U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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, 2014
Commission File Number: 333-168068
SOLARFLEX CORP.
(Exact name of small business issuer as specified in its charter)
| Delaware | 42-1771817 |
| (State of Incorporation) | (I.R.S. Employer Identification No.) |
| | |
| c/o Sergey 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
Securities Registered Pursuant to Section 12(g) of The Act: Common Stock, $0.0001, par value
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x
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 the Registrant's knowledge, in the definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨
On June 30, 2014, the aggregate market value of the 63,349,990 common stock held by non-affiliates of the Registrant was approximately $8,855,000 based on the last trade of the Registrants common stock at $0.14 on June 30, 2014. On March 17, 2015, the Registrant had 135,249,990 shares of common stock outstanding.
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 |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨
TABLE OF CONTENTS
PART I
Item 1. Business. Back to Table of Contents
As used in this Annual Report on Form 10-K (this "Report"), references to the "Company," the "Registrant," "we," "our," "us" or "Solarflex Corp", unless the context otherwise indicates.
Forward-Looking Statements
This Report contains forward-looking statements. For this purpose, any statements contained in this Report that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking information includes statements relating to future actions, prospective products, future performance or results of current or anticipated products, sales and marketing efforts, costs and expenses, interest rates, outcome of contingencies, financial condition, results of operations, liquidity, business strategies, cost savings, objectives of management, and other matters. You can identify forward-looking statements by those that are not historical in nature, particularly those that use terminology such as "may," "will," "should," "expects," "anticipates," "contemplates," "estimates," "believes," "plans," "projected," "predicts," "potential," or "continue" or the negative of these similar terms. The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking information to encourage companies to provide prospective information about themselves without fear of litigation so long as that information is identified as forward-looking and is accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those projected in the information.
These forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions that we cannot predict. In evaluating these forward-looking statements, you should consider various factors, including the following: (a) those risks and uncertainties related to general economic conditions, (b) whether we are able to manage our planned growth efficiently and operate profitable operations, (c) whether we are able to generate sufficient revenues or obtain financing to sustain and grow our operations, (d) whether we are able to successfully fulfill our primary requirements for cash, which are explained below under "Liquidity and Capital Resources." We assume no obligation to update forward-looking statements, except as otherwise required under the applicable federal securities laws.
Corporate Background
We were incorporated in Delaware on February 12, 2010. We are a development stage company established for the purpose of developing, manufacturing and selling a solar photovoltaic element (also known as a photovoltaic cell) based on certain proprietary technology that is expected to enable an increase in solar energy conversion and thus provide energy at a lower cost. A photovoltaic element is a device that converts light into electrical flow.
On March 10, 2010, we entered into a patent sale agreement (the "Patent Sale Agreement ") with P.T Holding, represented by its owner, Dr. Boris Sigalov, whereby P.T. Holding sold to us all of P.T. Holding's right, title, and interest in a patent application, Israel Patent Application Number 198369, (the "Patent Application"), for the design of and manufacturing method for a solar photovoltaic element. P.T. Holding transferred the Patent Application to us in exchange for our agreeing to pay P.T. Holding a sum equal to 10% of the royalties that we will receive in relation to the Patent Application.
Our Company's future product is based on the design detailed in Israel Patent Application Number 198369, for the design of and manufacturing method for a solar photovoltaic element. If the product based on this technology is able to be successfully adopted and implemented in both home and business solar energy markets, we believe it will deliver a significant improvement in energy conversion efficiency and with that improvement, we believe the solar energy market will react favorably to a product that has the potential to deliver electricity at a lower cost. However, as our Directors and officers have no experience in operating a company that sells solar photovoltaic elements, we can only confirm the expected results defined in the patent application by developing a working prototype of the product. If that is accomplished, we hope that a product based on our technology will be able to achieve efficiency improvement compared to existing solar photovoltaic elements based on thin film technologies which are manufactured by First Solar and GE Solar. Until our prototype is developed and proven to deliver these results, we cannot verify or confirm our expectations. Nevertheless, we recognize that we still need to establish that our technology will work as expected, and that we can implement the technology in the production cycle of photovoltaic cells at low cost. Once a working prototype has been developed and produced and the patent application design is validated, we believe these positive results will enable us to develop and manufacture the device in commercial quantities, or license the manufacturing and related marketing and selling rights to a third party.
Although a working prototype has not yet been developed all of the above assertions in relation to the expected efficiency improvement and related cost savings (including throughout this Form 10-K) are the assumptions of the current management based on the extensive and unique experience in the technology and software development industry of the CEO and upon the review in depth of the acquired patent and its ramifications. A further in depth explanation of the patent and its proposed efficiency and cost savings should be read in the section "PHOTOVOLTIC ELEMENT TECHNOLOGY" in the business section of this Form 10-K.
The Patent Application is for the design and manufacture of a solar photovoltaic element that absorbs the solar spectrum and that is expected to enable an increase in solar energy conversion. The device will be manufactured on the basis of at least one vacuum chamber and will include five layers. In August 2012, we received net proceeds of $50,000 from our sale of 2,500,000 shares in our public offering on Form S-1, after offering expenses of $25,000. Since August 2012, we have allocated approximately $183,972 to development of the prototype. Although we have not yet engaged a manufacturer to construct a working prototype, based on our preliminary discussions with certain manufacturers, we believe that it will take approximately twelve months to produce a working prototype, from design through construction. Once a working prototype has been developed and produced, we will work with third-party manufacturers to develop and manufacture the device in commercial quantities.
Recent Developments
On May 14, 2013, the Company entered into an Asset Purchase Agreement with International Executive Consulting SPRL (the "Seller"), organized under the laws of Belgium (the "Agreement"). Pursuant to the terms of the Agreement, the Registrant acquired certain machinery in consideration for a cash payment of $30,000 and the issuance of 6,000,000 shares of the Registrant's common stock valued at $180,000 or $.03 per share, representing approximately 44% of the Registrant's outstanding shares on the date of the Agreement. In addition, the Registrant has granted the Seller the right to designate one person to serve on the Registrant's board of directors.
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. At the time of the equipment was acquired, the machine was not in working order. As of December 31, 2013, 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 in working order, and given the circumstances the equipment was impaired at December 31, 2013.
Business Summary
Our business plan is to: (i) develop a working prototype of our invention for testing and evaluation; (ii) enter into arrangements with third parties for a manufacturing process to produce the photovoltaic elements for sale to solar panel producers; and (iii) enter into distribution agreements for the commercial sale of our products. In the event that we able to generate adequate resources, whether from our operations or through debt or equity capital, of which there can be no assurance, we may explore the possibility of undertaking the manufacture and distribute of our device ourselves.
We believe that a product based on the Solarflex technology can be adopted for both business and residential customers and we expect to develop commercial products of appropriate sizes and configurations for each of these markets. Our primary marketing consideration initially will be to focus more on areas in which solar energy is already popular. It is possible that building owners will be interested in purchasing our products, government agencies, large campuses such as universities and hospitals, etc. Essentially, any company, industry, or individual that uses electricity should benefit from using an alternative source of power, such as a product based on our technology.
In terms of entering into a licensing agreement with a company interested in licensing our technology, we believe there several potential opportunities that we can explore once we successfully develop a working prototype that can be used to show the potential of our technology. For example, we can approach building firms that are committed to including "green" technologies such as solar power in their projects.
The top three solar cell manufacturers in the field are Sharp Solar Corporation, based in Japan, Q-Cells from Germany, and Suntech Power Corporation, which has several bases, including in the United States, Europe and Africa. Other notable solar manufacturers around the world include BP Solar, First Solar, Shell Solar, Kyocera Solar, Mitsubishi Solar, and GE Solar. Each produces various solar devices based on its assets and technologies. We intend to develop and manufacture our solar photovoltaic element based on the manufacturing method detailed in the Patent Application. There are at least a dozen photovoltaic cell publicly traded companies in the world, several located in the United States and China. It is possible they would be interested in licensing our technology once we have a working prototype and can show affirmative results and energy savings beyond their current products or technologies. However, we also believe that there are other possible partnerships - including partnering or licensing to companies in the building industry, as previously mentioned.
Our proposed solar photovoltaic element will be comprised of five layers attached to a substrate. The top and bottom layers will be conductive. The three middle layers will be semi-conductive and consist of a positive layer (P-layer), an intrinsic layer (i-layer), and a negative layer (N-layer). The three semi-conductive layers will be made of silicon. The P-layer and the N-layer will be either a doped layer or a heterojunction metal oxide layer. The i-layer will be a graded band-gap layer.
A doped layer is a layer of material to which impurities have purposely been introduced (mechanically, electrically, or optically) in order to change the way the material reacts or performs in certain conditions. It is used in photovoltaic cells to absorb light. A heterojunction metal oxide layer is a layer of vanadium that changes its properties from conductor to semiconductor at 67 C. The graded band-gap layer is a specially grown thin film made mainly of silicon with a variable band-gap. The device will be manufactured on the basis of at least one vacuum chamber.
The product will be based on our detailed patent application (Israel Patent Application Number 198369), which includes both the design and manufacturing details of the device. We believe that our solar photovoltaic (photoelectric) element, once manufactured, will provide the performance of a solar element. We have not generated any revenues to date and our operations have been limited to organizational, start-up, and capital formation activities, as well as execution of the Patent Sale Agreement. We currently have no employees other than our officers, who are also our Directors and work only part time.
We have never declared bankruptcy, have never been in receivership, and have never been involved in any legal action or proceedings. We have not made any significant purchase or sale of assets, except for the purchase of all right, title, and interest in the Patent Application and the future rights in relation to the Patent Application. We are not a blank check registrant as that term is defined in Rule 419(a)(2) of Regulation C of the Securities Act of 1933, because we have a specific business plan and purpose. The Company has not been involved in any mergers, acquisitions or consolidations neither Solarflex Corp. nor its officers, Directors, promoters or affiliates, has had preliminary contact or discussions with, nor do we have any present plans, proposals, arrangements or understandings with any representatives of the owners of any business or company regarding the possibility of an acquisition or merger.
Employees
Other than our current Directors and officers, we have two part-time employees.
Transfer Agent
We have engaged Nevada Agency and Trust as our stock transfer agent. Nevada Agency and Trust is located at 50 West Liberty Street, Reno, Nevada 89501. Their telephone number is (775) 322-0626 and their fax number is (775) 322-5623. The transfer agent is responsible for all record-keeping and administrative functions in connection with our issued and outstanding common stock.
Item 1A. Risk Factors. Back to Table of Contents
In addition to the risk factors described in our Registration Statement on Form S1, as filed with the Securities and Exchange Commission, and although smaller reporting companies are not required to provide disclosure pursuant to this Item, your attention is directed to the following risk factor that relates to our business.
We do not have sufficient cash to fund our operating expenses for the next twelve months, and plan to seek funding through the sale of our common stock. Without significant improvement in the capital markets, we may not be able to sell additional shares of our common stock and further funding may not be available for continued operations.
There is not enough cash on hand to fund our administrative and other operating expenses as a public reporting company as well as our proposed research and development program for the next twelve months. In addition, we will require substantial new capital following the development of a strategic marketing plan for bringing our product to global markets in order to actually market, arrange for the manufacturing of, and sell our product. Because we do not expect to have any cash flow from operations within the next twelve months, we will need to raise additional capital in excess of the gross proceeds of $75,000 generated from our IPO, which may be in the form of loans from current stockholders and/or from public and private equity or debt offerings. Our ability to access capital will depend on our success in implementing our business plan. It will also depend upon the status of the capital markets at the time such capital is sought. Without significant improvement in the capital markets, sufficient capital may not be available and the implementation of our business plan could be delayed. If we are unable to raise additional funds in the future, we may have to cease all substantive operations.
Item 1B. Unresolved Staff Comments. Back to Table of Contents
None.
Item 2. Properties. Back to Table of Contents
Our principal office is located c/o Sergei Rogov, 12 Abba Hillel Silver Street, 11 th Floor, Ramat Gan 52506, Israel. Our telephone number is +972-3-753-9888.
Item 3. Legal Proceedings. Back to Table of Contents
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 Company's property is not the subject of any pending legal proceedings.
Item 4. Mine Safety Disclosure. Back to Table of Contents
Not applicable.
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Back to Table of Contents
Market Information
Since October 3, 2012, our common stock is quoted on the FINRA Bulletin Board under the symbol SFEX, a FINRA-sponsored and operated inter-dealer automated quotation system for equity securities not included on The Nasdaq Stock Market. Quotation of the Company's securities on the FINRA Bulletin Board limits the liquidity and price of the Company's common stock more than if the Company's shares of common stock were listed on The Nasdaq Stock Market or a national exchange. For the periods indicated, the following table sets forth the high and low bid prices per share of common stock. The below prices represent inter-dealer quotations without retail markup, markdown, or commission and may not necessarily represent actual transactions. The information below has been adjusted for a one-for-ten (10:1) forward split effective December 3, 2013.
| | Fiscal 2014 | | Fiscal 2013 | | Fiscal 2012 |
| | High | | Low | | High | | Low | | High | | Low |
First Quarter ended March 31 | | $ | 0.15 | | $ | 0.12 | | $ | 0.18 | | $ | 0.10 | | $ | -- | | $ | -- |
Second Quarter ended June 30 | | $ | 0.14 | | $ | 0.12 | | $ | 0.18 | | $ | 0.10 | | $ | -- | | $ | -- |
Third Quarter ended September 30 | | $ | 0.17 | | $ | 0.12 | | $ | 0.10 | | $ | 0.10 | | $ | -- | | $ | -- |
Fourth Quarter ended December 31 | | $ | 0.16 | | $ | 0.04 | | $ | 0.11 | | $ | 0.10 | | $ | 0.10 | | $ | 0.00 |
The transfer agent of our common stock is Transfer Agent, 50 West Liberty Street, Suite 880, Reno, NV 89501. Phone (775) 322-0626.
Holders
As of March 17, 2015, there were 135,249,990 common shares issued and outstanding, which were held by 39 stockholders of record.
Dividends
We have never declared or paid any cash dividends on our common stock nor do we anticipate paying any in the foreseeable future. Furthermore, we expect to retain any future earnings to finance our operations and expansion. The payment of cash dividends in the future will be at the discretion of our Board of Directors and will depend upon our earnings levels, capital requirements, any restrictive loan covenants and other factors the Board considers relevant.
Equity Compensation Plans
We do not have any equity compensation plans.
Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities
None
Purchases of Equity Securities by the Small Business Issuer and Affiliated Purchasers
We have not repurchased any shares of our common stock during the fiscal year ended December 31, 2014.
Item 6. Selected Financial Data. Back to Table of Contents
A smaller reporting company is not required to provide the information required by this item.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. Back to Table of Contents
Certain statements contained in this Annual Report, including statements regarding the anticipated development and expansion of our business, our intent, belief or current expectations, primarily with respect to the future operating performance of Solarflex Corp and the services we expect to offer and other statements contained herein regarding matters that are not historical facts, are "forward-looking" statements. Future filings with the Securities and Exchange Commission, future press releases and future oral or written statements made by us or with our approval, which are not statements of historical fact, may contain forward-looking statements, because such statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements.
All forward-looking statements speak only as of the date on which they are made. We undertake no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made.
This Management's Discussion and Analysis or Plan of Operations ("MD&A") section of this Report discusses our results of operations, liquidity and financial condition, and certain factors that may affect our future results. You should read this MD&A in conjunction with our audited financial statements and accompanying notes included in this Report. This plan of operation contains forward-looking statements that involve risks, uncertainties, and assumptions. The actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those presented under "Risk Factors" or elsewhere in this Report.
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 year ended December 31, 2014 as compared to the year ended December 31, 2013
We have not generated any revenues since inception. We have operating expenses related to general and administrative expenses being a public company and interest expenses. During 2014, we incurred a net loss of $188,265 due to expenses consisting of general and administrative expenses of $108,240, interest expenses of $9,161 and expenses related to amortization of debt discount of $70,864.During 2013, we incurred a net loss of $269,255 due to expenses consisting of general and administrative expenses of $47,351, interest expenses of $11,904, depreciation expenses of $26,495 and expenses of $183,505 related to impairment of fixed assets.
Liquidity and Capital Resources
On December 31, 2014, we had $1,824 in cash as compared to $971 in cash at December 31, 2013. As of December 31, 2014, we had total current liabilities of $91,235 consisting of $4,150 in accrued expenses, $9,810 in accrued interest and $77,275 in current portion of convertible notes. We had no long-term liabilities as of December 31, 2014.As of December 31, 2013, we had total current liabilities of $12,667 consisting of $6,557 in accrued expenses, $649 in accrued interest and $5,411 in current portion of convertible notes.
We used $78,147 in our operating activities during the year 2014, which was due to a net loss of $188,265 offset by increases in amortization of debt discount of $70,864, non-cash share compensation of $32,500 and an increase in accounts payable and accrued liabilities of $6,754.We used $60,270 in our operating activities during the year 2013, which was mainly due to a net loss of $269,255 offset by increases in amortization of debt discount of $5,411, depreciation expenses of $26,495, imputed interest of $5,844, a decrease in accounts payable and accrued liabilities of $12,270 and charges of $183,505 related to impairment of fixed assets.
We financed our negative cash flow from operations in 2014 through the issuance of a convertible note of $79,000.We financed our negative cash flow from operations in 2013 through proceeds from issuance of common stock in the amount of $60,000, $11,241 in loans from a related party and proceeds from the issuance of convertible notes of $20,000, representing total cash generated by financing activities of $91,241.
We used $30,000 in investing activities to purchase equipment during 2013 compared to no investing activities in 2014.
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.
Lack of Insurance
The Company currently has no insurance in force for its office facilities and operations and it cannot be certain that it can cover the risks associated with such lack of insurance or that it will be able to obtain and/or maintain insurance to cover these risks at economically feasible premiums.
Going Concern Consideration
Our registered independent auditors have issued an opinion on our 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 12 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. Accordingly, we must raise capital from sources other than the actual sale of the product. We must raise capital to implement our project and stay in business.
Recently issued accounting pronouncements
On June 10, 2014, the FASB issued Accounting Standards Update ("ASU") No. 2014-10 , which eliminates development stage reporting requirements under FASB ASC 915, as well as amends provisions of existing variable interest entity guidance under ASC 810. Additionally, the ASU indicates that the lack of commencement of principal operations represents a risk and uncertainty and, accordingly, is subject to the disclosure requirements of FASB ASC 275. As a result of the changes, existing development stage entity presentation and disclosure requirements are eliminated. The presentation and disclosure changes to FASB ASC 915 are effective for public entities for annual periods beginning after December 15, 2014, and the revisions to the consolidation standards are effective for annual periods beginning after December 15, 2015. The Company has adopted these provisions and enhanced disclosure of risks and uncertainties as required.
In April 2014, the FASB issued ASU 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. The amendments in this ASU change the criteria for reporting discontinued operations while enhancing disclosures in this area. Under the new guidance, only disposals representing a strategic shift in operations should be presented as discontinued operations. Those strategic shifts should have a major effect on the organization's operations and financial results and include disposals of a major geographic area, a major line of business, or a major equity method investment. The new guidance requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income, and expenses of discontinued operations. Additionally, the new guidance requires disclosure of the pre-tax income attributable to a disposal of a significant part of an organization that does not qualify for discontinued operations reporting. The amendments in the ASU are effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. Early adoption is permitted. The Company is currently evaluating the impact of this pronouncement.
In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern . The new standard requires management of public and private companies to evaluate whether there is substantial doubt about the entity's ability to continue as a going concern and, if so, disclose that fact. Management will also be required to evaluate and disclose whether its plans alleviate that doubt. The standard requires management to evaluate, for each reporting period, whether there are conditions or events that raise substantial doubt about a company's ability to continue as a going concern within one year from the date the financial statements are issued. The new standard is effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. Early adoption is permitted. We do not expect the adoption of the ASU to have a significant impact on our consolidated financial statements.
Management does not anticipate that the adoption of these standards will have a material impact on the financial statements.Off Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that are material to investors.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Back to Table of Contents
A smaller reporting company is not required to provide the information required by this item.
Item 8. Financial Statements and Supplementary Data. Back to Table of Contents
Index to Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Back to Table of Contents
To the Board of Directors
Solarflex Corp.
We have audited the accompanying balance sheets of Solarflex Corp. as of December 31, 2014 and 2013 and the related statements of operations, stockholders' deficit and cash flows for the years then ended. 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 audits.
We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. 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, the financial statements referred to above present fairly, in all material respects, the financial position of Solarflex Corp. as of December 31, 2014 and 2013 and the results of its operations and cash flows for the period described above in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 8 to the financial statements, the Company suffered a net loss from operations and has a net capital deficiency, which raises substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters are also described in Note 8. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ M&K CPAS, PLLC
www.mkacpas.com
Houston, Texas
March 18, 2015
| SOLARFLEX CORP. |
| Balance Sheets |
| As of December 31, 2014 and 2013 |
| Back to Table of Contents |
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| | December 31, 2014 | | December 31, 2013 |
ASSETS | | | | |
| Current assets: | | | | |
| Cash and cash equivalents | | 1,824 | | 971 |
| Total current assets | | 1,824 | | 971 |
| Total Assets | $ | 1,824 | $ | 971 |
| | | | | |
LIABILITIES AND STOCKHOLDERS' DEFICIT | | | | |
| | | | | |
| Current liabilities: | | | | |
| Accrued expenses | | 4,150 | | 6,557 |
| Accrued interest | | 9,810 | | 649 |
| Current portion of convertible notes payable, net of discount of $21,725 and $14,589, respectively. | | 77,275 | | 5,411 |
| Total current liabilities | | 91,235 | | 12,617 |
| | | | | |
| Total liabilities | | 91,235 | | 12,617 |
| | | | | |
| Stockholders' Deficit: | | | | |
| Common stock, par value $0.0001 per share; 500,000,000 shares authorized; | | | | |
| 135,249,990 shares issued and outstanding at December 31, 2014 and | | | | |
| 134,999,990 shares issued and outstanding at December 31, 2013 | | 13,525 | | 13,500 |
| Additional paid-in capital | | 491,791 | | 381,316 |
| Accumulated deficit | | (594,727) | | (406,462) |
| Total stockholders' deficit | | (89,411) | | (11,646) |
| Total Liabilities and Stockholders' Deficit | $ | 1,824 | $ | 971 |
| |
| The accompanying notes to financial statements are an integral part of these financial statements. |
| SOLARFLEX CORP. |
| Statements of Operations |
| For the Years ended December 31, 2014 and 2013 |
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| | | | | |
| | Year | | Year |
| | Ended | | Ended |
| | December 31, 2014 | | December 31, 2013 |
| Revenue | $ | - | $ | - |
| Expenses: | | | | |
| General and administrative | | 108,240 | | 47,351 |
| Depreciation expense | | - | | 26,495 |
| Impairment of fixed assets | | - | | 183,505 |
| Total general and administrative expenses | | 108,240 | | 257,351 |
| | | | | |
| (Loss) from operations | | (108,240) | | (257,351) |
| | | | | |
| Other income (expense) | | | | |
| Interest expense | | (80,025) | | (11,904) |
| Total cost and expense | | 188,265 | | 269,255 |
| | | | | |
| Provision for income taxes | | - | | - |
| Net (loss) | $ | (188,265) | $ | (269,255) |
| | | | | |
| (Loss) per common share: | | | | |
| (Loss) per common share - basic and diluted | $ | (0.00) | $ | (0.00) |
| | | | | |
| Weighted average number of common shares outstanding (basic and diluted) | | 135,183,552 | | 108,374,423 |
| |
| The accompanying notes to financial statements are integral part of these financial statements. |
| SOLARFLEX CORP. |
| Statement of Changes in Stockholders' Equity (Deficit) |
| For the Years Ended December 31, 2014 and 2013 |
| Back to Table of Contents |
| | | | | | | | |
| | Common Stock | | Additional | | | | |
| | | | | | Paid-In | | Accumulated | | |
| | Shares | | Amount | | Capital | | Deficit | | Total |
| Balance at December 31, 2012 | | 55,000,000 | $ | 5,500 | $ | 44,800 | $ | (137,207) | $ | (86,907) |
| Stock issued for cash | | 19,999,990 | | 2,000 | | 58,000 | | - | | 60,000 |
| Stock issued to purchase equipment | | 60,000,000 | | 6,000 | | 174,000 | | - | | 180,000 |
| Beneficial conversion feature | | - | | - | | 20,000 | | - | | 20,000 |
| Imputed interest deemed to be a capital contribution | | - | | - | | 5,844 | | - | | 5,844 |
| Forgiveness of debt to related party | | - | | - | | 78,672 | | - | | 78,672 |
| Net (loss) for the period | | - | | - | | - | | (269,255) | | (269,255) |
| Balance at December 31, 2013 | | 134,999,990 | $ | 13,500 | $ | 381,316 | $ | (406,462) | $ | (11,646) |
| Beneficial conversion feature | | - | | - | | 78,000 | | - | | 78,000 |
| Stock issued for services | | 250,000 | | 25 | | 32,475 | | - | | 32,500 |
| Net (loss) for the period | | - | | - | | - | | (188,265) | | (188,265) |
| Balance at December 31, 2014 | | 135,249,990 | $ | 13,525 | $ | 491,791 | $ | (594,727) | $ | (89,411) |
| |
| The accompanying notes to financial statements are integral part of these financial statements. |
| SOLARFLEX CORP. |
| Statements of Cash Flows |
| For the years ended December 31, 2014 and 2013 |
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|
| | | | | |
| | Year | | Year |
| | | Ended | | Ended |
| | | December 31, 2014 | | December 31, 2013 |
| Cash flows from operating activities: | | | | |
| Net loss | $ | (188,265) | $ | (269,255) |
| Adjustments required to reconcile net (loss) to net cash (used in) operating activities: | | | | |
| Amortization of debt discount | | 70,864 | | 5,411 |
| Depreciation | | - | | 26,495 |
| Common stock issued for services | | 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 | | 6,754 | | (12,270) |
| Net cash used in operating activities | | (78,147) | | (60,270) |
| | | | | |
| Cash flows from investing activities: | | | | |
| Purchase of equipment | | - | | (30,000) |
| Net cash used in investing activities | | - | | (30,000) |
| | | | | |
| Cash flows from financing activities: | | | | |
| Proceeds from issuance of common stock | | - | | 60,000 |
| Proceeds from convertible debt | | 79,000 | | 20,000 |
| Proceeds from related party loans | | - | | 11,241 |
| Net cash provided by financing activities | | 79,000 | | 91,241 |
| | | | | |
| Net (decrease) increase in cash | | 853 | | 971 |
| Cash - Beginning of period | | 971 | | - |
| Cash - End of period | $ | 1,824 | $ | 971 |
| | | | | |
| Supplemental Disclosure of Cash Flow Information: | | | | |
| Common stock issued to purchase equipment | $ | - | $ | 180,000 |
| Debt discount | $ | 78,000 | $ | 20,000 |
| Debt forgiveness - related party | $ | - | $ | 78,672 |
| |
| The accompanying notes to financial statements are integral part of these financial statements. |
SOLARFLEX CORP.
Notes to Financial Statements
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1. The Company and Significant Accounting Policies
Organizational Background: Solarflex Corp. ("Solarflex" or the "Company") is a Delaware corporation 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 December 31, 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 December 31, 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.
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 December 31, 2014 and 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 December 31, 2014 and 2013 and the years then ended on a recurring basis:
Fair Value Measurements at December 31, 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 December 31, 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.
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: When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of FASB ASC 740-10, Accounting for Uncertain Income Tax Positions, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for unrecognized tax benefits in the accompanying consolidated balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination.
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, 2014 we had no material unrecognized tax benefits and no adjustments to liabilities or operations were required under FASB ASC 740-10.
Recent Accounting Pronouncements
On June 10, 2014, the FASB issued Accounting Standards Update ("ASU") No. 2014-10 , which eliminates development stage reporting requirements under FASB ASC 915, as well as amends provisions of existing variable interest entity guidance under ASC 810. Additionally, the ASU indicates that the lack of commencement of principal operations represents a risk and uncertainty and, accordingly, is subject to the disclosure requirements of FASB ASC 275. As a result of the changes, existing development stage entity presentation and disclosure requirements are eliminated. The presentation and disclosure changes to FASB ASC 915 are effective for public entities for annual periods beginning after December 15, 2014, and the revisions to the consolidation standards are effective for annual periods beginning after December 15, 2015. The Company has adopted these provisions and enhanced disclosure of risks and uncertainties as required.
In April 2014, the FASB issued ASU 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. The amendments in this ASU change the criteria for reporting discontinued operations while enhancing disclosures in this area. Under the new guidance, only disposals representing a strategic shift in operations should be presented as discontinued operations. Those strategic shifts should have a major effect on the organization's operations and financial results and include disposals of a major geographic area, a major line of business, or a major equity method investment. The new guidance requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income, and expenses of discontinued operations. Additionally, the new guidance requires disclosure of the pre-tax income attributable to a disposal of a significant part of an organization that does not qualify for discontinued operations reporting. The amendments in the ASU are effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. Early adoption is permitted. The Company is currently evaluating the impact of this pronouncement.
In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern . The new standard requires management of public and private companies to evaluate whether there is substantial doubt about the entity's ability to continue as a going concern and, if so, disclose that fact. Management will also be required to evaluate and disclose whether its plans alleviate that doubt. The standard requires management to evaluate, for each reporting period, whether there are conditions or events that raise substantial doubt about a company's ability to continue as a going concern within one year from the date the financial statements are issued. The new standard is effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. Early adoption is permitted. We do not expect the adoption of the ASU to have a significant impact on our consolidated financial statements.
Management does not anticipate that the adoption of these standards will have a material impact on the financial statements.
2. Stockholders' Equity
Current 2014 Reporting Period:
During the quarter ended June 30, 2014 we issued 250,000 shares for services provided of our common stock valued at $0.13 per share, the price of our common stock on the date of issuance, or $32,500.
Historical Activity Prior to 2014:
During the year ended December 31, 2013, we issued 19,999,990 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.
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.
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 seven unsecured promissory notes with unrelated parties for an aggregate of $79,000. 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 $78,000 has been recorded as a discount to the notes payable and to Additional Paid-in Capital.
For the year ended December 31, 2014 the Company has recognized $9,161 in accrued interest expense related to the convertible notes and has amortized $70,864 of the beneficial conversion feature which has also been recorded as interest expense
Historical Disclosure for Periods 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 December 31, 2013 the Company has recognized $649 in accrued interest expense related to the convertible notes and has amortized $5,411 of the beneficial conversion feature which has also been recorded as interest expense.
The Company carries the notes net of unamortized discount. The carrying value of convertible notes at each presented balance sheet date is as follows:
| | December 31, 2014 | | December 31, 2013 |
| Face amount of the notes | $ | 99,000 | $ | 20,000 |
| less unamortized discount | | (21,725) | | (14,589) |
| Carrying Value | $ | 77,275 | $ | 5,411 |
5. Income Taxes
We have a current operating loss carry-forward of $325,786 resulting in deferred tax assets of $105,804. We have determined it more likely than not that these timing differences will not materialize and have provided a valuation allowance against substantially all our net deferred tax asset.
Future utilization of currently generated federal and state NOL and tax credit carry forwards may be subject to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended and similar state provisions. The annual limitation may result in the expiration of NOL and tax credit carry forwards before full utilization.
| | December 31 |
| | 2014 | | 2014 |
Individual components giving rise to the deferred tax assets are as follows: | $ | | $ | |
| Future tax benefit arising from net operating loss carryover | | 114,025 | | 76,141 |
Less valuation allowance | | (114,025) | | (76,141) |
Net deferred | $ | - | $ | - |
The Company is not under examination by any jurisdiction for any tax year. Our federal and state income tax returns are open for fiscal years ending on or after December 31, 2011.
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 December 31, 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. 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.
8. Going Concern
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 December 31, 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.
9. Subsequent Events
There were no material subsequent events following the period ended December, 31, 2014 and throughout the date of the filing of Form 10-K.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. Back to Table of Contents
Effective September 16, 2013, the Company received notice from its independent auditor, Weinberg & Baer LLC, that it had resigned.
Weinberg & Baer issued an auditor's report on the Company's financial statements for the years ended December 31, 2012 and 2011. During the years ended December 31, 2012 and 2011 and subsequent interim periods through September 16, 2013, the date of resignation of Weinberg & Baer, there were no disagreements with the firm on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to their satisfaction, would have caused Weinberg & Baer to make reference to the subject matter of the disagreements in connection with the Company's audited financial statement for the years 2012 and 2011 and there were no reportable events, as listed in Item 304(a)(l)(v) of Regulation S-K.
Effective September 17, 2013, the Company engaged M&K CPAS, PLLC ("M&K") as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2013. Prior to that date, neither the Company nor anyone on its behalf consulted with M&K regarding (i) the application of accounting principles to a specified transaction, either completed or proposed; (ii) the type of audit opinion that might be rendered by M&K, nor did M&K provide either a written report or oral advice that M&K concluded was an important factor considered by the Company in reaching a decision as to accounting, auditing or financial reporting.
Item 9A(T) Controls and Procedures. Back to Table of Contents
Evaluation of Disclosure Controls and Procedures
Evaluation of disclosure controls and procedures. As of December 31, 2014, the Company's chief executive officer/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/chief financial officer concluded that our disclosure controls and procedures were not effective as of the end of the fiscal year 2014.
Management’s Annual Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting and for the assessment of the effectiveness of those internal controls. As defined by the SEC, internal control over financial reporting is a process designed by our principal executive officer/principal financial officer, who is also the sole member of our Board of Directors, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements in accordance with U.S. generally accepted accounting principles.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2014. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on our assessment and those criteria, we have concluded that our internal control over financial reporting was not effective as of December 31, 2013. Management has identified corrective actions for the weakness and has begun implementation during the second quarter of 2015.
This annual report does not include an attestation report of the company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only Management’s report in this annual report.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting or in other factors identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during the fourth quarter ended December 31, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information. Back to Table of Contents
None.
PART III
Item 10. Directors, Executive Officers and Corporate Governance. Back to Table of Contents
| Name | | Age | | Title |
| Sergei Rogov | | 58 | | CEO, CFO and Chairman |
Our Directors hold office until the next annual meeting of our stockholders or until their successors is duly elected and qualified. Set forth below is a summary description of the principal occupation and business experience of each of our Directors and executive officers for at least the last five years.
Sergei Rogov, 58, has been our Director since the Company's inception in February 12, 2010, and our President since February 22, 2010. Mr. Rogov received his Bachelor of Science degree in Applied Mathematics from Polytechnic University in St. Petersburg, Russia in 1980. From 1999, he worked as a Senior Program Engineer in the Development Department of Identify Software Ltd., which in 2006 was acquired by BMC Software, to which he continued to provide services until 2009. As part of his duties, Mr. Rogov works with various development teams. Following his work for BMC Software and until present, Mr. Rogov has continues to provide senior software development services to Rollsoft Ltd. Prior to his position at Identity Software Ltd., he worked for Telegate Ltd. for two years as a Program Engineer, and for Prudence Ltd. for two years developing programs related to the electromagnetic fields for linear accelerators.
The Board has concluded that Mr. Rogov should serve as a Director because of his broad experience working with development teams and managing development efforts, which experience he gained while working at Identify Software Ltd. as well as his experience in the management of development efforts .
Each director of the Company serves for a term of one year or until the successor is elected at the Company's annual shareholders' meeting and is qualified, subject to removal by the Company's shareholders. Each officer serves, at the pleasure of the Board of Directors, for a term of one year and until the successor is elected at the annual meeting of the Board of Directors and is qualified.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires officers and directors of the Company and persons who own more than ten percent of a registered class of the Company's equity securities to file reports of ownership and changes in their ownership with the Securities and Exchange Commission, and forward copies of such filings to the Company. We believe, based solely on our review of the copies of such forms, that during the fiscal year ended December 31, 2014, our sole officer and director Mr. Rogov and International Executive Consulting SPRL have not complied with Section 16(a) filing requirements.
Auditors
Effective September 17, 2013, the Company engaged M&K CPAS, PLLC ("M&K") as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2014 and 2013.
We do not currently have a Code of Ethics applicable to our principal executive, financial and accounting officers. We do not have a financial expert on the board or an audit committee or nominating committee.
Potential Conflicts of Interest
Since we do not have an audit or compensation committee comprised of independent directors, the functions that would have been performed by such committees are performed by our directors. The Board of Directors has not established an audit committee and does not have an audit committee financial expert, nor has the Board established a nominating committee. The Board is of the opinion that such committees are not necessary since the Company has only two directors, and to date, such directors have been performing the functions of such committees. Thus, there is a potential conflict of interest in that our directors and officers have the authority to determine issues concerning management compensation, nominations, and audit issues that may affect management decisions. We are not aware of any other conflicts of interest with any of our executive officers or directors.
Involvement in Certain Legal Proceedings
There are no legal proceedings that have occurred within the past five years concerning our directors, or control persons which involved a criminal conviction, a criminal proceeding, an administrative or civil proceeding limiting one's participation in the securities or banking industries, or a finding of securities or commodities law violations.
Item 11. Executive Compensation. Back to Table of Contents
Summary Compensation Table |
| | | | | | | Long Term | |
| | | | Annual Compensation | Compensation Awards | |
| | | |
|
| |
| | | | | | Other | Restricted | Securities | |
| | | | | | Annual | Stock | Underlying | All Other |
| | | | Salary | Bonus | Compensation | Award(s) | Options | Compensation |
| Name and Principal Position | | Year | ($) | ($) | ($) | ($) | ($) | ($) |
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| Sergey Rogov, CEO, CFO and Chairman (1) | | 2014 | 0 | 0 | 0 | 0 | 0 | 0 |
| | | 2013 | 0 | 0 | 0 | 0 | 0 | 0 |
| | 2012 | 0 | 0 | 0 | 0 | 0 | 0 |
| Jonathan Beresovsky, former CFO (2) | | 2013 | 0 | 0 | 0 | 0 | 0 | 0 |
| | | 2012 | 0 | 0 | 0 | 0 | 0 | 0 |
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(1) Sergey Rogov was appointed CFO on June 11, 2013.
(2) Jonathan Beresovsky was the Companny's CFO since inception and resigned on June 11, 2013 as an officer.
Since our incorporation , we have not paid any compensation to any of our Directors in consideration for their services rendered to our Company in their capacity as such. We have no employment agreements with any of our Directors or executive officers. We have no pension, health, annuity, bonus, insurance, stock options, profit sharing or similar benefit plans.
Since our incorporation , no stock options or stock appreciation rights were granted to any of our Directors or executive officers. We have no long-term equity incentive plans.
Outstanding Equity Awards
None of our Directors or executive officers holds unexercised options, stock that has not vested, or equity incentive plan awards.
Compensation of Directors
Since our incorporation , no compensation has been paid to any of our Directors other than mentioned above in consideration for their services rendered in their capacity as directors.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. Back to Table of Contents
The following table lists, as of March 17, 2015, the number of shares of common stock of our Company that are beneficially owned by (i) each person or entity known to our Company to be the beneficial owner of more than 5% of the outstanding common stock; (ii) each officer and director of our Company; and (iii) all officers and directors as a group. Information relating to beneficial ownership of common stock by our principal shareholders and management is based upon information furnished by each person using beneficial ownership concepts under the rules of the Securities and Exchange Commission. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or direct the voting of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the Securities and Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest. Except as noted below, each person has sole voting and investment power.
The percentages below are calculated based on 135,249,990 shares of our common stock issued and outstanding as of March 17, 2015. We do not have any outstanding options, warrants or other securities exercisable for or convertible into shares of our common stock.
Name and Address of
Beneficial Owner | | Number of Shares of Common
Stock Beneficially
Owned or Right to
Direct Vote (1) | | Percent of Common
Stock Beneficially
Owned or Right
to Direct Vote |
| | | | |
| Sergei Rogov, CEO, CFO and Director | | 12,000,000 | | 8.89% |
| 12 Abba Hiller Silver Street, 11th Floor | | | | |
| Ramat Gan, Israel | | | | |
| | | | | |
| International Executive Consulting SPRL | | 60,000,000 | | 44.44% |
| 166 Grootsland | | | | |
| Dendermonde, Belgium | | | | |
| | | | | |
| Total Officers and Affiliates (2 persons) | | 72,000,000 | | 53.33% |
| | | | | |
(1) Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission (the "SEC") and generally includes voting or investment power with respect to securities. In accordance with SEC rules, shares of common stock issuable upon the exercise of options or warrants which are currently exercisable or which become exercisable within 60 days following the date of the information in this table are deemed to be beneficially owned by, and outstanding with respect to, the holder of such option or warrant. Except as indicated by footnote, and subject to community property laws where applicable, to our knowledge, each person listed is believed to have sole voting and investment power with respect to all shares of common stock owned by such person.
Item 13. Certain Relationships and Related Transactions, and Director Independence. Back to Table of Contents
Other than the transactions discussed below, we have not entered into any transaction nor are there any proposed transactions in which our Director, executive officer, stockholders, or any member of the immediate family of the foregoing had or is to have a direct or indirect material interest.
On February 24, 2010, the Company issued 23,400,000 shares of its common stock to Directors and officers at par value $0.0001 for $234.
Director Independence
We are not subject to listing requirements of any national securities exchange or national securities association and, as a result, we are not at this time required to have our board comprised of a majority of independent directors. We do not believe that any of our directors currently meet the definition of independents; as promulgated by the rules and regulations of the American Stock Exchange.
Item 14. Principal Accounting Fees and Services. Back to Table of Contents
The Registrant's Board of Directors has appointed M&K CPAS, PLLC ("MK") as independent public accountant for the fiscal year ended December 31, 2014 and 2013.
Principal Accounting Fees
The following table presents the fees for professional audit services rendered by MK for the audit of the Registrant's annual financial statements for the years ended December 31, 2014 and 2013, and fees billed for other services rendered by MK and WB during those periods.
| | Year Ended | | Year Ended |
| | December 31, 2014 | | December 31, 2013 |
Audit fees (1) | $ | 7,350 | $ | 7,350 |
Audit-related fees (2) | | --- | | --- |
Tax fees (3) | | --- | | --- |
All other fees | | | --- | | --- |
| (1) Audit fees consist of audit and review services, consents and review of documents filed with the SEC. |
| (2) Audit-related fees consist of assistance and discussion concerning financial accounting and reporting standards and other accounting issues. |
| (3) Tax fees consist of preparation of federal and state tax returns, review of quarterly estimated tax payments, and consultation concerning tax compliance issues. |
As of December 31, 2014 the Company did not have a formal documented pre-approval policy for the fees of the principal accountant. The Company does not have an audit committee. The percentage of hours expended on the principal accountant's engagement to audit our financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees was 0%.
PART IV
Item 15. Exhibits and Financial Statement Schedules. Back to Table of Contents
| Exhibit | | Description |
| | | |
| 3.1 | | Articles of Incorporation of the Company (filed as Exhibit 3.1 to Registration Statement on Form S1, filed with the Securities and Exchange Commission on February 8, 2012 ) |
| 3.2 | | Bylaws of the Company (filed as Exhibit 3.2 to Registration Statement on Form S1, filed with the Securities and Exchange Commission on February 8 , 2012 ) |
| 3.3 | | Form of Common Stock Certificate of the Company (filed as Exhibit 3.3 to Registration Statement on Form S1, filed with the Securities and Exchange Commission on February 8 , 2012 ) |
| 10.1 | | Patent Assignment Agreement (filed as Exhibit 10.1 to Registration Statement on Form S1, filed with the Securities and Exchange Commission on February 8 , 2012 ) |
| 31.1 | | Certification of Principal Executive Officer Pursuant to Exchange Act Rule 13A-14(A)/15D-14(A) as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| 31.2 | | Certification of Principal Accounting Officer Pursuant to Exchange Act Rule 13A-14(A)/15D-14(A) as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| 32.1 | | Certification of Principal Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002(filed herewith) |
| 32.2 | | Certification of Principal Accounting Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002(filed herewith) |
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: March 18, 2015 | By: | /s/ Sergei Rogov | |
| Name: |
| Title: Chief Executive Officer, Principal Accounting and Financial Officer and Director |
| |
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: March 18, 2015 | By: | /s/ Sergei Rogov | |
| Name: Title: Chief Executive Officer, Principal Accounting and Financial Officer and Director |
| |
