======
Geographic Revenue:
North America $ 5,233 $20,641 $ 690 $ 3,972
Central and South America 5,831 1,939 -- --
Europe 5,309 328 -- --
------- ------- ------- -------
Consolidated Geographic Revenue $16,373 $22,908 $ 690 $ 3,972
======= ======= ======= =======
Geographic Assets:
North America $29,192 $47,321 $29,968 $22,978
Central and South America 7,383 4,826 -- --
Europe 25,321 22,026 -- --
Asia 3,500 -- -- --
------- ------- ------- -------
Consolidated Geographic Assets $65,396 $74,173 $29,968 $22,978
======= ======= ======= =======
</TABLE>

Prior to 1994, two public utilities, Consumers Power Company of
Michigan ("Consumers") and Pacific Gas & Electric of California ("PG&E"), each
account for more than 10% of total revenues. In fiscal 1995 and 1994, no
customer accounted for more than 10% of total revenue.

NOTE 25. FINANCIAL INSTRUMENTS

By nature, all financial instruments involve risk, generally market
risk arising from change in interest rates and credit risk. Financial
instruments that potentially subject the company to credit risk consist
primarily of cash deposits, accounts receivable, accounts payable and long-term
debt. Statements of Financial Accounting Standards No. 107, "Disclosure about
Fair Value of Financial Instruments", defines the fair value of a financial
instrument as the amount at which the instrument could be exchanged in a current
transaction between willing parties, other than in a forced liquidation sale.

F - 38
<PAGE> 101
THE NEW WORLD POWER CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
1995
---------------------------
Carrying Estimate Fair
Amount Value
------ -----
(In thousands)
<S> <C> <C>
Assets:
Cash and cash equivalents $ 1,167 $1,167
Cash restricted in use 4,670 4,670
Notes receivable 186 186
Liabilities:
Debt due to Related Parties 4,919 --
Long-term Debt 26,378 --
</TABLE>

The following methods and assumptions were used to estimate the fair
value of each class of financial instruments:

Cash and Cash Equivalents, Cash Restricted in use and Notes Receivable
- The carrying amount is a reasonable estimate of fair value.

Debt Due to Related Parties and Long-term Debt - It was not practicable
to estimate the fair value of these financial instruments for 1995. See
Note 13 and Note 14 for debt terms.

The fair value estimates presented herein are based on pertinent
information available to management as of December 31, 1995. Although management
is not aware of any factors that would significantly affect the estimated fair
value amounts, such amounts have not been comprehensively revalued for purposes
of these financial statements since those dates , and estimates of fair value
subsequent to those dates may differ significantly from the amounts presented
herein.

NOTE 26. CONCENTRATIONS OF RISK

The Company derives all of its revenue from the production and sale of
electric power generated from renewable sources and, to a lesser extent, the
sale of products related to the renewable energy industry. As a result, the
Company is subject to several concentrations of risk. A significant majority of
the Company's revenues are derived from contracts for the sale of power to
regulated public utilities. Under many of these contracts, the price for energy
is subject to the utilities' "avoided cost". "Avoided cost" is affected by,
among other factors, the availability and market price of oil, gas, and other
energy sources. Additionally, the Company will have to renegotiate contracts
with the utilities when the present contracts expire. Further, the renewable
energy industry has, in the past, been subject to legislative and regulatory
changes, and will likely continue to be affected by such factors for the
foreseeable future.

F - 39
<PAGE> 102
THE NEW WORLD POWER CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 27. CHANGE IN FISCAL YEAR

The Company changed its fiscal year end from September to a calendar
year end in 1994. The period October through December 1993 was a transition
period.

NOTE 28. SUBSEQUENT EVENTS

Kenetech Litigation

A hearing was held on January 12, 1996 relating to the patent
infringement suit filed by Kenetech against the Company on January 30,
1995, where two motions were filed by Enercon GmbH and the Company. The
first motion was granted and Kenetech's claim for relief based on
actual patent infringement was dismissed. An initial determination
decision was rendered by the International Trade Commission on May 31,
1996 for the second motion, denying the claim and affirming that
Enercon equipment, if used in the United States, would infringe the
asserted Kenetech patents. Final determination is expected on or before
August 31, 1996, at which time an appeal is available. Management
believes that the decision rendered is vulnerable to reversal and will
be pursued. These proceedings are expected to be concluded without
liability on the part of the Company other than incidental costs of
defending.

Energy Unlimited Litigation

On February 29, 1996, the Company entered into a Settlement and Asset
Purchase Agreement with Energy Unlimited, Inc. and its affiliates. In
connection with this agreement, the Company received $350,000
representing the purchase price of certain wind turbines as full and
final settlement of all claims asserted in the arbitration.

Consumers Power Company Power Purchase Contract

The rates under this power purchase contract were subject to
negotiation on December 31, 1995. The Company has not yet been able to
renegotiate its contract with Consumers Power Company and has extended
its contract on a year to year basis under the conditions of the
original contract.

Debt Restructuring

During February and March 1996, the Company defaulted on three of its
loan agreements, and as a result, was required to restructure those
obligations. The more significant terms of these restructured
agreements are as follows:

F - 40
<PAGE> 103
THE NEW WORLD POWER CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8% Secured Subordinated Notes Due July 31, 2000

- The maturity date was changed from July 31, 2000 to July 31,
1997 or sooner if sinking fund balance is sufficient to redeem
notes.

- In addition to collateral in the Company's Photocomm shares
and New World China investment, additional collateral was
pledged as follows:

- The Company's 51% share in Solartec
- The Company's 29% share of REIL, that is not
otherwise encumbered
- The Company's 100% share of the Dona Julia
development project
- The Company's share in New World Power Texas Company
- The Company's U.S. wind farm equipment
- New World Power Company Limited's shares
- A second lien on the Company's United Kingdom wind
farms
- 744,000 shares of the Company's common stock

- Interest payments were restructured to include payments in the
form of interest notes and warrants for the Company's common
shares, as follows:

February 15, 1996 $60 of notes and 40 warrants per $1,000 of
outstanding subordinated notes
July 31, 1996 $70 of notes and 50 warrants per $1,000 of
outstanding subordinated notes or cash at an
8% annual rate, at the Company's option
January 31, 1997 Cash at an 8% annual rate
July 31, 1997 Cash at an 8% annual rate

The warrants will have a five year expiration date from the date of
issue and the exercise price will be $1.75, subject to certain
anti-dilution provisions.

- The 8% secured subordinated notes are exchangeable into New
Notes (as defined in the agreement). The New Notes are
unsecured and mature on July 31, 2000 and are convertible into
common shares at 65% to 75% of the common stock price, with a
minimum conversion price of $1 and maximum price of $3.25. The
New Notes are callable by the Company after the common stock
closes above $7 for 20 days out of 30 trading days.

- The Company will raise $10 million of net proceeds from the
sale of assets or securities by July 31, 1996.

- The Company will raise an additional $17 million of proceeds
from the sale of assets or securities by November 30, 1996.

- 100% of the proceeds from the sale of Photocomm shares and the
Company's Solartec subsidiary must be placed in a sinking fund
for the purpose of retiring the debt.

- 70% of the proceeds from the sale of the United Kingdom wind
farms, New World Power Texas Company, and New World Power
Company Limited must be placed in a sinking fund for purposes
of retiring debt.

F - 41
<PAGE> 104
THE NEW WORLD POWER CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8% Secured Subordinated Notes Due July 31, 2000 continued

- The exercise price of warrants originally issued with the debt
was reset to $1.75 per share.

- The $3.3 million of original proceeds from the loan held in
escrow will be released from escrow to the Company for
purposes of paying corporate expenses until July 1, 1996.
Thereafter, any amounts remaining in escrow will be held as
collateral against the loan.

0% Senior Secured Note

- Face amount of the note was changed from $550,000 to $579,851.

- The maturity date was changed from March 31, 1996 to December
1, 1996.

- The Company pledged additional collateral of 700,000 shares of
Renewable Energy Ireland Limited as security.

First Mortgage on Wolverine Power Corporation

- The note was refinanced with principal payments rescheduled
from seven quarterly payments commencing March 1, 1996 to four
payments due December 1, 1996, March 1, 1997, June 1, 1997 and
July 31, 1997.

- Interest was reset to LIBOR plus 2%.

- An additional 500 shares of New World Power Company Ltd. were
pledged as collateral.

- Defaults under the old loan agreement were waived by the
lender.

- The lender surrendered approximately 1.1 million warrants to
purchase common stock at exercise prices between $7.50 and
$15.00 for 444,000 new warrants with an exercise price of
$1.75.

As a result of the debt restructuring described above, which requires
the Company to make asset sales in 1996 in order to pay its debt
obligations, the Company reclassified the 8% secured subordinated notes
and First Mortgage on Wolverine to current obligations as of December
31, 1995 (Note 13 and 14).

F - 42
<PAGE> 105
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE

To the Board of Directors of
The New World Power Corporation:

Our audit of the consolidated financial statements referred to in our
report dated June 27, 1996 listed in the accompanying index, which
contains an explanatory paragraph with respect to substantial doubt
about the Company's ability to continue as a going concern, also
included an audit of the Financial Statement Schedule listed in Item
14(a) of this Form 10-K. In our opinion, this Financial Statement
Schedule presents fairly, in all material respects, the information set
forth therein when read in conjunction with the related consolidated
financial statements.

Price Waterhouse LLP

Hartford, CT
June 27, 1996

F - 43
<PAGE> 106
Sheet1

THE NEW WORLD POWER CORPORATION

SCHEDULE 1 - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(In thousands)

CONDENSED STATEMENT OF OPERATIONS
for the year ended December 31, 1995

<TABLE>
<CAPTION>
1995
----
<S> <C>
Revenues $ 11,487
Cost of sales 11,579
--------
Gross profit (92)
Research and development 426
Project development expense 4,361
General and administrative expenses 7,833
Equity loss in non-consolidated affiliates 4,199
Impairment charge 15,069
--------
Operating loss (31,980)
Other expense 1,835
Provision for income taxes 4
--------
Net loss $(33,819)
========

<CAPTION>
CONDENSED BALANCE SHEET
December 31, 1995

1995
----
<S> <C>
Cash and cash equivalent $ 36
Other current assets 10,295
--------
Total current assets 10,331
--------
Investments 13,728
Due from subsidiaries 8,081
Property, plant, equipment and other non-current assets 12,011
--------
Total assets $ 44,151
========

Current liabilities $ 5,908
Current portion of long-term debt 15,197
--------
Total current liabilities 21,105
--------
Long term debt, net of current portion 124
Long term liabilities 836
Minority interest 1,323
--------
Total liabilities 23,388
--------
Capital stock 73,806
Accumulated deficit (53,043)
--------
Shareholders' equity 20,763
--------
Total liabilities and shareholders' equity $ 44,151
========
</TABLE>

F-44
<PAGE> 107
Sheet 1

THE NEW WORLD POWER CORPORATION

SCHEDULE I -- CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(In thousands)

CONDENSED STATEMENT OF CASH FLOWS
for the year ended December 31, 1995

<TABLE>
<CAPTION>
1995
----
<S> <C>
Net cash used for operating activities $(7,810)
Net cash used for investing activities (11,365)
Net cash provided by financing activities 15,775
-------
Increase (decrease) in cash and equivalents (3,400)
Cash and cash equivalents at the beginning of the year 3,436
-------
Cash and cash equivalents at year end $ 36
=======
</TABLE>

NOTES:

See the Company's consolidated financial statement as of, and for the year
ended December 31, 1995, for a description of material contingencies,
provisions for long-term obligations and guarantees of the registrant.

F-45

<PAGE> 1
Exhibit 10.40

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT is entered into as of August 1, 1995, by and
between THE NEW WORLD POWER CORPORATION, a Delaware corporation with its
principal place of business at The Farmhouse, 558 Lime Rock Road, Lime Rock,
Connecticut 06039 (the "Company"), and JOHN D. KUHNS, an individual whose
principal residence is at 15 White Hollow Road, Lime Rock, Connecticut 06039
(the "Executive").

Background

The Executive is presently employed by the Company as the Chairman of
the Board and Chief Executive Officer and is providing certain consulting
services to two subsidiaries of the Company under certain Management Agreements
with East Rock Partners, Inc., a company affiliated with the Executive. These
agreements have been terminated at the effective date of this Agreement.

The Board of Directors of the Company recognizes that the Executive's
contribution to the growth and success of the Company has been and is expected
to be substantial. The Board desires to provide for the continued employment of
the Executive and to make certain changes in his employment arrangements which
the Board has determined will reinforce and encourage his continued attention
and dedication to the Company. The Executive is willing to commit himself to
continue to serve the Company on the terms and conditions provided herein.

Accordingly, in consideration of the premises and the respective
covenants and agreements set forth herein, and intending to be legally bound
hereby, the parties hereby agree as follows:

1. Employment Period. The Company shall employ the Executive for an
initial period of five (5) years beginning on the date hereof and continuing
through July 31, 2000, and for successive one-year renewal periods. Each renewal
shall be automatic unless either the Company or the Executive gives at least
ninety (90) days written notice of nonrenewal. The initial term and any renewal
periods are referred to herein as the "Employment Period."

2. Employment Duties. (a) The Company will continue to employ the
Executive as the Chairman of the Board and Chief Executive Officer. The
Executive agrees to continue in such employment for the duration of the
Employment Period and to perform in good faith and to the best of his abilities
all services which may be required of him in such offices and to be available to
render such services in accordance with the Company's Bylaws, as they may be
amended from time to time, and all reasonable directives and assignments issued
by the Company's Board of Directors.
<PAGE> 2
(b) During the Employment Period, the Executive will devote
his full time and efforts during normal business hours to the business and
affairs of the Company within the customary scope of his offices; provided,
however, that the foregoing shall not prevent the Executive from (i) purchasing
any securities or otherwise passively investing his personal or family assets in
any other company or business, or (ii) engaging in any governmental, political,
educational or charitable activities, but only to the extent that those
activities are not inconsistent with any direction of the Board or any duties
under this Agreement and do not interfere with his devoting his full time and
efforts to the business and affairs of the Company.

(c) The Executive shall be based at the principal executive
offices of the Company in Lime Rock, Connecticut, except for required travel on
Company business.

3. Compensation. (a) For service in 1995, the Executive base salary
will be at the annual rate of Four Hundred Eighty Thousand Dollars ($480,000);
provided, however, that, upon adoption of a resolution of a majority of the
entire Board of Directors, the Company may reduce the Executive's base salary by
not more than twenty-five percent (25%) in connection with and to the extent of
any across-the-board salary reduction for all employees of the Company and its
wholly-owned subsidiaries. The Board or an appropriate committee of the Board
will review his salary at least annually beginning in the fourth fiscal quarter
of 1995. The Board or such committee may, in its discretion, increase the base
salary of the Executive from time to time but may not reduce the base salary
below the rate set forth above. If so increased, the base salary shall not
thereafter be decreased during the Employment Period.

(b) The Executive's base salary will be paid at periodic
intervals in accordance with the Company's payroll practices for executive
employees.

(c) During the Period of Employment the Executive shall be
entitled to participate in, and to receive bonus payments in accordance with,
the terms of the Company's annual bonus plan. Annual bonus payments under such
plan shall be payable not later than thirty (30) days after completion of the
Company's audited financial statements for its preceding fiscal year, in an
amount determined by the Board or an appropriate committee of the Board based
upon the performance goals established by the Board or such committee for the
prior fiscal year.

(d) The Company will deduct and withhold, from any payments to
the Executive hereunder, any and all federal, state and local income and
employment withholding taxes and any other amounts required to be deducted or
withheld by the Company under applicable law.

(e) The Executive will act, without any additional
compensation, as an officer or director of any subsidiary or affiliate of the
Company if so elected or appointed.

-2-
<PAGE> 3
4. Expense Reimbursement. The Company shall reimburse the Executive for
all customary, ordinary and necessary business expenses incurred by him in the
performance of his duties hereunder in accordance with Company policies and
procedures.

5. Fringe Benefits. During the Employment Period, the Executive will be
eligible to participate in any retirement plan, annual and long-term incentive
compensation plan, stock option and purchase plan, group life insurance plan,
group medical and dental insurance plan, accidental death and dismemberment
plan, short-term disability program and other employee benefit plans which are
made available to other executive officers and for which he qualifies.

6. Vacation. The Executive will accrue paid vacation benefits during
the Employment Period in accordance with the Company policy in effect for other
executive officers.

7. Death. If the Executive dies during the Employment Period, the
employment relationship created by this Agreement will terminate, and the
Executive's salary shall continue to be paid to his designated beneficiary or,
if none, to his personal representative through the end of the month in which
his death occurred. In addition, the Executive, or his designated beneficiary or
personal representative, will be entitled to such death benefits as may be
payable under Section 5.

8. Disability. If the Executive becomes disabled during the Employment
Period, the employment relationship created by this Agreement may be terminated
by the Company pursuant to Section 11(a)(ii). The disability of the Executive
shall not constitute a breach of this Agreement by the Executive. The Executive
will be deemed to be disabled if he is, in the Company's reasonable opinion,
unable by reason of any physical or mental injury or illness to substantially
perform the services required of him hereunder either for a period in excess of
one hundred eighty (180) consecutive days or for a period of one hundred eighty
(180) days in the aggregate during any three-hundred sixty (360) day period. In
such event, the Executive will be deemed to be disabled as of the completion of
such one hundred eighty (180) day period or three hundred sixty (360) day
period, as the case may be.

9. Confidentiality. (a) The Executive hereby acknowledges that the
Company and its affiliates may, from time to time during the Employment Period,
disclose to him confidential and proprietary information pertaining to the
business and affairs of the Company and its affiliates. The Executive will not,
at any time during or after such Employment Period, disclose to any third party
or directly or indirectly make use of any such confidential or proprietary
information other than in connection with, and in furtherance of, the business
and affairs of the Company ad its affiliates.

(b) All documents and data (whether written, printed or
otherwise reproduced or recorded) containing or relating to any such proprietary
information of the Company and its affiliates which come into the Executive's
possession during the Employment Period will be returned by him to the Company
immediately upon the

-3-
<PAGE> 4
termination of his employment or upon any earlier request by the Company, and he
will not retain any copies, notes or excerpts thereof.

(c) The Executive's obligations under this Section 9 will
continue in effect after termination of his employment with the Company,
whatever the reason or reasons for such termination, and the Company will have
the right to communicate with any of his future or prospective employers
concerning his continuing obligations under this Section 9.

10. Ownership Rights. All materials, ideas, discoveries and inventions
pertaining to the business of the Company and its affiliates, including without
limitation all patents and copyrights, patent applications, patent renewals and
extensions belong solely to the Company and its affiliates.

11. Termination. (a) The Executive's employment hereunder may be
terminated only under the following circumstances:

(i) The Executive's employment hereunder shall terminate upon
his death or retirement in accordance with the Company's normal
retirement policies.

(ii) If the Executive is disabled within the meaning of
Section 8, the Company may terminate the Executive's employment upon
not less than thirty (30) days' prior written notice to the Executive
unless during such thirty-day period the Executive resumes the
performance of his duties hereunder on a full-time basis.

(iii) The Company may terminate the Executive's employment for
Cause. For purposes of this Agreement, the Company shall have "Cause"
to terminate the Executive's employment upon (a) the willful and
continued failure by the Executive to substantially perform his duties
hereunder (other than any failure resulting from the Executive's
disability or any actual or anticipated failure after the issuance of a
notice of termination under Subsection 11(b) or a termination by the
Executive for Good Reason under Section 11(a)(iv)), after written
demand for substantial performance is delivered by the Company
specifically identifying the manner in which the Company believes the
Executive has not substantially performed his duties, or (b) conviction
of a felony or a crime involving normal turpitude.

(b) Any termination of the Executive's employment by the
Company or by the Executive under this Section 11 (other than pursuant to
Subsection 11(a)(i) above) shall be communicated by written notice to the other
party hereto in accordance with this Section 11. Such notice shall indicate the
specific termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment.

(c) "Date of Termination" shall mean (i) if the Executive's
employment is terminated by his death or retirement, the date of death or
retirement, (ii) if the Executive's

-4-
<PAGE> 5
employment is terminated as a result of his disability, thirty (30) days after
notice of termination is given (provided that the Executive shall not have
returned to the performance of his duties on a full-time basis during such
thirty-day period), (iii) if the Executive's employment is terminated pursuant
to Subsection (a)(iii) or (iv) above, the date specified in the notice of
termination.

(d) If this Agreement is terminated by the Company as a result
of the disability of the Executive, the Company shall be obligated to continue
the salary and benefits of the Executive for a period of twelve months or such
greater period of time as the Board determines in its sole discretion, in each
case reduced by any disability insurance benefits provided for the benefit of
Executive at the expense of the Company. If the Executive is terminated for any
other reason, except for Cause, the Company shall maintain in full force and
effect for the Executive, for a period of twelve (12) months, all employee
welfare benefit plans in which the Executive was entitled to participate
immediately prior to the Date of Termination provided that the Executive's
continued participation is possible under the general terms and provisions of
such plans. In the event that the Executive's participation in any such plan is
barred, the Company shall arrange to provide the Executive with benefits
substantially similar to those which the Executive would otherwise have been
entitled to receive under such plans from which his continued participation is
barred.

(e) The Executive shall have no duty to mitigate his damages
following a termination of his employment.

12. Severance Benefit. (a) If the Company terminates the Executive for
any reason, other than a termination for death, retirement, disability or Cause,
including non-renewal of this Agreement, or if the Executive terminates this
Agreement for Good Reason or following a Change of Control, the Company shall
pay to the Executive an amount equal to three (3) years' base salary (the
"Severance Benefit"), payable on the Date of Termination.

(b) If the Executive is entitled to receive the Severance
Benefit following the termination of his employment and either party exercises
its option to purchase or sell any interest it may have in the Farmhouse
Property pursuant to Section 15, then the purchase price for such property
(determined in the manner set forth in Section 15) shall be credited toward and
offset against the Severance Benefit; or, if the Purchase Price is greater than
the Severance Benefit, the Executive shall pay the difference to the Company by
delivery of a promissory note payable in equal monthly installments over a
period of not less than three (3) years and bearing interest at a market rate.
Such note shall be secured by a mortgage on the Farmhouse Property.

13. Non-Competition Covenant. During the period of two (2) years
immediately following the termination of the Executive's employment, the
Executive agrees that he will not engage in any act which is directly
competitive with the Company's renewable energy activities or any other line of
business of the Company at the time. Prohibited acts include

-5-
<PAGE> 6
acting as a financial interest, serving as a board member, serving as a
consultant or otherwise assisting any entity other than the Company which has
one of its business, and such activity.

14. Indemnification. The indemnification provisions of the Company's
Bylaws will be extended to the Executive, to the maximum extent permitted by
law, during the period following the termination, irrespective of a Change of
Control, with respect to any and all matters, events or transactions occurring
or effected during the Employment Period.

15. Options to Purchase and Sell. (a) The Company hereby gives and
grants to the Executive, his heirs, representatives and assigns (collectively,
for the purposes of this Section 15, the "Executive"), the right to purchase all
right, title and interest the Company may have in and to the land and all
buildings and improvements now or hereafter located thereon at 558 Lime Rock
Road, Salisbury, Connecticut, which property is more particularly described in
Exhibit A attached hereto (the "Farmhouse Property"), subject to the terms,
conditions and provisions of this Section.

(b) The Executive hereby gives and grants to the Company, the
right to sell all right, title and interest the Company may have in the
Farmhouse Property to the Executive, subject to the terms, conditions and
provisions of this Section.

(c) Either option described above may be exercised by giving
the other party written notice within thirty (30) days following the termination
of Executive's employment hereunder, time being of the essence. The closing date
("Closing Date") shall occur within ninety (90) days after such notice.

(d) The purchase price for the interest the Company may have
in the Farmhouse Property shall be the Company's depreciated cost basis in the
Farmhouse Property.

(e) If either of the options described above is exercised, the
sale and purchase of the Company's interest, if any, in the Farmhouse Property
shall take place on the Closing Date upon the terms and conditions set forth
herein and such other terms as may be mutually acceptable to the parties.

(i) The Company shall sell to the Executive and the
Executive shall purchase from the Company, any and all interest the
Company may have in the Farmhouse property free and clear of all
encumbrances, liens or defects in title, except those encumbrances
listed in Exhibit B attached hereto (the "Permitted Encumbrances"). The
conveyance of any interest in the Farmhouse Property shall be in the
form of a Special Warranty Deed which shall be duly executed,
acknowledged and delivered, all at the Company's expense, conveying fee
simple marketable title in and to the Farmhouse Property to the
Executive free and clear of all encumbrances, other than Permitted
Encumbrances. The Company shall, upon the recording of the deed for the
Farmhouse Property, pay the amount of applicable conveyance taxes, and
any mortgage filing fees.

-6-
<PAGE> 7
(ii) In the event that either party exercises its
option described above and the other party fails to perform any of its
obligations and duties under this Section 15, the exercising party
shall be free to seek whatever remedy may be available, either at law
or in equity, including without limitation, specific performance, in
order to enforce said option.

(iii) All closing adjustments will be made in
accordance with local custom and practices.

16. Counsel Fees and Indemnification. (a) The Company shall pay, or
reimburse the Executive, the reasonable fees and expenses of his personal
counsel for his professional services rendered to the Executive in connection
with this Agreement and matters related thereto.

(b) In the event that (i) the Company terminates, or seeks to
terminate the Executive's employment for Cause, the Executive disputes the
termination or attempted termination, and he prevails, or (ii) the Executive
elects to terminate his employment hereunder for Good Reason or within six (6)
months after a Change of Control, and the Company disputes its obligation to pay
him the Severance Benefit, and he prevails, then the Company shall pay, or
reimburse to the Executive, all reasonable costs incurred by him in such
dispute, including attorneys' fees and costs.

(c) The Company shall indemnify and hold the Executive
harmless to the maximum extent permitted by law against judgments, fines,
amounts paid in settlement and reasonable expenses, including attorneys' fees
incurred by him, in connection with the defense of, or as a result of any action
or proceeding (or any appeal from any action or proceeding) in which he is made
or is threatened to be made a party by reason of the fact that he is or was an
officer of the Company or any subsidiary or affiliate thereof, regardless of
whether such action or proceeding is one brought by or in the right of the
Company, to procure a judgment in its favor (or other than by or in the right of
the Company). The undertakings of Subparagraphs (a) and (b) above, are
independent of, and shall not be limited to or prejudiced by the undertakings in
this Subparagraph (c).

(d) The Company further represents and warrants: (i) that the
Executive is and shall continue to be covered and insured up to the maximum
limits provided by all insurance which the Company maintains to indemnify its
directors and officers (and to indemnify the Company for any obligations which
it incurs as a result of its undertaking to indemnify its officers and
directors); and (ii) that the Company will use its best efforts to maintain such
insurance, in not less than its present limits, in effect throughout the Period
of Employment.

17. Arbitration. (a) Any controversy which may arise between the
Executive and the Company with respect to the construction, interpretation or
application of any of the terms, provisions, covenants or conditions of this
Agreement or any claim arising from or

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<PAGE> 8
relating to this Agreement will be submitted to final and binding arbitration in
Hartford, Connecticut, in accordance with the rules of the American Arbitration
Association then in effect.

(b) The Executive and the Company agree that neither they nor
their respective immediate family members, agents, assigns, officers, directors,
executives, heirs, successors or representatives, will publish, publicize or
disseminate, or cause to be published, publicized or disseminated, in any
manner, the details of any such controversy or arbitration proceedings, to any
third person, including, without limitation, any current or former Company
employee, organization, the news and communications media or any agents thereof,
excepting such disclosure as is required by law or that the Executive or the
Company makes to their respective attorneys, tax planners or advisors consulted
regarding it or any disclosure to members of the Executive's immediate family.
Furthermore, both the Executive and the Company may also disclose such
information to Company personnel on a need-to-know basis for purposes of
carrying out or effecting compliance with the parties' obligations under this
Agreement.

18. Binding Agreement. This Agreement shall be binding upon, and inure
to the benefit of, the Executive and the Company and their respective successors
and permitted assigns (including, without limitation, the surviving entity or
successor party resulting from a Change in Control).

19. Nonassignability. Neither this Agreement nor any right or interest
hereunder shall be assignable by the Executive, his beneficiaries, or legal
representatives without the Company's prior written consent; provided, however,
that nothing in this Section 19 shall preclude (i) the Executive from
designating a beneficiary to receive any benefit payable hereunder upon his
death, or (ii) the executors, administrators or other legal representatives of
the Executive or his estate from assigning any rights hereunder to any person
entitled thereto.

20. Governing Law. This Agreement will be governed by, and construed
and interpreted in accordance with, the laws of the State of Delaware.

21. Entire Agreement; Amendment. This Agreement sets forth the entire
agreement between the parties relating to the terms of the Executive's
employment and it supersedes all prior agreements and understandings with
respect to such subject matter. This agreement any only be amended by written
instrument signed by the Executive and an authorized officer of the Company.

22. Waiver. No term or condition of this Agreement shall be deemed to
have been waived, nor shall there by any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall

-8-
<PAGE> 9
not constitute a waiver of such terms or condition for the future or as to any
act other than that specifically waived.

23. Severability. If any provision of this Agreement is held to be
invalid or unenforceable for any reason, such invalidity or unenforceability
shall not affect any other provision of this Agreement not held so invalid or
unenforceable, and each such other provision shall to the full extent consistent
with law continue in full force and effect. If any provision of this Agreement
shall be held invalid or unenforceable in part, such invalidity or
unenforceability shall in no way affect the rest of such provision, and the rest
of such provision, together with all other provisions of this Agreement, shall
to the full extent consistent with law continue in full force and effect. If any
one or more of the provisions of this Agreement shall for any reason be held to
be excessively broad as to duration, geographic scope, activity or subject, it
shall be construed by limiting and reducing it, so as to be enforceable to the
extent compatible with applicable law.

24. Equitable Relief. The parties hereto acknowledge and agree that
Executive's duties under Sections 9, 10 and 13 of this Agreement are vitally
important to the continuing welfare of the Company and that a remedy at law for
any breach or threatened breach of these provisions would be wholly inadequate.
Accordingly, the parties agree that the Company shall be entitled to specific
performance and/or injunctive relief in order to enforce or prevent any
violations of the provisions of such Sections. Such remedies shall be cumulative
and not exclusive and shall be in addition to any other remedies which the
parties hereto may possess.

IN WITNESS WHEREOF the parties have signed his Agreement as of the date
set forth above.

The Company:

THE NEW WORLD POWER CORPORATION

By: /s/ Robert R. MacDonald
--------------------------------------
Robert R. MacDonald, Its Vice Chairman

The Executive:

/s/ John D. Kuhns
------------------------------------------
John D. Kuhns

-9-
<PAGE> 10
EXHIBIT A

(LEGAL DESCRIPTION OF PROPERTY AND PERMITTED ENCUMBRANCES)

<PAGE> 11
TERMINATION AGREEMENT

The undersigned hereby agree to terminate the Management Agreements
entered in as of December 1, 1989, by and between East Rock Partners, Inc. a
Delaware corporation, and Arcadian Renewable Power Corporation, formerly named
Fayette Energy Corporation, a Delaware corporation, and Wolverine Power
Corporation, successor to Wolverine Hydroelectric Corporation, a Delaware
corporation, respectively. The effective date of termination shall be July 31,
1995.

IN WITNESS WHEREOF the parties have caused this Agreement to be signed
by their duly authorized officers as of August 1, 1995.

ARCADIA RENEWABLE POWER CORPORATION

By: /s/ Dwight C. Kuhns
------------------------------
Dwight C. Kuhns, its President

WOLVERINE POWER CORPORATION

By: /s/ Dwight C. Kuhns
------------------------------
Dwight C. Kuhns, its President

EAST ROCK PARTNERS, INC.

By: /s/ John D. Kuhns
------------------------------
John D. Kuhns, its Chairman

<PAGE> 1
Exhibit 10.41

AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT

WHEREAS, The New World Power Corporation (the "Company")
entered into an employment agreement with John D. Kuhns (the "Executive") as of
August 1, 1995 (the "Employment Agreement"); and

WHEREAS, the Company and the Executive are desirous of
amending certain provisions in the Employment Agreement; and

WHEREAS, the Company has instituted an across-the-board salary
reduction for all employees of the Company and its wholly owned subsidiaries of
25% or more;

Accordingly, in consideration of the premises and respective
covenants and agreements set forth herein, and intending to be legally bound
hereby, the parties hereby agree, effective March 1, 1996, as follows:

1. Compensation. Until such time as the Company has paid in
full its 8% Convertible Subordinated Notes, as amended, due July 31, 1997 (the
"Notes"):

(a) The Executive's Base Salary will be at the annual
rate of Two Hundred Twenty Thousand Dollars ($220,000);

(b) The Executive shall receive monthly proceeds from the sale
of Common Stock of The New World Power Corporation (which the Company hereby
agrees to use its best efforts to effect) through Oakes, Fitzwilliams acting as
agent, or through another agent satisfactory to the Executive, provided that
Executive shall not receive in excess of $12,000 per month for

<PAGE> 2
those sales except to the extent required to make up in any monthly period
shortfalls for prior monthly periods;

(c) The Executive shall receive as a bonus a portion of the
gross cash proceeds of the sale of the assets, provided such sale occurs prior
to the termination of the Executive's employment, listed on Schedule A as
follows: (i) one-half of one percent (.5%) of the gross cash proceeds derived
from the sale of any assets up to the "minimum value" plus (ii) two percent (2%)
of any gross cash proceeds in excess of the "minimum value." The sale of assets
shall be deemed to occur upon the execution of a definitive agreement, provided
that no sums shall be due unless and until the buyer has delivered the cash
proceeds. Notwithstanding the foregoing, however, the Executive shall not be
entitled to receive pursuant to Sections 1(a), 1(b) and 1(c) hereof any amount
in any year in excess of $480,000 regardless of any amounts paid in any other
year.

(d) The Executive shall accept in lieu of any Severance
Benefit or other unpaid compensation due upon termination, and the Company shall
be obligated to transfer, the Farmhouse Property, including all furniture and
fixtures thereon and excluding all files, business records and readily removable
items necessary to the continued operation of the Company. In the event the
Company is obligated to transfer the Farmhouse Property to the Executive, the
Company shall prepare at its own expense all documentation necessary for the
transfer, which shall be completed within 10 business days following the
Executive's

-2-

<PAGE> 3
termination of employment; the Executive shall accept title to the Farmhouse
Property pursuant to a Special Warranty Deed and the Company shall pay the
amount of applicable conveyance taxes and any mortgage filing fees. Nothing in
this Section 1(d) shall be deemed to entitle the Executive to any greater rights
to a Severance Benefit that he would be entitled to receive under the Employment
Agreement.

(e) The Executive shall not seek to enforce any claim, or make
any demand for, or have any recourse with respect to, compensation or cash
payments from the Company except pursuant to the Employment Agreement as
amended.

2. Waivers. The Executive hereby consents to the foregoing
change in compensation and waives any claim that such change constitutes "Good
Reason" under paragraph 11(a)(iv) of the Employment Agreement and waives any
claim to the Severance Benefit as a result of the foregoing change.

3. Deferred Shares. As part of the Executive's deferred
compensation, the Company agrees to set aside 16,250 shares of Common Stock in
the name of the Executive at the beginning of each of twelve consecutive months
beginning March 1, 1996 (the "Shares") for delivery to the Executive on January
31, 1997 to the extent Shares have accrued prior to January 31, 1997 and for
delivery to the Executive on January 31, 1998 to the extent Shares accrue after
January 31, 1997 provided, however, that Shares shall cease to accrue further to
the Executive if his employment with the Company is terminated for any reason,

-3-
<PAGE> 4
provided further, that if the Executive's employment with the Company is
terminated for any reason, nothing in this Section 3 shall be deemed to prevent
delivery, on the appropriate date, of Shares which have accrued to the Executive
prior to the date of the termination of his employment with the Company.

4. Registration Statement. In the event the Company files a
registration statement, it shall also register the Shares, if the Executive so
requests.

5. Future Option Grants. The Company through its Board of
Directors may, from time to time at the discretion of the Company, grant stock
options to the Executive and other employees of the Company.

6. Condition Precedent. This Amendment shall be effective upon
approval of the Company's Board of Directors or upon the approval of the
Compensation Committee of the Board of Directors of the Company.

7. Miscellaneous.

a) The parties hereto acknowledge that the firm Olshan
Grundman Frome and Rosenzweig LLP ("OGFR") served as counsel to the Executive in
connection with the negotiation of the Employment Agreement and that OGFR is
acting as counsel to the Company in connection with the negotiation of this
Amendment. Both sides further acknowledge that OGFR has acted, and continues to
act, as counsel for the Executive in certain matters unrelated to his employment
with the Company or the business affairs of the Company and that OGFR has acted,
and continues to act, as counsel

-4-
<PAGE> 5
to the Company in certain litigation matters and in connection with the
restructuring of the Notes. All parties consent to the firm OGFR representation
of the Company in connection with the negotiation of this Amendment. The
Executive has had an opportunity to consult independent counsel concerning the
terms of this Amendment.

b) Upon payment in full of the Notes, Paragraph 1 hereof shall
cease to be effective and the Executive's compensation shall be determined in
accordance with the Employment Agreement, as amended by Paragraphs 2, 3 and 4
hereof.

c) Except as modified herein, the Employment Agreement shall
remain in full force and effect. The Employment Agreement, as amended hereby,
sets forth the entire understanding of the parties hereto with respect to the
matters covered by the Employment Agreement as amended.

-5-
<PAGE> 6
IN WITNESS WHEREOF, the parties have signed this Amendment as
of the date first set forth above.

THE NEW WORLD POWER CORPORATION

By: /s/ Robert R. McDonald
-----------------------
Robert R. McDonald, its
Vice Chairman

/s/ John D. Kuhns
-----------------------
John D. Kuhns

-6-
<PAGE> 7
SCHEDULE A

<TABLE>
<CAPTION>
Minimum
Asset Sale Price
----- ----------
<S> <C>
1. Shares of Photocomm $16.5 million

2. Xia Yang Hydroelectric $4.2 million for the 24%
Facility currently held by the Company

3. Solartech $1.5 million for the 51%
equity interest currently
held by the Company

4. UK Wind Farms $5.5 million for the 100%
equity

5. Dona Julia $1.0 million for the 100%
equity interest, net of
project liabilities

6. REIL shares $2.5 million for the 79%
equity interest in REIL held
by the Company
</TABLE>

-7-

<PAGE> 1
Exhibit 10.42

AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT

WHEREAS, The New World Power Corporation (the "Company")
entered into an employment agreement with John D. Kuhns (the "Executive") as of
August 1, 1995 (the "Employment Agreement"); and

WHEREAS, the Company and the Executive entered into
Amendment No. 1 to the Employment Agreement, March 1, 1996
("Amendment No. 1"); and

WHEREAS, the Company and the Executive are desirous of
further amending certain provisions in the Employment Agreement;
and

WHEREAS, the Company has instituted salary reductions
for certain employees of the Company and its wholly owned
subsidiaries;

1. Amend No. 1. Amendment No. 1 is hereby cancelled and
terminated effective March 31, 1996. Both the Executive and the Company
acknowledge that each has fully performed its obligations under Amendment No. 1.

2. Employment Duties and Term. Paragraph 2(a) of the
Employment Agreement is amended to delete "and Chief Executive
Officer" and paragraph 1 of the Employment Agreement is amended

<PAGE> 2
to change "July 31, 2001" to "July 31, 1997" and "five (5)" to "two (2)."

3. Compensation and Duties

(a) Paragraph 2(a) of the Employment Agreement is amended to
add the following: "The principal duties of the Executive, unless modified by a
vote of the Board of the Company with the Executive's written consent, shall be
assisting current management in the further development and marketing of
projects now in development and assistance in the sale of assets set forth in
the Company's most recent business plan, provided that nothing in the foregoing
shall require the Company to develop any projects or sell any assets should it
determine in its sole discretion not to do so; and any such determination by the
Company shall neither be a breach of the Employment Agreement as amended nor
give rise to any rights to compensation by the Executive, except as set forth in
the Employment Agreement as amended. The Executive shall work with, and report
to, the Chief Executive Officer, or such other person as the Board may direct.

(b) The Executive's Base compensation will be at the monthly
rate of Eighteen Thousand Three Hundred and Thirty Three Dollars ($18,333),
payable on the first day of each month;

(c) In addition, the Executive shall receive additional
compensation of twelve thousand dollars ($12,000) per month by the fifteenth day
of each month, in either of the following ways which the Company may select at
its sole discretion:

-2-
<PAGE> 3
(i) monthly proceeds from the sale of Common
Stock of The New World Power Corporation (which the Company hereby agrees to use
its best efforts to effect) through Oakes, Fitzwilliams acting as agent, or
through another agent satisfactory to the Executive and the Company, provided
that Executive shall not receive in excess of $12,000 per month for those sales
except to the extent required to make up in any monthly period shortfalls for
prior monthly periods; or

(ii) in lieu of subpart (i) and/or to the extent
not previously paid under subpart (i), from funds legally available to the
Company, an amount sufficient to compensate the Executive at the monthly rate of
Twelve Thousand Dollars ($12,000) through the date of any asset sale.

(d) In addition, the Executive shall receive as a bonus a
portion of the gross cash proceeds of the sale of the assets, provided such sale
occurs prior to the termination of the Executive's employment, listed on
Schedule A as follows: (i) one-half of one percent (.5%) of the gross cash
proceeds derived from the sale of any assets up to the "minimum value" plus (ii)
two percent (2%) of any gross cash proceeds in excess of the "minimum value."
The sale of assets shall be deemed to occur upon the execution of a definitive
agreement, provided that no sums shall be due unless and until the buyer has
delivered the cash proceeds. Notwithstanding the foregoing, however, the
Executive shall not be entitled to receive pursuant to Sections 1(b), 1(c),

-3-
<PAGE> 4
and 1(d) hereof any amount in any year in excess of $480,000 regardless of any
amounts paid in any other year.

(e) In lieu of a Severance Benefit and/or any unpaid
compensation upon termination or upon non-renewal, the Company shall pay, and
Executive shall accept, either (i) the Severance Benefit in cash form as
computed under the Employment Agreement before amendment, or (ii) in the
Company's sole discretion, the Farmhouse Property, which the Company shall
transfer to the Executive no later than 90 days after termination of the
Executive's employment. The Farmhouse Property shall be transferred free of all
liens or other encumbrances other than liens or encumbrances that run with the
real property on which the Farmhouse Property is located, and shall include all
furniture and fixtures thereon and exclude all files, business records and
readily removable items necessary to the continued operation of the Company. In
the event the Company elects to transfer the Farmhouse Property to the
Executive, the Company shall prepare at its own expense all documentation
necessary for the transfer, which shall be completed within 10 business days
following the Executive's termination of employment; the Executive shall accept
title to the Farmhouse Property pursuant to a Special Warranty Deed in form
acceptable to the town of Salisbury and County of Litchfield and the Company
shall pay the amount of applicable conveyance taxes and any mortgage filing
fees. The value for the Farmhouse Property shall be such amount as the parties'
agree or, if no agreement is reached prior to

-4-
<PAGE> 5
transfer, at the value shown in an appraisal to be obtained by the Executive
from a licensed real estate professional with an office in Litchfield County and
delivered upon the transfer. Nothing in this Section 1(d) shall be deemed to
entitle the Executive to any greater rights to a Severance Benefit that he would
be entitled to receive under the Employment Agreement. After the Executive's
termination or the Initial Term, the Company shall make the Farmhouse Property
available at reasonable times for showing to potential buyers designated by
Executive.

(f) The Executive shall not seek to enforce any claim, or make
any demand for, or have any recourse with respect to, compensation or cash
payments from the Company except pursuant to the Employment Agreement as
amended.

4. Waivers. The Executive hereby consents to the foregoing
change in compensation and waives any claim that such change constitutes "Good
Reason" under paragraph 11(a)(iv) of the Employment Agreement and waives any
claim to the Severance Benefit as a result of the foregoing change.

5. Deferred Shares. To induce the Executive to sign this
Amendment, the Company agrees to set aside 16,250 shares of Common Stock in the
name of the Executive at the beginning of each of twelve consecutive months
beginning March 1, 1996 (the "Shares") for delivery to the Executive on January
31, 1997 and for delivery to the Executive on January 31, 1998 to the extent
Shares accrue after January 31, 1997 provided, however, that Shares shall cease
to accrue further to the Executive if his

-5-
<PAGE> 6
employment with the Company is terminated for any reason, provided further, that
if the Executive's employment with the Company is terminated for any reason
other than Cause or by the Executive without Good Reason, nothing in this
Section 6 shall be deemed to prevent delivery on the appropriate date, of all
Shares which have accrued to the Executive prior to the date of the termination
of his employment with the Company. All shares accruing hereunder shall be
non-transferable prior to delivery to the Executive and may not be voted by the
Executive at any meeting of Shareholders. This provision replaces any obligation
of the Company under Section 3 of Amendment No. 1.

6. Future Option Grants. The Company through its Board of
Directors may, from time to time at the discretion of the Company, grant stock
options to the Executive or award any other form of compensation.

7. Condition Precedent. This Amendment shall be effective upon
approval of the Company's Board of Directors or upon the approval of the
Compensation Committee of the Board of Directors of the Company.

8. Miscellaneous.

(a) The parties hereto acknowledge that the firm Olshan
Grundman Frome and Rosenzweig LLP ("OGFR") served as counsel to the Executive in
connection with the negotiation of the Employment Agreement and that OGFR is
acting as counsel to the Company in connection with the negotiation of this
Amendment and Amendment No. 1. Both sides further acknowledge that OGFR

-6-
<PAGE> 7
has acted, and continues to act, as counsel for the Executive in certain matters
unrelated to his employment with the Company or the business affairs of the
Company and that OGFR has acted, and continues to act, as counsel to the Company
in certain litigation matters and in connection with the restructuring of the
Notes. All parties consent to the firm OGFR representing the Company in
connection with the negotiation of this Amendment. The Executive has had an
opportunity to consult independent counsel concerning the terms of this
Amendment.

(b) Paragraph 13 of the Employment Agreement is deleted.

(c) Paragraph 15 of the Employment Agreement is deleted. The
term "Farmhouse Property" is defined as the buildings and improvements now or
hereafter located at 558 Lime Rock Road, Salisbury, Connecticut. The Company
represents that it has no interest in the real property located at the above
address other then its interests in the Farmhouse Property which it holds free
and clear of all liens or encumbrances other than those that run with the real
property underlying the Farmhouse Property.

(d) The Executive may only be terminated by the Board of the
Company.

(e) The Executive shall serve as an independent contractor and
shall be responsible for all taxes due on sums earned by him, so that the
Company shall not withhold state or federal taxes from sums due to the
Executive.

-7-
<PAGE> 8
(f) In the event the Company fails to execute definitive
restructuring agreements with its lenders, Flemings & Co. Ltd. and Sundial & Co.
Ltd., before May 31, 1996, the Executive may within 5 days thereafter, in his
sole discretion, by written notice to the Company, terminate this Amendment No.
2.

(g) Except as modified herein, the Employment Agreement shall
remain in full force and effect. The Employment Agreement, as amended hereby,
sets forth the entire understanding of the parties hereto with respect to the
matters covered by the Employment Agreement as amended.

-8-
<PAGE> 9
IN WITNESS WHEREOF, the parties have signed this Amendment as
of the date first set forth above.

THE NEW WORLD POWER CORPORATION

By: /s/ Robert R. McDonald
-----------------------
Robert R. McDonald, its
Vice Chairman

/s/ John D. McDonald
-----------------------
John D. Kuhns

-9-
<PAGE> 10
SCHEDULE A

<TABLE>
<CAPTION>
Minimum
Asset Sale Price
----- ----------

<S> <C>
1. Shares of Photocomm $16.5 million

2. Xia Yang Hydroelectric $4.2 million for the 24%
Facility currently held by the Company

3. Solartech $1.5 million for the 51%
equity interest currently
held by the Company

4. UK Wind Farms $5.5 million for the 100%
equity

5. Dona Julia $1.0 million for the 100%
equity interest, net of
project liabilities

6. REIL shares $2.5 million for the 79%
equity interest in REIL held
by the Company
</TABLE>

-10-

<PAGE> 1
Exhibit 10.43

This Amendment Agreement is made the 3rd day of August 1995

BETWEEN

(1) CCJEC: China Chang Jiang Energy Corporation (Group), with its legal address
at No. 124, Quangahang Yi Road, Hong Shang District, Wuhan, Hubei Province, PRC,
and with Mr. Yu Zhian, President, a citizen of the PRC, as its legal
representative;

(2) NWPC: The New World Power Corporation, incorporated in Delaware, U.S.A.,
with its principal office at the Farmhouse, 558 Lime Rock Road, Lime Rock,
Connecticut, U.S.A. 06039, and with Mr. John D. Kuhns, Chairman of the Board, a
citizen of the United States, as its legal representative.

WHEREAS

(A) CCJEC and NWPC entered into a Share Transfer Agreement (the "Transfer
Agreement"), dated 24th February 1995 in respect of the transfer of 40%
interests of CCJEC in the Fujian Chang Ping Hydro Power Company Limited (the "JV
Company") to NWPC at the consideration of 120,720,000 yuan (Say One Hundred
Twenty Million Seven Hundred Twenty Thousand Yuan).

(B) CCJEC has secured the consent of Fujian Mingbei Hydroelectric Resources
Mixed Development Company ("MINGBEI") in waiving their first rights of refusal
of the share transfer as set out in clause 15 of the Joint Venture Agreement
signed between CCJEC and MINGBEI on September 1994;

IT IS AGREED as follows:

1. CONDITIONS PRECEDENT

The provisions of clause 2 shall take effect and from the date NWPC
received the following documentation from CCJEC and found to be
satisfactory in form and substance to it:

(a) an opinion of C & C Law Office of the document as provided by
CCJEC in the Due Diligence Progress Report as attached in
Schedule One;

(b) an audited report of the employment of funds of the JV Company
up to the date of by a licensed certified public
accountant of the PRC or Hong Kong;

<PAGE> 2
(c) the issuance by CCJEC of the receipt of US$1 million to NWPC
on the payment which was made on 22nd May 1995.

2. AMENDMENTS

2.1 The Share Transfer Agreement shall be amended as follows:

(a) On clause 3, add the following two subparagraphs immediately
after the first paragraph:

(a) On completion of the transfer of 40% interest from
CCJEC to NWPC, CCJEC shall surrender all its
propriety, right and interest of the 40% interests in
the JV Company to NWPC.

(b) NWPC shall have the right to appoint a third party to
assume one of the two seats in the Board of Directors
which NWPC is entitled to hold in the JV Company
after the completion of the transfer of interests.

(b) On clause 4, delete subparagraphs (a) and (b) and (c) and
replace it with the following:

(a) That the first payment of US$1 million to be made by
NWPC to CCJEC on 22nd May 1995.

(b) NWPC will make the second payment of US$3.2 million
to CCJEC immediately on completion of this Agreement.

(c) Upon receipt of the second payment from NWPC, CCJEC
shall surrender a total of 24% interests in the JV
Company to NWPC. CCJEC shall formally issue a
certificate to the effect that the 24% interest has
been duly passed to NWPC, its assignee, beneficiary
or successor.

(d) The balance of the payment will be made by NWPC to
CCJEC in September 1995 when CCJEC shall execute the
formal transfer of the rest of the 40% interests of
the JV Company to NWPC.

(e) Upon completion of full payment by NWPC to CCJEC,
NWPC, its assignee, beneficiary or successor shall
have its respective rights and interests in the
distribution of profits of the JV Company.

-2-
<PAGE> 3
3. MISCELLANEOUS

3.1 The Share Transfer Agreement shall as and from the effective date of
this Agreement be read and construed together with this Amendment
Agreement and the original Share Transfer Agreement together with this
Agreement shall be deemed to constitute one and the same instrument.

3.2 Save as expressly provided in this Amendment Agreement, the Share
Transfer Agreement remains and shall continue in full force and effect.

3.3 This Amendment Agreement shall be governed by and construed in
accordance with PRC law.

IN WITNESS WHEREOF this Agreement has been duly executed by the duly authorized
representatives of the parties hereto on the date first above written.

CHINA CHANG JIANG ENERGY CORPORATION (GROUP)

By: /s/ Yu Zhian
-----------------------

Name: Yu Zhian
Title: President

By: /s/ John D. Kuhns
-----------------------

Name: John D. Kuhns
Title: Chairman of the Board

-3-

<PAGE> 1
Exhibit 10.44

SHARE TRANSFER AGREEMENT

BETWEEN

CHINA CHANG JIANG ENERGY CORPORATION (GROUP)

AND

THE NEW WORLD POWER CORPORATION

FOR THE

FUJIAN CHANG PING HYDRO POWER COMPANY

1. PREAMBLE

The Fujian Chang Ping Hydro Power Company, Ltd. (hereinafter
referred to as Chang Ping Hydro) is a joint venture company established by China
Chang Jiang Energy Corporation (Group) (Chang Jiang Power Development (Hong
Kong) Co. Ltd. (hereinafter referred to as "CCJEC") and Mingbei Hydroelectric
Resource Mixed Development Company (hereinafter referred to as "Mingbei") in
accordance with the laws of the Peoples Republic of China on Sino-Foreign Equity
Joint Ventures and other laws and regulations of the PRC. The purpose of the
Company is to invest, construct and operate the Fujian Nan Ping Xiayang Hydro
Power Plant.

Whereas, CCJEC desires to transfer part of its share ownership
of the Chang Ping Hydro to the New World Power Corporation (hereinafter referred
to as "New World") in furtherance of the Joint Venture and Business Plan
Agreement between CCJEC and New World, and New World desires to purchase the
shares offered by CCJEC, then CCJEC and New World mutually agree as follows.

2. PARTIES TO THIS AGREEMENT

The Parties to this agreement are:

(a) The Chang Jiang Energy Corporation (Group) (Chang Jiang
Power Development (Hong Kong) Co. Ltd., otherwise referred to
as CCJEC), whose legal address is:

No. 124 Guangshang Yi Road
Hong Shang District
<PAGE> 2
Withan, Hubei Province
China (Room 1008-9, Hsin Teh Center, Hong Kong)

The legal representative for CCJEC is Yu Zhian, Chairman; and

(b) The New World Power Corporation, otherwise known as New
World, whose legal address is:

The Farmhouse
558 Lime Rock Road
Lime Rock, CT 06039

The legal representative for New World is John D. Kuhns,
Chairman.

3. TRANSFER OF SHARE OWNERSHIP

The total capital invested in Chang Ping Hydro is Three
Hundred and One Million Eight Hundred Thousand Yuan ($301,800,000) in Renminbi,
of which CCJEC has paid in ninety-five (95) percent and owns ninety-five (95)
percent of the shares in Chang Ping Hydro. CCJEC will transfer, pursuant to the
terms and conditions set forth in Section (4) (below), forty (40) percent of the
shares its owns in Chang Ping Hydro to New World, and New World, pursuant to the
terms and conditions set forth in Section (4) will pay CCJEC One Hundred Twenty
Million Seven Thousand Yuan ($120,720,000) in Renminbi for the purchase of those
shares. Upon transfer of shares, New World will agree to observe the Articles of
Corporation, enjoy the rights granted pursuant to those articles, agree to
assume the obligations related thereto, and be entitled to two of the seats on
the Board of Directors currently held by CCJEC, which CCJEC shall immediately
transfer to New World. One of the two directors shall be Vice Chairman of Chang
Ping Hydro.

4. PAYMENT FOR SHARES

New World make its payment for the shares to CCJEC in either
Renminbi or U.S. dollars, providing that CCJEC agrees that fifty (50) percent of
the payment for the shares may be made in the form of stock in New World Power,
at the option of New World. Payment for the shares shall be made in the
following manner:

(a) The first payment, representing thirty (30) percent of the
purchase price of the shares (Thirty-six Million Two Hundred Sixteen Thousand
Yuan), shall be made upon the satisfactory completion of the due diligence
report to be made by New World.

(b) The second payment, representing thirty (30) percent of
the purchase price (Thirty-six Million Two Hundred Sixteen Thousand Yuan), shall
be made within ninety days (90) days after the effective date of this agreement;

-2-
<PAGE> 3
(c) The third and final payment for the shares, representing
forty (40) percent of the purchase price (Forty-eight Million Two Hundred Eighty
Eight Thousand Yuan), shall be made within one hundred eighty days (180) after
the effective date of this agreement.

At the option of New World, all payments shall be made half in
currency and half in New World Power stock.

5. FOREIGN EXCHANGE

New World may have its share of the profits of the company
remitted to a country outside of China, and it shall be the responsibility of
CCJEC to convert the profit distribution from Renminbi to U.S. dollars.

6. LANGUAGE

This Agreement shall be executed in both Chinese and English
with four copies made of each version, and each party shall receive two copies
of the Chinese version and two copies of the English version.

7. EFFECTIVE DATE

This Agreement shall take effect when it is signed by both
parties and approved by the relevant departments of the government of the PRC.

IN WITNESS WHEREOF, the Parties have caused this Agreement to
be signed by their duly authorized representatives.

CHINA CHANG JIANG ENERGY CORPORATION (GROUP)

By: /s/ Yu Zhian
-----------------------
Yu Zhian, Chairman

THE NEW WORLD POWER CORPORATION

By: /s/ John D. Kuhns
-----------------------
John D. Kuhns, Chairman

-3-

<PAGE> 1
Exhibit 10.45

GLASS & ASSOCIATES, INC.

CONSULTING AGREEMENT

THIS AGREEMENT is made and entered into this 7th day of February, 1996,
by and between Glass & Associates, Inc. ("Glass"), a Delaware corporation with
its principal offices located at 4571 Stephen Circle N.W., Suite 130, Canton,
Ohio 44718, and The New World Power Corporation of The Farmhouse, 558 Lime Rock
Road, Lime Rock, CT 06039 (the "Company")"

W I T N E S S E T H :

WHEREAS, Company wishes to engage professional management assistance to
provide consultation to the Management and the Board of Directors for operations
and business affairs, and to assist the Company to the extent possible in
seeking and finding solutions to certain problems within the sphere of
management direction and planning; and

WHEREAS, Glass wishes to provide such professional management
assistance to Company, and Company desires to engage Glass to provide such
services;

NOW, THEREFORE, intending to be legally bound, Company and Glass hereby
agree as follows:

1. Services. The Company hereby engages Glass for the purpose of providing
management consultation services. Glass will provide Shaun Donnellan
and George Petrenko as representatives of Glass to serve as Special
Consultant to the Chairman and Chief Executive Officer of Company
subject to terms and conditions set forth herein. Glass may provide
others from time to time as required during the course of the
assignment.

2. Scope. The Scope of Phase 1 of this engagement will include consulting
regarding financial restructuring, mediation with lenders regarding the
restructuring and, where appropriate, a review of operations and
business affairs of the Company. The scope of Phase 2 will be
determined at the completion of Phase 1.

3. Limitation of Authority. The relationship between Company and Glass
created with respect to Glass is one of independent contractor, and
Glass shall have no authority to legally bind Company in any matter
whatsoever, except as specified herein. Glass may, in the performance
of its duties, negotiate on behalf of Company with various parties,
including but no limited to lenders, creditors, stockholders and
employees of Company, and governmental entities, but unless authorized
in writing by the Board of Directors of Company, in no case shall Glass
have any authority or be under any duty

<PAGE> 2
Glass & Associates
Consulting Agreement

whatsoever to execute documents in the name of or on behalf of Company
with respect to such negotiations or the transactions contemplated
therein.

4. Access to Personnel. Glass shall have full access to all personnel,
books, and records of Company and an open working relationship with the
entire internal organization of Company.

5. Financial and Operating Policies. Glass shall review, as necessary, all
financial and operating policies, plans and programs of Company and
shall participate in any major decisions which might have a significant
impact on such policies, plans or programs.

6. Evaluation of Glass. Glass shall work collaboratively with the Chief
Executive Officer and provide periodic reports to the Board of
Directors of the Company. Except for such duty to report, the actions
and decisions of Glass shall not be subject to review by any other
person or persons.

7. Compensation. Glass shall be compensated for its services under this
Agreement at its regular published rates, per the attached schedule,
plus expenses. There shall be an initial deposit of thirty thousand
dollars ($30,000) the unused portion of which will be refunded upon
termination of this Agreement should the total amount billed to Company
by Glass under this Agreement not equal or exceed the amount of such
deposit. Fees and expenses shall be billed bi-weekly unless otherwise
agreed to in writing, and all invoices are due and payable upon
receipt.

(a) For Phase 1 in recognition of the bonus provision below, the
hourly rates will be:

(i) Shaun Donnellan $200

(ii) George Petrenko $150

8. Bonus. Upon completion of its engagement, the Board at its sole
discretion will consider a performance bonus for Glass. During the
course of the assignment, Glass may propose a basis upon which such
bonus could be paid.

(a) Pending the successful restructuring of payment obligations to
the Convertible Subordinated Note Holders and Sundial on terms
mutually agreeable to those lenders and the Company, Glass
will be paid a bonus of $15,000 at the conclusion of Phase 1.

9. Release and Indemnification. In consideration for Glass undertaking to
discharge the responsibilities as set forth above:

-2-
<PAGE> 3
Glass & Associates
Consulting Agreement

(a) The Company shall and does hereby forever release, remise and
discharge, agree to indemnify, pay on demand nd hold harmless
Glass, its agents, attorneys, employees, and representatives
(the "Releases"), from any and all claims, costs, demands,
actions, liabilities, judgments, or attorneys fees which may
result from any act or failure to act in what Releasees in
good faith believe to be the best interests of the Company
arising out of Releasees' performance or non-performance under
this Agreement, or Releasees' present or future association
with the affairs of the Company, its creditors, stockholders,
employees, agents, attorneys or representatives. This release,
indemnification and agreement to hold harmless extends to all
claims of every nature and kind whatsoever, past, present or
future, known or unknown, and suspected or unsuspected.

(b) Company further expressly agrees that it will execute and
enter into, sign, seal and deliver any and all additional
documents, papers, releases, indemnity agreements, and will do
and perform any and all things which Glass may deem desirable
to protect it or its agents, attorneys, employees,
representatives, and each of them, from any aforesaid claims,
costs, demands, actions, liabilities, judgments or attorneys
fees, whatsoever, and to do any and all other things necessary
or desirable in the opinion of Glass to effectuate the
purposes of this release, indemnification and agreement to
hold harmless.

(c) In the event of a breach of this Agreement by the Company, the
Company agrees to pay all costs, including reasonable
attorneys' fees incurred by Glass in its efforts to enforce
its rights under this Agreement.

10. Termination. This engagement of Glass shall continue at the pleasure of
the Board of Directors and may be terminated at any time by resolution
of the Board of Directors, a certified copy of which shall be delivered
to Glass. Glass shall have the option to terminate its employment at
any time upon written notification to the Board of Directors of its
desire to terminate.

11. Modification. No modification, amendment, addition to, or termination
of this Agreement, nor waiver of any of its provisions, shall be valid
or enforceable unless in writing and signed by all parties, except that
any notice terminating this Agreement need only be executed by the
party giving such notice in order to be effective.

12. Legal Construction. The parties hereto agree that the interpretation
and enforceability of this Agreement shall be determined in accordance
with the substantive laws of the State of Delaware, exclusive of choice
of law provisions. In case any one or more of the provisions contained
in this Agreement shall for any reason be held to be invalid, illegal,
or unenforceable in any respect, such invalidity, illegality or
unenforceability

-3-
<PAGE> 4
Glass & Associates
Consulting Agreement

shall not affect any other provision hereof, and this Agreement shall
be construed as if such invalid, illegal, or unenforceable provision
had never been contained herein.

IN WITNESS WHEREOF, the parties have hereto executed this Agreement on
the date first above written.

COMPANY:

By: /s/ John D. Kuhns
----------------------
John D. Kuhns
Chairman and CEO

GLASS ASSOCIATES, INC.

By: /s/ Shaun K. Donnellan
----------------------
Shaun K. Donnellan
President

-4-
<PAGE> 5
RATE SCHEDULE

Effective January 1, 1991

Principal........$250.00-$265.00 per hour

Case Director........$200.00-$250.00 per hour

Senior Consultant........$175.00-$200.00 per hour

Consultant........$125.00-$150.00 per hour

Clerical/Administrative........$45.00-$60.00 per hour

Out-of-Pocket Expenses........At Cost

<PAGE> 1
Exhibit 10.46

GLASS & ASSOCIATES, INC.

AGREEMENT ENGAGING THE SERVICES OF
GLASS & ASSOCIATES, INC. AS INTERIM MANAGER

The New World Power Corporation ("the Company"), a Delaware corporation
with its principal offices located at 558 Lime Rock Road, Lime Rock, CT 06039,
wishes to engage professional management assistance to provide general
management of the Company's operating and business affairs, and to assist the
Company to the extent possible in seeking and finding solutions to certain
problems within the sphere of management direction and planning.

The Company hereby agrees to engage Glass & Associates, Inc. ("Glass"),
a Delaware corporation with its principal offices located at 4571 Stephen Circle
N.W., Suite 130, Canton, Ohio 44718, for the purpose of assisting in managing
the Company during the critical period ahead, and implementing the business plan
of the Company adopted by the Board of Directors and as amended from time to
time by the Board of Directors. Glass will provide Shaun Donnellan as Consultant
to the Company, and George Petrenko to serve as Interim Chief Executive Officer,
both reporting to the Board of Directors of the Company, subject to the
following terms and conditions. Glass may provide others from time to time as
required during the course of the assignment, and as approved by the Board of
Directors.

1. Glass shall have full access to all personnel and a relationship with
the entire internal organization. The relationship of Glass to the
Company shall at all times be that of an independent contractor, and
Glass shall have no authority to legally bind Company in any matter
whatsoever, except as specified herein. Glass may, in the performance
of its duties, negotiate on behalf of Company with various parties,
including but not limited to creditors, stockholders and employees of
Company, and governmental entities, but unless authorized in writing by
the Board of Directors or the Executive Committee of the Company, in no
case shall Glass have any authority or be under any duty whatsoever to
execute documents in the name of or on behalf of Company with respect
to such negotiations or the transactions contemplated therein.

2. Glass shall review all financial and operating policies, plans and
programs and shall participate in any major decision which might have a
significant impact on such policies.

3. Glass shall be subject solely to the control of the Board of Directors
of the Company. Except for such control, Glass shall not be subject to
the control of any other person or persons.
<PAGE> 2
4. Glass shall be compensated for its services under this agreement at the
rate of $10,000.00 per week for George Petrenko and Shaun Donnellan,
plus out-of-pocket expenses incurred by Glass, George Petrenko and
Shaun Donnellan, and any other personnel or representative of Glass,
including legal expenses incurred by Glass in respect of this
agreement. Additional services under this agreement will be provided at
Glass' regular published rates, per the attached schedule. There shall
be an initial payment of $30,000.00 as a client deposit which unused
portion will be refunded at the end of the assignment. Fees and
expenses shall be billed bi-weekly, and all invoices are due and
payable upon receipt.

5. Glass will be paid a bonus based on asset sales set out in the attached
Schedule A. This will include all asset sales closings or project
financings completed up to 90 days after the termination of this
Agreement.

6. In consideration for Glass undertaking to discharge the
responsibilities as set forth in this Agreement, the Company:

(a) Shall and does forever release, remise and discharge Glass and
its officers, employees, agents, attorneys and representatives
from any and all actions, claims, demands, damages or
liabilities whatsoever, whether direct or derivative in law or
in equity, which the Company may have against any of them as a
result of any act or failure to act in what they in good faith
believe to be in the best interests of the Company, arising
out of any action taken pursuant to this Agreement or their
past, present or future association with the affairs of the
Company, its shareholders, creditors or employees.

(b) Shall indemnify and hold harmless Glass and its officers,
employees, agents, attorneys and representatives against any
and all actions, claims, demands, damages or liabilities,
whatsoever, whether direct or derivative, in law or in equity,
to which any of them may become subject insofar as any such
actions, claims, demands, damages or liabilities arise out of
or are based upon any alleged action taken by them or any
alleged failure to act, pursuant to this Agreement or their
past, present or future association with the affairs of the
Company, its shareholders, creditors or employees, and the
Company shall reimburse Glass and its officers, employees,
agents, attorneys or representatives for any legal or other
expenses that any of them may reasonably incur, through
counsel or of their own choice or otherwise in connection with
investigating, defending or settling any such action, claim or
demand, as such expenses are incurred. Any right of
indemnification provided under this Paragraph 5(b) shall be
supplemental to any rights of indemnification to which Glass
and its officers, employees, agents, attorneys and
representatives may be entitled under the Company's articles,
by-laws, contracts of insurance or under any applicable law.

-2-
<PAGE> 3
7. This engagement of Glass shall continue at the pleasure of the Board of
Directors, and may be terminated at any time by resolution of the Board
of Directors, a certified copy of which shall be delivered to Glass.
Glass shall have the option to terminate its employment at any time
upon notification to the Board of Directors of its desire to terminate.

8. In the event that the Glass representative is offered and accepts a
permanent assigned position with the Company, Glass will receive from
Company payment equal to 30% of his first year's total compensation, an
amount not unlike that received by an executive recruiter.

Dated: 4/18/96 GLASS & ASSOCIATES, INC.

By: /s/ Shaun K. Donnellan
-------------------------
Shaun K. Donnellan, Pres.

THE NEW WORLD POWER CORPORATION

By: /s/ John D. Kuhns
-------------------------
John D. Kuhns
Its: Chairman

-3-
<PAGE> 4
RATE SCHEDULE

Effective January 1, 1991

Principal........$250.00-$265.00 per hour

Case Director........$200.00-$250.00 per hour

Senior Consultant........$175.00-$200.00 per hour

Consultant........$125.00-$150.00 per hour

Clerical/Administrative........$45.00-$60.00 per hour

Out-of-Pocket Expenses........At Cost

<PAGE> 5
Schedule A
Bonus to be paid on the sale of assets and financing or sale of development
projects.

Percentages will be applied to the net proceeds.

INCENTIVE RATE ON NET PROCEEDS

<TABLE>
<CAPTION>
ASSET SALES PLAN SALE
PROJECT DATE 2% 1% 0.5% 0%
<S> <C> <C> <C> <C> <C>
Bellacorick 6/96 Mar May Jul Sept+

Partial or Apr Jun Aug
Complete

UK Wind 6/96 Mar May Jul Sept+

Farms Apr Jun Aug

Dona Julia 6/96 Mar May Jul Sept+
Apr Jun Aug

Wireless 11/96 Mar to Aug Sept to Nov Dec 96 to Mar 97+
Feb 97

<CAPTION>
DEVELOPMENT 2% 1% 0.5% 0%
PROJECT
<S> <C> <C> <C> <C> <C>
Texas 6/96 Mar May Jul Sept+
Apr Jun Aug

Tierras 6/96 Mar May Jul Sept+
Morenas Apr Jun Aug

Lerma 9/96 Mar to Jun Jul to Sep Oct to Dec Jan 97+
</TABLE>

<PAGE> 1
Exhibit 10.47

June 11, 1996

John D. Kuhns
Chairman
The New World Power Corporation
The Farmhouse
558 Lime Rock Road
Lime Rock, CT 06039

Dear John:

We confirm our discussions with you, Shaun Donnellan and George
Petrenko regarding fees to be paid to Oakes, Fitzwilliams & Co. ("OFCO") by The
New World Power Corporation (the "Company") for (1) services rendered during
1995 and 1996 relating to the restructuring of the Company's management and
capitalization ("Restructuring Services") and (2) services to be rendered in
connection with the anticipated negotiations with Cedar Group, Inc. ("Cedar") or
other entity ("Financial Advisory Services").

A. Restructuring Services.

Since the end of 1995, we have arranged meetings and telephonic
conferences among several parties in respect of NWPC, including directors,
officers, lenders, note holders and investors, to discuss and analyze the severe
liquidity crisis faced by the Company for the purpose of solving the crisis.

This advisory role was initiated by OFCO without prior formal
appointment by the Company because, among other things, (a) OFCO was the logical
party to serve as moderator and coordinator among the parties, and (b) there was
not sufficient time to negotiate an agreement and to permit all required
corporate procedures, including board approval, to authorize OFCO's appointment.

The benefits of OFCO's Restructuring Services are evidenced, among
other places in the renegotiation of the terms of the debt instruments held by
Sundial International Fund Limited and the group led by Fleming Capital
Management, Inc.

As we discussed, you would recommend to the Board of Directors of the
Company that (a) OFCO be issued 240,000 shares of the Company's Common Stock (in
lieu of
<PAGE> 2
The New World Power Corporation
June 11, 1996
Page 2

$125,000 in cash), (b) OFCO be paid its expenses already incurred, some of which
have been submitted to the Company but not paid, in the approximate amount of
$85,000 and (c) the warrants to purchase shares of Common Stock of the Company
received in the past by OFCO as compensation be exchanged for New Warrants (as
defined in the Forbearance Agreement dated May __, 1996 between the Company and
Sundial International Fund Limited) as set forth in Appendix A to this letter.

These actions will be taken promptly, and before June 30, 1996.

B. Financial Advisory Services.

We are pleased to confirm in principle that OFCO is prepared to act as
the financial advisor to the Company in respect of the negotiations with Cedar
or other entity introduced by OFCO to the Company or referred to OFCO by the
Company ("Other Entity") regarding an equity investment or other provision of
capital, or a joint venture or other corporate arrangement ("Transaction").

1. OFCO introduced Cedar to the Company earlier this year as a possible
entity with which to enter into a Transaction. Cedar has initiated its serious
due diligence review and has provided in its letter of June 7, 1996 a proposed
basis for a Transaction.

In order to develop the interest of Cedar to enter into a Transaction
with the Company, (a) OFCO has had many meetings personally and by telephone
with representatives of Cedar at and during which (b) OFCO has presented the
merits of the Company's business on the basis of Company and other documents and
OFCO's own analysis of both the Company as well as the industry. These meetings
have included at different times representatives of OFCO, Cedar and more
recently the Company.

In order to assure that such interest of Cedar or will continue and be
brought to a closing, OFCO will (a) maintain its active discussions with Cedar
on behalf of the Company, (b) arrange meetings for you and other representatives
of the Company with Cedar, (c) continue to respond to Cedar's inquiries by
providing analysis and forecasts relating to industry trends and the Company and
(d) throughout the entire negotiation process, provide the Company with advice
regarding negotiating strategies and terms and conditions of the Transaction.
These same services would also be provided in connection with an Other Entity.

OFCO has committed substantial time and effort to the Cedar potential
and anticipates that substantial time and effort will still be required to
convert the interest of Cedar or Other Entity into a Transaction which benefits
the Company and its shareholders.
<PAGE> 3
The New World Power Corporation
June 11, 1996
Page 3

2. From the date of execution of this letter until termination thereof,
OFCO will have the exclusive right to act as the Company's financial advisor
with respect to a Transaction for Cedar or Other Entity.

3. At the Closing of a Transaction, the Company will (a) pay to OFCO a
cash fee in an amount equal to 2.5% of the value of the total consideration of
the Transaction and (b) reimburse OFCO its reasonable out-of-pocket expenses not
incurred in the normal course of business.

4. In the event that Cedar or Other Entity makes an investment in,
provides capital to or otherwise enters into a transaction with the Company or
an entity owned in whole or in part by the Company within a period of one year
from the date of execution of this letter, the Company will compensate OFCO in
accordance with the provisions set forth in paragraph 3 above.

The relationship and arrangements contemplated by this letter, except
as provided in 4, between the Company and OFCO may be terminated by the Company
or OFCO at any time upon sixty days notice.

------------

If the foregoing conforms to your understanding and you wish us to
proceed on your behalf as outlined above, please sign and return the enclosed
copy of this letter.

Thank you for your assistance and support.

Very truly yours,

Oakes, Fitzwilliams & Co., L.P.

By: /s/
---------------------------

The foregoing is hereby
confirmed and agreed:
The New World Power Corporation

By: /s/
----------------------------

<PAGE> 1
Exhibit 23.01

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 33-66950) of The New World Power Corporation of our
report dated June 27, 1996, appearing on page F-2 of this Form 10-K. We also
consent to the incorporation by reference of our report on the Financial
Statement Schedule, appearing on page F-43 of this Form 10-K.

PRICE WATERHOUSE LLP
Hartford, Connecticut
June 27, 1996

E-1

<PAGE> 1
EXHIBIT 23.02

CONSENT OF INDEPENDENT AUDITORS

We hereby consent to the incorporation by reference in the registration
statement on Form S-8 of The New World Power Corporation of our report dated
February 23, 1996, relating to the consolidated balance sheet of Photocomm,
Inc. and subsidiaries as of December 31, 1995, and the related consolidated
statements of operations, stockholders' equity, and cash flows for the year
then ended.

KPMG Peat Marwick LLP
Phoenix, Arizona
June 27, 1996

<PAGE> 1
Exhibit 23.03

CONSENT OF INDEPENDENT AUDITORS

The Board of Directors
The New World Power Corporation:

We hereby consent to the incorporation by reference in the registration
statement on Form S-8 of the New World Corporation of our report dated March 15,
1995, relating to the consolidated balance sheet of The New World Power
Corporation and subsidiaries as of December 31, 1994, and the related
consolidated statements of operations, stockholders equity, and cash flows for
the year ended December 31, 1994, the three months ended December 31, 1993 and
the year ended September 30, 1993, which report appears in the December 31,
1995, annual report on Form 10-K of The New World Power Corporation.

KPMG PEAT MARWICK LLP
New York, New York
June 28, 1996

E-2

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