United States securities and exchange commission logo
July 24, 2020
K. Bryce Toussaint
Chief Executive Officer
Principal Solar, Inc.
100 Crescent Court
Suite 700
Dallas, TX 75201
Re: Principal Solar,
Inc.
Offering Statement
on Form 1-A
Filed June 29, 2020
File No. 024-11253
Dear Mr. Toussaint:
We have reviewed your offering statement and have the following
comments. In some of
our comments, we may ask you to provide us with information so we may
better understand your
disclosure.
Please respond to this letter by amending your offering statement
and providing the
requested information. If you do not believe our comments apply to your
facts and
circumstances or do not believe an amendment is appropriate, please tell
us why in your
response. After reviewing any amendment to your offering statement and
the information you
provide in response to these comments, we may have additional comments.
Offering Statement on Form 1-A
Summary, page 2
1. Please revise to
clarify the nature of your agreement with Tokata Oil Recovery, Inc. For
example, on page 2 you
disclose that you have "licensed" oil extraction technologies, and
on page 31 you refer to
the agreement with Tokata as a five year "license agreement."
However, we note that
the agreement filed as Exhibit 6.4 is a term sheet that states that the
parties intend to enter
into a licensing agreement.
Distribution
Pricing of the Offering, page 25
2. You disclose that your
offering will be conducted on a best efforts basis by your officers
upon reliance on the
safe harbor from broker-dealer registration set out in Rule 3a4-1
K. Bryce Toussaint
FirstName LastNameK. Bryce Toussaint
Principal Solar, Inc.
Comapany
July NamePrincipal Solar, Inc.
24, 2020
July 24,
Page 2 2020 Page 2
FirstName LastName
under the Securities Exchange Act of 1934. However, your disclosure on
page 25 states
that the initial public offering price was determined by negotiation
between you and the
underwriter. In addition, you disclose on the cover page that you will
offer the common
stock "primarily through an online platform." However, such platform
is not described
elsewhere in your offering statement. Please explain or reconcile
these apparent
inconsistencies.
Business
Oil Recovery System, page 32
3. You state that the Tokata oil recovery process has been
successfully utilized by the
Licensor for several years. Expand your disclosure to clarify the
total number of wells in
which the Tokata Process Technology was successfully applied.
4. You disclose that your target customer is one in which its oil wells
have experienced
reduced oil production. You additionally disclose that these wells
started their productive
life producing much greater volumes using natural pressure, but over
time, the natural
pressure has decreased and oil production has dropped.
If the referenced costs savings achieved by the application of the
Tokata Process
Technology is limited by the historical producing characteristics of
the target reservoir,
revise your disclosure accordingly or tell us why a revision is not
needed. For example,
address whether the referenced cost savings can be similarly achieved
in 1) reservoirs
whose primary recovery mechanism was strong water drive and that have
historically
produced significant amounts of water that ultimately resulted in the
decline in their crude
oil production as well as 2) reservoirs whose primary recovery
mechanism was pressure
depletion that ultimately resulted in the decline in their crude oil
production without
having historically produced significant amounts of water.
Statement of Stockholders Deficit, page F-52
5. It does not appear that you have presented a statement of stockholders
deficit for each of
the two fiscal years preceding the date of your most recent balance
sheet. Revise your
presentation accordingly. Refer to section (b)(4) of Part F/S of Form
1-A.
Exhibits
6. Please file copies of your promissory note and security agreement with
Arowana in the
original principal amount of $1.6 million, and each of your four
promissory notes arising
from the acquisition of Bayou Road Investments in the aggregate
principal amount of
$350,000 as exhibits to your offering statement or tell us why you
believe you are not
required to do so. Refer to Item 17 of Part III of Form 1-A.
General
7. We note that the offering statement has not been signed by a majority
of the members of
K. Bryce Toussaint
Principal Solar, Inc.
July 24, 2020
Page 3
your board of directors, as required by Form 1-A. Please revise.
We will consider qualifying your offering statement at your request. In
connection with
your request, please confirm in writing that at least one state has advised you
that it is prepared
to qualify or register your offering. If a participant in your offering is
required to clear its
compensation arrangements with FINRA, please have FINRA advise us that it has
no objections
to the compensation arrangements prior to qualification.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
You may contact Jennifer O'Brien, Staff Accountant, at 202-551-3721 or
Ethan
Horowitz, Accounting Branch Chief, at 202-551-3311 if you have questions
regarding comments
on the financial statements and related matters. Please contact Irene
Barberena-Meissner, Staff
Attorney, at 202-551-6548 or Laura Nicholson, Special Counsel, at 202-551-3584
with any other
questions.
Sincerely,
FirstName LastNameK. Bryce Toussaint
Division of
Corporation Finance
Comapany NamePrincipal Solar, Inc.
Office of Energy &
Transportation
July 24, 2020 Page 3
cc: Donnell Suares, Esq.
FirstName LastName