PROSPECTUS As Filed Pursuant to Rule 424(b)(3)
Registration No. 333-144377
PHOTOVOLTAIC SOLAR CELLS, INC.
4115 Bandy Blvd., Unit A-7
Ft Pierce, Florida 34981
(727) 735-7832
MAXIMUM NUMBER OF SHARES OF COMMON STOCK: 4,000,000
NO MINIMUM NUMBER OF SHARES
OFFERING PRICE: $0.20 PER SHARE
Photovoltaic Solar Cells, Inc. offers for sale, on a self-underwritten/best
efforts/no minimum basis, a maximum of 4,000,000 shares of common stock at a
price of $0.20 per share. There is no minimum number of shares that we have to
sell. Proceeds from the sale of shares will not be placed in an escrow account.
Rather, proceeds will be held in our account. We may use all funds received from
the offering immediately, and there may not be any refunds. The offering will be
for a period of 90 days from the date of this Prospectus, and may be extended
for an additional 90 days in our sole discretion. This offering will end no
later than 180 days from the date of this Prospectus and may be terminated
sooner in our sole discretion.
This is our initial public offering. No public market currently exists for our
shares, although we intend to apply in the future for inclusion in the
"Electronic Pink Sheets" of the National Quotation Bureau or the
Over-the-Counter Bulletin Board, and perhaps for listing on London's AIM market.
We know of no market makers for our common stock. The offering price may not
reflect the market price of our shares after the offering.
The shares will be offered and sold by one of our officers, Lawrence F. Curtin,
without any discounts or other commissions. An indeterminate number of shares
may be sold through broker/dealers who are members of the National Association
of Securities Dealers and who will be paid a maximum 10% commission on the sales
they make. We currently have no agreements, arrangements, or understandings with
any broker/dealers to sell our shares. Until 90 days from the effective date of
the Registration Statement of which this Prospectus is a part, or such shorter
period as the Securities & Exchange Commission may specify, all dealers that
effect transactions in these securities, whether or not participating in this
offering, may be required to deliver a Prospectus. This is in addition to the
dealers' obligation to deliver a Prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.
______________________
You should consider carefully the Risk Factors beginning on page 4 of this
Prospectus. Any investor who cannot afford to sustain the complete loss of his
or her investment should not purchase the securities offered herein.
______________________
Neither the Securities and Exchange Commission nor any state securities
commission has approved these securities or determined that this Prospectus is
accurate or complete. Any representation to the contrary is a criminal offense.
The date of this Prospectus is July 24, 2007.
1
TABLE OF CONTENTS
SUMMARY INFORMATION 3
RISK FACTORS 4
USE OF PROCEEDS 13
DETERMINATION OF OFFERING PRICE 13
DILUTION 13
DIVIDEND POLICY 15
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 15
BUSINESS 15
MANAGEMENT 24
EXECUTIVE COMPENSATION 25
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 25
PRINCIPAL STOCKHOLDERS 26
DESCRIPTION OF SECURITIES 26
PLAN OF DISTRIBUTION 28
DISCLOSURE OF COMMISSION POSITION OF
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES 28
INTEREST OF NAMED EXPERTS AND COUNSEL 29
INDEX TO FINANCIAL STATEMENTS 30
2
SUMMARY INFORMATION
This summary highlights information contained elsewhere in this Prospectus. You
should read the entire Prospectus carefully, including "Risk Factors," before
investing in our common stock.
Company Photovoltaic Solar Cells, Inc. was incorporated
on March 28, 2007 under the laws of the State of
Nevada. Our company was formed for purposes of
producing and marketing an inexpensive solar
cell that can be sold over the Internet, shipped
by overnight carrier without breakage, and
assembled into solar panels either at the job
site or in job shops around the world. Our
company is in a developmental stage and has not
yet commenced full scale sales, marketing and
production activities.
Common stock outstanding 4,050,000 shares
prior to this offering
Common stock being offered Up to 4,000,000 shares
to the public
Common stock outstanding 8,050,000 shares, assuming all 4,000,000 shares
are sold after this offering
Price per share to the public $.20
Offering period The shares are being offered for a period not to
exceed 90 days, unless extended by our board of
directors for an additional 90 days.
Total proceeds raised by Approximately $775,000, assuming all shares are
offering sold and no brokerage fees are paid
Use of proceeds Payment of offering expenses, purchase of
equipment and supplies, payment of overhead,
payment of management salaries, and the
establishment of a working capital reserve
Plan of distribution We plans to offer the shares only to qualified
investors through the best efforts of its one of
our officers, Lawrence F. Curtin, without any
discounts or other commissions; provided,
however, that we pay a commission to broker/
dealers who are members of the National
Association of Securities Dealers not to exceed
10% of the aggregate subscription proceeds of
any investors presented to us by them. We
currently have no agreements, arrangements, or
understandings with any broker/dealers to sell
our shares.
Risk factors Significant risks are involved in investing in
our company. For a discussion of risk factors
you should consider before buying our common
stock, see "RISK FACTORS" beginning on page 4.
3
RISK FACTORS
The securities covered by this Prospectus involve a significant degree of
risk. Accordingly, they should be considered speculative. You should read the
entire Prospectus and carefully consider, among the other factors and financial
data described herein, the following risk factors:
Risks Related to our Company
OUR EXTREMELY LIMITED HISTORY MAKES AN EVALUATION OF US AND OUR FUTURE
EXTREMELY DIFFICULT, AND PROFITS ARE NOT ASSURED.
Our company was incorporated in March 2007 for the purpose of producing and
marketing an inexpensive solar cell that can be sold over the Internet, shipped
by overnight carrier without breakage, and assembled into solar panels either at
the job site or in job shops around the world. We currently have our
intellectual property (which is patented in the United States) as our only
asset, and we have had no operating history upon which to base an evaluation of
us and our business and prospects. Our business and prospects must be considered
in light of the risks, expenses and difficulties frequently encountered by
companies in their early stage of development. For our business plan to succeed,
we must successfully undertake most of the following activities:
* Raise a sufficient amount of funds to construct necessary equipment
and commence production
* Construct and successfully test the equipment necessary to
manufacture our solar cells
* Successfully commence the commercial production of our solar cells
* Develop and increase our customer bases
* Implement and successfully execute our business and marketing
strategy
* Provide superior customer service and order fulfillment
* Continue to develop our technology
* Respond to competitive developments
* Attract, retain and motivate qualified personnel.
There can be no assurance that we will be successful in undertaking such
activities. Our failure to undertake successfully one or more of the activities
described above could materially adversely affect our business, prospects,
financial condition and results of operations. In addition, once we commence
commercial productions of our solar cells, we could incur operating losses until
such time (if ever) as we receive a sufficient number of purchase orders for our
solar cells. There can be no assurance that sales of our solar cells will ever
generate significant revenue, that we will ever generate positive cash flow from
our operations or that (if ever attained) we will be able to sustain
profitability in any future period.
AT THIS STAGE OF OUR BUSINESS OPERATIONS, EVEN WITH OUR GOOD FAITH EFFORTS,
POTENTIAL INVESTORS HAVE A POSSIBILITY OF LOSING THEIR INVESTMENT.
Because the nature of our business is expected to change as a result of shifts
as a result of market conditions, competition, and the development of new and
improved technology, management forecasts are not necessarily indicative of
future operations and should not be relied upon as an indication of future
performance. While management believes its estimates of projected occurrences
and events are within the timetable of its business plan, our actual results may
differ substantially from those that are currently anticipated. The shares being
offered pursuant hereto should be regarded as speculative investments. There is
no assurance that investors will obtain any return on their investment, and
investors will be subject to a risk of losing their entire investment.
4
WE MAY NEED ADDITIONAL CAPITAL IN THE FUTURE TO FINANCE OUR PLANNED GROWTH,
WHICH WE MAY NOT BE ABLE TO RAISE OR IT MAY ONLY BE AVAILABLE ON TERMS
UNFAVORABLE TO US OR OUR STOCKHOLDERS, WHICH MAY RESULT IN OUR INABILITY TO FUND
OUR WORKING CAPITAL REQUIREMENTS AND HARM OUR OPERATIONAL RESULTS.
We believe that the proceeds from this offering (if at least half of the shares
offered pursuant to this Prospectus are sold) will be sufficient to fund our
operations until we are able to finance our operations through cash flow,
although there can be no assurance that such proceeds will be sufficient for
such purpose. If operating difficulties or other factors (many of which are
beyond our control) delay our realization of revenues or cash flows from
operations, we may be limited in our ability to pursue our business plan.
Moreover, if our resources or cash flows do not satisfy our operational needs or
if unexpected expenses arise due to unanticipated pressures or our decision to
expand our business plan beyond it currently anticipated level or otherwise, we
will require additional financing to fund our operations, in addition to
anticipated cash generated from our operations. Additional financing might not
be available on terms favorable to us, or at all. If adequate funds were not
available or were not available on acceptable terms, our ability to fund our
operations, take advantage of unanticipated opportunities, develop or enhance
our business or otherwise respond to competitive pressures would be
significantly limited. In a worse case scenario, we might not be able to fund
our operations or to remain in business, which could result in a total loss of
your investment. If we raise additional funds through the issuance of equity or
convertible debt securities, the percentage ownership of our stockholders would
be reduced, and these newly issued securities might have rights, preferences or
privileges senior to those of existing stockholders.
OUR AUDITOR HAS GIVEN US A "GOING CONCERN" QUALIFICATION, WHICH QUESTIONS OUR
ABILITY TO CONTINUE AS A GOING CONCERN WITHOUT ADDITIONAL FINANCING.
Our independent certified public accountant has added an emphasis paragraph to
its report on our financial statements for the period from March 28, 2007 (date
of inception) through May 31, 2007 regarding our ability to continue as a going
concern. Key to this determination is our limited operations, lack of sufficient
working capital, and loss from operations in the development stage. Management
plans to try to raise capital through this initial public offering. In the event
that this raising proves to be insufficient, we will seek additional funding,
through either an alternative equity financing. There can be no assurance that
we will be successful in achieving these objectives, becoming profitable,
commencing commercial production of our product, or (once commenced) continuing
such production without either a temporary interruption or a permanent
cessation.
WE DEPEND ON CERTAIN KEY PERSONNEL.
We substantially depend upon the efforts and skills of our current management.
The loss of the services of one or more members of our current management, or
the inability of one or more of them to devote sufficient attention to our
operations, could materially and adversely affect our operations. We have not
entered into a written employment agreement with Lawrence F. Curtin, our
President. As a result, Mr. Curtin may discontinue providing his services to us
at any time and for any reason, and even thereafter commence competition with
us. Moreover, we do not maintain key man life insurance on any member of
management, and we have not required any member of management to enter into any
covenant or agreement not to compete with us.
OUR HUMAN RESOURCES MAY NOT BE SUFFICIENT FOR THE FUTURE, AND WE
HAVE NO ASSURANCE THAT WE CAN ATTRACT ADDITIONAL QUALIFIED PERSONNEL.
There can be no assurance that the current level of human resources is
sufficient to perform all responsibilities necessary or beneficial for
management to perform. Our success in attracting additional qualified personnel
will depend on many factors, including our ability to provide them with
competitive compensation arrangements, equity participation and other benefits.
There is no assurance that (if we need to) we will be successful in attracting
highly qualified individuals in key positions.
LIMITATIONS ON CLAIMS AGAINST OUR OFFICERS AND DIRECTORS, AND OUR
OBLIGATION TO INDEMNIFY THEM, COULD PREVENT OUR RECOVERY OF LOSSES
CAUSED BY THEM.
The corporation law of Nevada allows a Nevada corporation to limit the liability
of its directors to the corporation and its stockholders to a certain extent,
and our Restated Articles of Incorporation have eliminated our directors'
liability to the maximum extent permitted by the corporation law of Nevada.
Moreover, our Bylaws provide that we must indemnify each director, officer,
agent and/or employee to the maximum extent provided for by the corporation law
of Nevada. Further, we may purchase and maintain insurance on behalf of any such
persons whether or not we have the power to indemnify such person against the
liability insured against. Consequently, because of the actions or omissions of
officers, directors, agents and employees, we could incur substantial losses and
be prevented from recovering such losses from such persons. Further, the
Securities & Exchange Commission maintains that indemnification for liabilities
arising under the Securities Act is against the public policy expressed in the
Securities Act, and is therefore unenforceable.
5
INCUMBENT MANAGEMENT OWNS A LARGE PERCENTAGE OF OUR OUTSTANDING STOCK, AND
CUMULATIVE VOTING IS NOT AVAILABLE TO STOCKHOLDERS.
Our current officers and directors currently own approximately 88.9% of our
outstanding common stock and (assuming all 4,000,000 shares are sold) will own
approximately 44.7% of our outstanding common stock after this offering (with
the percentage being higher to the extent that fewer than all of the shares are
sold). Cumulative voting in the election of directors is expressly denied in our
Restated Articles of Incorporation. Accordingly, the holder or holders of a
majority of our outstanding shares of common stock may elect all of our
directors. The large percentage ownership of our outstanding common stock held
by our officers and directors helps enable them to maintain their positions as
such and thus control of our business and affairs.
WE MAY EXPERIENCE RAPID GROWTH, AND IN SUCH CASE WE WILL NEED TO MANAGE
THIS GROWTH EFFECTIVELY.
* Manage relationships with various strategic partners and other third
parties;
* Hire and retain skilled personnel necessary to support our business;
* Train and manage a growing employee base;
* Continually develop our financial and information management systems;
and
* Raise any required capital.
If we fail to make adequate allowances for the costs and risks associated with
this expansion or if our systems, procedures or controls are not adequate to
support our operations, our business could be harmed. Our inability to manage
growth effectively could materially and adversely affect our business, results
of operations and financial condition.
Risks Related to our Business
WE DEPEND ON THE ACCEPTANCE OF OUR SOLAR CELLS IN THE SOLAR ELECTRIC POWER
MARKET.
We believe we can produce our solar cells at a lower cost per watt than other
currently available competing solar cell technologies because of the truly
continuous nature of our manufacturing process, the unique design of our solar
cells, the use of inexpensive raw materials and the elimination of costly
manufacturing steps that must be used in other competing technologies. We
believe that the anticipated lower cost per watt of solar cells produced by our
manufacturing process will provide us with pricing advantages over current
technologies. Our ability to sell our solar cells at a lower price per watt than
conventional solar cells and the market acceptance of our solar cells may be
affected by:
* our inability to produce our solar cells at projected costs
* a more rapid decline in prices for competing solar cells than is
currently anticipated
* the lower energy conversion efficiency and power of our solar cells
compared to some competing solar cells
* the size, appearance and quality of our solar cells
* the acceptance of our solar cells for incorporation into other
applications by manufacturers over which we have no control
To date, we have received no revenue from the sale of our solar cells. While we
believe that our solar cells are commercially viable, developing new products is
inherently difficult and uncertain. There can be no assurance that significant
market demand for our solar cells will ever develop. The failure of our solar
cells to achieve market acceptance, price advantage or both could materially
adversely affect our business, results of operations and financial condition.
WE HAVE ONLY ONE TYPE OF PRODUCT, AND OUR SUCCESS DEPENDS ON THE SUCCESS OF
THIS SINGLE TYPE OF PRODUCT.
We currently intend to manufacture only solar cells for the foreseeable future.
At the present, our success depends entirely upon our ability to manufacture and
sell solar cells on a profitable basis. Our lack of product diversification may
make the results of our operations riskier and more volatile than they would be
if we manufactured more than one type of product. Unlike certain entities that
have the resources to consummate several business combinations or entities
operating in multiple industries or multiple segments of a single industry, we
will not have the resources to diversify our operations or benefit from the
possible spreading of risks or offsetting of losses.
6
THE GROWTH OF THE SOLAR ELECTRIC POWER MARKET IS UNCERTAIN.
The market for solar electric power products has grown steadily in the past. See
the data contained in "BUSINESS - The Solar Electric Power Industry." The
success of our business depends in part on the assumption of continuing market
growth. The failure of the market for solar electric power to continue to grow
could materially adversely affect our business, results of operations and
financial condition.
IF OUR MANUFACTURING EQUIPMENT FAILS, WE WILL NOT BE ABLE TO COMMENCE OR
(ONCE COMMENCED) CONTINUE PRODUCTION OF OUR SOLAR CELLS.
The equipment by which we expect to manufacture our solar cells will be
customized and will need to be built. In view of the preceding, our equipment
may take longer to construct, may cost more than expected, and may never operate
as anticipated. We expect that our manufacturing equipment will be comprised of
existing, available components that we will assemble in a proprietary way. As a
result, we do not expect to engage an engineer to prepare designs and
specifications for the equipment. Following construction of the equipment, we
will need to test it to ensure that it meets production standards. If our
equipment fails, we might not be able to commence production of our solar cells
or (once commenced) to continue production. Moreover, if any manufacturer of the
components to be incorporated into our equipment were to cease making such
components, we might encounter difficulty in repairing or replacing our
equipment if it were to become damaged or stop working. Any failure of our
manufacturing equipment could materially adversely affect our business, results
of operations and financial condition.
THE UNAVAILABILITY OF A KEY COMPONENT COULD INTERRUPT OR IMPAIR OUR ABILITY
TO MANUFACTURE OUR SOLAR CELLS.
Selenium/Graphite is the primary raw material that we will use in the production
of our solar cells. Selenium (Se) is the 69th most abundant material in the
earth's crust. It is also recoverable from both waste water and from refineries.
However Se is the major component of CIGS solar cells. There are several
companies that have announced the plans for building facilities to make CIGS
solar cells. Once these plants come online the price of Selenium could increase
substantially. Graphite is a readily available material. If Selenium ever became
scarce, our operations could be interrupted or impaired. During times of
scarcity, suppliers could substantially increase their prices, and we may be
unable to pass increases in the cost of our raw materials through to our
customers. Future increases in demand for Selenium due to an increased demand
for solar energy could result in higher future prices for Selenium.
WE MUST KEEP PACE WITH TECHNOLOGICAL CHANGES.
The markets for our solar electric power products are characterized by changing
technology. While we believe we have developed a new technology for solar
electric power applications, our future success will largely depend on our
ability to keep pace with advancing solar electric power technology. In addition
to our technology, we believe that there are a variety of competing technologies
under active development by other companies. Any of these competing technologies
could achieve manufacturing costs less than the manufacturing costs expected to
be achieved by the solar cells being developed by us. Our development efforts
could be rendered obsolete by technological advances of others. Moreover, other
materials could prove more advantageous for the commercialization of solar
electric power products. We believe that to remain competitive in the future, we
will need to invest continued efforts and financial resources in research and
development. Our failure to develop and introduce new or improved solar cells in
a timely fashion could materially adversely affect our business, results of
operations and financial condition.
OUR INDUSTRY IS HIGHLY COMPETITIVE.
The markets for our solar cells are intensely competitive and characterized by
changing technology. We expect to experience competition from numerous companies
in each of the markets in which we will participate. We expect that our
competition will consist of major electrical, oil and chemical companies,
specialized electronics firms, universities, research institutions in the United
States, Germany, Japan, Australia and other parts of Asia and Europe, and
foreign government sponsored companies. Most of our competitors will be more
established, benefit from greater market recognition and have substantially
greater financial, development, manufacturing and marketing resources than we
expect to have. We believe the principal competitive factors in the market for
solar electric power components are:
* price per watt
* long term stability and reliability
* product performance (primarily conversion efficiency)
* ease of handling and installation
* product quality
* reputation
7
WE ARE SUBJECT TO COMPLEX LAWS AND REGULATIONS, WHICH CAN MATERIALLY AND
ADVERSELY AFFECT THE COST, MANNER OR FEASIBILITY OF DOING BUSINESS.
Existing regulations and policies and changes to these regulations and policies
may present technical, regulatory and economic barriers to the purchase and use
of solar cells, which may significantly reduce demand for our products. The
market for electricity generation products is heavily influenced by foreign,
federal, state and local government regulations and policies concerning the
electric utility industry, as well as policies promulgated by electric
utilities. These regulations and policies often relate to electricity pricing
and technical interconnection of customer-owned electricity generation. In the
United States and in a number of other countries, these regulations and policies
currently are being modified and may be modified again in the future. These
regulations and policies could deter end-user purchases of solar cells and
investment in the research and development of solar cell technology. We
anticipate that our solar cells and their installation will be subject to
oversight and regulation in accordance with national and local ordinances
relating to building codes, safety, environmental protection, utility
interconnection and metering and related matters. Tracking the requirements of
individual states and design equipment to comply with the varying standards is
difficult. Any new government regulations or utility policies pertaining to our
solar cells may result in significant additional expenses to us, our resellers
and their customers and, as a result, could cause a significant reduction in
demand for our solar cells.
ENVIRONMENTAL OBLIGATIONS AND LIABILITIES COULD HAVE A SUBSTANTIAL NEGATIVE
IMPACT ON OUR FINANCIAL CONDITION, CASH FLOWS AND PROFITABILITY.
Our operations involve the use, handling, generation, processing, storage,
transportation and disposal of hazardous materials and are subject to extensive
environmental laws and regulations at the national, state, local and
international level. Such environmental laws and regulations include those
governing the discharge of pollutants into the air and water, the use,
management and disposal of hazardous materials and wastes, the cleanup of
contaminated sites and occupational health and safety. We may have to incur
significant costs and capital expenditures in complying with these laws and
regulations. In addition, violations of, or liabilities under, environmental
laws or permits may result in restrictions being imposed on our operating
activities or in our being subjected to substantial fines, penalties, criminal
proceedings, third party property damage or personal injury claims, cleanup
costs or other costs. Future developments such as more aggressive enforcement
policies, the implementation of new, more stringent laws and regulations, or the
discovery of unknown environmental conditions may require expenditures that
could materially adversely affect our business, results of operations or
financial condition.
In addition, certain components of our products contain Selenium (Se). Elemental
Se and certain of its compounds are regulated as hazardous due to the adverse
health effects that may arise from human exposure. Although the risks of
exposure to Se are not believed to be as serious as those relating to the
exposure of elemental Se, the chemical, physical and toxicological properties of
Se have not been thoroughly investigated and reported. We plan to maintain
controls to minimize personal exposure to Se and require our personnel who
handle Se compounds to follow certain safety procedures, including the use of
personal protective equipment such as respirators, chemical goggles and
protective clothing. While we believe that such factors and procedures are
sufficient to protect our personnel, end-users and the general public from Se
exposure, we cannot assure you that human or environmental exposure to Se or Se
compounds to be used in our products will not occur. Any such exposure could
result in future third-party claims against us, as well as damage to our
reputation and heightened regulatory scrutiny of our products. The occurrence of
such future events could materially adversely affect our business, financial
condition or results of operations. The use of Se in various products is also
coming under increasingly stringent governmental regulation. Future regulation
in this area could impact the manufacture and sale of Se-containing solar
modules and could require us to make unforeseen environmental expenditures.
PRODUCT DEFECTS OR ERRORS MAY HAVE A NEGATIVE IMPACT ON OUR REVENUES,
DAMAGE OUR REPUTATION AND DECREASE OUR ABILITY TO ATTRACT NEW CUSTOMERS.
Products as complex as those that we are developing often contain errors or
defects, particularly when first introduced and when new versions or
enhancements are released. Although we will strive to assure that our products
have no errors and defects, there can be no assurance that (despite testing)
defects and errors will not be found in our products after commencement of
commercial shipments. Any defects or errors could result in damage to our
reputation, the loss of sales, a diversion of our product development resources,
or a delay in market acceptance and thereby materially adversely affecting our
business, operating results and financial condition. Furthermore, there can be
no assurance that our products will meet all of the expectations and demands of
our customers. The failure of our products to perform to customer expectations
could also give rise to warranty claims. Any of these claims, even if not
meritorious, could result in costly litigation or divert management's attention
and resources.
8
WE MAY INCUR LOSSES RESULTING FROM PRODUCT LIABILITY CLAIMS, BUSINESS
INTERRUPTIONS OR NATURAL DISASTERS, AND WE MAY NOT HAVE ADEQUATE INSURANCE TO
PROTECT AGAINST SUCH EVENTS.
We are exposed to risks associated with product liability claims in the event
that the use of our solar cells results in personal injury or property damage.
Since our solar cells are electricity-producing devices, users could conceivably
be injured or killed by our solar cells, whether by product malfunctions,
defects, improper installation or other causes. We are unable to predict whether
product liability claims will be brought against us in the future or the effect
of any resulting adverse publicity on our business. Moreover, we may not have
adequate resources and insurance to satisfy a judgment in the event of a
successful claim against us. The successful assertion of product liability
claims against us could result in potentially significant monetary damages and
require us to make significant payments. Any business disruption or natural
disaster could result in substantial costs and diversion of resources. We do not
have in effect general liability insurance, although we will to attempt to
procure such insurance when funds are available for it. Such insurance may prove
to be unavailable on terms acceptable to us or unavailable upon any terms at all
for that matter. Even if we procure this insurance, the insurance may not cover
all potential claims or may not adequately indemnify us for all liability to
which we are imposed. Any liability or legal defense expenses not covered by
insurance or exceeding our insurance coverage could materially and adversely
affect our business, operating results and financial condition.
IF WE ARE UNABLE TO PROTECT ADEQUATELY OR ENFORCE OUR RIGHTS TO OUR INTELLECTUAL
PROPERTY, WE MAY LOSE VALUABLE RIGHTS, EXPERIENCE REDUCED MARKET SHARE, IF ANY,
OR INCUR COSTLY LITIGATION TO PROTECT SUCH RIGHTS.
We will generally require our employees, consultants, advisors and collaborators
to execute appropriate confidentiality agreements. These agreements typically
will provide that all materials and confidential information developed or made
known to the individual during the course of the individual's relationship with
us is to be kept confidential and not disclosed to third parties except in
specific circumstances. These agreements may be breached, and in some instances,
we may not have an appropriate remedy available for breach of the agreements.
Furthermore, our competitors may independently develop substantial equivalent
proprietary information and techniques, reverse engineer information and
techniques, or otherwise gain access to our proprietary technology. In addition,
the laws of some foreign countries may not protect proprietary rights to the
same extent as U.S. law. We may be unable to meaningfully protect its rights in
trade secrets, technical know how and other non patented technology.
We may have to resort to litigation to protect our rights for certain
intellectual property, or to determine their scope, validity or enforceability.
Enforcing or defending our rights is expensive and may distract management from
its development of the business if not properly managed. Such efforts may not
prove successful. There is always a risk that patents, if issued, may be
subsequently invalidated, either in whole or in part, and this could diminish or
extinguish protection for any technology we may license. Any failure to enforce
or protect our rights could cause it to lose the ability to exclude others from
using our technology to develop or sell competing products.
THIRD PARTIES MAY SUE US, CLAIMING THAT OUR PRODUCT INFRINGES ON THEIR
INTELLECTUAL PROPERTY RIGHTS. DEFENDING AN INFRINGEMENT LAWSUIT IS COSTLY, AND
WE MAY NOT HAVE ADEQUATE RESOURCES TO DEFEND. ANY SETTLEMENT OR JUDGMENT AGAINST
US COULD HARM OUR FUTURE PROSPECTS.
We may be exposed to future litigation by third parties based on claims that our
technology, product or activity infringes on the intellectual property rights of
others or that we have misappropriated the trade secrets of others. This risk is
compounded by the fact that the validity and breadth of claims covered in
technology patents in general, and the breadth and scope of trade secret
protection, involves complex legal and factual questions for which important
legal principles are unresolved. Any litigation or claims against us, whether or
not valid, could result in substantial costs, could place a significant strain
on our financial and managerial resources, and could harm our reputation. In
addition, intellectual property litigation or claims could force us to do one or
more of the following:
* Cease selling, incorporating or using any of our technology and/or
product that incorporates the challenged intellectual property,
which could adversely affect our revenue;
* Obtain a license from the holder of the infringed intellectual
property right, which may be costly or may not be available on
reasonable terms, if at all; or
* Redesign our product, which would be costly and time consuming.
9
THERE ARE RISKS ASSOCIATED WITH INTERNATIONAL SALES.
We expect that international sales will represent a significant portion of
our product sales. International sales are subject to a number of risks,
including the following:
* changes in foreign government regulations and technical standards
* difficulty of protecting intellectual property
* export license requirements, tariffs, taxes and other trade barriers
* requirements or preferences of foreign nations for domestic products
* fluctuations in currency exchange rates relative to the U.S. dollar
* difficulties in collecting accounts receivable
* extended accounts receivable cycles
* political and economic instability
* potentially adverse tax consequences
The occurrence of any of the events described above on a broad basis could
materially adversely affect our business, results of operations and financial
condition.
Risks Related to our Common Stock
OUR AUTHORIZED PREFERRED STOCK EXPOSES HOLDERS OF OUR COMMON STOCK TO
CERTAIN RISKS.
Our Restated Articles of Incorporation, as amended, authorize the issuance of up
to 10,000,000 shares of preferred stock, par value $.0001 per share. The
authorized but unissued preferred stock constitutes what is commonly referred to
as "blank check" preferred stock. This type of preferred stock may be issued by
the Board of Directors from time to time on any number of occasions, without
stockholder approval, as one or more separate series of shares comprised of any
number of the authorized but unissued shares of preferred stock, designated by
resolution of the Board of Directors stating the name and number of shares of
each series and setting forth separately for such series the relative rights,
privileges and preferences thereof, including, if any, the: (i) rate of
dividends payable thereon; (ii) price, terms and conditions of redemption; (iii)
voluntary and involuntary liquidation preferences; (iv) provisions of a sinking
fund for redemption or repurchase; (v) terms of conversion to common stock,
including conversion price, and (vi) voting rights. Such preferred stock may
provide our Board of Directors the ability to hinder or discourage any attempt
to gain control of us by a merger, tender offer at a control premium price,
proxy contest or otherwise. Consequently, the preferred stock could entrench our
management. The market price of our common stock could be depressed to some
extent by the existence of the preferred stock. As of the date of this
Prospectus, no shares of preferred stock had been issued.
OUR COMMON STOCK HAS NEVER BEEN TRADED.
There has not been any established public market for the trading of our shares
of common stock. Subject to the sponsorship of a market maker, our shares of
common stock will be traded in the "Electronic Pink Sheets" of the National
Quotation Bureau or in the over-the-counter market on the OTC Electronic
Bulletin Board, and possibly on London's AIM market. There can be no assurance
as to the prices at which our common stock will trade in the future. Until
shares of our common stock become more broadly held and orderly markets develop,
and even thereafter, the price of our common stock may fluctuate significantly.
The price for our common stock will be determined in the marketplace and may be
influenced by many factors, including the following: * The depth and liquidity
of the markets for our common stock; * Investor perception of us and the
industry in which we participate; * General economic and market conditions; *
Responses to quarter to quarter variations in operating results; * Failure to
meet securities analysts' estimates; * Changes in financial estimates by
securities analysts; * Conditions, trends or announcements in the oil and gas
industry; * Announcements of significant acquisitions, strategic alliances,
joint ventures or capital commitments by us or our competitors; * Additions or
departures of key personnel; * Sales of our common stock; * Accounting
pronouncements or changes in accounting rules that affect our financial
statements; and * Other factors and events beyond our control.
The market price of our common stock could experience significant fluctuations
unrelated to our operating performance. As a result, a stockholder (due to
personal circumstances) may be required to sell such stockholder's shares of our
common stock at a time when our stock price is depressed due to fluctuations,
possibly based on factors beyond our control.
10
OUR COMMON STOCK HAS A LIMITED FLOAT.
Only the shares of Common Stock offered pursuant to this Prospectus will be
freely tradable after the completion of this offering. This limited float may
decrease the liquidity of our Common Stock from what it would be in a more
active trading market. It could also cause holders of our Common Stock to retain
their shares longer than they may want. The resulting limited liquidity may also
have the effect of depressing the price of our Common Stock. We believe that the
initial limited float will be eased to some extent over time as, if and when the
following events occur:
* Shares of Common Stock subject to legal or contractual restrictions
become freely tradeable
* We undertake public offerings of additional shares of Common Stock
SALES OF LARGE QUANTITIES OF OUR COMMON STOCK COULD REDUCE THE PRICE OF OUR
COMMON STOCK.
Presently, 4.05 million shares of Common Stock are issued and outstanding, all
of which are "restricted securities" as that term is defined in Rule 144
promulgated under the Act. Rule 144 provides in general that a person (or
persons whose shares are aggregated) who has satisfied a one-year holding
period, may sell within any three month period, an amount which does not exceed
the greater of 1% of the then outstanding shares of Common Stock or (in certain
circumstances not expected to apply to us for some period of time) the average
weekly trading volume during the four calendar weeks prior to such sale. Rule
144 also permits the sale of shares, under certain circumstances, without any
quantity limitation, by persons who are not affiliates of us and who have
beneficially owned the shares for a minimum period of two years. The possible
sale of these restricted shares may, in the future dilute an investor's
percentage of freely tradeable shares and may have a depressive effect on the
price of our securities and such sales, if substantial, might also adversely
affect our ability to raise additional equity capital. See "DESCRIPTION OF
SECURITIES Shares Eligible for Future Sale."
BECAUSE OUR BOARD OF DIRECTORS DOES NOT INTEND TO PAY DIVIDENDS ON OUR
COMMON STOCK IN THE FORESEEABLE FUTURE, STOCKHOLDERS MAY HAVE TO SELL THEIR
SHARES OF OUR COMMON STOCK TO REALIZE A RETURN ON THEIR INVESTMENT IN THE
SHARES.
The holders of our shares of common stock are entitled to receive dividends
when, as and if declared by our Board of Directors out of funds legally
available therefor. To date, we have paid no dividends. Our Board of Directors
does not intend to declare any dividends in the foreseeable future, but instead
intends to retain all earnings, if any, for use in our business operations.
Accordingly, a return on an investment in shares of our common stock may be
realized only through a sale of such shares, if at all.
Risks Related to the Offering
THE ABSENCE OF A REQUIREMENT THAT A MINIMUM NUMBER OF UNITS BE SOLD IN THIS
OFFERING EXPOSES INVESTORS TO CERTAIN RISKS.
This offering does not require that we sell a certain minimum aggregate number
of shares in connection with this offering. No assurance may be given that all
(or even a majority) of the shares of the shares will be sold or that we will
not terminate this offering before a sufficient number of shares are sold to
enable us to obtain the funds we consider necessary to pursue our business plan.
Thus, investors may be at a greater risk that sufficient funding may not be
obtained in this offering than in other offerings where a minimum amount of
securities must be sold. There can be no assurance that we will be able to sell
a sufficient number of shares to finance our business plan. If we fail to sell a
sufficient number of shares to finance our business plan, we would be
constrained to seek alternative financing, and there is no assurance that we
would be successful in obtaining such financing. In a worse case scenario, we
might not be able to fund our operations or to remain in business, which could
result in a total loss of your investment.
WE ARBITRARILY SET THE OFFERING PRICE OF THE SHARES.
To some extent, we have arbitrarily set the offering price of the shares offered
hereby. The offering price is not based on any generally accepted method for
valuing securities. Such offering price may not be any indication of the value
of the shares or the value of our business. No assurance can be given that any
shares, if transferable, could be sold for the offering price or for any other
amount.
11
INVESTORS IN THE SHARES WILL EXPERIENCE IMMEDIATE AND SUBSTANTIAL
DILUTION.
Purchasers of the shares are expected to experience an immediate and substantial
dilution in net tangible book value per share, and existing stockholders are
expected to experience an immediate and substantial increase in net tangible
book value per share. The foregoing could materially adversely affect the market
value of the shares. The net tangible book value dilution to new investors in
this offering will be $.114 per share at a public offering price of $.20 per
share, assuming all shares offered hereby are sold and no commission is paid to
any licensed broker/dealer. See "Dilution" for a more complete description of
how the value of your investment in our shares will be diluted upon completion
of this offering.
BECAUSE THERE IS NO UNDERWRITER, YOU WILL NOT RECEIVE THE BENEFITS OF AN
UNDERWRITTEN OFFERING.
There is no underwriter for this offering. Therefore, you will not have the
benefit of an underwriter's due diligence efforts, which would typically include
underwriter involvement in the preparation of information for disclosure and the
pricing of the securities being offered as well as other matters. Because we
have only very limited experience in the private sales of securities, investors
may not be able to rely on our ability to consummate this offering. Accordingly,
there can be no assurances as to the number of shares that may be sold or the
amount of capital that may be raised by this offering.
THE TRADING PRICE OF OUR COMMON STOCK MAY ENTAIL ADDITIONAL REGULATORY
REQUIREMENTS, WHICH MAY NEGATIVELY AFFECT SUCH TRADING PRICE.
We expect that the trading price of our common stock will start below $5.00 per
share. As a result of this price level, trading in our common stock will be
subject to the requirements of certain rules promulgated under the Exchange Act.
These rules require additional disclosure by broker dealers in connection with
any trades generally involving any non NASDAQ equity security that has a market
price of less than $5.00 per share, subject to certain exceptions. Such rules
require the delivery, before any penny stock transaction, of a disclosure
schedule explaining the penny stock market and the risks associated therewith,
and impose various sales practice requirements on broker dealers who sell penny
stocks to persons other than established customers and accredited investors
(generally institutions). For these types of transactions, the broker dealer
must determine the suitability of the penny stock for the purchaser and receive
the purchaser's written consent to the transaction before sale. The additional
burdens imposed upon broker dealers by such requirements may discourage broker
dealers from effecting transactions in our common stock. As a consequence, the
market liquidity of our common stock could be severely affected or limited by
these regulatory requirements.
OUR MANAGEMENT HAS BROAD DISCRETION OVER THE USE OF THE NET PROCEEDS FROM
THIS OFFERING, AND YOU MAY NOT AGREE WITH HOW THEY USE THEM.
Our management will have significant flexibility in applying a portion of the
proceeds that we receive in this offering and that will be placed in a working
capital reserve. Because these proceeds are not required to be allocated to any
specific purpose, investment or transaction, you cannot determine the value or
propriety of our management's application of the proceeds on our behalf. See
"Use of Proceeds" for a more detailed description of how management intends to
apply the proceeds of this offering, and the approximate amounts that will be
placed in a working capital reserve depending on the amount raised in this
offering.
USE OF PROCEEDS
This offering is being made on a best efforts/no minimum basis. Since this is a
no minimum offering, there is no assurance that we will raise any proceeds. The
following table sets forth management's current estimate of the allocation of
net proceeds expected to be received from this offering in four scenarios.
Actual expenditures may vary from these estimates. Pending such uses, we will
invest the net proceeds in an interest-bearing account. Under the four scenarios
set forth below, we anticipate that resulting net proceeds sufficient to pursue
our business plan for the next 12 months as now in effect will be available so
long as we sell 50% of the shares being offered pursuant to this Prospectus. We
cannot guarantee that our cash requirements will be satisfied during this time
period. Should our cash requirements exceed our net proceeds during the subject
time period, then we will have to raise additional funds in order to continue
our business. Thus, we might need to raise additional funds during the next 12
months; otherwise our business may fail.
12
If the Maximum
4,000,000 If 3,000,000 If 2,000,000 If 1,000,000
Shares sold Shares sold Shares sold Shares sold
Total Proceeds: $800,000 $600,000 $400,000 $200,000
Less:
Commissions (1) 80,000 60,000 40,000 20,000
Offering Expenses 25,000 25,000 20,000 15,000
-------- ------- ------- -------
Net Proceeds from $695,000 515,000 340,000 165,000
Offering Available:
Use of Net Proceeds:
Equipment and Supplies $146,000 146,000 146,000 146,000
Overhead (2) 76,200 76,200 76,200 -0- (3)
Management Compensation 54,000 54,000 54,000 -0-
Working Capital Reserve $418,800 238,800 63,800 19,000
-------- ------- ------- -------
Total Use of Net Proceeds: $695,000 515,000 340,000 165,000
(1) We plan to have one of our officers, Lawrence F. Curtin, sell shares offered
pursuant to this Prospectus. Mr. Curtin will not receive any commissions or
discounts. We do not have any agreements, arrangements or understandings with
any broker/dealers to offer or sell our shares, although we may, at our
discretion, retain such to assist in the offer and sale of our shares. This
represents the maximum underwriting discounts and commissions we will pay if
broker/dealers are used to sell the shares. To the extent that we do not pay
underwriting discounts and commissions, Net Proceeds from Offering Available,
Working Capital Reserve, and Total Use of Net Proceeds will increase, except
that if a small number of shares are raised Overhead and Management Compensation
may increase while Working Capital Reserve may not.
(2) Depending on the amount raised in the offering, a substantial part of the
proceeds may be allocated to overhead expenses. Specifically, we expect that the
overhead expenses portion of the proceeds will be used to pay expenses such as
employee wages, office rent, electrical usages, Internet site maintenance,
limited marketing, administration costs, and other office expenses.
(3) One of our officers, Lawrence F. Curtin, has agreed that, if a sufficient
number of shares offered pursuant to this Prospectus are not sold, he will
provide facilities that will alleviate our overhead expenses.
DETERMINATION OF OFFERING PRICE
As no underwriter has been retained to offer our securities, the offering price
of our shares was not determined by negotiation with an underwriter as is
customary in underwritten public offerings. Rather, we arbitrarily selected the
offering price. There is no relationship between the offering price of the
shares and our assets, earnings, book value, net worth or other economic or
recognized criteria or future value of our shares.
DILUTION
Dilution represents the difference between the offering price and the net
tangible book value per share immediately after completion of this offering. Net
tangible book value is the amount that results from subtracting total
liabilities and intangible assets from total assets. Dilution arises mainly as a
result of our arbitrary determination of the offering price of the shares being
offered. Dilution of the value of the shares that you purchase is also a result
of the lower book value of the shares held by our existing shareholders.
As of the date of this Prospectus, we had 4.05 million common shares issued and
outstanding and a net tangible book value of $200 or $-0- per share.
The proceeds from the sale of shares will vary depending on the total number of
shares sold.
13
Upon completion of this offering, if all 4,000,000 shares (or 100%) offered
hereunder are sold, there would be a total of 8.05 million common shares issued
and outstanding. If the maximum 4,000,000 shares are sold, then the net proceeds
after deducting offering expenses of $105,000 will be $695,000. The net offering
proceeds taken together with the net tangible book value would amount to a total
net tangible book value of $695,200. Our net tangible book value divided by the
number of shares outstanding results in a per share book value of $.086. Thus,
shareholders who purchase shares in this offering will incur an immediate
dilution in book value of their shares of $.114 or approximately 57% and our
existing shareholders would receive an increase in book value of approximately
$.086 per share without any additional investment on their part.
Upon completion of this offering, if 3,000,000 shares (or 75%) offered hereunder
are sold, there would be a total of 7.05 million common shares issued and
outstanding. If 3,000,000 shares are sold, then the net proceeds after deducting
offering expenses of $85,000 will be $515,000. The net offering proceeds taken
together with the net tangible book value would amount to a total net tangible
book value of $515,200. Our net tangible book value divided by the number of
shares outstanding results in a per share book value of $.073. Thus,
shareholders who purchase shares in this offering will incur an immediate
dilution in book value of their shares of $.127 or approximately 63% and our
existing shareholders would receive an increase in book value of approximately
$.127 per share without any additional investment on their part.
Upon completion of this offering, if 2,000,000 shares (or 50%) offered hereunder
are sold, there would be a total of 6.05 million common shares issued and
outstanding. If 2,000,000 shares are sold, then the net proceeds after deducting
offering expenses of $60,000 will be $340,000. The net offering proceeds taken
together with the net tangible book value would amount to a total net tangible
book value of $340,200. Our net tangible book value divided by the number of
shares outstanding results in a per share book value of $.056. Thus,
shareholders who purchase shares in this offering will incur an immediate
dilution in book value of their shares of $.144 or approximately 72% and our
existing shareholders would receive an increase in book value of approximately
$.144 per share without any additional investment on their part.
Upon completion of this offering, if 1,000,000 shares (or 25%) offered hereunder
are sold, there would be a total of 5.05 million common shares issued and
outstanding. If 1,000,000 shares are sold, then the net proceeds after deducting
offering expenses of $35,000 will be $165,000. The net offering proceeds taken
together with the net tangible book value would amount to a total net tangible
book value of $165,200. Our net tangible book value divided by the number of
shares outstanding results in a per share book value of $.0327. Thus,
shareholders who purchase shares in this offering will incur an immediate
dilution in book value of their shares of $.1673 or approximately 84% and our
existing shareholders would receive an increase in book value of approximately
$.0327 per share without any additional investment on their part.
The following information compares the differences of your investment in our
shares with the investment of our existing shareholders:
Existing Shareholders
Price per share $.0185
Net tangible book value per share before offering $ -0-
Net tangible book value per share after offering $.0860
Increase to current shareholders in net tangible book
value per share after offering $.0675
Capital Contributions $ -0-
Number of shares outstanding before the offering 4,050,000
Number of shares outstanding after the offering
by public investors 8,050,000
Percentage of ownership after the offering 50.3%
Purchasers of Shares in this Offering if all Shares sold
Price per share $ .20
Dilution per share $ .114
Capital contributions $ -0-
Number of shares after offering held
by public investors 4,000,000
Percentage of ownership after the offering 49.7%
Purchasers of Shares in this Offering if 75% of Shares sold
Price per share $ .20
Dilution per share $ .127
Capital contributions $ -0-
Number of shares after offering held
by public investors 3,000,000
Percentage of ownership after the offering 42.5%
Purchasers of Shares in this Offering if 50% of Shares sold
Price per share $ .20
Dilution per share $ .144
Capital contributions $ -0-
Number of shares after offering held
by public investors 2,000,000
Percentage of ownership after the offering 33%
Purchasers of Shares in this Offering if 25% of Shares sold
Price per share $ .20
Dilution per share $.1673
Capital contributions $ -0-
Number of shares after offering held
by public investors 1,000,000
Percentage of ownership after the offering 19.8%
14
DIVIDEND POLICY
Our company has paid no cash dividends on its Common Stock, and we presently
intend to retain earnings to finance the expansion of our business. Payment of
future dividends, if any, will be at the discretion of the Board of Directors
after taking into account various factors, including our financial condition,
results of operations, current and anticipated cash needs and plans for
expansion.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Our securities are not currently traded publicly. There is no assurance that a
trading market will develop, or, if developed, that it will be sustained.
Consequently, a purchaser of shares may find it difficult to resell the
securities offered herein should the purchaser desire to do so when eligible for
public resales. Furthermore, the shares are not marginable and it is not likely
that a lending institution would accept our common stock as collateral for a
loan.
Pursuant to this Prospectus, we propose to publicly offer up to a total of up to
4,000,000 shares of common stock on a best efforts/no minimum basis. To date,
none of our outstanding shares of common stock are subject to outstanding
options, warrants to purchase, or securities convertible into common stock. We
have not agreed to register shares of common stock held by existing security
holders for resale. We currently have six shareholders.
BUSINESS
Overview
Photovoltaic Solar Cells, Inc. was incorporated on March 28, 2007 under the laws
of the State of Nevada. Our company was formed for purposes of producing and
marketing an inexpensive solar cell that can be sold over the Internet, shipped
by overnight carrier without breakage, and assembled into solar panels either at
the job site or in job shops around the world. Solar cells are semiconductor
devices that convert sunlight into electricity and form the building block for
all solar electric power products. We have acquired the patent rights to a
proprietary process and design (the "Process and Design") from Lawrence F.
Curtin, a Director and our President. We believe that the Process and Design
have certain advantages over other current technologies used for the manufacture
of solar cells. These advantages include the following:
* Faster manufacturing process
* Less expensive manufacturing process using less expensive raw
materials
* The production of finished solar cells that are lighter and less
susceptible to damage during shipping and that result in lower
shipping costs as a result
* The production of finished solar cells that have lower installation
costs and are less susceptible to theft
We are in a developmental stage and have not yet commenced full scale sales,
marketing and production activities. Once commercial production commences, our
solar cells will be marketed and sold as a commodity for incorporation into
applications and panels developed by original equipment manufacturers, other
companies or individuals. (Panels are assemblies of solar cells connected
together and encapsulated in a weatherproof package.) We do not intend to
develop applications or panels for its solar cells at any time in the
foreseeable future.
15
The Solar Electric Power Industry
Solar electric power offers a number of advantages over traditional sources of
power. These advantages include the following:
* Fuel risk advantage. Unlike fossil and nuclear-fueled power
generation, solar power generation does not require additional fuel
and therefore is not susceptible to rising fuel prices or delivery
risk. Although the amount and timing of sunlight varies over the day,
season and year, a properly sized and configured system can be
designed to be highly reliable while providing a long-term, fixed
price electricity supply.
* Reliability. With no moving parts or regularly required
maintenance, solar power systems are among the most reliable forms of
electricity generation, unlike a conventional utility grid that is
subject to power delivery constraints or outages during periods of
high demand.
* Durability. Accelerated aging tests have shown that, without the
need for major maintenance, solar power systems can operate for 25 or
more years.
* Scalability. Solar electric power is highly scalable, unlike a
conventional utility grid that depends critically on economies of
large scale.
* Environmental advantage. Solar power is one of the cleanest
electric generation sources, capable of generating electricity
without air or water emissions, noise, vibration, habitat impact or
waste generation.
* Peak energy use advantage. Solar power is well-suited to match
peak energy needs as maximum sunlight hours generally correspond to
peak energy demand periods when electricity prices are at their
highest, as compared to other renewable resources that generally do
not align power generation with peak demand periods.
* Location Advantage. Given the universal availability of sunlight,
solar cell systems are generally installed at a customer's site.
Therefore, solar power does not face the same expenses and energy
losses associated with transmission and distribution from large-scale
power generation plants to the end users. In addition, solar power
often is regarded as an attractive, and sometimes the only viable,
choice among renewable energy sources for retail customers given its
universal location availability. Distributed generation can be more
cost effective than conventional "central station" generation in the
following cases:
** users live far from urban centers
** only a small amount of electricity is required
** the capacity of the existing power delivery infrastructure
prevents incremental load growth
* Government Incentives. A growing number of countries have
established incentive programs for the development of solar and other
renewable energy sources, such as (i) net metering laws that allow
on-grid end users to sell electricity back to the grid at retail
prices, (ii) direct subsidies to end users to offset costs of
photovoltaic equipment and installation charges, (iii) low interest
loans for financing solar power systems and tax incentives; and (iv)
government standards that mandate minimum usage levels of renewable
16
energy sources.
Solar electric power is used in three major market segments:
* On grid. In this application, solar electric power is used as an
environmentally preferred source of alternative or supplemental
electricity for customers already connected to the utility grid.
Primarily concentrated in Europe, Japan and the United States, this
application has represented the fastest growing segment of the solar
electric power market for the last three years.
* Rural electrification. Many of the estimated two billion people
still without electricity live in geographic areas not conducive to
electrification by means of the utility grid. For these people,
solar electric power can be a cost effective and rapid way in which
to acquire electrical service.
* Telecommunications. Solar electric power is used for a wide variety
of applications related to the telecommunications and transportation
industries. Examples of these applications include: cellular
telephone base stations, fiber optic and radio repeaters, telemetry
and data acquisition systems, traffic information signs, warning
displays and emergency call boxes.
The market for solar electric power products has grown steadily in the past. The
following table sets forth information about solar cell production featured on
page 137 of the March 2007 edition of Photon International magazine:
Production Percentage Increase
Year (measured in megawatts) Over Previous Year
1999 202 Base Year
2000 287 42%
2001 401 40%
2002 560 39%
2003 750 34%
2004 1,256 68%
2005 1,815 45%
2006 2,536 40%
The following five different sciences are essentially involved in making
solar cells/solar panels:
1. Ingots of either single crystal or polycrystalline silicon materials
are cast in molds. These ingots are then sawed into wafers. These
single crystal wafers have fingers printed onto the top side of the
cells. The cells are interconnected in series using metallic strips.
The benefit of single crystal materials is that electrons flow freely
through an organized structure. The problems are that a highly refined
material is needed to make single crystal materials. There currently is
a shortage of this starting material.Also, when the ingots are sliced,
half of the material goes on the floor, although effort are being
exerted to reuse this material after it is further refined. Most solar
panels are currently made using this method, and solar panels made with
this method have the highest efficiency of all production solar panels
of near 18%. Polycrystalline solar cells have made advances in being
made on low cost ceramics recently. These cells have a semi-ordered
state. However their efficiencies are not nearly as great as those
from single crystal materials. Evergreen Solar in Massachusetts is now
making ingots from crystalline silicon drawn from vats. This is a
promising advance in the area of production and manufacture of solar
panels. Evergreen uses multi-production tools of their design in their
manufacturing.
2. Thin films deposited in vacuum chambers or by other controlled process
are materials from the arsenide family, amorphous silicon group,
chalcopyrite based cells or copper-indium-gallium di-selenium (CIGS),
Cd/Te, Cd/S and Cd/Se cadmium selenium. The arsenide group has
achieved record results as multi-stacked cells in efficiencies.
However, making high purity arsenide materials is difficult. Amorphous
silicon solar cells have achieved 11% in production efficiencies. These
cells have disordered states. Their life span rarely lasts longer than
20 years, if that long. CIGS solar cells have created great interest
because the cells have been claimed to last for 100 years. This is
believed to be the case because the copper atoms migrate through the
cells and repair any damage done by photons. The vacuum chambers and
gas carrier systems used in these processes are very expensive.
17
3. Dye doped solar cells recently have also created quite an interest.
These cells usually feature a TiO2 layer that acts as the charge
acceptors coated with a dye that acts as the charge generator. These
cells have achieved a production efficiency of 6% of late. They suffer
from the long-term effect of having the dye bleached out by the sun.
4. Plastic solar cells have also achieved rather low efficiencies in the
1-2% range. However, they are very inexpensive to make. No one is
currently commercializing these cells. Alan Heeger's lab at the
Univerity of California, Santa Barbara was able to make laboratory-size
solar cells made of conductive plastics in the late 1990's.
5. The making of solar cells using nano powders has now become of great
interest. These particles can benefit from having a single crystal or
polycrystalline order. Nano Solar Inc. out of California has recently
announced the building of a $100 million production facility. They use
a CIGS particle in the range of between 20 to 100 nanometers in their
roll-to-roll production process. It has been shown that when some nano
particles in the 20-nanometer size are hit with one photon, they will
at times emit two electrons.
The Solar Electric Power Challenge
We believe that the primary challenge among competitors in the solar cell
industry is simply to produce and sell better, more affordable solar cells in a
more efficient way. We have acquired the rights to a manufacturing process and
solar cell design that it believes will permit us to do this. We believe that
the quality and cost of solar cells is driven by the following factors:
* Cost of raw materials and manufacturing
* Throughput, i.e. the volume of output in a given period of time
* Cost of marketing and sales
* Cost and ease of shipping
* Cost and ease of installation
* Stability, and efficiency of conversion of solar power to electricity
* Security of product from theft
Strategy
Our goal is to become a meaningful global solar cell manufacturer and marketer.
To achieve this, we intend to:
Capitalize on a large, steadily growing market. The market for solar
electric power products has grown steadily in the past. By the of end
of 2006, the production of solar cells had grown more than 12.5 times
the level of production during 1996. For more information about this
growth, see the data contained in "The Solar Electric Power Industry"
above. We plan to try to capitalize on this large, steadily growing
market.
Complete the design and construction of our manufacturing equipment
and commence commercial production. We believe that the process and
solar cell design that we intend to use to manufacture solar cells
gives us considerable advantages over its competitors. See "Overview"
above. We have internally designed our manufacturing equipment, which
will be comprised of existing, available components assembled in a
proprietary way. We intend internally to select the needed components
and construct our manufacturing equipment with the assistance of
outside contractors to the extent required. Our management is
confident that it has the skills and experience to over see the
completion of our manufacturing equipment. We expect to complete
construction and testing of our equipment is within nine months from
the date that sufficient funds are obtained in this offering. Once
we have completed this, hired and trained needed employees and
procured an initial stock of raw materials, commercial production of
our solar cells will commence. We do not expect any difficulty or
lengthy delay in the hiring and training of needed employees and
procuring an initial stock of raw materials.
18
Maintain low overhead and operating costs. In terms of operating
costs, we believe we will be a low-cost solar cell producer. Our
overhead will be kept at a minimum from the beginning, with our
manufacturing equipment being maintained in a low-cost facility and
with management personally overseeing the operation of such equipment
initially.
Transfer production of solar panels to other manufacturers.
We believe that the most important aspect of our solar cells business
will be the fact that the construction of the solar panel is
transferred to the buyer of the solar cells and that they can
configure solar panels to meet the buyer's needs.
Orderly expand manufacturing capacity. We believe that, given the
right business opportunities, we will be above to expand our
operations significantly and in an orderly fashion. The expansion
would take the form of an addition of another main production tool,
followed by any additional required equipment.
The addition of another main production tool should be fairly easy and
not too costly as we expect that an additional such tool would be
identical to our initial one and all design work on this initial tool
has already been completed. In addition, we believe that our existing
personnel who will operate our initial manufacturing line would be
capable of operating a second main production tool simultaneously.
Maintain our manufacturing and technology advantage. Because of the
competitive nature of our industry and the risk of technological
obsolescence, we intend to strive continually to enhance our
manufacturing process, design and technologies. There can be no
assurance that we will be able to improve these items or that another
technology vastly superior to ours will not be developed.
Utilize the Internet as our marketing avenues. The Company intends to
utilize the Internet as its primary marketing avenues. The Company
believes that this approach will greatly reduce the costs of our
marketing and selling efforts while giving the Company immediate
access to a large, global pool of potential customers.
Diversify our sales effort and customer base. Through our Internet-
based marketing effort, we intend to seek a broad geographic presence
and diversified customer base. We especially expect the solar energy
market in China to have great potential in response to recent
legislation and policies encouraging the use of renewable energy
sources.
Products
Our proposed business is to manufacture and sell solar cells. Solar cells are
semiconductor devices that convert sunlight directly into electricity by means
of a solid state process known as the photovoltaic effect. Solar cells are the
core component inside every solar electric power system. We have not yet begun
commercial production of our solar cells. Commercial production of our solar
cells depends on our procurement of necessary financing through this offering
(or a fairly comparable amount in alternative equipment financing) and the
construction of our manufacturing equipment. Once commercial production
commences, our solar cells will be marketed and sold as a commodity for
incorporation into applications, modules and panels developed by original
equipment manufacturers, other companies or individuals. We do not intend to
develop applications, modules or panels for our solar cells at any time in the
foreseeable future. Applications for our solar cells could include the
generation of electricity for users not connected to the utility grid, including
the electrification of rural homes and villages, and power supply for equipment
in the communications and transportation industries. Our solar cells could also
be used by customers already connected to the utility grid as a clean, renewable
source of alternative or supplemental electricity.
Our solar cells are a strip featuring a contact transfer release sheet. When
pulled off, the release sheet will leave an adhesive material on the solar cell.
This will allow the solar cell to be stuck onto a translucent material.
Moreover, conductive fingers will be printed onto the solar cell. Our solar
cells will feature two bus bars, one of which will be connected to the fingers
while the other will not be. The one that will be connected to the fingers will
be attached to the N-side of the solar cell. This is the window side of the
solar cell, the side through which sunlight comes. The one that will not be
connected to the fingers will feature an exposed part of the aluminum foil upon
which the solar cell has been built. It will be the contact for the P-side of
the solar cells. Our solar cells can be attached together in series or parallel
by a inexpensive aluminum interconnect device that is also part of the patent.
19
The manner in which our solar cells will be manufactured in part follows our
patent. Our solar cells will be manufactured in a roll-to-sheet process. However
they will not be manufactured in a vacuum chamber. Our manufacturing process is
comprised of three stages. In the first stage, we chemically pre-condition
aluminum foil. Our second stage involves our main production tool, which will be
custom-made. We have internally designed our main production tool, which will be
comprised of existing, available components assembled in a proprietary way. We
intend internally to select the needed components and construct our
manufacturing equipment with the assistance of outside contractors to the extent
required. Our management is confident that it has the skills and experience to
over see the completion of our manufacturing equipment. In our main production
too, a roll of aluminum foil will be mounted onto a roller. The operator will
then take it over to a moveable clamp. There will be a mask above one side of
the foil that keeps a small amount of the foil from being exposed. That will be
the bottom contact of the solar cell. A moveable transporter is located above
the aluminum foil that holds two separate electrostatic spraying nozzles, one
radio frequency coil and a ink jet printing system. The transporter moves one
electrostatic spraying nozzle allowing it to spray on a base coat of
Selenium/Graphite onto the exposed area of aluminum. Once that has been sprayed
on the transporter moves a radio frequency coil over the area sprayed annealing
it to the aluminum foil. The transporter then allows a second coat of materials
using the other nozzle to be electrostatic sprayed onto the layer below. Again
the transporter moves the radio frequency coil over the layer just applied
annealing it to the one below. Finally the transporter allows the top bus bar
and conductive fingers to be sprayed on using an ink jet system. That is then
annealed onto the top layer by the radio frequency coil thus completing the
circuit for the solar cell. This completed section of the aluminum foil is then
advanced by the automated moveable clamp and cut. Once cut it falls into a tray
below. The clamp then returns and the jaws of the clamp are automatically closed
onto the aluminum foil again. The process is begun all over again automatically
until the roll of aluminum foil is exhausted and replaced by the operator. The
tray of sheets are then moved to a device which lays onto each sheet a contact
transfer release sheet that has a layer of silicone on it. The silicone adheres
to the active layer of the solar cell. These sheets are then cut into one inch
by six-inch strips. This is the product that is offered for sale along with the
interconnect device over the Internet.
When powders in a colloid are electrostaticly deposited, no materials are
wasted. This is unlike vapor deposition where 50% of the material sticks to the
walls, ceiling and floor of the chamber and is not recoverable. Radio Frequency
induction heating allows the materials to be annealed in seconds More
importantly there is no peel-away problem with our solar cells because they are
built from the bottom up on aluminum foil. In a vapor deposition process, the
panels are made from the top down. Experience has shown that these panels can
suffer from the back contact layer peeling away over time. In addition, if one
of our solar cells were to fail, one simply scrapes the cell off of the
translucent material and replaces it. When a cell on a solar panel fails, it
acts as resistor to the panel, and the output of the panel is lowered to the
output of the bad cell. The solar panel has to then be replaced.
We have not commercially produce any solar cells based on the Process and the
Design. We have produced solar cells for laboratory testing only based on our
Process and the Design. Based on this production and the theoretical aspect of
the Process and Design, we are confident that the solar cells can be
commercially produced in a successful manner, although there can be no certainty
in this regard until commercial production actually occurs.
We believe that our solar cells will be less expensive than and preferable to
competing solar cells for several reasons. See "Overview " above. Management's
research found that crystalline silicon solar cells are being sold for as low as
$1.60 per watt. We expect to sell our solar cells from as low as $.99 per watt,
depending on then existing supply and demand and the size and terms of the
related purchase order.
We intend to establish a reputation as a manufacturer and seller of quality
solar cells and to improve continuously the quality of our solar cells and
services. Quality testing will occur in batches at the completion of the
manufacturing process. The efficiency of each batch of solar cells will be
estimated, and that batch may be priced based on the estimate.
20
Sales and Marketing
We believe that the market of solar cells is comprised of four sub-markets.
These sub-markets include the following:
* The domestic on grid market. We believe that the deregulation of the
energy industry provides a favorable climate for marketing solar
electric power and solar systems to domestic on grid customers.
* The international on grid market. The international on grid market
has developed more rapidly than the domestic on grid market,
particularly in Europe and Japan. We believe that customers in
Europe and Japan are strongly motivated by environmental concerns and
that their governments will continue to support renewable energy
sources.
* The rural electrification market. This market segment addresses a
large number of people throughout the world who are not yet served
with electric power.
* The telecommunications market. This market segment includes a wide
variety of telecommunications and related industrial applications.
Our solar cells will be marketed and sold as a commodity for incorporation into
applications, modules and panels developed by original equipment manufacturers,
other companies or individuals. The Company does not intend to develop
applications, modules or panels for its solar cells at any time in the
foreseeable future. Thus, the Company expects that only persons having at least
a minimal technical ability will be potential customers for its solar cells. The
Company expects that potential customers should range from the individual
homeowner and hobbyist to large commercial users. Just by having its Web site
active, the Company has received expression of interests in its solar cells from
other businesses around the world.
We intend to use the Internet as our primary marketing and sales channel. The
increasing functionality, accessibility and overall usage of the Internet have
made it an attractive commercial medium. A Web site features the ability to
reach and serve a large, global group of customers electronically from a central
location. Purchasing is more convenient because purchases can be done 24 hours a
day, seven days a week and do not require any interfacing with an actual
individual. Products can be shipped directly to the customer's business.
Moreover, a Web site avoids the burdensome costs of employing inside or outside
sales personnel, premises in which to house inside sales personnel, travel to
make sales calls, and continuous printing and mailing costs of marketing
materials. Web-based businesses are generally able to conduct the same volume of
business as traditional retailers and wholesales but with fewer employees.
Furthermore, Web sites can process transactions and fulfill orders, provide
customers with rapid and accurate responses to their questions, and gather
customer feedback efficiently. Because of these advantages, electronic retailers
have the potential to build large, global customer bases quickly and to achieve
superior economic returns over the long term. Our management has had prior
success in Internet marketing. We believe that our solar cells can be
successfully sold over the Internet, and that our primary reliance on the
Internet will give us an advantage over our competitors.
Our marketing strategies will be designed to strengthen our brand name, increase
customer traffic to our Web site, build strong customer loyalty, and maximize
repeat purchases. We expect to place advertisements on various Web sites. These
advertisements will probably take the form of banners that encourage readers to
click through directly to our Web site. We will also strive to obtain greater
search engine presence. Currently, we are relying primarily on Google's and
Yahoo's advertising programs. From time to time, the results of a search of the
words "photovoltaic solar cells" on the Google and Yahoo search engines list our
Web site as the first site match. The Company will strive for more of this type
of search engine presence.
Competition
The market for solar electric power components and systems is intensely
competitive. The Company believes that this market will continue to be intensely
competitive, particularly if products with significant cost and performance
attributes are developed. The Company also believes that while a single
technology, crystalline silicon, has been dominant throughout the industry's
approximately 25 year history, this market will be characterized by future
technological change.
A number of large U.S., Japanese and European companies are actively engaged in
the development, manufacturing and marketing of solar electric power components
and systems. Nearly all of these companies will have significantly greater
resources to devote to the research, development, manufacturing and marketing
than the Company expects to have. There are also a large number of smaller
companies involved in both the development of, as well as the ongoing
manufacturing and marketing of, solar electric power components and systems.
21
There are a variety of competing technologies currently under active development
by a large number of organizations. These technologies include other amorphous
silicon technologies, cadmium telluride and copper indium diselenide as well as
advanced concepts for both bulk, ingot based, and thin film crystalline silicon.
Any of these competing technologies could theoretically achieve manufacturing
costs per watt lower than the technology we are developing.
The Company believes that the principal competitive factors in the market for
solar electric power components are the following:
* price per watt
* long term stability and reliability
* product performance (primarily conversion efficiency)
* ease of handling and installation
* product quality
* reputation
In addition to direct competition from other solar electric power manufacturers,
the wholesale market for solar electric power competes with other
environmentally friendly sources of power such as wind and geothermal energy.
Intellectual Property
We expect that our success and ability to compete will significantly depend on
the proprietary process and design we will use in connection with the
manufacture of our solar cells. This process and design was developed and
patented (U.S. Patent No. 6,380,477 B1 dated April 30, 2002, "Method of Making
Photovoltaic Device") by Lawrence F. Curtin, a Director and our President, and
has been assigned to us. We will decide on a case by case basis whether and in
what countries we will file foreign counterparts of our current and any future
U.S. patents. We currently possess no granted international patents and no
pending international patent application. We believe that our current patent
offers us a competitive advantage. Our policy will be to protect its
technologies by filing patent applications with respect to technology considered
important to business development. In addition to our rights in the foregoing
patent, we also expect that we will rely upon unpatented know-how and continuing
technological innovation to develop and maintain our competitive position.
All of our employees and consultants will generally be required to sign
confidential information non disclosure agreements upon the commencement of
their employment with us. Our non disclosure agreements will provide that all
confidential information developed or made known to the individual during the
course of the individual's relationship with us is to be kept confidential and
not disclosed to third parties except in specific circumstances. These
agreements also provide that all inventions made by the individual shall be our
exclusive property. However, these agreements may not provide meaningful
protection for our trade secrets or adequate remedies in the event of
unauthorized use or disclosure of such information.
There can be no assurance that the steps Mr. Curtin or we have taken or will
take to protect the proprietary rights on which we will be relying will be
adequate or that third parties will not infringe or misappropriate such
proprietary rights. Moreover, the confidentiality agreements required of
employees and consultants may not provide meaningful protection for our trade
secrets or adequate remedies in the event of unauthorized use or disclosure of
such information. In addition, there can be no assurance that other parties will
not assert infringement claims against us. We may be subject to legal
proceedings and claims from time to time in the ordinary course of its business,
including claims of alleged infringement of patents and other intellectual
property rights of third parties by us. Such claims, even if not meritorious,
could result in the expenditure of significant financial and managerial
resources.
Plan of Operation
The following matters constitute the Company's primary immediate objectives:
* Complete the offering of a sufficient number of shares pursuant to
this Prospectus to enable us to construct our proposed equipment and
have adequate working capital, although there can be no assurance
that we will be successful in so completing the offering;
* Complete construction of our equipment, which we expect will take
nine months from the date that sufficient funds are obtained in this
offering, although there can be no assurance that we will be able to
construct our equipment in this time frame;
* Successfully test our completed equipment;
* Procure an initial stock of raw materials, commence commercial
production of our solar cells, and build up an inventory of finished
solar cells; and
* Engage in marketing effort, primarily focused on selling on Internet
by means of Web listings.
22
Initially, our two officers and directors will personally operate our
manufacturing equipment and be responsible for order fulfillment after
commercial production of our solar cells commences. Once sales reach a certain
level, we will hire and train an employee to take over the operation of our
manufacturing equipment. We do not expect any difficulty or lengthy delay in the
hiring and training of employees and procuring an initial stock of raw
materials. Once sales reach a certain higher level, we will consider adding
another main production tool. We expect that the initial employee hired to
oversee the operation of our initial manufacturing equipment will also be able
to operate at least one and possibly more than one additional main production
tools. If sales continue to increase, we will consider adding additional
employees and additional main production tools as well as additional required
equipment.
We do not anticipate performing any research and development in the next twelve
months, other than that the testing of our equipment after construction is
completed. We expect no purchases or sales of any plant or significant
equipment, other than our proposed custom-made manufacturing equipment and
initial supplies expected to cost about $146,000. We do not anticipate any
significant increase in our number of employees.
Properties and Facilities
Our principal assets will be our intellectual property patented in the United
States and believed by us to be valuable to our business and our custom-made
manufacturing equipment expected to cost about $146,000. Other than for this and
such inventories as we shall own in various quantities from time to time, we do
not expect to own any significant tangible property. Our principal offices and
manufacturing facilities are fairly small and are located at 4115 Bandy Blvd.,
Unit A-7, Ft Pierce, Florida 34981. Lawrence F. Curtin, a director and our
President, currently provides these offices and facilities to us for free,
although he also uses these offices and facilities for another business of his.
If our business develops as planned, we will seek an alternative facility, which
we believe can be readily obtained if needed.
Employees
We currently have no employees. Our two officers Lawrence F. Curtin (President)
and Zechariah Krogen-Curtin (Secretary), currently serve all our labor needs.
Once construction of our equipment is completed and sales reach a certain level,
we expect to hire an additional employee who will run the equipment. We expect
to hire additional employees beyond that as the business needs dictate. We do
not foresee any difficulty in hiring qualified employees as needed.
Legal Proceedings
The Company is not currently involved in any legal proceeding. However, in the
future, the Company may become involved in various additional legal proceedings
from time to time, either as a plaintiff or as a defendant, and either in or
outside the normal course of business. The Company is not now in a position to
determine when (if ever) such a legal proceeding may arise. If the Company ever
becomes involved in a legal proceeding, the Company's financial condition,
operations, or cash flows could be materially and adversely affected, depending
on the facts and circumstances relating to such proceeding. Available
Information
The Company has filed with the Securities & Exchange Commission (the
"Commission") a Registration Statement on Form SB-2 and exhibits relating
thereto (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Act"), of which this Prospectus is a part. This Prospectus does
not contain all the information set forth in the Registration Statement.
Reference is made to such Registration Statement for further information with
respect to the Company and the securities of the Company covered by this
Prospectus. Statements contained herein concerning the provisions of documents
are necessarily summaries of such documents, and each statement is qualified in
its entirety by reference to the copy of the related document filed with the
Commission.
The Company intends to register as a reporting company under the Securities
Exchange Act of 1934 (the "Exchange Act"). As a consequence, the Company will
file with the Commission Annual Reports on Form 10-KSB, Quarterly Reports on
Form 10-QSB, and Current Reports on Form 8-K. The Annual Reports on Form 10-KSB
will contain audited financial statements. After they are filed, these reports
can be inspected at, and copies thereof may be obtained at prescribed rates, at
the Commission's Public Reference Room located at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call the Commission at 202/942-4040 for further
information on the Public Reference Room. The Commission maintains a Web site
that contains reports, proxy statements and information statements and other
information (including the Registration Statement) regarding issuers that file
electronically with the Commission. The address of such site is
http://www.sec.gov. The Company's reports can be inspected at, and copies
downloaded from, the Commission's Web site.
23
MANAGEMENT
The authorized number of directors of the Company is presently fixed at three.
Each director serves for a term of one year that expires at the following annual
stockholders' meeting. Our Board of Directors has determined that none of its
members is "independent" within the meaning of the listing standards of any
national stock exchange or any inter-dealer quotation system that has
requirements that a majority of the board of directors be "independent."
Executive officers are appointed by the Board of Directors and serve until their
successors are appointed. Lawrence F. Curtin is the father of Zechariah
Krogen-Curtin. There are no arrangements or understandings between or among any
of the directors, executive officers or other person pursuant to which such
person was selected to serve as a director or officer.
Our Board of Directors does not have a separately-designated standing audit
committee or a committee performing similar functions. Our entire Board of
Directors is acting as our Audit Committee. Our Board of Directors has
determined that Harvey Judkowitz is an "audit committee financial expert," as
defined by applicable U.S. Securities and Exchange Commission rules and
regulations.
Our directors, executive officers and control persons are listed below with
information about their respective backgrounds:
Name Age Positions
Lawrence F. Curtin 64 Director & President
Harvey Judkowitz 62 Director & Treasurer
Zechariah Krogen-Curtin 21 Director & Secretary
Lawrence F Curtin - Director, President. Lawrence F. Curtin has served as a
Director and our President since our inception. He was first introduced to the
area of Photovoltaics in 1957 at the United Nations Solar Energy Center in
Cairo, Egypt. In 1981 he founded a company that built photovoltaic lighting
systems for the outdoor advertising industry. His partner in this venture was
Crouse Hinds Lighting, which was then the second largest lighting company in the
United States. He sold his interest in 1985. In 1985 he signed a contract with
China International Advertising in Beijing, China to build these device in the
Beijing province. This contract was sold in 1986. In 1997 Lawrence Curtin
created a paint process to paint on solar cells to an existing surface. The
University of Miami Chemistry Department gave him a lab and two graduate
students to work on this project. A patent was awarded for this in 1999. In 1998
he was invited by the Swiss Institute of Technology in Lausanne, Switzerland to
consult with the head of the Chemistry Department on this process. In 1998 he
was invited to Cannon Corporation in Tokyo, Japan to consult with them on the
marketing of a self adhesive solar cell made on a roll to roll web which he had
filed patents on. Patents for this process were awarded in 2000 and 2002. While
waiting for these patents to be issued in 1999 Lawrence Curtin began an Internet
sales operation for solar cells. This business was hosted on
www.photovoltaics.com. It went from seven thousand in sales the first month to
two hundred and fifty thousand in sales in the eight month. It had 270 clients
world-wide. Because he had no secure supply of solar cells, he sold this
business to his largest client in 2000. In 2002 and 2003 he developed a method
of making nano particle solar cells and electrostatic coating them onto a moving
conductive film. He had contracted with IBM's Thomas Watson Research Labs in
2002 to ion etch into a silicon wafer 50 billion holes that were 50 nano meters
deep and 20 nano meters in diameter. Various materials were stacked into these
holes to create nano particle solar cell. The solar cells were then vibrated out
of these holes and used in a colloid to paint onto a conductive surface. In 1998
he was invited to visit Alan Heeger's lab by one of his staff at the University
of California, Santa Barbara to consult on conductive plastics for solar cells.
Alan Heeger won the Nobel Prize in Chemistry for conductive Plastics in 2000. In
2003 Lawrence Curtin was invited to work at Cornell's Knight Labs to develop his
nano particle solar cells. He has been invited to lecture at the Technical
Institute in Moldova and Florida Atlantic University on nano particles. In
October of 2005 Lawrence Curtin founded Photovoltaics.com, Inc. This company has
filed for patents in 2006 in the US, Germany, China and India on a non-vacuum
way of producing a multiple stacked solar cell in a ceramic sleeve that uses
nano particles that the company makes, and uses clear crystal wave guides to
bring light from the opening of an orifice down to the last junction in the
solar cell. This company has also filed for a patent in the US and made a PCT
application on a way to produce hydrogen from seawater using the solar cell that
had patents applied for in 2006. This invention is called a Hydrogen Absorption
Rod. Mr. Curtin graduated from the University of Wisconsin in 1967 with a degree
in Science.
24
Harvey Judkowitz - Director & Treasurer. Harvey Judkowitz has served as a
Director and our Treasurer since shortly after our inception. He is a Certified
Public Accountant licensed in both New York and Florida. From 1988 to date, Mr.
Judkowitz has conducted his own CPA practice. Mr. Judkowitz was the Chairman of
the Board and CEO of UniPro Financial Services, Inc. (UPRO) from June, 2003
until the Company was sold in September, 2005. He currently serves on the Board
of Directors and is chairman of the audit committees for the following publicly
traded companies: The Singing Machine, Inc. (SMD), and Hard To Treat Diseases,
Inc. (HTDS). He is also a member of the Board of Directors and member of the
audit committee of Cavit Sciendes, Inc. In the past, he has served as Chief
Financial Officer of Claire's Stores and several other publicly traded
companies. Mr. Judkowitz graduated from Pace University in 1967 with a BBA in
Accounting. Over the past 20 years, Mr. Judkowitz has been a consultant to
assist several companies in going public and arrange short term financing until
the public money could be raised
Zechariah Krogen-Curtin- Director & Secretary. Zechariah Krogen-Curtin has
served as a Director and our Secretary since our inception. He has been a
full-time employee of Photovoltaics.com, Inc. since its founding in 2005. He
works in all areas of work at Photovoltaics.com, Inc. Mr. Krogen-Curtin attended
Indian River Community College 2004, Kalamazoo College (a college within Western
Michigan University) in 2005. He is continuing his education in the area of
Physics, Chemistry, Photovoltaics, Geology and Oceanography while working.
EXECUTIVE COMPENSATION
We expect to pay $3,000 per month to Lawrence F. Curtin, our President, to the
extent that funds are available for such remuneration. We expect to pay $1,500
per month to Zechariah Krogen-Curtin, our Secretary, to the extent that funds
are available for such remuneration. We do not presently expect to pay any
remuneration to our directors for their service as such.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with the organization of our company, we issued to Lawrence F.
Curtin, a director and our President, 3.1 million shares of Common Stock
(600,000 of which were subsequently assigned to Zechariah Krogen-Curtin, Mr.
Curtin's son, as a gift) in consideration of the assignment of his rights in a
certain patent. Mr. Curtin has indicated that he expended approximately $700,000
in direct costs in connection with the development of the technology covered by
this patent. The number of shares for the acquisition of the preceding patent
rights was not determined in true arms length negotiations. Accordingly, there
can be no assurance that the number of shares was not as favorable to us as the
number that would have been agreed to in true arms length negotiations.
Moreover, in connection with the organization of our company, we issued to
Harvey Judkowitz, a director and our Treasurer, 500,000 shares of Common Stock
in consideration of services theretofore provided to us. The number of shares to
be issued to Mr. Judkowitz was determined in arms-length negotiations between
Mr. Judkowitz and Lawrence F. Curtin, our President. The factors addressed by
Mr. Curtin in negotiating this number of shares included the value of services
theretofore provided to us by Mr. Judkowitz, an assessment of Mr. Judkowitz's
ability to contribute to the management and growth of our business; and the
perceived value of our stock at that time. Mr. Curtin and Mr. Judkowitz have had
a long business relationship with each other in other business endeavors. Mr.
Curtin's large percentage ownership of our outstanding common stock gives to him
an interest in assuring that the number of shares issued to Mr. Judkowitz is
commercially reasonable. Accordingly, Mr. Curtin does not believe that his prior
and current relationship with Mr. Judkowitz impaired his ability to negotiate
commercially reasonable terms in connection with the issuance of shares to Mr.
Judkowitz.
25
PRINCIPAL STOCKHOLDERS
The following table sets forth as of June 29, 2007, the number of shares of our
Common Stock beneficially owned by (i) each of our directors; (ii) each of our
executive officers; (iii) each person known by us to beneficially own more than
5% of the outstanding shares of Common Stock; and (iv) all executive officers
and directors as a group. Unless otherwise indicated, each person has sole
voting and dispositive power over such shares. Shares not outstanding but deemed
beneficially owned by virtue of the right of a person or member of a group to
acquire them within 60 days are treated as outstanding only when determining the
amount and percent owned by such group or person. Unless otherwise indicated,
the address for each person named in the table is 4115 Bandy Blvd., Unit A-7, Ft
Pierce, Florida 34981.
Amount of Percentage of Percentage of
Name and Address of Beneficial Outstanding Shares Outstanding Shares
Beneficial Owner Ownership Before Offering After Offering (1)
Lawrence F. Curtin 2,500,000 61.7% 31.1%
Zechariah Krogen-Curtin 600,000 14.8% 7.5%
Harvey Judkowitz 500,000 12.3% 6.2%
14241 SW 92th St.
Miami, Florida 33176
All directors and officers 3,600,000 88.9% 44.7%
as a group (three persons)
(1) Assumes that all 4,000,000 shares are sold in this offering.
DESCRIPTION OF SECURITIES
Capital Stock.
The Company's authorized capital stock consists of 50,000,000 shares of Common
Stock, $.0001 par value per share and 10,000,000 shares of Preferred Stock,
$.0001 par value per share.
Common Stock.
The authorized Common Stock of the Company consists of 50,000,000 shares, par
value $0.0001 per share. After taking into consideration the issuance of all of
the shares being registered, 8.05 million shares of Common Stock will be issued
and outstanding. All of the shares of Common Stock will be validly issued, fully
paid and non-assessable. Holders of record of Common Stock will be entitled to
receive dividends when and if declared by the Board of Directors out of funds of
the Company legally available therefore. In the event of any liquidation,
dissolution or winding up of the affairs of the Company, whether voluntary or
otherwise, after payment or provision for payment of the debts and other
liabilities of the Company, including the liquidation preference of all classes
of preferred stock of the Company, each holder of Common Stock will be entitled
to receive his pro rata portion of the remaining net assets of the Company, if
any. Each share of Common stock has one vote, and there are no preemptive,
subscription, conversion or redemption rights. Shares of Common Stock do not
have cumulative voting rights, which means that the holders of a majority of the
shares voting for the election of directors can elect all of the directors.
26
Preferred Stock.
The Company's Certificate of Incorporation authorizes the issuance of up to
10,000,000 shares of the Company's $0.0001 par value preferred stock (the
"Preferred Stock"). As of the date of this Prospectus, no shares of Preferred
Stock were issued and outstanding. The Preferred Stock constitutes what is
commonly referred to as "blank check" preferred stock. "Blank check" preferred
stock allows the Board of Directors, from time to time, to divide the Preferred
Stock into series, to designate each series, to issue shares of any series, and
to fix and determine separately for each series any one or more of the following
relative rights and preferences: (i) the rate of dividends; (ii) the price at
and the terms and conditions on which shares may be redeemed; (iii) the amount
payable with respect to shares in the event of involuntary liquidation; (iv) the
amount payable with respect to shares in the event of voluntary liquidation; (v)
sinking fund provisions for the redemption or purchase of shares; (vi) the terms
and conditions pursuant to which shares may be converted if the shares of any
series are issued with the privilege of conversion; and (vii) voting rights.
Dividends on shares of Preferred Stock, when and as declared by the Board of
Directors out of any funds legally available therefore, may be cumulative and
may have a preference over Common Stock as to the payment of such dividends. The
provisions of a particular series, as designated by the Board of Directors, may
include restrictions on the ability of the Company to purchase shares of Common
Stock or to redeem a particular series of Preferred Stock. Depending upon the
voting rights granted to any series of Preferred Stock, issuance thereof could
result in a reduction in the power of the holders of Common Stock. In the event
of any dissolution, liquidation or winding up of the Company, whether voluntary
or involuntary, the holders of each series of the then outstanding Preferred
Stock may be entitled to receive, prior to the distribution of any assets or
funds to the holders of the Common Stock, a liquidation preference established
by the Board of Directors, together with all accumulated and unpaid dividends.
Depending upon the consideration paid for Preferred Stock, the liquidation
preference of Preferred Stock and other matters, the issuance of Preferred Stock
could result in a reduction in the assets available for distribution to the
holders of the Common Stock in the event of liquidation of the Company. Holders
of Preferred Stock will not have preemptive rights to acquire any additional
securities issued by the Company. Once a series has been designated and shares
of the series are outstanding, the rights of holders of that series may not be
modified adversely except by a vote of at least a majority of the outstanding
shares constituting such series.
One of the effects of the existence of authorized but unissued shares of Common
Stock or Preferred Stock may be to enable the Board of Directors of the Company
to render it more difficult or to discourage an attempt to obtain control of the
Company by means of a merger, tender offer at a control premium price, proxy
contest or otherwise and thereby protect the continuity of or entrench the
Company's management, which concomitantly may have a potentially adverse effect
on the market price of the Common Stock. If in the due exercise of its fiduciary
obligations, for example, the Board of Directors were to determine that a
takeover proposal were not in the best interests of the Company, such shares
could be issued by the Board of Directors without stockholder approval in one or
more private placements or other transactions that might prevent or render more
difficult or make more costly the completion of any attempted takeover
transaction by diluting voting or other rights of the proposed acquirer or
insurgent stockholder group, by creating a substantial voting block in
institutional or other hands that might support the position of the incumbent
Board of Directors, by effecting an acquisition that might complicate or
preclude the takeover, or otherwise.
Nevada Legislation.
Sections 78.411-78.444 of the General Corporation law of Nevada ("Business
Combination Statute") would be applicable to us when we have 200 or more
stockholders and certain other conditions are met. These provisions may make it
more difficult to effect certain transactions between a corporation and a person
or group that owns or has the right to acquire 10% or more of the corporation's
outstanding voting stock, or a person who is an affiliate or associate of the
corporation and who was the owner of 10% or more of such voting stock at any
time within three years immediately prior to the date in question ("Interested
Stockholder"). The Business Combination Statute prevents the following
transactions between the corporation and the Interested Stockholder for three
years following the date the stockholder became a 10% or more holder of the
corporation's voting stock, unless certain conditions are met: (i) any merger or
consolidation; (ii) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition of the corporation's assets having a total market value equal
to 10% or more of the total market value of all the assets of the corporation;
or 5% or more of the total market value of all outstanding shares of the
corporation or representing 10% or more of the earning power of the corporation;
(iii) the issuance or transfer by the corporation of any shares of the
corporation that have an aggregate market value equal to 5% or more of the
aggregate market value of all the outstanding shares of the corporation to
stockholders except under the exercise of warrants or rights to purchase shares
offered, or a dividend or distribution paid or made, pro rata to all
stockholders of the corporation; (iv) the adoption of any plan or proposal for
the liquidation or dissolution of the corporation proposed by, or under any
agreement or arrangement or understanding, whether or not in writing, with the
Interested Stockholder; (v) any reclassification of securities,
recapitalization, merger or consolidation or other transaction which has the
effect, directly or indirectly, of increasing the proportionate share of the
outstanding shares owned by the Interested Stockholder, and (vi) any receipt by
the Interested Stockholder of the benefit, except proportionally as a
stockholder of the corporation, of any loan or other financial assistance or any
tax credit or other tax advantage provided by or through the corporation. The
three-year ban does not apply if, prior to the date the stockholder became an
Interested Stockholder, the Board of Directors of the corporation approves
either the proposed transaction or the transaction by which the Interested
Stockholder became an Interested Stockholder.
Shares Eligible for Future Sale.
Prior to this offering, there has been no public market for the Common Stock.
Sales of a substantial amount of Common Stock in the public market, or the
perception that such sales may occur, could adversely affect the market price of
the Common Stock prevailing from time to time in the public market and could
impair our ability to raise additional capital through the sale of its equity
securities in the future.
27
Upon completion of this offering, we will have issued and outstanding 8.05
million shares of Common Stock, 4.05 million of which will be "restricted" or
"control" shares for purposes of the Act. "Restricted" shares are those acquired
from us or an "affiliate" other than in a public offering, while "control"
shares are those held by affiliates of ours regardless as to how they were
acquired. During May 2008, all of these 4.05 million restricted and control
shares of Common Stock will become eligible for sale under Rule 144, subject to
the volume limitations of Rule 144. In general, under Rule 144, one year must
have elapsed since the later of the date of acquisition of restricted shares
from us or any affiliate of ours. No time needs to have lapsed in order to sell
control shares that are not also restricted shares. Once the restricted or
control shares may be sold under Rule 144, the holder is entitled to sell within
any three-month period such number of restricted or control shares that does not
exceed the greater of 1% of the then outstanding shares or (in certain cases not
expected to apply to us for the foreseeable future) the average weekly trading
volume of shares during the four calendar weeks preceding the date on which
notice of the sale is filed with the Commission. Sales under Rule 144 are also
subject to certain restrictions on the manner of selling, notice requirements
and the availability of current public information about us. Under Rule 144, if
two years have elapsed since the holder acquired restricted shares from us or
from any affiliate of ours, and the holder is deemed not to have been an
affiliate of ours at any time during the 90 days preceding a sale, such person
will be entitled to sell such Common Stock in the public market under Rule
144(k) without regard to the volume limitations, manner of sale provisions,
public information requirements or notice requirements.
PLAN OF DISTRIBUTION
Currently, we plan to sell the shares in this offering through Lawrence F.
Curtin, our President and director. Mr. Curtin will not receive any commission
from the sale of any shares. Mr. Curtin will not register as a broker/dealer
under Section 15 of the Securities Exchange Act of 1934 (the "Act") in reliance
upon Rule 3a4-1. Rule 3a4-1 sets forth those conditions under which a person
associated with an issuer may participate in the offering of the issuer's
securities and not be deemed to be a broker-dealer. These conditions are as
follows:
* The person is not subject to a statutory disqualification, as that
term is defined in Section 3(a)(39) of the Act, at the time of his
participation;
* The person is not compensated in connection with his participation by
the payment of commissions or other remuneration based either directly
or indirectly on transactions in securities;
* The person is not, at the time of their participation, an associated
person of a broker-dealer; and
* The person meets the conditions of paragraph (a)(4)(ii) of Rule 3a4-1
of the Act in that he (a) primarily performs, or is intended to
primarily perform at the end of the offering, substantial duties for
or on behalf of the Issuer other than in connection with transactions
in securities; and (b) is not a broker-dealer, or an associated person
of a broker-dealer, within the preceding twelve (12) months; and (c)
does not participate in selling and offering of securities for any
Issuer more than once every twelve (12) months other than in reliance
on paragraphs (a)(4)(i) or (a) (4) (iii) of the Act.
Mr. Curtin is not subject to disqualification, is not being compensated, and is
not associated with a broker-dealer. Mr. Curtin is and will continue to be one
of our officers and directors at the end of the offering and, during the last
twelve months, he has not been and is not currently a broker-dealer nor
associated with a broker-dealer. Mr. Curtin has not, during the last twelve
months, and will not, during the next twelve months, offer or sell securities
for another corporation other than in reliance on paragraphs (a)(4)(i) or (a)(4)
(iii) of the Act.
In the past, we have received unsolicited indications of interest in investing
in our company from individuals familiar with us. Mr. Curtin will arrange for
delivery of a Prospectus to these individuals and to others who he believes may
be interested in purchasing all or a part of this offering.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
The corporation law of Nevada allows a Nevada corporation to indemnify each
director, officer, agent and/or employee in certain circumstances. Moreover, our
Bylaws provide that we must indemnify each director, officer, agent and/or
employee to the maximum extent provided for by the corporation law of Nevada.
Further, we may purchase and maintain insurance on behalf of any such persons
whether or not we have the power to indemnify such person against the liability
insured against. There is no pending material litigation or proceeding involving
a director, officer, employee or other agent of ours as to which indemnification
is being sought, nor are we aware of any pending or threatened material
litigation that may result in claims for indemnification by any director,
officer, employee or other agent. Insofar as indemnification for liabilities
arising under the Securities Act of 1933 ("the Act") may be permitted to our
directors, officers, and controlling persons pursuant to the provisions of our
bylaws, applicable Nevada corporation law, or otherwise, we have been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
In the event that any claim for indemnification against such liabilities (other
than the payment by us of expenses incurred or paid by one of our directors,
officers or controlling persons in the defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, we will, unless in the opinion
of its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question of whether such indemnification
by us is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
28
INTEREST OF NAMED EXPERTS AND COUNSEL
Legal Matters. Certain legal matters will be passed upon for us by Randall W.
Heinrich, 8 Greenway Plaza, Suite 818, Houston, Texas 77046. To date, Mr.
Heinrich assisted with the organization of our company; drafted the registration
statement of which this Prospectus is a part; and issued an opinion regarding
validity of the issuance of our shares. Mr. Heinrich will remain involve with us
as an outside attorney after the completion of this offering. Mr. Heinrich is
the beneficial owner of 300,000 shares of our common, which were issued to him
in consideration of his agreement to provide services on a reduced-cash basis.
In the future, assuming Mr. Heinrich continues to provide legal work for us,
fees in connection with such work may be billed to us for cash payments in
accordance with his usual billing practices.
Accounting Matters. The financial statements included in this Prospectus and
elsewhere in the registration statement of which this Prospectus is a part have
been audited by Berkovits, Lago and Company located in Fort Lauderdale, Florida
as set forth in their report, and are included herein in reliance upon the
authority of the stated firm as experts in accounting and auditing in rendering
such reports.
29
PHOTOVOLTAIC SOLAR CELLS, INC.
INDEX TO FINANCIAL STATEMENTS
Page
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM F-1
FINANCIAL STATEMENTS
Balance Sheet as of May 31, 2007 F-2
Statement of Operations for the period from March 28, 2007
(date of inception) through May 31, 2007 F-3
Statement of Changes in Stockholders' Equity for the period
from March 28, 2007 through May 31, 2007 F-4
Statements of Cash Flows for the period from March 28, 2007
(date of inception) through May 31, 2007 F-5
Notes to Financial Statements F-6
30
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Photovoltaic Solar Cells, Inc.
We have audited the accompanying balance sheet of Photovoltaic Solar Cells, Inc.
("the Company") (a development stage company) as of May 31, 2007, and the
related statements of operations, changes in stockholders' equity, and cash
flows for the period from March 28, 2007 (inception) to May 31, 2007. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with the 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 require to
have, nor were we engaged to perform, an audit of its 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 financial statements, includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit will 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 Photovoltaic Solar Cells, Inc.
(a development stage company) as of May 31, 2007, and the results of its
operations and its cash flows for the period from March 28, 2007 (inception) to
May 31, 2007 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 1 to the
financial statements, the Company's limited operations, lack of sufficient
working capital, and loss from operations in the development stage raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans are described in Note 1 to the financial statements. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ Berkovits, Lago & Company, LLP
Ft. Lauderdale, Florida
June 21, 2007
F-1
PHOTOVOLTAIC SOLAR CELLS, INC.
(A Development Stage Company)
BALANCE SHEET
MAY 31, 2007
ASSETS
------
Current Assets:
Cash $ 5,200
---------------
Total Current Assets 5,200
Intangible Asset - Patent 55,970
---------------
TOTAL ASSETS $ 61,170
===============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accrued professional fees $ 5,000
---------------
Total current liabilities 5,000
Stockholders' equity:
Common stock, $0.0001 par value; 50,000,000 shares
authorized, 4,050,000 shares issued and outstanding 405
Additional paid-in capital 74,265
Deficit accumulated during the development stage (18,500)
--------------
Total stockholders' equity 56,170
--------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 61,170
===============
The accompanying notes are an integral part of these financial statements.
F-2
PHOTOVOLTAIC SOLAR CELLS, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM MARCH 28, 2007 (INCEPTION) THROUGH MAY 31, 2007
Period
from March 28, 2007
(Inception)
Through
May 31, 2007
------------
Revenues $ -
---------------
Expenses:
Professional fees 18,500
---------------
Total expenses 18,500
---------------
Net loss $ (18,500)
===============
Net Loss per share-basic and diluted $ (.01)
Weighted average number of shares outstanding
- -basic and diluted 1,833,077
The accompanying notes are an integral part of these financial statements
F-3
PHOTOVOLTAIC SOLAR CELLS, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM MARCH 28, 2007 (INCEPTION) THROUGH MAY 31, 2007
Deficit
Accumulated
Additional During Total
Common Stock Paid-In Development Stockholders
Shares Amount Capital Stage Equity
Common stock issued for
patent and cash at
$.018 per share 3,100,000 $ 310 $ 55,860 $ - $ 56,170
Common stock sold for
cash at $.10
per share 100,000 10 9,990 - 10,000
Common stock issued for
professional fees at
$.01 per share 850,000 85 8,415 8,500
Net Loss - - - (18,500) (18,500)
------------------------------------------------------
Balance, May 31, 2007 4,050,000 $ 405 $ 74,265 $ (18,500) $ 56,170
=======================================================
The accompanying notes are an integral part of these financial statements.
F-4
PHOTOVOLTAIC SOLAR CELLS, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
FOR THE PERIOD FROM MARCH 28, 2007 (INCEPTION) THROUGH MAY 31, 2007
Period
from March 28, 2007
(Inception)
through
May 31, 2007
------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (18,500)
Adjustments to reconcile net loss to
net cash used in operating activities:
Stock issued for professional fees 8,500
Changes in operating assets and liabilities:
Increase in accrued professional fees 5,000
--------------------
Net cash used in operating activities (5,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of common stock 10,200
--------------------
Net cash provided by financing activities 10,200
--------------------
Net increase in cash 5,200
Cash, beginning of period -
--------------------
Cash, end of period $ 5,200
====================
NON CASH INVESTING ACTIVITIES:
Common stock issued for patent $ 55,970
The accompanying notes are an integral part of these financial statements.
F-5
PHOTOVOLTAIC SOLAR CELLS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
Note 1 - Organization and Summary of Significant Accounting Policies
Organization
Photovoltaic Solar Cells, Inc. ("we", "us" or "our company") was incorporated in
the State of Nevada on March 28, 2007 primarily to engage in manufacturing solar
cells to be used as an alternative method of producing electricity.
Nature of Operations
To date the Company has had no operations other than the exchange of 4,050,000
shares of common stock for a patent, professional services and cash. (See Note
4).
Going Concern Issue
We are a development stage company with no current revenue, limited operations
and limited assets. There can be no assurance that upon implementing our
business plan, we will be successful or that we will start producing sufficient
revenues to maintain our operations. The Company's ability to execute its
business plan will depend on its ability to obtain additional funding and
achieve a profitable level of operations. There can be no assurance that
sufficient funding will be obtained. Nor can the Company give any assurance that
it will generate substantial revenues or that its business operations will prove
to be profitable. The foregoing matters raise substantial doubt about our
ability to continue as a going concern.
The Company intends to raise capital through an initial public offering. In the
event that this raising proves to be insufficient, the Company will seek
additional funding, through either equity or debt financing.
Intangible assets
Intangible assets consist of a patent that is recorded at its acquisition cost
as described in Note 2. The patent has a 17 year life, which expires in 2019,
and will be amortized over the expiration term when the Company commences
operations which generate revenues.
Use of Estimates
These financial statements have been prepared in accordance with accounting
principles generally accepted in the United States and, accordingly, require
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period.
F-6
PHOTOVOLTAIC SOLAR CELLS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
Note 1 - Organization and Summary of Significant Accounting Policies (continued)
Income Taxes
The Company accounts for income taxes following the asset and liability method
in accordance with statement of Financial Accounting Standards ("SFAS") No. 109,
"Accounting for Income Taxes". Under the asset and liability method of SFAS 109,
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to be recovered or settled. Under SFAS 109, the effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
As of May 31, 2007, the Company has concluded that it is more likely than not
that the Company will not realize any deferred tax assets arising from its net
operating loss and has provided a valuation allowance against the entire
balance.
Cash
We maintain our cash in a bank deposit account, which at times, may exceed
federally insured limits. We have not experienced any losses in such account.
Net Loss Per Share
We use SFAS No. 128, "Earnings Per Share" for calculating the basic and diluted
loss per share. We compute basic loss per share by dividing net loss and net
loss attributable to common shareholders by the weighted average number of
common shares outstanding. Diluted loss per share is computed similar to basic
loss per share except that the denominator is increased to include the number of
additional common shares that would have been outstanding if the potential
shares had been issued and if the additional shares were dilutive. Common
equivalent shares are excluded from the computation of net loss per share if
their effect is anti-dilutive.
Fair Value of Financial Instruments
The carrying value of the Company's financial instruments, including cash and
accrued expenses, approximate their fair value because of their relatively short
maturities.
F-7
PHOTOVOLTAIC SOLAR CELLS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
Note 1 - Organization and Summary of Significant Accounting Policies (continued)
Recent Accounting Pronouncements and Interpretations
In February 2007, the FASB issued SFAS No. 159, "Establishing the Fair Value
Option for Financial Assets and Liabilities ("SFAS No. 159"). SFAS No. 159 was
to permit all entities to choose to elect, at specified election dates, to
measure eligible financial instruments at fair value. An entity shall report
unrealized gains and losses on items for which the fair value option has been
elected in earnings at each subsequent reporting date, and recognize upfront
costs and fees related to those items in earnings as incurred and not deferred.
SFAS No. 159 applies to fiscal years beginning after November 15, 2007, with
early adoption permitted for an equity that has also elected to apply the
provisions of SFAS No. 157, "Fair Value Measurements". An entity is prohibited
from retrospectively applying SFAS No. 159, unless it chooses early adoption.
SFAS No. 159 also applies to eligible items existing at November 15, 2007 (or
early adoption date). The Company is evaluating the impact of the adoption of
SFAS No. 159 could have on the Company's financial statements.
In December 2006, the Financial Accounting Standards Board (FASB) issued Staff
Position (FSP) EITF 00-19-2, "Accounting for Registration Payment Arrangements".
This FSP specifies that the contingent obligation to make future payments or
otherwise transfer consideration under a registration payment arrangement,
whether issued as a separate agreement or included as a provision of a financial
instrument or other agreement, should be separately recognized and measured in
accordance with FASB Statement No. 5, "Accounting for Contingencies". The
guidance is effective for fiscal years beginning December 15, 2006. The Company
is evaluating what the impact of the adoption of SFAS No. 159 could have on the
Company's financial statements.
FASB Statement of Financial Accounting Standards (SFAS) No. 157, Fair Value
Measurements, issued in September 2006, establishes a formal framework for
measuring fair value under GAAP. It defines and codifies the many definitions of
fair value included among various other authoritative literature, clarifies and,
in some instances, expands on the guidance for implementing fair value
measurements, and increases the level of disclosure required for fair value
measurements. Although SFAS No. 157 applies to and amends the provisions of
existing FASB and AICPA pronouncements, it does not, of itself, require any new
fair value measurements, nor does it establish valuation standards. SFAS No. 157
applies to all other accounting pronouncements requiring or permitting fair
value measurements, except for; SFAS No. 123 (R), share-based payment and
related pronouncements, the practicability exceptions to fair value
determinations allowed by various other authoritative pronouncements, and AICPA
Statements of Position 97-2 and 98-9 that deal with software revenue
recognition. This statement is effective for financial statements issued for
fiscal years beginning after November 15, 2007, and interim periods within those
fiscal years. The Company is evaluating the impact of SFAS 157 on its financial
statements.
F-8
PHOTOVOLTAIC SOLAR CELLS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
Note 1 - Organization and Summary of Significant Accounting Policies (continued)
In June 2006, FASB issued FIN 48 ("FIN48"). "Accounting for Uncertainty in
Income Taxes" was issued, which clarifies the accounting for uncertainty in
income taxes recognized in an enterprise's financial statements in accordance
with FASB Statement No. 109, Accounting for Income Taxes. FIN 48 prescribes a
recognition threshold and measurement attribute for the financial statement
recognition and measurement of a tax position taken or expected to be taken in a
tax return. FASB 48 also provides guidance on de-recognition, classification,
interest and penalties, accounting in interim periods, disclosure, and
transition. FIN 48 is effective for fiscal years beginning after December 15,
2006, and earlier application of the provision of FIN 48 is encouraged if the
enterprise has not yet issued financial statements, including interim financial
statements, in the period that FIN 48 is adopted. The Company does not believe
that the adoption of FIN 48 will materially impact its financial statements.
Note 2 - Intangible Asset - Patent
On April 30, 2007, the major stockholder and President of the Company assigned
to the Company the exclusive title to the patent No. US 6,380,477 related to a
photovoltaic cell product and a method for its manufacture obtained in April
2002 from the United States Patent and Trademark Office, which expires in April
2019. The patent relates to the design of a photovoltaic device and a method for
its manufacture. The invention facilitates the manufacture, transportation, and
installation of solar cells. The Company issued 3,100,000 shares of its common
stock in exchange for the exclusive rights to the aforementioned patent. See
Note 4.
Note 3 - Provision For Income Taxes
Significant components of the Company's deferred tax assets and liabilities for
federal and state tax purposes are as follows:
May 31, 2007
--------------
Total deferred tax asset $ 6,500
Valuation allowance (6,500)
-------
Net deferred tax assets $ -
=======
SFAS 109 provides for the recognition of deferred tax assets if realization of
such assets is more likely than not. Based upon the weight of available
evidence, which includes the Company's historical operating performance and the
reported cumulative net losses in prior years, the Company has provided a full
valuation allowance against its net deferred tax assets.
F-9
PHOTOVOLTAIC SOLAR CELLS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
Note 3 - Provision for Income Taxes (continued)
Utilization of some of the net operating loss carryforwards may be subject to
substantial annual limitations due to the ownership change limitations provided
by the Internal Revenue Code and similar state provisions. The annual limitation
may result in the expiration of net operating loss carryforwards before
utilization. The net operating loss carryforwards will expire in 2027. The
Company is taxable as a C Corporation under the Internal Revenue Service Code.
Note 4 - Stockholders' Equity
Our certificate of incorporation authorizes the issuance of 50,000,000 shares of
common stock, par value $0.0001 as well as 10,000,000 shares of preferred stock
par value $0.0001.
On May 11, 2007, the Company issued 3,100,000 shares of common stock to the
Company's founder and President in exchange for exclusive rights to a patent
that cost $55,970 in fees and $200 in cash.
On May 11, 2007, 100,000 shares of common stock were sold to an investor at $.10
per share for an aggregate cost of $10,000.
On May 11, 2007, 300,000 shares of common stock were given to the Company's
attorney as payment for legal fees amounting to $3,000. Common stock was valued
at $.01 per share.
On May 11, 2007, 550,000 shares of common stock were given to two consultants as
payment of professional fees amounting to $5,500. Common stock was valued at
$.01 per share.
Note 5 - Related Party Transactions
The Company utilizes office space and manufacturing facilities provided by its
major stockholder and President at no cost. There was no compensation to
officers of the Company during the year 2006.
F-10