Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended March 31, 2011
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from _______________ to ______________
Commission File Number 000-49805
SOLAR3D, INC.
-----------------------------------------
(Name of registrant in its charter)
DELAWARE 01-05922991
----------------------------------- --------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
6500 HOLLISTER AVENUE, SUITE 130 , GOLETA, CALIFORNIA 93117
--------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone Number: (805) 690-9000
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 whether the registrant has submitted electronically
and posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T
(ss.232.405 of this chapter) during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such files).
Yes[__] No[_X_]
Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, or a smaller reporting company.
See definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [___] Accelerated filer [___]
Non-accelerated filer (Do not check [___] Smaller reporting company [_X_]
if a smaller reporting company)
Indicate by check mark whether the Registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).
Yes[__] No[_X_]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of the latest practicable date.
The number of shares of registrant's common stock outstanding as of March
31, 2011 was 105,309,829
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED ...................................................................................... 1
Consolidated Balance Sheets at March 31, 2011 (Unaudited) and December 31, 2010................. 2
Consolidated Statements of Operations for the Three Months Ended
March 31, 2011 and March 31, 2010 (Unaudited)................................................... 3
Consolidated Statement of Shareholders' Deficit at March 31, 2011 (Unaudited)................... 4
Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 2011 and March 31, 2010 (Unaudited)................................................... 5
Notes to the Consolidated Financial Statements (Unaudited)...................................... 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS..............11
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ........................................12
ITEM 4. CONTROLS AND PROCEDURES............................................................................12
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings..................................................................................13
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS........................................13
ITEM 3. DEFAULTS UPON SENIOR SECURITIES....................................................................13
ITEM 4. (REMOVED AND RESERVED).............................................................................13
ITEM 5. OTHER INFORMATION..................................................................................13
ITEM 6. EXHIBITS...........................................................................................13
SIGNATURES.........................................................................................................14
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
-----------------------------
-1-
SOLAR3D, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
March 31, 2011 December 31, 2010
------------------ -------------------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 120,702 $ 3,311
Prepaid expense 18,822 24,822
------------------ -------------------
TOTAL CURRENT ASSETS 139,524 28,133
------------------ -------------------
PROPERTY & EQUIPMENT, at cost
Machinery & equipment 13,080 13,080
Computer equipment 55,717 55,717
Furniture & fixture 4,670 4,670
------------------ -------------------
73,467 73,467
Less accumulated depreciation (68,494) (67,923)
------------------ -------------------
NET PROPERTY AND EQUIPMENT 4,973 5,544
------------------ -------------------
OTHER ASSETS
Security deposit 2,975 2,975
------------------ -------------------
TOTAL OTHER ASSETS 2,975 2,975
------------------ -------------------
TOTAL ASSETS $ 147,472 $ 36,652
================== ===================
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable $ 17,573 $ 13,444
Accrued expenses 461,365 453,232
Accrued interest, other 26,975 25,025
Accrued interest, related parties 107,074 107,074
Convertible promissory note 65,000 65,000
------------------ -------------------
TOTAL CURRENT LIABILITIES 677,987 663,775
------------------ -------------------
SHAREHOLDERS' DEFICIT
Common stock, $.001 par value;
550,000,000 authorized shares;
105,309,829 and 100,689,825 shares issued and outstanding, respectively 105,309 100,689
Additional paid in capital 8,244,271 7,815,088
Deficit accumulated during the development stage (8,880,095) (8,542,900)
------------------ -------------------
TOTAL SHAREHOLDERS' DEFICIT (530,515) (627,123)
------------------ -------------------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT $ 147,472 $ 36,652
================== ===================
The accompanying notes are an integral part of these
consolidated financial statements
-2-
SOLAR3D, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
From Inception
January 30,2002
Three Months Ended through
March 31, 2011 March 31, 2010 March 31, 2011
------------- ------------- --------------
REVENUE $ - $ - $ 1,127,406
COST OF SERVICES - - 496,177
------------- ------------- --------------
GROSS PROFIT - - 631,229
------------- ------------- --------------
OPERATING EXPENSES
Selling, General and administrative expenses 313,232 47,308 5,231,137
Research and development 15,299 1,580 1,491,206
Impairment loss - - 1,753,502
Depreciation and amortization expense 6,571 117 126,818
------------- ------------- --------------
TOTAL OPERATING EXPENSES 335,102 49,005 8,602,663
------------- ------------- --------------
LOSS FROM OPERATIONS (335,102) (49,005) (7,971,434)
------------- ------------- --------------
OTHER INCOME/(EXPENSES) BEFORE PROVISION FOR INCOME TAXES
Interest income - 1 10,255
Interest expense (2,093) (2,518) (271,777)
Penalties - - (155)
Gain/(loss) on investment - - (73,121)
Loss on settlement of debt - - (567,300)
Gain/(loss) on sale of asset - - (963)
------------- ------------- --------------
TOTAL OTHER INCOME/(EXPENSES) (2,093) (2,517) (903,061)
------------- ------------- --------------
LOSS BEFORE PROVISION FOR INCOME TAXES (337,195) (51,522) (8,874,495)
PROVISION FOR INCOME TAXES - - (5,600)
------------- ------------- --------------
NET LOSS $ (337,195) $ (51,522) $ (8,880,095)
============= ============= ==============
BASIC AND DILUTED LOSS PER SHARE $ (0.00) $ (0.00)
============= =============
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING
BASIC AND DILUTED 102,497,253 44,928,692
============= =============
The accompanying notes are an integral part of these
consolidated financial statements
-3-
SOLAR3D, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF SHAREHOLDERS' DEFICIT
FOR THE THREE MONTHS ENDED MARCH 31, 2011
Accumulated
Deficit During
Common stock Additional the
---------------------- Paid-in Development
Shares Amount Capital Stage Total
----------- --------- ----------- ------------ -----------
Balance at December 31, 2010 100,689,825 $ 100,689 $ 7,815,088 $(8,542,900) $ (627,123)
Issuance of common stock in January for cash
(1,500,000 issued at $0.05 per share) (unaudited) 1,500,000 1,500 73,500 - 75,000
Issuance of common stock in February for cash
(670,000 issued at $0.08 per share) (unaudited) 670,000 670 49,580 - 50,250
Issuance of common stock in March for cash
(2,450,004 issued at $0.08 per share) (unaudited) 2,450,004 2,450 181,300 - 183,750
Stock compensation cost (unaudited) - - 124,803 - 124,803
Net loss for the three months ended March 31, 2011 (unaudited) - - - (337,195) (337,195)
------------ --------- ----------- ------------- -----------
Balance at March 31, 2011 (unaudited) 105,309,829 $ 105,309 $ 8,244,271 $ (8,880,095) $ (530,515)
============ ========= =========== ============= ===========
The accompanying notes are an integral part of these
consolidated financial statements
-4-
SOLAR3D, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
From Inception
January 30, 2002
Three Months Ended through
March 31, 2011 March 31, 2010 March 31, 2011
--------------- -------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (337,195) $ (51,522) $ (8,880,095)
Adjustments to reconcile net loss to net cash
used in operating activities
Depreciation and amortization 571 117 120,818
Issuance of common shares and warrants for services - - 727,713
Issuance of common shares in conversion of debt - - 400,000
(Gain)/loss on investment - - 73,121
Stock Compensation Cost 124,803 - 402,586
Gain on sale of asset - - 963
Impairment loss - - 1,753,502
Loss on settlement of debt - - 567,300
Changes in Assets and Liabilities
(Increase) Decrease in:
Prepaid expenses 6,000 - (18,822)
Deposits and other assets - - 2,025
Increase (Decrease) in:
Accounts payable 4,129 (25,319) 97,073
Accrued expenses 10,083 27,185 595,414
--------------- -------------- --------------
NET CASH USED IN OPERATING ACTIVITIES (191,609) (49,539) (4,158,402)
--------------- -------------- --------------
NET CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchase of property and equipment - - (79,120)
Sale of asset - - 3,963
Investment in companies - - (6,121)
--------------- -------------- --------------
NET CASH USED IN INVESTING ACTIVITIES - - (81,278)
--------------- -------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable related parties 47,000 - 1,174,342
Proceeds from convertible promissory note - 129,000
Repayment of notes payable related party (47,000) (44,000) (184,000)
Contributed capital by shareholder - - 19,197
Proceeds from subsidiary - - 300,000
Proceeds from issuance of common stock 309,000 200,000 2,914,193
--------------- -------------- --------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 309,000 156,000 4,352,732
--------------- -------------- --------------
NET INCREASE IN CASH 117,391 106,461 113,052
CASH, BEGINNING OF PERIOD 3,311 10,002 7,650
--------------- -------------- --------------
CASH, END OF PERIOD $ 120,702 $ 116,463 $ 120,702
=============== ============== ==============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid $ 134 $ - $ 137,618
=============== ============== ==============
Income taxes $ - $ - $ 5,600
=============== ============== ==============
The accompanying notes are an integral part of these
consolidated financial statements
-5-
SOLAR3D, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED
MARCH 31, 2011
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all normal recurring adjustments considered necessary for a fair
presentation have been included. Operating results for the three months
ended March 31, 2011 are not necessarily indicative of the results that may
be expected for the year ending December 31, 2011. For further information
refer to the consolidated financial statements and footnotes thereto
included in the Company's Form 10-K for the year ended December 31, 2010.
GOING CONCERN
The accompanying consolidated financial statements have been prepared on a
going concern basis of accounting, which contemplates continuity of
operations, realization of assets and liabilities and commitments in the
normal course of business. The accompanying consolidated financial
statements do not reflect any adjustments that might result if the Company
is unable to continue as a going concern. The Company does not generate
significant revenue, and has negative cash flows from operations, which
raise substantial doubt about the Company's ability to continue as a going
concern. The ability of the Company to continue as a going concern and
appropriateness of using the going concern basis is dependent upon, among
other things, an additional cash infusion. The Company has obtained funds
from its shareholders since its inception through March 31, 2011. It is
Management's plan to generate additional working capital from investors,
and then continue to pursue its business plan and purposes.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of Solar3D, Inc. is
presented to assist in understanding the Company's consolidated financial
statements. The consolidated financial statements and notes are
representations of the Company's management, which is responsible for their
integrity and objectivity. These accounting policies conform to accounting
principles generally accepted in the United States of America and have been
consistently applied in the preparation of the consolidated financial
statements.
DEVELOPMENT STAGE ACTIVITIES AND OPERATIONS
The Company has been in its initial stages of formation and for the three
months ended March 31, 2011, had insignificant revenues. A development
stage activity is one in which all efforts are devoted substantially to
establishing a new business and even if planned principal operations have
commenced, revenues are insignificant.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its subsidiaries Wideband Detection Technologies, Inc. and Micro
Wireless Technologies, Inc. All significant inter-company balances and
transactions have been eliminated.
CASH AND CASH EQUIVALENT
The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents.
-6-
SOLAR3D, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED
MARCH 31, 2011
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
REVENUE RECOGNITION
We recognize revenue upon delivery, provided that evidence of an
arrangement exists, title, and risk of loss have passed to the customer,
fees are fixed or determinable, and collection of the related receivable is
reasonably assured. We record revenue net of estimated product returns,
which is based upon our return policy, sales agreements, management
estimates of potential future product returns related to current period
revenue, current economic trends, changes in customer composition and
historical experience. We accrue for warranty costs, sales returns, and
other allowances based on our experience, which tells us we have less than
$25,000 per year in warranty returns and allowances. Generally, we extend
credit to our customers and do not require collateral. We perform ongoing
credit evaluations of our customers and historic credit losses have been
within our expectations. We do not ship a product until we have either a
purchase agreement or rental agreement signed by the customer with a
payment arrangement. This is a critical policy, because we want our
accounting to show only sales which are "final" with a payment arrangement.
We do not make consignment sales, nor inventory sales subject to a "buy
back" or return arrangement from customers. Accordingly, original equipment
manufacturers do not presently have a right to return unsold products to
us.
We also grant exclusive licenses for the use of the technology required to
operate our products. Software license revenue is recognized over the
contract period, for those contracts that either do not contain a service
component or that have services which are not essential to the
functionality of any other element of the contract.
LOSS PER SHARE CALCULATIONS
Loss per Share dictates the calculation of basic earnings per share and
diluted earnings per share. Basic earnings per share are computed by
dividing income available to common shareholders by the weighted-average
number of common shares available. Diluted earnings per share is computed
similar to basic earnings per share except that the denominator is
increased to include the number of additional common shares that would have
been outstanding if the potential common shares had been issued and if the
additional common shares were dilutive. No shares for employee options or
warrants were used in the calculation of the loss per share as they were
all anti-dilutive. The Company's diluted loss per share is the same as the
basic loss per share for the three months ended March 31, 2011 and 2010 as
the inclusion of any potential shares would have had an anti-dilutive
effect due to the Company generating a loss.
STOCK-BASED COMPENSATION
Share based payments applies to transactions in which an entity exchanges
its equity instruments for goods or services, and also applies to
liabilities an entity may incur for goods or services that are to follow a
fair value of those equity instruments. We will be required to follow a
fair value approach using an option-pricing model, such as the
Black-Scholes option valuation model, at the date of a stock option grant.
The deferred compensation calculated under the fair value method would then
be amortized over the respective vesting period of the stock option. The
adoption of share based compensation has no material impact on our results
of operations.
RECLASSIFICATION OF EXPENSES
Certain expenses for the period ended March 31, 2010 were reclassified to
conform to the expenses for the period ended March 31, 2011.
3. CAPITAL STOCK AND WARRANTS
During the three months ended March 31, 2011, the Company issued 4,620,004
shares of common stock at prices between $0.05 and $0.075 per share for
$309,000 in cash. During the three months ended March 31, 2010, the Company
issued 16,000,000 shares of common stock at a price of $0.0125 for $200,000
in cash.
-7-
SOLAR3D, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED
MARCH 31, 2011
4. STOCK OPTIONS AND WARRANTS
During the year ended December 31, 2010, in consideration for services as a
director of the Company, the Board of Directors issued to Mr. Nelson a
nonqualified stock option to purchase up to 15,000,000 shares of the
Company's common stock. The stock options were granted on July 22, 2010 and
vest 1/36th per month on a monthly basis commencing on August 21, 2010 for
as long as he is an employee or consultant of the Company. The stock
options are exercisable for a period of seven years from the date of grant
at an exercise price of $0.05 per share, as adjusted for the five for one
reverse split of the Company's common stock. The Company determined the
fair market value of these options by using the Black Scholes option
valuation model with the following significant assumptions:
3/31/2011
-----------------
Risk free interest rate 2.38%
Stock volatility factor 229%
Weighted average expected option life 7 years
Expected dividend yield None
A summary of the Company's stock option activity and related information
follows:
3/31/2011
--------------------------------
Weighted
Number average
of exercise
Options price
--------------------------------
Outstanding, beginning of period 15,000,000 $ 0.05
Granted - -
Exercised - -
Expired - -
--------------------------------
Outstanding, end of period 15,000,000 $ 0.05
================================
Exercisable at the end of period 3,333,333 $ 0.05
================================
Weighted average fair value of
options granted during the period $ -
============
The stock-based compensation expense recognized in the statement of
operations during the period ended March 31, 2011 is $124,803.
WARRANTS
The stock-based compensation expense recognized in the statement of
operations during the three month periods ended March 31, 2011and 2010,
were $124,803 and $0, respectively.
5. SUBSEQUENT EVENTS
Management has evaluated subsequent events according to the requirements of
ASC TOPIC 855 and has determined there are no subsequent events to be
reported.
-8-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
--------------------------------------------------------------------------------
CAUTIONARY STATEMENTS
This Form 10-Q contains financial projections and other
"forward-looking statements," as that term is used in federal securities laws,
about Solar3D, Inc.'s ("Solar3D," "we," "us," or the "Company") financial
condition, results of operations and business. These statements include, among
others: statements concerning the potential for revenues and expenses and other
matters that are not historical facts. These statements may be made expressly in
this Form 10-Q. You can find many of these statements by looking for words such
as "believes," "expects," "anticipates," "estimates," or similar expressions
used in this Form 10-Q. These forward-looking statements are subject to numerous
assumptions, risks and uncertainties that may cause the Company's actual results
to be materially different from any future results expressed or implied by the
Company in those statements. The most important facts that could prevent the
Company from achieving its stated goals include, but are not limited to, the
following:
(a) inability to complete research and development of the new
Solar3D technology with little or no current revenue;
(b) volatility or decline of the Company's stock price;
(c) potential fluctuation in quarterly results;
(d) failure of the Company to earn revenues or profits;
(e) inadequate capital to continue business;
(f) barriers to raising the additional capital or to obtaining the
financing needed to implement its business plans;
(g) lack of demand for the Company's products and services;
(h) rapid and significant changes in markets;
(i) litigation with or legal claims and allegations by outside
parties;
(j) insufficient revenues to cover operating costs;
(k) inability to start or acquire new businesses, or lack of
success of new businesses started or acquired by the Company,
if any;
(l) inability to effectively develop or commercialize our new
Solar3D technology; and
(m) inability to obtain patent or other protection for the
Company's proprietary intellectual property.
Because the statements are subject to risks and uncertainties, actual
results may differ materially from those expressed or implied by the
forward-looking statements. The Company cautions you not to place undue reliance
on the statements, which speak only as of the date of this Form 10-Q. The
cautionary statements contained or referred to in this section should be
considered in connection with any subsequent written or oral forward-looking
statements that the Company or persons acting on its behalf may issue.
The Company does not undertake any obligation to review or confirm
analysts' expectations or estimates or to release publicly any revisions to any
forward-looking statements to reflect events or circumstances after the date of
this Form 10-Q or to reflect the occurrence of unanticipated events.
The following discussion should be read in conjunction with our
condensed financial statements and notes to those statements. In addition to
historical information, the following discussion and other parts of this
quarterly report contain forward-looking information that involves risks and
uncertainties.
OVERVIEW
On August 5, 2010, the holders of a majority of the outstanding voting
stock of the Company voted by written consent to (1) effect a one-for-five
reverse stock split, and (2) change the name of the Company to Solar 3D, Inc.
Our new business focus will be centered on the acquisition, development, and
commercialization of new proprietary technology to significantly increase the
-9-
efficiency and energy production of solar photovoltaic cells that are currently
offered in the market and that may be developed in the future. In furtherance of
our new business focus, we recently applied for patents covering a novel
three-dimensional solar cell technology that is designed to maximize the
conversion of sunlight into electricity. We believe our new technology will
dramatically increase the efficiency of solar cells.
Almost all conventional solar cells have a two-dimensional design where
up to 30 percent of incident is sunlight reflected off of each solar cell's
surface and more light energy absorbed and lost inside the solar cell materials
than is converted into energy. By contrast, our Solar3D design uses a matrix of
light-collecting elements that guide sunlight into a corresponding array of
three-dimensional, micro-photovoltaic structures. The sunlight, in the form of
photons, is trapped among these micro-structures, where it bounces around until
virtually all of the energy is converted into electricity. Solar3D aims to
create a better solar cell using this innovative technique by eliminating
surface reflection and maximizing the conversion of photons into electrons to
achieve greater efficiency and a lower cost per watt.
We still own all of the MachineTalker technology. In May 2008, we
successfully interconnected our Talker(R) product line to our new "GuardDog"
product which uses Ultra-Wide Band ("UWB') technology to detect any movement or
motion in its vicinity. The combination of Talkers(R) and GuardDog employs UWB
radar-like signals to detect movement within an area, either in the open space
or inside of a closed chamber like that of a shipping container. In addition,
this new product can detect changes other than movement, such as a break or hole
being made in the side of a container. This product is aimed at a unique method
of protection for goods in transit or in storage, and has been proposed as part
of a package to several potential customers.
We currently have two full time employees, our chief executive officer
and our chief financial officer. We also retain the services of several research
consultants who are responsible for product development
CRITICAL ACCOUNTING POLICIES
Our discussion and analysis of our financial condition and results of
operations are based upon our financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States of
America. The preparation of these financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses, and related disclosures of contingent assets and
liabilities. On an ongoing basis, we evaluate our estimates, including those
related to impairment of property, plant and equipment, intangible assets,
deferred tax assets and fair value computation using the Black Scholes option
pricing model. We base our estimates on historical experience and on various
other assumptions, such as the trading value of our common stock and estimated
future undiscounted cash flows, that we believe to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying value of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions; however, we believe that our estimates, including
those for the above-described items, are reasonable.
USE OF ESTIMATES
In accordance with accounting principles generally accepted in the
United States, management utilizes estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the financial statements as well as the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. These estimates and assumptions
relate to recording net revenue, collectability of accounts receivable, useful
lives and impairment of tangible and intangible assets, accruals, income taxes,
inventory realization, stock-based compensation expense and other factors.
Management believes it has exercised reasonable judgment in deriving these
estimates. Consequently, a change in conditions could affect these estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Our cash, cash equivalents, investments, accounts receivable and
accounts payable are stated at cost which approximates fair value due to the
short-term nature of these instruments.
-10-
REVENUE RECOGNITION
We will continue to recognize revenue in accordance with the Securities
and Exchange Commission Staff Accounting Bulletin No. 104, "Revenue Recognition
in Financial Statements" ("SAB 104"). We will continue to recognize revenue upon
delivery, provided that evidence of an arrangement exists, title, and risk of
loss have passed to the customer, fees are fixed or determinable, and collection
of the related receivable is reasonably assured. We will continue to record
revenue net of estimated product returns, which is based upon our return policy,
sales agreements, management estimates of potential future product returns
related to current period revenue, current economic trends, changes in customer
composition and historical experience. We will continue to accrue for warranty
costs, sales returns, and other allowances based on our prior experience in
servicing customers and products. We may extend credit to our customers based
upon credit evaluations and do not require collateral. We do not and will not
ship a product until we have either a purchase agreement or rental agreement
signed by the customer with a payment arrangement. This is a critical policy,
because we want our accounting to show only sales which are "final" with a
payment arrangement. We do not and will not make consignment sales or inventory
sales subject to a "buy back" or return arrangement from customers.
PROVISION FOR SALES RETURNS, ALLOWANCES AND BAD DEBTS
We will continue to maintain a provision for sales allowances, returns
and bad debts. Sales returns and allowances result from equipment damaged in
delivery or customer dissatisfaction, as provided by agreement. The provision
will continue to be provided for by reducing gross revenue by a portion of the
amount invoiced during the relevant period. The amount of the reduction will
continue to be estimated based on historical experience.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2011 COMPARED TO THE
THREE MONTHS ENDED MARCH 31, 2010
REVENUE AND COST OF SALES
For the three months ended March 31, 2011 and 2010, the Company had no
revenue or cost of sales and is in its development stage.
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES
Selling, general, and administrative ("SG&A") expenses increased by
$265,924 to $313,232 for the three months ended March 31, 2011 compared to
$47,308 for the three months ended March 31, 2010. SG&A expenses increased due
to increases in non-cash stock compensation cost of $124,803, and overall
operating expenses, including marketing services of $41,409, and salaries of
$52,833.
RESEARCH AND DEVELOPMENT
Research and development ("R&D") costs increased by $13,719 to $15,299
for the three months ended March 31, 2011 compared to $1,580 for the three
months ended March 31, 2010. This increase in R&D costs was the result of an
increase in consulting fees due to a change in focus of our technology.
NET LOSS
Net loss increased by $(285,673) to $(337,195) for the three months
ended March 31, 2011, compared to $(51,522) for the three months ended March 31,
2010. The increase in net loss was the result of an increase in operating
expenses as above mentioned. Currently operating costs exceed revenue because
sales are not yet significant. We cannot assure when or if revenue will exceed
operating costs.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2011, we had a working capital deficit of $(538,463) as
compared to $(635,642) at December 31, 2010. This decrease in working capital
deficit of $(97,179) was due primarily to an increase in cash from investors.
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Cash flow used in operating activities was $(191,609) for the three
months ended March 31, 2011, as compared to cash used of $(49,539) for the three
months ended March 31, 2010. This increase of cash used in operating activities
of $(142,070) was primarily attributable to the increase in net loss of
$285,673, plus the payment of accounts payable, accrued expenses, and prepaid
expenses.
Cash provided from financing activities during the three months ended
March 31, 2011 was $309,000 as compared to cash provided of $156,000 for the
three months ended March 31, 2010. The increase of $153,000 was primarily due to
an increase in equity financing.
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any off balance sheet arrangements that are reasonably
likely to have a current or future effect on our financial condition, revenues,
results of operations, liquidity, or capital expenditures.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
-------------------------------------------------------------------
Not Applicable.
ITEM 4. CONTROLS AND PROCEDURES
-------------------------------
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures that are designed to
ensure that information required to be disclosed by us is recorded, processed,
summarized, and reported within the time periods specified in the rules and
forms of the Securities and Exchange Commission.
Our management, under the direction of our Chief Executive Officer and
Principal Financial Officer, has evaluated the effectiveness of the design and
operation of our disclosure controls and procedures (as such terms are defined
in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2011.
As part of such evaluation, management considered the matters discussed below
relating to internal control over financial reporting. Based on this evaluation
our management, including our Chief Executive Officer and Principal Financial
Officer, has concluded that our disclosure controls and procedures were
effective as of March 31, 2011
INTERNAL CONTROL OVER FINANCIAL REPORTING
The Company's Chief Executive Officer and Principal Financial Officer
are responsible for establishing and maintaining adequate internal control over
financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our
internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes of accounting
principles generally accepted in the United States. Because of its inherent
limitations, internal control over financial reporting may not prevent or detect
misstatements. Therefore, even those systems determined to be effective can
provide only reasonable assurance of achieving their control objectives.
CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
There were no changes in the Company's internal control over financial
reporting identified in connection with the evaluation of it that occurred
during the three month period ended March 31, 2011 that materially affected or
are reasonably likely to materially affect the Company's internal control over
financial reporting.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
--------------------------
None.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
--------------------------------------------------------------------
In addition to the sales of equity reported by us on Form 8K during
three month period ended March 31, 2011, we issued a total of 4,620,004 shares
of common stock at prices between $0.05 and $0.075 per share for $309,000 in
cash, pursuant to the private placement exemption available under Rule 506 of
Regulation D of the Securities Act of 1933, as amended. The proceeds from the
sale of these shares are being used for general working capital.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
----------------------------------------
None.
ITEM 4. (REMOVED AND RESERVED).
-------------------------------
ITEM 5. OTHER INFORMATION.
--------------------------
None.
ITEM 6. EXHIBITS.
-----------------
EXHIBIT DESCRIPTION
------- ---------------------------------------------------------
31.1 Section 302 Certification of Principal Executive Officer
31.2 Section 302 Certification of Chief Financial Officer
32.1 Section 906 Certification of Principal Executive Officer
32.2 Section 906 Certification of Chief Financial Officer
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
SOLAR3D, INC.
Dated: May 16, 2011 By: /s/James B. Nelson
--------------------------------------------
James B. Nelson,
Director and Chief Executive Officer
(Principal Executive Officer)
Dated: May 16, 2011 By: /s/Roland F. Bryan
--------------------------------------------
Roland F. Bryan, Chairman of the Board,
President, and Chief Financial Officer
(Principal Financial Officer)
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