Attached files
file | filename |
---|---|
EX-31 - EXHIBIT 31.1 - KinerjaPay Corp. | exh31_1.htm |
EX-32 - EXHIBIT 32.1 - KinerjaPay Corp. | exh32_1.htm |
EXCEL - IDEA: XBRL DOCUMENT - KinerjaPay Corp. | Financial_Report.xls |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM 10-Q
___________________
ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2014
Commission File Number: 333-168068
SOLARFLEX
CORP.
(Exact Name Of
Registrant As Specified In Its Charter)
Delaware | 42-1771817 |
(State of Incorporation) | (I.R.S. Employer Identification No.) |
c/o Sergei Rogov, 12 Abba Hillel Silver Street, 11th Floor, Ramat Gan, Israel | 52506 |
(Address of Principal Executive Offices) | (ZIP Code) |
Registrant's Telephone Number, Including Area Code: +(972) 3-753-9888
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 is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer (as defined in Rule 12b-2 of the Exchange Act) or a smaller reporting company .
Large accelerated filer ¨ | Accelerated filer ¨ | Non-Accelerated filer ¨ | Smaller reporting company x |
On August 5, 2014, the Registrant had 135,249,990 shares of common stock outstanding.
Item |
Description |
Page |
|||
---|---|---|---|---|---|
PART I - FINANCIAL INFORMATION |
|||||
ITEM 1. | FINANCIAL STATEMENTS. | 3 | |||
Balance Sheets | 4 | ||||
Statements of Operations | 5 | ||||
Statements of Cash Flows | 6 | ||||
Notes to Financial Statements | 7 | ||||
ITEM 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND PLAN OF OPERATIONS. | 13 | |||
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. | 14 | |||
ITEM 4. | CONTROLS AND PROCEDURES. | 14 | |||
PART II - OTHER INFORMATION |
|||||
ITEM 1. | LEGAL PROCEEDINGS. | 15 | |||
ITEM 1A. | RISK FACTORS. | 15 | |||
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. | 15 | |||
ITEM 3. | DEFAULT UPON SENIOR SECURITIES. | 15 | |||
ITEM 4. | MINE SAFETY DISCLOSURE. | 15 | |||
ITEM 5. | OTHER INFORMATION. | 15 | |||
ITEM 6. | EXHIBITS. | 15 |
PART I - FINANCIAL INFORMATION
SOLARFLEX CORP. | ||||
(A Development Stage Company) | ||||
Balance Sheets | ||||
As of June 30, 2014 and December 31, 2013 | ||||
Back to Table of Contents | ||||
June 30, 2014 | December 31, 2013 | |||
(Unaudited) | (Audited) | |||
ASSETS |
||||
Current assets: | ||||
Cash | $ | 4,846 | $ | 971 |
Total current assets | 4,846 | 971 | ||
Total Assets | $ | 4,846 | $ | 971 |
LIABILITIES AND STOCKHOLDERS' DEFICIT |
||||
Current liabilities: | ||||
Accrued expenses | $ | 4,000 | $ | 6,557 |
Accrued interest | 4,287 | 649 | ||
Current portion of convertible notes payable, net of discount of $49,277 and $14,589, respectively | 35,723 | 5,411 | ||
Total current liabilities | 44,010 | 12,617 | ||
Total liabilities | 44,010 | 12,617 | ||
Stockholders' deficit: | ||||
Common stock, par value $0.0001 per share; 500,000,000 shares authorized; | ||||
135,249,990 and 134,999,990 shares issued and outstanding at June 30, 2014 and December 31, 2013, respectively | 13,525 | 13,500 | ||
Additional paid-in capital | 478,791 | 381,316 | ||
Deficit accumulated during the development stage | (531,480) | (406,462) | ||
Total stockholders' deficit | (39,164) | (11,646) | ||
Total Liabilities and Stockholders' Equity | $ | 4,846 | $ | 971 |
See notes to unaudited interim financial statements. |
SOLARFLEX CORP. | ||||||||||
(A Development Stage Company) | ||||||||||
Statements of Operations | ||||||||||
For the Three and Six Months Ended June 30, 2014 and 2013 and for the Period from Inception (February 2, 2010) to June 30, 2014 | ||||||||||
(Unaudited) | ||||||||||
Back to Table of Contents | ||||||||||
Cumulative from | ||||||||||
For the | For the | For the | For the | Inception | ||||||
Three Months Ended | Three Months Ended | Six Months Ended | Six Months Ended | (February 12, 2010 | ||||||
June 30, 2014 | June 30, 2013 | June 30, 2014 | June 30, 2013 | to June 30, 2014) | ||||||
Revenue | $ | - | $ | - | $ | - | $ | - | $ | - |
Expenses: | ||||||||||
General and administrative | 63,955 | 8,393 | 91,068 | 17,851 | 277,945 | |||||
Depreciation expense | - | - | - | - | 26,495 | |||||
Impairment of fixed assets | - | - | - | - | 183,505 | |||||
Total | 63,955 | 8,393 | 91,068 | 17,851 | 487,945 | |||||
(Loss) from operations | (63,955) | (8,393) | (91,068) | (17,851) | (487,945) | |||||
Other income (expense): | ||||||||||
Interest expense | (2,260) | (3,638) | (10,131) | |||||||
Amortization of debt discount | (18,835) | (30,312) | (35,723) | |||||||
Other income | - | - | - | - | 2,319 | |||||
Total costs and expenses | 85,050 | 8,393 | 125,018 | 17,851 | 531,480 | |||||
Net loss before income taxes | (85,050) | (8,393) | (125,018) | (17,851) | (531,480) | |||||
Income taxes | - | - | - | - | - | |||||
Net loss | $ | (85,050) | $ | (8,393) | $ | (125,018) | $ | (17,851) | $ | (531,480) |
Basic and diluted per share amounts: | ||||||||||
Basic and diluted net loss | $ | (0.00) | $ | (0.00) | (0.00) | (0.00) | ||||
Weighted average shares outstanding | ||||||||||
(basic and diluted) | 135,230,759 | 10,507,326 | 134,999,980 | 8,121,547 | ||||||
See notes to unaudited interim financial statements. |
SOLARFLEX CORP. | ||||||
(A Development Stage Company) | ||||||
Statements of Cash Flows | ||||||
For the Six Months Ended June 30, 2014 and 2013 and for the Period from Inception (February 2, 2010) to June 30, 2014 | ||||||
(Unaudited) | ||||||
Back to Table of Contents | ||||||
For the | For the | Cumulative from | ||||
Six Months Ended | Six Months Ended | Inception (February 2, 2010) | ||||
June 30, 2014 | June 30, 2013 | to June 30, 2014 | ||||
Cash flows from operating activities: | ||||||
Net loss | $ | (125,018) | $ | (17,851) | $ | (531,480) |
Adjustments required to reconcile net loss to cash used in operating activities: | ||||||
Amortization of debt discount | 30,312 | - | 35,723 | |||
Depreciation | - | - | 26,495 | |||
Common stock issued for services | 32,500 | - | 32,500 | |||
Imputed interest | - | - | 5,844 | |||
Impairment of fixed assets | - | - | 183,505 | |||
Changes in net assets and liabilities: | ||||||
Increase (decrease) in accounts payable and accrued liabilities | 1,081 | (8,235) | 8,287 | |||
Net cash used in operating activities | (61,125) | (26,086) | (239,126) | |||
Cash flows from investing activities: | ||||||
Purchase of equipment | - | (30,000) | (30,000) | |||
Net cash used in investing activities | - | (30,000) | (30,000) | |||
Cash flows from financing activities: | ||||||
Proceeds from issuance of common stock | - | 60,000 | 135,300 | |||
Offering costs | - | - | (25,000) | |||
Proceeds of convertible debt | 65,000 | - | 85,000 | |||
Proceeds from related party loans | - | - | 78,672 | |||
Net cash provided by financing activities | 65,000 | 60,000 | 273,972 | |||
Change in cash | 3,875 | 3,914 | 4,846 | |||
Cash - Beginning of period | 971 | - | - | |||
Cash - End of period | $ | 4,846 | $ | 3,914 | $ | 4,846 |
See notes to unaudited interim financial statements. | ||||||
Supplemental Cash Flow Disclosure: | ||||||
Common stock issued to purchase equipment | $ | - | $ | - | $ | 180,000 |
Debt discount | $ | 65,000 | $ | - | $ | 85,000 |
Related party debt forgiveness | $ | - | $ | - | $ | 78,672 |
SOLARFLEX CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO UNAUDITED INTERIM
FINANCIAL STATEMENTS
Back to Table of Contents
1. The Company and Significant Accounting Policies
Organizational Background: Solarflex Corp. ("Solarflex" or the "Company") is
a Delaware corporation in the development stage and has not commenced
operations. The Company was incorporated under the laws of the State of Delaware
on February 12, 2010. The business plan of the Company is to develop a
commercial application of the design in a patent of a "Solar element and method
of manufacturing the same". The Company also intends to produce a prototype, and
manufacture and market the product and/or seek third party entities interested
in licensing the rights to manufacture and market the device. The accompanying
financial statements of the Company were prepared from the accounts of the
Company under the accrual basis of accounting.
Basis of Presentation:
The accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America, which
contemplate continuation of the Company as a going concern. The Company has not
established any source of revenue to cover its operating costs, and as such, has
incurred an operating loss since inception. Further, as of June 30, 2014, the
cash resources of the Company were insufficient to meet its current business
plan, and the Company had negative working capital. These and other factors
raise substantial doubt about the Company's ability to continue as a going
concern. The accompanying financial statements do not include any adjustments to
reflect the possible future effects on the recoverability and classification of
assets or the amounts and classification of liabilities that may result from the
possible inability of the Company to continue as a going concern.
Significant Accounting Policies
Use of Estimates: The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statement and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from the estimates.
Cash and Cash Equivalents: For
financial statement presentation purposes, the Company considers those
short-term, highly liquid investments with original maturities of three months
or less to be cash or cash equivalents. There were no cash equivalents as of
June 30, 2014 and December 31, 2013.
Property and Equipment: New
property and equipment are recorded at cost. Depreciation is computed using the
straight-line method over the estimated useful lives of the assets, generally 5
years. Expenditures for renewals and betterments are capitalized. Expenditures
for minor items, repairs and maintenance are charged to operations as incurred.
Gain or loss upon sale or retirement due to obsolescence is reflected in the
operating results in the period the event takes place.The equipment carried on
the September 30, 2013 balance sheet (a multiple target industrial vacuum) has
not yet been placed in service.
Valuation of Long-Lived Assets: We
review the recoverability of our long-lived assets including equipment, goodwill
and other intangible assets, when events or changes in circumstances occur that
indicate that the carrying value of the asset may not be recoverable. The
assessment of possible impairment is based on our ability to recover the
carrying value of the asset from the expected future pre-tax cash flows
(undiscounted and without interest charges) of the related operations. If these
cash flows are less than the carrying value of such asset, an impairment loss is
recognized for the difference between estimated fair value and carrying value.
Our primary measure of fair value is based on discounted cash flows. The
measurement of impairment requires management to make estimates of these cash
flows related to long-lived assets, as well as other fair value determinations.
Stock Based Compensation: Stock-based awards are accounted for using
the fair value method in accordance with ASC 718, Share-Based Payments. Our
primary type of share-based compensation consists of stock options. We use the
Black-Scholes option pricing model in valuing options. The inputs for the
valuation analysis of the options include the market value of the Company's
common stock, the estimated volatility of the Company's common stock, the
exercise price of the warrants and the risk free interest rate.
Accounting For Obligations And Instruments Potentially To Be Settled In The
Company's Own Stock: We account for obligations and instruments potentially to
be settled in the Company's stock in accordance with FASB ASC 815, Accounting
for Derivative Financial Instruments. This issue addresses the initial balance
sheet classification and measurement of contracts that are indexed to, and
potentially settled in, the Company's own stock.
Fair Value of
Financial Instruments: FASB ASC 825, "Financial Instruments," requires
entities to disclose the fair value of financial instruments, both assets and
liabilities recognized and not recognized on the balance sheet, for which it is
practicable to estimate fair value. FASB ASC 825 defines fair value of a
financial instrument as the amount at which the instrument could be exchanged in
a current transaction between willing parties. At June 30, 2014 and December
31.2013, the carrying value of certain financial instruments (cash and cash
equivalents, accounts payable and accrued expenses.) approximates fair value due
to the short-term nature of the instruments or interest rates, which are
comparable with current rates.
Fair Value Measurements: The
Company measures fair value under a framework that utilizes a fair value
hierarchy that prioritizes the inputs to valuation techniques used to measure
fair value. The hierarchy gives the highest priority to unadjusted quoted prices
in active markets for identical assets or liabilities (level 1 measurements) and
the lowest priority to unobservable inputs (level 3 measurements). The three
levels of inputs which prioritize the inputs used in measuring fair value are:
Level 1: Inputs to the valuation methodology are unadjusted quoted prices
for identical assets or liabilities in active markets that the Company has the
ability to access.
Level 2: Inputs to the valuation methodology include:
- Quoted prices for similar assets or liabilities in active markets;
- Quoted
prices for identical or similar assets or liabilities in inactive markets;
-
Inputs other than quoted prices that are observable for the asset or liability;
- Inputs that are derived principally from or corroborated by observable market
data by correlation or other means.
If the asset or liability has a specified
(contractual) term, the level 2 input must be observable for substantially the
full term of the asset or liability.
Level 3: Inputs to the valuation
methodology are unobservable and significant to the fair value measurement.
The assets or liability's fair value measurement level within the fair value
hierarchy is based on the lowest level of any input that is significant to the
fair value measurement. Valuation techniques used need to maximize the use of
observable inputs and minimize the use of unobservable inputs. The following
table presents assets that were measured and recognize at fair value on June 30,
2014 and December 31.2013 and the year periods ended on a recurring basis:
Fair Value Measurements at June 30, 2014 |
||||||||
Quoted Prices in Active |
Significant Other |
Significant |
||||||
Markets for Identical Assets |
Observable Inputs |
Unobservable Inputs |
||||||
Total |
(Level 1) |
(Level 2) |
(Level 3) |
|||||
None | $ |
- |
$ |
- | $ |
- |
$ |
- |
Total assets at fair value | $ |
- |
$ |
- | $ |
- |
$ |
- |
Fair Value Measurements at December 31, 2013 |
||||||||
Quoted Prices in Active |
Significant Other |
Significant |
||||||
Markets for Identical Assets |
Observable Inputs |
Unobservable Inputs |
||||||
Total |
(Level 1) |
(Level 2) |
(Level 3) |
|||||
None | $ |
- |
$ |
- | $ |
- |
$ |
- |
Total assets at fair value | $ |
- |
$ |
- | $ |
- |
$ |
- |
When the Company changes its valuation inputs for measuring financial
assets and liabilities at fair value, either due to changes in current
market conditions or other factors, it may need to transfer those assets or
liabilities to another level in the hierarchy based on the new inputs used.
The Company recognizes these transfers at the end of the reporting period
that the transfers occur. For the fiscal periods ended June 30, 2014 and
2013, there were no significant transfers of financial assets or financial
liabilities between the hierarchy levels.
Earnings per Common
Share: We compute net income (loss) per share in accordance with ASC
260, Earning per Share. ASC 260 requires presentation of both basic and
diluted earnings per share (EPS) on the face of the income statement. Basic
EPS is computed by dividing net income (loss) available to common
shareholders (numerator) by the weighted average number of shares
outstanding (denominator) during the period. Diluted EPS gives effect to all
dilutive potential common shares outstanding during the period using the
treasury stock method and convertible preferred stock using the if-converted
method. In computing Diluted EPS, the average stock price for the period is
used in determining the number of shares assumed to be purchased from the
exercise of stock options or warrants. Diluted EPS excludes all dilutive
potential shares if their effect is anti-dilutive.
On September 20, 2013
we declared a forward split of our common stock. The formula provided that
every one (1) issued and outstanding shares of common stock of the
Corporation be automatically split into ten (10) shares of common stock. The
forward stock split was effective September 20, 2013 for holders of record
as of that date. Except as otherwise noted, all share, option and warrant
numbers have been restated to give retroactive effect to this split. All per
share disclosures retroactively reflect shares outstanding or issuable as
though the forward split had occurred at inception, February 12, 2010.
Income Taxes: We have adopted ASC 740, Accounting for Income
Taxes. Pursuant to ASC 740, we are required to compute tax asset benefits
for net operating losses carried forward. The potential benefits of net
operating losses have not been recognized in these financial statements
because the Company cannot be assured it is more likely than not it will
utilize the net operating losses carried forward in future years.
We
must make certain estimates and judgments in determining income tax expense
for financial statement purposes. These estimates and judgments occur in the
calculation of certain tax assets and liabilities, which arise from
differences in the timing of recognition of revenue and expense for tax and
financial statement purposes.
Deferred tax assets and liabilities are
determined based on the differences between financial reporting and the tax
basis of assets and liabilities using the tax rates and laws in effect when
the differences are expected to reverse. ASC 740 provides for the
recognition of deferred tax assets if realization of such assets is more
likely than not to occur. Realization of our net deferred tax assets is
dependent upon our generating sufficient taxable income in future years in
appropriate tax jurisdictions to realize benefit from the reversal of
temporary differences and from net operating loss, or NOL, carryforwards. We
have determined it more likely than not that these timing differences will
not materialize and have provided a valuation allowance against
substantially all of our net deferred tax asset. Management will continue to
evaluate the realizability of the deferred tax asset and its related
valuation allowance. If our assessment of the deferred tax assets or the
corresponding valuation allowance were to change, we would record the
related adjustment to income during the period in which we make the
determination. Our tax rate may also vary based on our results and the mix
of income or loss in domestic and foreign tax jurisdictions in which we
operate.
In addition, the calculation of our tax liabilities involves
dealing with uncertainties in the application of complex tax regulations. We
recognize liabilities for anticipated tax audit issues in the U.S. and other
tax jurisdictions based on our estimate of whether, and to the extent to
which, additional taxes will be due. If we ultimately determine that payment
of these amounts is unnecessary, we will reverse the liability and recognize
a tax benefit during the period in which we determine that the liability is
no longer necessary. We will record an additional charge in our provision
for taxes in the period in which we determine that the recorded tax
liability is less than we expect the ultimate assessment to be.
ASC
740 which requires recognition of estimated income taxes payable or
refundable on income tax returns for the current year and for the estimated
future tax effect attributable to temporary differences and carry-forwards.
Measurement of deferred income tax is based on enacted tax laws including
tax rates, with the measurement of deferred income tax assets being reduced
by available tax benefits not expected to be realized.
Uncertain
Tax Positions
The Financial Accounting Standards Board issued Interpretation No. 48,
"Accounting for Uncertainty in Income Taxes - an interpretation of FASB
Statement No. 109, Accounting for Income Taxes" ("FIN No. 48") which was
effective for the Company on January 1, 2007. FIN No. 48 addresses the
determination of whether tax benefits claimed or expected to be claimed on a
tax return should be recorded in the financial statements. Under FIN No.
48, the Company may recognize the tax benefit from an uncertain tax position
only if it is more likely than not that the tax position will be sustained
on examination by the taxing authorities based on the technical merits of
the position. The tax benefits recognized in the financial statements from
such position should be measured based on the largest benefit that has a
greater than fifty percent likelihood of being realized upon ultimate
settlement. FIN No. 48 also provides guidance on derecognition,
classification, interest and penalties, accounting in interim periods and
disclosure requirements.
Our federal and state income tax returns are
open for fiscal years ending on or after December 31, 2008. We are not under
examination by any jurisdiction for any tax year. At December 31, 2013 we
had no material unrecognized tax benefits and no adjustments to liabilities
or operations were required under FIN 48.
Recent Accounting
Pronouncements
In July 2013, FASB issued ASU No. 2013-11,
"Presentation of an Unrecognized Tax Benefit When a Net Operating Loss
Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists." The
provisions of ASU No. 2013-11 require an entity to present an unrecognized
tax benefit, or portion thereof, in the statement of financial position as a
reduction to a deferred tax asset for a net operating loss carryforward or a
tax credit carryforward, with certain exceptions related to availability.
ASU No. 2013-11 is effective for interim and annual reporting periods
beginning after December 15, 2013. The adoption of ASU No. 2013-11 is not
expected to have a material impact on the Company's Consolidated Financial
Statements.
In February 2013, the Financial Accounting Standards
Board (FASB) issued Accounting Standards Update (ASU) No. 2013002,
Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of
Accumulated Other Comprehensive Income, to improve the transparency of
reporting these reclassifications. Other comprehensive income includes gains
and losses that are initially excluded from net income for an accounting
period. Those gains and losses are later reclassified out of accumulated
other comprehensive income into net income. The amendments in the ASU do not
change the current requirements for reporting net income or other
comprehensive income in financial statements. All of the information that
this ASU requires already is required to be disclosed elsewhere in the
financial statements under U.S. GAAP. The new amendments will require an
organization to:
- Present (either on the face of the statement where
net income is presented or in the notes) the effects on the line items of
net income of significant amounts reclassified out of accumulated other
comprehensive income - but only if the item reclassified is required under
U.S. GAAP to be reclassified to net income in its entirety in the same
reporting period; and
- Cross-reference to other disclosures currently
required under U.S. GAAP for other reclassification items (that are not
required under U.S. GAAP) to be reclassified directly to net income in their
entirety in the same reporting period. This would be the case when a portion
of the amount reclassified out of accumulated other comprehensive income is
initially transferred to a balance sheet account (e.g., inventory for
pension-related amounts) instead of directly to income or expense.
The amendments apply to all public and private companies that report
items of other comprehensive income. Public companies are required to comply
with these amendments for all reporting periods (interim and annual). The
amendments are effective for reporting periods beginning after December 15,
2012, for public companies. Early adoption is permitted. The adoption of ASU
No. 2013002 is not expected to have a material impact on our financial
position or results of operations.
In January 2013, the FASB issued ASU
No. 2013001, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures
about Offsetting Assets and Liabilities, which clarifies which instruments
and transactions are subject to the offsetting disclosure requirements
originally established by ASU 2011011. The new ASU addresses preparer
concerns that the scope of the disclosure requirements under ASU 2011011 was
overly broad and imposed unintended costs that were not commensurate with
estimated benefits to financial statement users. In choosing to narrow the
scope of the offsetting disclosures, the Board determined that it could make
them more operable and cost effective for preparers while still giving
financial statement users sufficient information to analyze the most
significant presentation differences between financial statements prepared
in accordance with U.S. GAAP and those prepared under IFRSs. Like ASU
2011011, the amendments in this update will be effective for fiscal periods
beginning on, or after January 1, 2013. The adoption of ASU 2013001 is not
expected to have a material impact on our financial position or results of
operations.
Management does not anticipate that the adoption of these standards will
have a material impact on the financial statements.
The Financial
Statements presented herein have been prepared by us in accordance with the
accounting policies described in our December 31, 2013 Annual Report and
should be read in conjunction with the Notes to Financial Statements which
appear in that report.
The preparation of these financial statements
in conformity with accounting principles generally accepted in the United
States requires us to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenues and expenses, and related
disclosure of contingent assets and liabilities. On an on-going basis, we
evaluate our estimates, including those related intangible assets, income
taxes, insurance obligations and contingencies and litigation. We base our
estimates on historical experience and on various other assumptions that are
believed to be reasonable under the circumstances, the results of which form
the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other resources. Actual
results may differ from these estimates under different assumptions or
conditions.
In the opinion of management, the information furnished
in these interim financial statements reflects all adjustments necessary for
a fair statement of the financial position and results of operations and
cash flows as of and for the three and six-month periods ended June 30, 2014
and 2013. All such adjustments are of a normal recurring nature. The
Financial Statements do not include some information and notes necessary to
conform to annual reporting requirements.
2. Stockholders' Equity
Common Stock Split
On September 20, 2013 we declared a forward split of our common stock.
The formula provided that every one (1) issued and outstanding shares of
common stock of the Corporation be automatically split into ten (10) shares
of common stock. The forward stock split was effective September 20, 2013
for holders of record as of that date. Except as otherwise noted, all share,
option and warrant numbers have been restated to give retroactive effect to
this split. All per share disclosures retroactively reflect shares
outstanding or issuable as though the forward split had occurred at
inception, February 12, 2010.
Current 2014 Reporting Period:
During the quarter ended June 30, 2014 we issued 250,000 shares of our
common stock in valued at $0.13 or $32,500 as consideration for services.
Historical Activity Prior to 2014:
During the year ended
December 31, 2013 we issued 20,000,000 shares of our common stock in
exchange for $60,000. The shares were sold for $0.003 per share to seven
individuals. We also issued 60,000,000 shares valued at $0.003 or $180,000
as consideration for the purchase of equipment.
On February 24, 2010,
the Company issued 2,340,000 shares of its common stock to individuals who
are Directors and officers of the company for $234.
On February 24,
2010, the Company issued 660,000 shares of its common stock to individuals
who are founders of the company for $66.
The Company commenced a capital formation activity by filing a Registration Statement on Form S-1 with the SEC to register and sell in a self-directed offering 2,500,000 shares of newly issued common stock at an offering price of $0.03 per share for proceeds of up to $75,000. The Registration Statement was declared effective on February 10, 2012. On August 6, 2012, the Company issued 2,500,000 shares of common stock pursuant to the Registration Statement on Form S-1 for proceeds of $75,000. The offering costs of $25,000 related to this capital formation activity were charged against the capital raised.
3. Related Party Transactions not Disclosed Elsewhere
Due Related Parties: Amounts due related parties consist of corporate reinstatement and regulatory compliance expenses paid directly by various directors and shareholders of the company. Such items totaled $78,672. The advances were not formalized by a written agreement and do not carry a specific date of payment and are non-interest bearing. The advances were forgiven in 2013 and reflected as additional paid-in capital.
4. Convertible Notes
Current 2014 Reporting Period:
During 2014 the Company signed
five unsecured promissory notes with unrelated parties for an aggregate of
$65,000. The notes bear interest at 12% per annum and are due approximately
one year from the date of issuance. The notes have a conversion right that
allows the holder of each note to convert the principal balance into the
Company's common stock at the lender's sole discretion at $0.03 per share.
In accordance with ASC 470, the Company has analyzed the beneficial nature of the conversion terms and determined that a beneficial conversion feature (BCF) exists because the effective conversion price was less than the quoted market price at the time of the issuance. The Company calculated the value of the BCF using the intrinsic method as stipulated in ASC 470. The BCF of $65,000 has been recorded as a discount to the notes payable and to Additional Paid-in Capital.
Historical Activity Prior to 2014:
During 2013 the Company
signed four unsecured promissory notes with unrelated parties for an
aggregate of $20,000. The notes bear interest at12% per annum and are due
approximately one year from the date of issuance. The notes have a
conversion right that allows the holder of each note to convert the
principal balance into the Company's common stock at the lender's sole
discretion at $0.03 per share.
In accordance with ASC 470, the Company has analyzed the beneficial
nature of the conversion terms and determined that a beneficial conversion
feature (BCF) exists because the effective conversion price was less than
the quoted market price at the time of the issuance. The Company calculated
the value of the BCF using the intrinsic method as stipulated in ASC 470.
The BCF of $20,000 has been recorded as a discount to the notes payable and
to Additional Paid-in Capital.
For the period ended June 30, 2014 the
Company has recognized $3,638 in accrued interest expense related to the
convertible notes and has amortized $30,312 of the beneficial conversion
feature which has also been recorded as interest expense. The carrying value
of convertible note is as follows:
June 30, 2014 |
December 31, 2013 |
|||
Face amount of the notes | $ | 85,000 | $ | 20,000 |
Less unamortized discount | $ | (49,277) | $ | (14,589) |
Carrying value | $ | 35,723 | $ | 5,415,411 |
5. Future Commitment
On March 10, 2010, the Company entered into a Patent Sale Agreement whereby the Company acquired all of the rights, title and interest in the patent known as the "Solar element and method of manufacturing the same". In consideration of the sale the Company agrees to pay to seller a sum equal to 10% of the royalties that the Company will receive in relation to the patent for an indefinite period.
6. Impairment of Equipment
On May 15, 2013, the Company acquired equipment through payment of $30,000 in cash and the issuance of 60,000,000 shares of common stock valued by the company at $180,000. The shares of restricted common stock were valued at the most recent third party sales of the Company's common stock. At the time of the equipment was acquired, the machine was not in working order. As of June 30, 2014, the machine has not yet been in working order and no estimated timeline has been established for this to occur. The Company intends to use the machine in the future for development of its solar panel technology. However, as a result of not having any concrete plan in place to put the machine a working order, and given the circumstances the equipment was impaired at December 31, 2013.
7. Development Stage Activities and Going Concern
The Company is currently in the development stage and has limited operations. The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The Company has not established any source of revenue to cover its operating costs, and as such, has incurred an operating loss since inception. Further, as of June 30, 2014, the cash resources of the Company were insufficient to meet its current business plan. These and other factors raise substantial doubt about the Company's ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.
8. Subsequent Events
There were no material subsequent events following the period ended June 30, 2014 and throughout the date of the filing of Form 10-Q.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.
As used in this Form 10-Q, references to the SOLARFLEX CORP , Company, we, our or us refer to SOLARFLEX CORP . Unless the context otherwise indicates.
Forward-Looking Statements
The following discussion should be read in conjunction with our financial statements, which are included elsewhere in this Form 10-Q (the Report). This Report contains forward-looking statements which relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as may, should, expects, plans, anticipates, believes, estimates, predicts, potential or continue or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors that may cause our or our industrys actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
For a description of such risks and uncertainties refer to our Registration Statement on Form S-1, filed with the Securities and Exchange Commission. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Plan of Operation
We are a development stage company that has acquired the rights to a patent application for the design of and manufacturing method for a solar photovoltaic conversion element which is expected to reduce cost, enhance the flexibility of the manufacturing process, improve manufacturing efficiency and absorb the solar spectrum better than current models, which should enable our product to increase solar energy conversion rates.
Our goal in the next twelve months is to complete development and production of a fully operational prototype of our solar photovoltaic conversion element, identify sub-contractors or licensees which will have the ability to design and manufacture our product in commercial quantities, and market our product to solar panel producers.
Although we have not yet engaged a manufacturer to develop a fully operational prototype of the solar photovoltaic conversion element, based on our preliminary discussions with certain manufacturers, we believe that it will take approximately twelve months, from design to manufacture, to produce a basic prototype of our product. Once the prototype has been produced, we plan for the design and development of a commercial product to be carried out by specialist subcontractors offering expertise in several relevant disciplines, including plastics and metal, electricity and electronics, device design, operation and control, automation and mechanics, computer and microcomputers, and others.
We initially intend to focus on the following activities:
- Locating third parties to perform research and development and engineering services
- Completing development of our solar photovoltaic conversion element.
- Producing a working prototype of our product.
- Locating sub-contractors or licensees to design and manufacture our product in
commercial quantities
- Marketing our product to solar panel producers.
We estimate the cost to develop and produce the prototype at $14,000, which include $10,500 in technology development and engineering costs, and $3,500 for the manufacture of the prototype.
The design and development of a working prototype of our product will be divided into three stages:
a) Technical Concept/Definition (three months) to be performed by management and
a third party contractor.
b) Engineering Specification (four months) to be performed by management and a
third party contractor.
c) Engineering & Preparation for Production & Actual Manufacture (four months)
to be performed by management and a third party contractor
If and when we have a viable prototype, depending on the availability of funds, we estimate that we would need approximately an additional four to six months to bring this product to market. Our objective is either to manufacture the product ourselves through third party sub-contractors, and market the product as an off-the-shelf device, and/or to license the manufacturing rights to the product and related technology to third party manufacturers who would then assume responsibility for marketing and sales.
Results of Operations during the three months ended June 30, 2014 as compared to the three months ended June 30, 2013
We have not generated any revenues since inception. We have operating expenses related to general and administrative expense being a public company and interest expense. During the three months ended June 30, 2014, we incurred a net loss of $63,955 due to general and administrative expense of $85,050, interest expense of $2,260 and amortization of debt discount expense of $18,835 compared to a net loss of $8,393 due to general and administrative expense in the same amount during the three months ended June 30, 2013.
Results of Operations during the six months ended June 30, 2014 as compared to the six months ended June 30, 2013
We have not generated any revenues since inception. We have operating expenses related to general and administrative expense being a public company and interest expense. During the six months ended June 30, 2014, we incurred a net loss of $125,018 due to general and administrative expense of $91,068, interest expense of $3,638 and amortization of debt discount expense of $30,312 compared to a net loss of $17,851 due to general and administrative expenses in the same amount during the six months ended June 30, 2013.
Liquidity and Capital Resources
On June 30, 2014, we had $4,846 in cash as compared to $971 in cash at December 31, 2013. We had total current liabilities of $44,010 consisting of $4,000 in accrued expenses, $4,287 in accrued interest and $35,723 in current portion of convertible notes payable compared to total current liabilities of $12,617 as of December 31, 2013 consisting of $6,557 in accrued expenses, accrued interest of $649 and $5,411 in current portion of convertible notes payable. Our accumulated deficits as of June 30, 2014 and December 31, 2013 were $531,480 and $406,462, respectively.
We used $61,125 in our operating activities during the six-month period ended June 30, 2014, which was due to a net loss of $125,018 offset by amortization of debt discount expenses of $30,312, non-cash compensation of $32,500 and an increase in accounts payable and accrued liabilities by $1,081. We used $26,086 in our operating activities during the six-month period ended June 30, 2013, which was the result of a net loss of $17,851 and a decrease in accounts payable and accrued liabilities by $8,235.
We financed our negative cash flow from operations during the six-month period ended June 30, 2014 through the issuance of $65,000 in convertible debt. We financed our negative cash flow from operations during the six-month period ended June 30, 2013 through proceeds of $60,000 from issuance of common stock.
Going Concern Consideration
Our auditors have issued an opinion on our annual financial statements which includes a statement describing our going concern status. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills and meet our other financial obligations. This is because we have not generated any revenues and no revenues are anticipated until we begin marketing the product.
The Company does not believe that without cash resources it will be able to fund its expenses over the next 12 months. There can be no assurance that additional capital will be available to the Company. The Company currently has no agreements, arrangements, or understandings with any person to obtain funds through bank loans, lines of credit, or any other sources. Since the Company has no such arrangements or plans currently in effect, its inability to raise funds for the above purposes will have a severe negative impact on its ability to remain a viable company.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
A smaller reporting company, as defined by Item 10 of Regulation S-K, is not required to provide the information required by this item.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of disclosure controls and procedures. As As of June 30, 2014, the Company's chief executive officer and chief financial officer conducted an evaluation regarding the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act. Based upon the evaluation of these controls and procedures, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this report.
Changes in internal controls. During the quarterly period covered by this report, no changes occurred in our internal control over financial reporting that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II
OTHER INFORMATION
There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Companys property is not the subject of any pending legal proceedings.
A smaller reporting company, as defined by Item 10 of Regulation S-K, is not required to provide the information required by this item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES UND USE OF PROCEEDS.
None.
ITEM 3. DEFAULT UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURE.
None.
None.
Exhibit No. | Description |
31.1 | Certification of CEO pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
31.2 | Certification of CFO pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32.1 | Certification of CEO pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
32.2 | Certification of CFO pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Solarflex Corp | |||
Date: August 5, 2014 | By: | /s/ Sergei Rogov | |
Name: Sergei Rogov | |||
Title: Chief Executive Officer> | |||
By: | /s/ /s/ Sergei Rogov | ||
Name : Sergei Rogov | |||
Title : Principal Accounting and Financial Officer |
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Date: August 5, 2014 | By: | /s/ Sergei Rogov | |
Name: Sergei Rogov | |||
Title: Chief Executive Officer and Chairman> |