UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 2012
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition from __________ to __________.
Commission File Number: 0-54036
CIRALIGHT GLOBAL, INC.
(Exact name of registrant as specified in its charter)
Nevada 26-4549003
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
670 E. Parkridge Ave, Suite 112, Corona, CA 92879
(Address of principal executive offices) (Zip code)
(877) 520-5005
(Registrant's telephone number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of November 19, 2012 there were
14,944,067 outstanding shares of the Registrant's Common Stock, $0.001 par
value.
Report on Form 10-Q
For the Quarter Ended September 30, 2012
INDEX
Page
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements 3
Condensed Balance Sheets as of September 30, 2012 (Unaudited)
and December 31, 2011 3
Condensed Statements of Operations for the Three and Nine
Months Ended September 30, 2012 and 2011 (Unaudited) 4
Condensed Statements of Cash Flows for the Nine Months
Ended September 30, 2012 and 2011 (Unaudited) 5
Notes to Condensed Unaudited Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 23
Item 3. Quantitative and Qualitative Disclosures about Market Risk 32
Item 4. Controls and Procedures 32
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 32
Item 1A. Risk Factors 32
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 33
Item 3. Defaults Upon Senior Securities 33
Item 4. Mine Safety Disclosures 33
Item 5. Other Information 33
Item 6. Exhibits 33
SIGNATURES 36
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
CIRALIGHT GLOBAL, INC
CONDENSED BALANCE SHEETS
(Unaudited)
September 30, December 31,
2012 2011
------------ ------------
(Unaudited)
ASSETS
Current assets:
Cash $ 18,569 $ 97,443
Restricted cash 7,600 7,600
Accounts receivable net of allowance of $23,200 and $0, respectively 99,600 175,235
Inventory 201,987 197,619
Prepaid expenses and other current assets 92,996 16,090
------------ ------------
Total current assets 420,752 493,987
------------ ------------
Property and equipment, net 4,545 6,928
Intangible assets, net 68,962 27,198
------------ ------------
Total assets $ 494,259 $ 528,113
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 135,478 $ 128,764
Advances payable - related party 503,000 300,000
Accrued expenses - related party 64,142 151,813
Deferred revenue 107,946 30,932
Other payables 109,678 18,426
------------ ------------
Total current liabilities 920,244 629,935
------------ ------------
Stockholders' equity (deficit)
Preferred stock - $.001 par value; 10,000,000 shares authorized,
1,000,000 Redeemable Series A Preferred shares issued and outstanding 1,000 1,000
Common stock - $.001 par value; 50,000,000 shares authorized,
14,944,067 and 14,322,567 shares issued and outstanding, respectively 14,944 14,322
Additional paid-in capital 3,211,396 2,664,633
Accumulated deficit (3,633,325) (2,781,777)
------------ ------------
Total stockholders' equity (deficit) (425,985) (101,822)
------------ ------------
Total liabilities and stockholders' equity (deficit) $ 494,259 $ 528,113
============ ============
The accompanying notes are an integral part of
these condensed financial statements
3
CIRALIGHT GLOBAL, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
For the Quarter Ended For the Nine Months Ended
September 30, September 30,
------------------------------ ------------------------------
2012 2011 2012 2011
------------ ------------ ------------ ------------
Sales $ 105,715 $ 246,013 $ 500,849 $ 823,139
Cost of goods sold 67,905 149,540 441,163 586,974
------------ ------------ ------------ ------------
Gross profit 37,810 96,473 59,686 236,166
------------ ------------ ------------ ------------
Operating expenses
Research and development expenses 38,255 223 52,824 31,833
Selling and marketing expenses 24,377 66,807 122,875 169,653
General and administrative expenses 249,008 208,116 706,997 582,534
------------ ------------ ------------ ------------
Total operating expenses 311,640 275,146 882,696 784,020
------------ ------------ ------------ ------------
Loss from operations (273,830) (178,673) (823,010) (547,854)
------------ ------------ ------------ ------------
Other expense
Interest expense, net (7,038) (12,260) (28,538) (28,472)
------------ ------------ ------------ ------------
Total other expense (7,038) (12,260) (28,538) (28,472)
------------ ------------ ------------ ------------
Net loss $ (280,868) $ (190,933) $ (851,548) $ (576,326)
============ ============ ============ ============
Basic loss per share $ (0.02) $ (0.01) $ (0.06) $ (0.04)
============ ============ ============ ============
Weighted average shares used in
per share calculation 14,824,204 14,208,702 14,489,388 13,660,919
============ ============ ============ ============
The accompanying notes are an integral part of
these condensed financial statements
4
CIRALIGHT GLOBAL, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Nine Months Ended
September 30,
-------------------------------
2012 2011
---------- ----------
Cash flows from operating activities:
Net Loss $ (851,548) $ (576,326)
Adjustments to reconcile net loss to net
cash used in operating activities:
Common stock issued for compensation and services -- 25,000
Options issued for services 77,720 9,611
Options issued for financing costs 11,480 22,960
Depreciation and amortization 4,750 6,906
Contribution of rent from a related party 1,500 4,500
Bad debt expense 23,200 25,896
Changes in operating assets and liabilities
(Increase) decrease in Inventory (4,368) 44,215
(Increase) decrease in Accounts Receivable 52,435 (17,014)
(Increase) decrease in prepayments and deposits (68,257) (45,148)
(Increase) decrease in notes receivable - related party -- 35,244
Increase (decrease) in accounts payable 39,715 (131,012)
Increase (decrease) in accrued expenses related party 16,120 5,250
Increase (decrease) in other payables 103,075 10,812
Increase (decrease) in deferred revenue 77,014 --
---------- ----------
Net cash used in operating activities (517,164) (579,106)
Cash flow used in investing activities
Patent development costs (21,710) --
Acquisition of property and equipment -- (4,262)
---------- ----------
Net cash used in investing activities (21,710) (4,262)
Cash flows from financing activities:
Cash from sale of common stock 300,000 475,680
Cash from exercise of Options -- 1,500
Payments of Commission on sales of Common Stock (10,000) (32,438)
Payment of related party note payable (50,000) (200,000)
Proceeds from related party advances 220,000 200,000
---------- ----------
Net cash provided by financing activities 460,000 444,742
---------- ----------
Net (decrease) increase in cash (78,874) (138,626)
Cash, beginning of period 97,443 203,108
---------- ----------
Cash, end of period $ 18,569 $ 64,482
========== ==========
Supplemental cash flow information:
Interest paid $ -- $ --
Income taxes paid $ -- $ --
Common Stock & options issued for the acquisition of Intangible assets $ 22,422 $ --
Common Stock & options issued for Settlement of Liabilities $ 115,616 $ --
The accompanying notes are an integral part of
these condensed financial statements
5
CIRALIGHT GLOBAL, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
September 30, 2012
(Unaudited)
1. Background:
Ciralight Global, Inc. (the "Company") was incorporated in the State of Nevada
on February 26, 2009. The Company is in the business of designing, developing,
and distributing proprietary advanced day lighting systems for traditional
non-residential markets that benefit from natural lighting.
In April 2009, we entered into an Exchange of Stock for Assets Agreement with
Mr. George Adams, Sr. ("Adams Agreement") to acquire certain assets including,
but not limited to, a U.S. patent, patent applications pending in Canada,
Europe, Mexico and the United States, artwork, trademarks, equipment, furniture,
databases, technical drawings, promotional materials, trade names and inventory
parts and marketing rights related to the SunTracker One(TM) and SunTracker
Two(TM) daylighting products previously owned and distributed by Ciralight,
Inc., a Utah corporation, such assets having been foreclosed on by Mr. Adams,
who was the secured creditor of Ciralight, Inc. Ciralight, Inc. is a predecessor
to the Company, although we have no affiliation, contractual or otherwise, with
Ciralight, Inc. or any of its employees, officers or directors.
Ciralight, Inc., the company whose assets were foreclosed on by Mr. Adams, was
also in the business of designing, developing, and distributing proprietary
advanced day lighting systems for traditional non-residential markets that
benefit from natural lighting. Ciralight, Inc. ceased operations on March 14,
2009, following the foreclosure by Mr. Adams. Since the acquisition of the
assets was through a foreclosure, the former company and its officers remain
liable for the Ciralight Inc.'s debts and the Company has no financial
responsibility for those debts. None of the employees or management of Ciralight
Inc. are involved in the Company. The business operations of our Company are
located in Irvine, California and the Company operates with four employees, the
Chief Executive Officer, the Chief Financial Officer / Chief Operations Officer,
a warehouse manager and an executive assistant.
In April 2009, we acquired all of the above described assets from Mr. Adams,
except for the U.S. patent and the patent applications pending in Canada,
Europe, Mexico and the United States, in exchange for 3,200,000 shares of our
common stock and 1,000,000 shares of our Series A Preferred Stock. On December
15, 2009, we acquired the U.S. patent and patent applications pending in Canada,
Europe, Mexico and the United States from Mr. Adams in exchange for the issuance
by us of an additional 400,000 shares of our common stock and a convertible
promissory note in the amount of $250,000. The note is convertible into shares
of our common stock at a conversion rate of one share per $.25 of outstanding
principal and interest. As a result of this transaction, Mr. Adams is our
largest shareholder. Aside from our U.S. patent and our four pending patent
applications, we have no other patent rights.
6
CIRALIGHT GLOBAL, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
September 30, 2012
(Unaudited)
2. Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles in the United States of
America ("GAAP") for interim financial information and in conformity with the
instructions to Form 10-Q and Article 8-03 of Regulation S-X. Accordingly, these
unaudited condensed financial statements do not include all of the information
and footnotes required by GAAP for complete financial statements and, therefore,
should be read in conjunction with the financial statements and related notes
contained in the Company's most recent Annual Report on Form 10-K filed with the
Securities and Exchange Commission ("SEC").
The unaudited condensed financial statements included in this document have been
prepared on the same basis as the annual condensed financial statements and in
management's opinion, reflect all adjustments, including normal recurring
adjustments, necessary to present fairly the Company's financial position,
results of operations and cash flows for the interim periods presented. In the
opinion of management, the disclosures included in these financial statements
are adequate to make the information presented not misleading.
The results of operations for the nine month period ended September 30, 2012 is
not necessarily indicative of the results that the Company will have for any
subsequent quarter or full fiscal year.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. Actual results could differ
significantly from those estimates.
Reclassifications
Certain reclassifications have been made to prior period amounts to conform to
the current period presentations.
3. Liquidity and Operations:
The Company had a net loss of $851,548 for the nine months ended September 30,
2012. As of September 30, 2012, the Company had cash of approximately $18,569.
In addition, the Company had accounts receivable of approximately $99,600,
inventory on hand at a cost valuation of approximately $201,987, and accounts
payable of approximately $135,478.
7
CIRALIGHT GLOBAL, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
September 30, 2012
(Unaudited)
The Company has experienced losses primarily attributable to research,
development, marketing and other costs associated with the strategic plan to
develop as a world class supplier of sustainable lighting technologies. Cash
flows from operations have not been sufficient to meet our obligations.
Therefore, we have had to raise funds through several financing transactions. At
least until we reach breakeven volume in sales and develop and/or acquire the
capability to manufacture and sell our products profitably, we will need to
continue to rely on cash from external financing sources. Our operations during
the quarter ended September 30, 2012 and the year ended December 31, 2011 were
financed by product sales contracts, common stock issuances, as well as from
working capital reserves. In addition, on March 23, 2012, the company entered
into a revolving line of credit with the Adams family, a related party, in the
amount of up to $500,000. The line of credit is for a period of six months at an
interest rate of prime plus 2%. In the event that the loan balance is not fully
repaid at the end of the six month term, then the outstanding balance plus
accrued interest may be convertible to common stock at the option of the
Creditors at the rate of $0.10 per share.
In addition the company was recently approved by the Export-Import Bank of the
United States ("Ex-Im") to insure and finance transactions for international
Distributors and Dealers. This provides up to $270,000 in financing. Under this
Ex-Im program, the company will receive 90% of an international sale at the time
the order ships thus improving the company's cash flow. The international
Distributor and Dealer than have 90 days, instead of 21 days to pay back the
Ex-Im which is a good incentive for our Distributors and Dealers to sell more
product. When the Distributor or Dealer pays back Ex-Im, the balance of the
order is remitted to the Company. In addition, The company will continue to
obtain working capital by accessing capital markets. The company has orders in
hand at the start of the fourth quarter that total approximately $760,000. As
these orders ship the company will have a positive cash flow in the fourth
quarter. Management believes that with the increased level of sales, and the
Ex-Im financing the company will have sufficient liquidity to carry on
operations for the next twelve months. However, there can be no assurance that
management will be able to fully deliver on its business plans.
4. Summary of Significant Accounting Policies:
CASH AND CASH EQUIVALENTS - The Company considers all highly liquid debt
instruments with original maturities of three months or less to be cash
equivalents.
ACCOUNTS RECEIVABLE - The Company's accounts receivable are unsecured and the
Company is at risk to the extent such amounts become uncollectible. Management
continually monitors accounts receivable balances and provides for an allowance
for doubtful accounts at the time collection becomes questionable based on
payment history or age of the receivable. The Company sells products and
services generally on terms of receiving a 50% deposit prior to shipment and the
remaining 50% within 21 days of date of shipment. The Company charges nominal
financing fees on late payments. Accounts receivable are charged to the
8
CIRALIGHT GLOBAL, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
September 30, 2012
(Unaudited)
allowance for bad debts when the Company has exhausted all reasonable means of
collection. At September 30, 2012, management deemed that an allowance of
$23,200 should be recorded based on expected collections.
CONCENTRATION OF CREDIT RISK - Financial instruments that potentially subject
the Company to concentrations of credit risk consist of cash and trade accounts
receivable. Credit is extended to customers based on an evaluation of the
customer's financial condition. As of September 30, 2012 the top three
distributors had balances representing 30%, 15.5% and 12.8% respectively of the
Company's total accounts receivable balance. The Company maintains its cash
balances in the aggregate at various financial institutions. At times such
balances may exceed federally insured limits. The Company has not experienced
any losses in such accounts. The Company believes it is not exposed to any
significant credit risk on cash.
INVENTORY - Inventory consists of finished units, parts and packaging materials
and is stated at lower of historical cost or current cost. Management will
establish a reserve for damaged and discontinued inventory when determined
necessary. At September 30, 2012 no reserve was required.
PROPERTY AND EQUIPMENT - Property and equipment are stated at historical cost,
which consists of the net book value of the assets carried on the prior
company's books. Depreciation is computed over the estimated useful lives of the
assets using the straight-line method generally over a 3- to 5-year period.
Leasehold improvements will be amortized on the straight-line method over the
life of the related lease. Expenditures for ordinary maintenance and repairs are
charged to expense as incurred. Upon retirement or disposal of assets, the cost
and accumulated depreciation are eliminated from the account and any gain or
loss is reflected in the statement of operations. Depreciation expense for
property and equipment is recorded as either cost of goods sold or general and
administrative expense, depending on the use of the assets.
IMPAIRMENT OF LONG-LIVED ASSETS - The Company evaluates its long-lived assets
for impairment, in accordance with FASB ASC 360-10, when events or changes in
circumstances indicate that the related carrying amount may not be recoverable.
Impairment is considered to exist if the total estimated future cash flow on an
undiscounted basis is less than the carrying amount of the related assets. An
impairment loss is measured and recorded based on the discounted estimated
future cash flows. Changes in significant assumptions underlying future cash
flow estimates or fair values of assets may have a material effect on the
Company's financial position and results of operations. No such impairment was
indicated at September 30, 2012.
WARRANTY COSTS - The Company provides a ten-year warranty covering the labor and
materials associated with its installations. The Company (at its option) will
repair, replace or give credit for the original purchase price on any of its
products or parts. An accrual for a loss contingency has been made, since
9
CIRALIGHT GLOBAL, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
September 30, 2012
(Unaudited)
warranty expenses to date have been consistent and a reasonable estimate of
future expenses can be made, in accordance with FASB ASC 460-10-50-8 (c).
Changes in the liability for product warranty were as follows:
Liability at December 31, 2011 $ 9,476
Plus: Warranty Costs Accrued 57,450
Less: Amounts Paid (44,590)
--------
Liability at September 30, 2012 $ 22,336
========
STOCK-BASED COMPENSATION - The Company accounts for stock-based compensation
under the provisions of FASB ASC 718 "Compensation - Stock Compensation," which
requires the Company to measure the stock-based compensation costs of
share-based compensation arrangements based on the grant date fair value and
generally recognizes the costs in the financial statements over the employee's
requisite service period. Stock-based compensation expense for all stock-based
compensation awards granted was based on the grant date fair value estimated in
accordance with the provisions of FASB ASC 718.
The Company measures compensation expense for its non-employee stock-based
compensation under FASB ASC 505-10 and 50, "Accounting for Equity Instruments
that are Issued to Other Than Employees for Acquiring, or in Conjunction with
Selling, Goods or Services". The fair value of the option issued is used to
measure the transaction, as this is more reliable than the fair value of the
services received. The fair value is measured at the value of the Company's
common stock on the date that the commitment for performance by the counterparty
has been reached or the counterparty's performance is complete. The fair value
of the equity instrument is charged directly to compensation expense and
additional paid-in capital.
The Company recognizes stock compensation expense by recording employee
stock-based compensation using the fair value recognition provisions of
Accounting Standards Codification ("ASC") Topic 718 ("ASC 718") using the
modified prospective transition method, and recording non-employee stock-based
compensation expense in accordance with ASC Topic 505.
INCOME TAXES - The Company accounts for income taxes in accordance with
Accounting Standards Codification 740, INCOME TAXES ("ASC 740"). Deferred tax
assets and liabilities are determined based on the temporary differences between
the financial reporting and tax bases of assets and liabilities, applying
enacted statutory tax rates in effect for the year in which the differences are
expected to reverse. A valuation allowance is recorded when it is more likely
than not that some or all of the deferred tax assets will not be realized.
The Company uses a two-step approach to recognizing and measuring uncertain tax
positions accounted for in accordance with ASC 740. The first step is to
evaluate the tax position for recognition by determining if the weight of
10
CIRALIGHT GLOBAL, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
September 30, 2012
(Unaudited)
available evidence indicates that it is more likely than not that the position
will be sustained on audit, including resolution of related appeals or
litigation processes, if any. The second step is to measure the tax benefit as
the largest amount that is more likely than not to be realized upon settlement.
The Company will classify the liability for unrecognized tax benefits as current
to the extent that the Company anticipates payment (or receipt) of cash within
one year. There were no significant matters determined to be unrecognized tax
benefits taken or expected to be taken in a tax return that have been recorded
on the Company's condensed financial statements for the nine months ended
September 30, 2012.
The Company recognizes interest and penalties related to unrecognized tax
benefits in the tax provision. As of and for the nine months ended September 30,
2012, there were no interest or penalties related to income taxes that have been
accrued or recognized.
CONVERTIBLE NOTES PAYABLE - The Company accounts for its convertible notes
payable under the provisions of FASB ASC 470 (Staff Position No. APB 14-1
"Accounting for Convertible Debt Instruments that may be Settled in Cash upon
Conversion (including partial cash settlement"). FASB ASC 470 clarifies that
convertible debt instruments that may be settled in cash upon conversion
(including partial cash settlement) are not addressed by FASB ASC 470-20-65-1
(paragraph 12 of APB Opinion No. 14, "Accounting for Convertible Debt and Debt
Issued with Stock Purchase Warrants"). Additionally, FASB ASC 470 specifies that
issuers of such instruments should separately account for the liability and
equity components in a manner that will reflect the entity's nonconvertible debt
borrowing rate when interest cost is recognized in subsequent periods.
REVENUE RECOGNITION - The Company recognizes revenue from product sales when
persuasive evidence of an arrangement exists, shipment has occurred, the
seller's price to the buyer is fixed or determinable and collectability is
reasonably assured.
SHIPPING AND HANDLING COSTS - The Company includes shipping and handling costs
that are billed to our customers in revenue and the actual costs incurred for
shipping and handling are included in costs of goods sold in accordance with the
provisions of FASB ASC 605-45-45-20. The related costs are considered necessary
to complete the revenue cycle.
RESEARCH AND DEVELOPMENT EXPENSES - Research and development expenses are
charged to operations in the period incurred. The amount expensed for the nine
month period ended September 30, 2012 and 2011 were $52,824 and $31,833,
respectively.
11
CIRALIGHT GLOBAL, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
September 30, 2012
(Unaudited)
SELLING AND MARKETING EXPENSES - Selling and marketing expenses are expensed as
incurred. These expenses were $122,875 and $169,653 for the nine month period
ended September 30, 2012 and 2011, respectively.
GENERAL AND ADMINISTRATIVE EXPENSES - General and administrative expenses are
expensed as incurred. These expenses were $706,997 and $582,534 for the nine
month periods ended September 30, 2012 and 2011, respectively.
EARNINGS PER SHARE - Earnings per share is computed in accordance with the
provisions of Financial Accounting Standards (FASB) Accounting Standards
Codification (ASC) Topic 260 (SFAS No. 128, "EARNINGS PER Share"). Basic net
income (loss) per share is computed using the weighted-average number of common
shares outstanding during the period. Diluted earnings per share is computed
using the weighted-average number of common shares outstanding during the
period, as adjusted for the dilutive effect of the Company's outstanding
convertible preferred shares using the "if converted" method and dilutive
potential common shares. Potentially dilutive securities include warrants,
convertible preferred stock, restricted shares, and contingently issuable
shares.
COMPREHENSIVE INCOME (LOSS) - FASB ASC Topic 220 (Statement of Financial
Accounting Standards No. 130, "REPORTING COMPREHENSIVE INCOME") establishes
standards for reporting comprehensive income (loss) and its components in a
financial statement that is displayed with the same prominence as other
financial statements. Comprehensive income (loss), as defined, includes all
changes in equity during the period from non-owner sources, such as foreign
currency translation adjustments.
5. Balance Sheet Information:
Cash consisted of the following at September 30, 2012:
Checking accounts $ 13,746
Merchant Account 4,823
--------
Total Cash $ 18,569
========
Inventory consisted of the following at September 30, 2012:
Finished units and components $201,987
--------
Total Inventory $201,987
========
Prepaid expenses and other current assets consist of the following at September
30, 2012:
Purchase order prepaid deposits $ 67,324
Prepaid expenses 23,039
Employee Advances 2,633
--------
Total prepayments and deposits $ 92,996
========
12
CIRALIGHT GLOBAL, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
September 30, 2012
(Unaudited)
Purchase order prepaid deposits represent the prepayment required under the
agreements with several suppliers of our inventory components.
Property and equipment are stated at cost, net of accumulated depreciation.
Expenditures for maintenance and repairs are expensed as incurred; additions,
renewals and betterments are capitalized. Depreciation of property and equipment
is provided using the straight-line method with estimated lives ranging from 3
to 5 years as presented in the following schedule.
Property and equipment consist of the following at September 30, 2012:
Furniture and equipment $ 10,513
Vehicles 2,771
Tooling costs 24,683
Convention Display 1,817
---------
Property & Equipment 39,784
Less Accumulated depreciation (35,239)
---------
Total property & equipment, net $ 4,545
=========
Depreciation expense for the nine month period ended September 30, 2012 was
$2,382 and was recorded as cost of goods sold. The use of the above property and
equipment determines if the depreciation is recorded as cost of goods sold or as
general and administrative expenses.
Patent costs are stated at cost, net of accumulated amortization. Amortization
of patent costs is provided using the straight-line method with estimated lives
of 20 years. As of September 30, 2012, capitalized patent costs are as follows:
Patent and patent applications $ 52,302
Less Accumulated amortization (4,641)
--------
Total patent costs, net $ 47,661
========
Amortization expense for the nine month period ended September 30, 2012 was
$1,248, related to the Company's patent rights and was recorded as cost of goods
sold.
Software costs are stated at cost, net of accumulated amortization. Amortization
of software assets is provided using the straight-line method with estimated
lives of 5 years. As of September 30, 2012, capitalized software costs are as
follows:
Software $ 22,422
Less Accumulated amortization (1,121)
--------
Total software, net $ 21,301
========
13
CIRALIGHT GLOBAL, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
September 30, 2012
(Unaudited)
Total intangibles at September 30, 2012 consist of the following:
Patent and patent applications, net $ 47,661
Software, net 21,301
--------
$ 68,962
========
Amortization expense for the nine month period ended September 30, 2012 was
$1,121, related to the Company's software and was recorded as cost of goods
sold.
Advances Payable-related party - George Adams advanced the company $90,000
during the first quarter of 2012. This was partially offset by a repayment of
$50,000 to Terry Adams on February 1, 2012. Terry Adams advanced the company
$90,000 during the second quarter of 2012. During the third quarter George Adams
advanced the company $15,000 and Terry Adams advanced the company $25,000. In
addition, Fred Feck Executed a note for $33,000 on June 30, 2012 in exchange for
rent for the warehouse occupied the company. At September 30, 2012 the Advances
Payable- related party balance was $503,000. Related accrued interest of $23,078
is included in the Other Payables amount on the Company's financial statements.
On March 23, 2012, the company entered into a revolving line of credit with the
Adams family, a related party, in the amount of up to $500,000. The line of
credit is for a period of six months at an interest rate of prime plus 2%. In
the event that the loan balance is not fully repaid at the end of the six month
term, then the outstanding balance plus accrued interest may be convertible to
common stock at the option of the creditors at the rate of $0.10 per share. The
principle balance owed as of September 30, 2012 was $470,000.
Accrued Expenses, Related Party - As of September 30, 2012, the Company had
accrued expenses due to related parties of the following:
Accrued Expenses - Related Party
Royalty fees - Related Party $ 41,064
Accrued Interest - Related Party 23,078
--------
Total Other Payables - Related Party $ 64,142
========
Royalty Fees Payable - The Adams Agreement described in Note 1 above, granted
Mr. Adams a royalty fee of $20.00 for each SunTracker One(TM) and SunTracker
Two(TM) unit or any future units that are based on the patent rights we acquired
from him. The maximum royalty fees payable under the Adams Agreement is
$2,000,000 based on the sale of 100,000 units. At September 30, 2012 accrued
royalties in the amount of $41,064, related to our sale of 2,053 units.
Other Payables - As of September 30, 2012, the Company had Other Payables
consisting of the following:
Other Payables
Accrued Warranty Expense $ 22,336
Accrued Stock Payable 85,160
Accrued Sales Tax 2,182
--------
Total Other Payables $109,678
========
14
CIRALIGHT GLOBAL, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
September 30, 2012
(Unaudited)
Deferred Revenue - Shipments that were staged and ready for shipment were
recorded as deferred revenue. Upon shipment to customers, the sale will be
recorded as revenue. Deferred Revenue totaled $107,946 at September 30, 2012.
6. Stockholders' Equity:
Common stock:
The Company is authorized to issue up to 50,000,000 shares of common stock with
a par value of $0.001, under terms and conditions established by the Board of
Directors.
The Company had 14,944,067 issued and outstanding common stock shares as of
September 30, 2012. Details of the issued and outstanding common stock shares
are shown below.
Common stock shares issued as of September 30, 2012 are as follows:
Amount of
Description Shares Issued
----------- -------------
Stock issued for acquisition of assets 3,600,000
Stock issued for legal services (founder's shares) 240,000
Stock issued for consulting services (founder's shares) 240,000
Stock issued as compensation (founder's shares) 1,138,182
Stock issued to private offering subscribers 7,177,178
Stock issued for compensation and services rendered 743,358
Stock issued for conversion of notes payable 1,803,349
Stock issued for exercise of stock options 2,000
----------
Total 14,944,067
==========
During the three month period ended March 31, 2012, a total of 21,500 shares of
common stock were issued for services rendered and valued at the aggregate
amount of $11,825.
During the three month period ended June 30, 2012, a total of 181,818 shares of
common stock were issued, at $.55 per share, from the sales of our stock through
a Private Placement Offering.
During the three month period ended September 30, 2012, a total of 400,000
shares of common stock and warrants were issued, at $.50 per unit, from the
sales of our stock and warrants through a Private Placement Offering. In
addition, 18,182 shares of common stock were issued in exchange for the source
code provided by one of the Company's engineers.
15
CIRALIGHT GLOBAL, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
September 30, 2012
(Unaudited)
Preferred stock:
The Company is authorized to issue 10,000,000 shares of preferred stock, par
value $0.001 per share. Currently, we have 1,000,000 shares of preferred stock
issued and outstanding. As part of the purchase contract for the acquisition of
assets, we issued 1,000,000 shares of Series A Preferred Stock to the seller of
those assets, Mr. George Adams, Sr. The Series A Preferred Stock has the
following rights and references:
Voting Rights: As long as the holder of our Series A Preferred Stock owns
1,000,000 shares of the Company's Series A Preferred Stock and at least
3,200,000 shares of the Company's common stock, such holder shall have the right
to vote 51% of the total votes necessary for the election of directors and for
any acquisition or merger transaction.
Redemption Rights: The Company will have the right to redeem shares of the
Series A Preferred Stock by paying Mr. Adams $1.00 per share. Such redemption
may occur any time the Company has money legally available for such redemption.
Shares Issued: 1,000,000 shares have been issued to George Adams, Sr. No other
shares of preferred stock shall be issued by the Company that would grant the
holder(s) equal or superior rights to the Series A Preferred Stock.
7. Stock Options and Warrants:
On December 30, 2010, the Company's Board of Directors approved and adopted the
Company's 2010 Employee and Consultant Stock Incentive Plan ("Plan") and
reserved a total of 800,000 shares of common stock for issuance pursuant to the
Plan. The purpose of this Plan is to provide incentives to attract, retain and
motivate eligible persons whose present and potential contributions are
important to the success of the Company by offering them an opportunity to
participate in the Company's future performance through awards of Options,
Restricted Stock and Stock Bonuses.
On December 30, 2010, the Board of Directors granted a total of 605,000 options
at an exercise price of $.425 per share, exercisable over five years from the
date of grant. We entered into eight stock option agreements with five
individuals in recognition of various services performed for the Company. The
individuals have the option to purchase a certain amount of shares of common
stock at $.425 per share. The options expire on December 15, 2015. Jeffrey S.
Brain, the Company's President, Chief Executive Officer and Director, entered
into four stock option agreements relating to assisting the Company with its
registration process and becoming a publicly traded Company, entering into a
certain contract with a major customer and for serving on the Company's board of
directors. Mr. Brain was granted options to purchase an aggregate of 275,000
shares of common stock. Frederick Feck, the Company's Corporate Secretary and
Director, entered into a stock option agreement for serving on the Company's
board of directors and was granted options to purchase 100,000 shares of common
16
CIRALIGHT GLOBAL, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
September 30, 2012
(Unaudited)
stock. Jacqui Matsumoto, a Company employee, entered into a stock option
agreement for significant contributions to the Company and was granted options
to purchase 30,000 shares of common stock. David E. Wise, the Company's
corporate securities counsel, entered into a stock option agreement for legal
services to the Company and was granted options to purchase 100,000 shares of
common stock. Terry Adams, a Company founder and investor, entered into a stock
option agreement for significant contributions to the Company and was granted
options to purchase 100,000 shares of common stock.
Stock options exercisable into an aggregate of 978,900 shares of the Company's
common stock were outstanding on December 31, 2011, of which 878,900 were vested
on the date granted and 100,000 are scheduled to vest during 2012. No options
were exercised during the year ended December 31, 2010. The Black-Scholes
option-pricing model was used to estimate the option fair values , in accordance
with the provisions of Statement of Financial Accounting Standards No. 148,
"Accounting for Stock-Based Compensation -- Transition and Disclosure." This
option-pricing model requires a number of assumptions, of which the most
significant are, expected stock price volatility, the expected pre-vesting
forfeiture rate and the expected option term (the amount of time from the grant
date until the options are exercised or expire). Since the Company's stock does
it have an extended history of stock prices or volatility, expected volatility
and average contractual life variables were estimated utilizing a weighted
average of comparable published volatilities and contractual lives based on
industry comparables. Expected pre-vesting forfeitures were estimated based on
expected employee turnover. The fair value of options granted during the year
ended December 31, 2011 was estimated as of the grant date using the
Black-Scholes option pricing model with the following assumptions: a dividend
yield of zero percent, an expected volatility of between 70.5% and 71.5%, a
risk-free interest rate of 0% and a remaining contractual life of between 1.0
and 5.0 years.
In April 2011, in consideration of the Adams agreeing to offer the Company
advances up to $500,000, the Company agreed to grant the Adams 300,000 stock
options at an exercise price of $.50 per option that will be exercisable over
five years. The options will vest over one year at 75,000 options per quarter.
In addition, 2,000 stock options were exercised at $.75 per option during April
2011.
On January 1, 2012, the Board of Directors granted a total of 400,000 options at
an exercise price of $0.47 per share, exercisable over five years from the date
of grant. The Company entered into stock option agreements with three
individuals in recognition of serving on the Company's board during 2011. The
individuals have the option to purchase shares of common stock at $0.47 per
share, which expires on December 31, 2016. Jeffrey S. Brain, the Company's
President, Chief Executive Officer and Director, Frederick Feck, the Company's
Corporate Secretary and Director and Terry Adams, Company Director, were each
granted options to purchase 100,000 shares of common stock. In addition, David
E. Wise, the Company's corporate securities counsel, entered into a stock option
agreement for legal services to be performed for the Company during 2012. Mr.
Wise was granted options to purchase 100,000 shares of common stock.
17
CIRALIGHT GLOBAL, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
September 30, 2012
(Unaudited)
On June 25, 2012 the Board of Directors approved a compensation plan that would
grant each Director 50,000 options for each year of service. The options accrue
monthly and are issued quarterly with an exercise price of 85% of the stock
value. The options expire five years after being issued. The Board of Directors
compensation plan commenced May 1, 2012. The financial statements include
options granted to the Board of Directors for May through September 2012 as of
September 30, 2012 with an exercise price of $.4675 per share and expiring
September 30, 2017. In addition, the Board granted 24,000 options to Jarett
Fenton as a bonus with an exercise price of $.4675 on May 1, 2012. The options
expire April 30, 2017.
The following table summarizes the activity of stock options for the nine months
ended September 30, 2012:
Number of Shares Weighted Average
Outstanding Exercise Price
----------- --------------
Balance, December 31, 2011 978,000 $ .47
Options granted 474,000 $ .47
Options Exercised -- --
Options forfeited or expired -- --
Balance, September 30, 2012 1,452,900 $ .47
The weighted average fair values of options granted during the quarter ended
September 30, 2012 was $.25 per option. The value recorded for the options
granted during the first quarter was $34,597, during the second quarter was
$25,602 and during the third quarter was $38,593.
The following table summarizes the activity of warrants for the nine months
ended September 30, 2012:
Number of Warrants Weighted Average
Outstanding Exercise Price
----------- --------------
Balance, December 31, 2011 -- --
Warrants granted 400,000 $ .50
Warrants Exercised -- --
Warrants forfeited or expired -- --
Balance, September 30, 2012 400,000 $ .50
During the nine months ended September 30, 2012, the company granted 400,000
stock purchase warrants through the sale of a unit that included Common Stock
and Warrants pursuant to a Private Placement Offering.
18
CIRALIGHT GLOBAL, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
September 30, 2012
(Unaudited)
8. Commitments and Contingencies:
Operating Leases -- The Company has not entered into any long term leases. The
Company is currently leasing approximately 3,500 square feet of warehouse space
in Corona, California, on a verbal month to month basis from one of our
Directors, Frederick Feck. Commencing October 1, 2009, the Company paid $3,000
per month for the Corona, California warehouse space. In the second quarter of
2012, the company moved its executive offices and accounting functions to
operate out of the warehouse in Corona. The Company has chosen to rent a small
office space in Sherman Oaks, California, on a month to month basis for $625 per
month plus $30 for monthly utilities.
In February 2010, the Company entered into an eighteen month services agreement
with a construction data company regarding Smart BIM; the construction and
maintenance of databases relating to customers, sales leads and marketing
strategies. Before the first payment was made, SmartBim sold their BIM operation
to a third party. Ciralight determined that the organizational changes that the
contractor made in their operation made the contract non viable. As such, the
Company terminated the agreement on September, 20 2011 in favor of a one-time
payment to the contractor of $2,660.
The Company, as of September 30, 2012 has no additional financial commitments
that would represent long term commitments on behalf of the Company.
Capital Leases - The Company has not entered into any kind of capital leases for
furnishings, equipment or for any other purposes.
Prepaid Inventory - Ciralight has agreements with several inventory component
suppliers generally provide that between 50% and 60% of the purchase order price
is due upon the placement of an order, with the remaining balance due upon
completion and shipment of the order, normally within 30 days. Purchase order
prepaid deposits are included in the balance sheet as Prepaid expenses and other
current assets. As of September 30, 2012, purchase order prepaid deposits
totaled $66,825 with several of our major suppliers.
9. Related Party Transactions:
As described in Note 8, above, the Company leases warehouse space from one of
our directors, Frederick Feck.
In January 2010, we entered into a nonexclusive distributorship agreement with
Chaparral Green Energy Solutions, LLC, an entity in which our securities
attorney, David E. Wise, Esq., owns a 50% equity interest. This non-exclusive
dealer agreement with the Company is to sell products in Texas and is on the
same terms, conditions and pricing as other dealer agreements. Thus, Mr. Wise's
company will not receive any beneficial or special treatment over our other
dealers or distributors.
19
CIRALIGHT GLOBAL, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
September 30, 2012
(Unaudited)
The terms and conditions of the dealer agreement with Chaparral Green Energy
Solutions, LLC are the same as for the other dealer and distributorship
agreements. Therefore, the agreement with Chaparral Green Energy Solutions, LLC
does not contain preferential or more favorable terms or conditions than
agreements with our other dealers or distributors.
In January 2010, we also entered into non-exclusive dealer agreements with both
Green Tech Design-Build, Inc., an entity located in Salt lake City, Utah, and
Eco-Smart, Inc., an entity located in Sarasota, Florida. In addition, we entered
into an exclusive international distribution agreement with Zeev Shimon & Sons,
Ltd., an entity located in Petah-Tikva, Israel.
As of September 30, 2012 the Related party line of credit due to George and
Terry Adams was $255,000 and $215,000, respectively. These proceeds have been
used for short term working capital purposes. Interest payable of $22,636 has
been recorded as of September 30, 2012, making a total amount due of $492,636.
On April 1, 2011, in consideration of the Adams notes to offer the Company, the
Company agreed to grant the Adams 300,000 stock options at an exercise price of
$.50 per option that will be exercisable over five years. The options will vest
over one year at 75,000 options per quarter. Additionally, the company executed
a note payable to Vera Cruz Properties, which is owned by a related party, Fred
Feck, who is a board member and Secretary of the company in exchange for accrued
rent on the space the company rents from Vera Cruz in the amount of $33,000 plus
$443 in interest. Fred Feck agreed to accrue the monthly rent in order to assist
the company with its cash flow. The note was executed on June 30, 2012, with
interest at prime plus two, all due and payable in one year. The note is
convertible to common stock at option of the holder at the price of $.50 per
share.
10. Share Based Compensation:
During the nine months ending September 30, 2012 there were shares issued to the
Board of Directors for their services and to Smokey Robinson for his services
related to Marketing and Public Relations. Each of the six Board Members
receives 50,000 common stock shares per year with the shares accrued monthly and
issued quarterly. In addition, Smokey receives 50,000 shares for his marketing
and public relation services. These are also accrued monthly and issued
quarterly.
11. Legal Matters:
We have no legal matters pending against us. On August 15, 2011 we filed a
collection action against Nature's Lighting for their failure to pay for product
purchased from us. The amount owed to us is $39,000 plus legal fees and costs.
On January 30, 2012 we were successful in obtaining a default judgment and now
are proceeding to collect the balance owed to us.
20
CIRALIGHT GLOBAL, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
September 30, 2012
(Unaudited)
12. Change in Officers and Directors:
In April 2012 Jarett Fenton was hired to serve as a contract Chief Financial
Officer. In May 2012, the Board added Terry Adams, Larry Eisenberg, Richard Katz
and William "Smokey" Robinson Jr. to the Board of Directors. Terry Adams was
appointed by the Board to serve as the Chairman of the Board. At the June 25,
2012 Shareholder meeting all of the Board of Directors were elected to new
terms. The Board thereafter confirmed the officers to be Terry Adams, as
Chairman of the Board, Jeff Brain as CEO, President and Chief Operating Officer,
Jarett Fenton as Chief Financial Officer and Fred Feck as Secretary.
13. Subsequent Events:
The Company has performed an evaluation of subsequent events pursuant to ASC 855
and is not aware of any subsequent events which would require recognition or
disclosure in the financial statements other than as follows.
In November 2012 the company received approval by EX Bank to insure the
collection of sales from international sales up to $500,000 and to finance sales
to the Company's distributors up to $270,000.
14. New Accounting Pronouncements
In April 2011, the Financial Accounting Standards Board (FASB) issued ASU
2011-04, FAIR VALUE MEASUREMENT (TOPIC 820): AMENDMENTS TO ACHIEVE COMMON FAIR
VALUE MEASUREMENT AND DISCLOSURE REQUIREMENTS IN U.S. GAAP AND IFRS. This ASU
amends current fair value measurement and disclosure guidance to include
increased transparency around valuation input and investment categorization. ASU
2011-04 is effective for fiscal years and interim periods beginning after
December 15, 2011, with early adoption not permitted. The adoption of ASU
2011-04 in the second quarter of 2012 did not have an impact on our financial
position, results of operations, or cash flows.
In June 2011, the FASB issued ASU 2011-05, COMPREHENSIVE INCOME (TOPIC 220):
PRESENTATION OF COMPREHENSIVE INCOME. ASU 2011-05 allows an entity to present
components of net income and other comprehensive income in one continuous
statement, referred to as the statement of comprehensive income, or in two
separate, but consecutive statements. ASU 2011-05 eliminates the option to
present the components of other comprehensive income as part of the statement of
changes in stockholders' equity. In December 2011, the FASB issued ASU 2011-12
"Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments
21
CIRALIGHT GLOBAL, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
September 30, 2012
(Unaudited)
to the Presentation of Reclassifications of Items Out of Accumulated Other
Comprehensive Income in Accounting Standards Update No. 2011-05." ASU 2011-12
deferred the effective date of the specific requirement to present items that
are reclassified out of accumulated other comprehensive income to net income
alongside their respective components of net income and other comprehensive
income. While the new guidance changes the presentation of comprehensive income,
there are no changes to the components that are recognized in net income or
other comprehensive income under current accounting guidance. ASU 2011-05 is
effective for fiscal years and interim periods beginning after December 15, 2011
and must be applied retrospectively. The adoption of ASU 2011-05 in the second
quarter of 2012 did not have an impact on our financial position, results of
operations, or cash flows.
In December 2011, the FASB issued ASU 2011-11, Balance Sheet (Topic 210),
DISCLOSURES ABOUT OFFSETTING ASSETS AND LIABILITIES, which requires companies to
disclose information about financial instruments that have been offset and
related arrangements to enable users of their financial statements to understand
the effect of those arrangements on their financial position. Companies will be
required to provide both net (offset amounts) and gross information in the notes
to the financial statements for relevant assets and liabilities that are offset.
ASU 2011-11 is effective for fiscal years, and interim periods within those
years, beginning on or after January 1, 2013. We do not expect the adoption of
ASU 2011-11 in the first quarter of 2013 to have an impact on our financial
position, results of operations, or cash flows.
22
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
CAUTIONARY FORWARD - LOOKING STATEMENT
The following discussion should be read in conjunction with our financial
statements and related notes.
Certain matters discussed herein may contain forward-looking statements that are
subject to risks and uncertainties. Such risks and uncertainties include, but
are not limited to, the following:
* the volatile and competitive nature of our industry,
* the uncertainties surrounding the rapidly evolving markets in which we
compete,
* the uncertainties surrounding technological change of the industry,
* our dependence on its intellectual property rights,
* the success of marketing efforts by third parties, o the changing
demands of customers and
* the arrangements with present and future customers and third parties.
Should one or more of these risks or uncertainties materialize or should any of
the underlying assumptions prove incorrect, actual results of current and future
operations may vary materially from those anticipated.
THE FOLLOWING DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL
CONDITION OF CIRALIGHT GLOBAL, INC., FOR THE NINE MONTH PERIOD ENDED SEPTEMBER
30, 2012 (UNAUDITED) SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL
STATEMENTS, AND THE NOTES TO THOSE FINANCIAL STATEMENTS THAT ARE INCLUDED IN
ITEM 1 ELSEWHERE IN THIS FILING. REFERENCES TO "WE," "OUR," OR "US" IN THIS
SECTION REFERS TO THE COMPANY AND ITS SUBSIDIARIES. OUR DISCUSSION INCLUDES
FORWARD-LOOKING STATEMENTS BASED UPON CURRENT EXPECTATIONS THAT INVOLVE RISKS
AND UNCERTAINTIES, SUCH AS OUR PLANS, OBJECTIVES, EXPECTATIONS AND INTENTIONS.
ACTUAL RESULTS AND THE TIMING OF EVENTS COULD DIFFER MATERIALLY FROM THOSE
ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF A NUMBER OF
FACTORS, INCLUDING THOSE SET FORTH UNDER THE RISK FACTORS, FORWARD-LOOKING
STATEMENTS AND BUSINESS SECTIONS IN THIS PROSPECTUS. WE USE WORDS SUCH AS
"ANTICIPATE," "ESTIMATE," "PLAN," "PROJECT," "CONTINUING," "ONGOING," "EXPECT,"
"BELIEVE," "INTEND," "MAY," "WILL," "SHOULD," "COULD," AND SIMILAR EXPRESSIONS
TO IDENTIFY FORWARD-LOOKING STATEMENTS.
23
OVERVIEW
We are a manufacturer and wholesaler of "advanced skylights" for use in
warehouses, schools, retail stores, airports, military installations and
residential buildings. We renamed our products as of January 1st, 2011. Our
products are no longer referred to as SunTrackerOne, SunTrackerTwo, and
SunTrackerThree. Instead, our 4'x4' SunTracker is now called the SunTracker 400,
(with an option of a single or triple mirror), and our 4'x8' SunTracker is now
called the SunTracker 800. When our smaller model for homes and classrooms is
released, it will be called the SunTracker 200. These new model names are
simple, intuitive, and reinforce the brand name and image.
We were incorporated in the state of Nevada on February 26, 2009, under the name
"Ciralight West, Inc." On March 13, 2009, we changed our name to "Ciralight
Global, Inc." In April 2009, we entered into an Exchange of Stock for Assets
Agreement with Mr. George Adams, Sr. to acquire certain assets including, but
not limited to, a United States patent, patent applications pending in Canada,
Europe, Mexico and the United States, artwork, trademarks, equipment, furniture,
databases, technical drawings, promotional materials, trade names and inventory
parts and marketing rights related to the Suntracker One(TM) and Suntracker
Two(TM) daylighting products previously owned and distributed by Ciralight,
Inc., a Utah corporation, such assets having been foreclosed on by Mr. Adams,
who was the secured creditor of Ciralight, Inc. We did not acquire any equity
securities, debts, liabilities or financial obligations of Ciralight, Inc., the
Prior Company. Ciralight, Inc. is a predecessor to Ciralight Global, Inc.,
although we have no affiliation, contractual or otherwise, with Ciralight, Inc.
or any of its employees, officers or directors. Ciralight, Inc. ceased
operations on January 27, 2009.
In April 2009, we acquired all of the above described assets from Mr. Adams,
except for the United States patent and the patent applications pending in
Canada, Europe, Mexico and the United States, in exchange for 3,200,000 shares
of our common stock and 1,000,000 shares of our Series A Preferred Stock. In
December 2009, we acquired the United States patent and the patent applications
pending in Canada, Europe, Mexico and the United States from Mr. Adams in
exchange for the issuance by us of an additional 400,000 shares of our common
stock and a convertible promissory note in the amount of $250,000. The
promissory note we issued to Mr. Adams is convertible into shares of our common
stock at a conversion rate of one share per $.25 of outstanding principal and
interest. As a result of this transaction, Mr. Adams is our largest shareholder
and has voting control over us.
As described in the above paragraphs, Ciralight, Inc. is a predecessor to
Ciralight Global, Inc., since the major portion of the business and assets of
Ciralight, Inc. were acquired by Ciralight Global, Inc. in a series of related
successions in each of which the acquiring person or entity acquired the major
portion of the business and assets of Ciralight, Inc.
24
In order to provide working capital, Ciralight Global, Inc. sold common stock
through a private placement that raised $1,300,000 with the sale of 5,200,000
shares at a price of $0.25 per share from April 30, 2009 to January 15, 2010.
During the third and fourth quarters of 2010, the Company sold common stock
through a private placement that raised $222,000 with the sale of 444,000 shares
at a price of $0.50 per share. During 2011, the Company sold common stock
through a private placement that raised $475,680 with the sale of 951,360 shares
at a price of $0.50 per share. During the nine months ending September 30, 2012
the company has sold common stock to one of its new distributors in the amount
of $100,000 for a sale of 181,818 shares and sold common stock and warrants to a
new shareholder in the amount of $200,000.
RISKS, UNCERTAINTIES AND TRENDS RELATING TO THE COMPANY AND INDUSTRY
The industrial lighting industry is intensely competitive. We have numerous
competitors in the United States and elsewhere. Several of these competitors
have already successfully marketed and commercialized products that compete with
our products. Our success is dependent up our ability to effectively and
profitably produce, market and sell our products. Our business strategy and
success is dependent on the skills and knowledge of our management team and
consultants. The marketability and profitability of our products is subject to
unknown economic conditions, which could significantly impact our business,
financial condition, the marketability of our products and our profitability. We
are vulnerable to the current economic crisis which may negatively affect our
profitability. Our success depends, in part, on the quality of our products.
Our SunTracker(TM) products provide natural daylighting that is a key component
in many current construction and existing structures. SunTrackers(TM) are
maintenance free, powered by the sun and completely self-contained. We are
currently marketing our SunTracker(TM) products to warehouse owners, roofing
companies, shopping centers, schools and military installations in the United
States. We are working on establishing sales in Canada, Mexico and overseas. The
market for advanced skylights is growing year over year due to pressures on
building owners, tenants, schools and government agencies to reduce energy
consumption and expense. The "green" movement, carbon footprint ideology and
other environmental initiatives should provide increased growth in our market
segment.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our management's discussion and analysis of our financial condition and results
of operations are based on our condensed financial statements, which have been
prepared in accordance with generally accepted accounting principles in the
United States of America ("GAAP") for interim financial information and in
conformity with the instructions to Form 10-Q and Article 8-03 of Regulation
S-X. Accordingly, these unaudited condensed financial statements do not include
all of the information and footnotes required by GAAP for complete financial
statements and, therefore, should be read in conjunction with the financial
25
statements and related notes contained in the Company's most recent Annual
Report on Form 10-K filed with the Securities and Exchange Commission ("SEC").
The unaudited condensed financial statements included in this document have been
prepared on the same basis as the annual condensed financial statements and in
management's opinion, reflect all adjustments, including normal recurring
adjustments, necessary to present fairly the Company's financial position,
results of operations and cash flows for the interim periods presented. In the
opinion of management, the disclosures included in these financial statements
are adequate to make the information presented not misleading.
The results of operations for the nine month period ended September 30, 2012 is
not necessarily indicative of the results that the Company will have for any
subsequent quarter or full fiscal year.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. Actual results could differ
significantly from those estimates.
Reclassifications
Certain reclassifications have been made to prior periods amounts to conform to
the current periods presentations.
See Note 4, "Summary of Significant Accounting Policies" to our condensed
consolidated financial statements included in this Quarterly Report on Form 10-Q
for a full description of accounting policies.
See Note 14. "Recent Accounting Pronouncements," to our condensed consolidated
financial statements included in this Quarterly Report on Form 10-Q for a
summary of recent accounting pronouncements.
RESULTS OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 30, 2012 COMPARED TO THREE
MONTHS ENDED SEPTEMBER 30, 2011
NET SALES. Net sales decreased from $246,013 for the three months ended
September 30, 2011 to $105,715 for the three months ended September 30, 2012.
This decrease in sales was due to an interruption in our product supply due to
the transition by the company that manufacturers our GPS Controller which closed
its factory near Houston where they were making our product to their factory in
Phoenix. As a result of this transition, the company did not receive any new
product from July 1, 2012 until August 30, 2012 when it received its first
26
shipment in the quarter. As a result of this interruption and concerns over
production errors made by the manufacturer, Ciralight in mid September
terminated its relationship with the manufacturer and elected to move production
of its GPS Controllers to a new supplier. The new manufacturer is expected to be
in full production in the fourth quarter and will be able to fill back orders
that have accumulated. With the back order of sales to be fulfilled in the
fourth quarter we expect that fourth quarter sales will be sufficient to
overcome this decrease in sales and by the end of the 2012 the company should
exceed 2011 total sales.
COST OF SALES. Cost of sales decreased from $149,540 for the three months ended
September 30, 2011 to $67,905 for the three months ended September 30, 2012.
Cost of sales consists of the cost of our products with related shipping costs.
The decrease in our third quarter cost of sales is due to the interruption in
product availability experienced as a result of a transition by our GPS
Manufacturer which closed the factory where they made our product. The
interruption in product availability caused a decrease in sales which decreased
our cost of sales.
GROSS PROFIT. Gross profit decreased from $96,473 for the three months ended
September 30, 2011 to $37,810 for the three months ended September 30, 2012.
This decrease in gross profit was due to an interruption in our product supply
due to the transition by the company that manufacturers our GPS Controller which
closed its factory near Houston where they were making our product to their
factory in Phoenix. As a result of this transition, the company did not receive
any new product from July 1, 2012 until August 30, 2012 when it received its
first shipment in the quarter. As a result of this interruption and concerns
over production errors made by the manufacturer, Ciralight in mid September
terminated its relationship with the manufacturer and elected to move production
of its GPS Controllers to a new supplier. The new manufacturer is expected to be
in full production in the fourth quarter and will be able to fill back orders
that have accumulated. With the back order of sales to be fulfilled in the
fourth quarter we expect that fourth quarter sales will be sufficient to
overcome this decrease in sales and by the end of the 2012 the company should
exceed 2011 total sales.
OPERATING EXPENSES. Our operating expenses consist of research and development
expenses, selling and marketing expenses and general and administrative
expenses. Total operating expenses increased from $275,146 for the three months
ended September 30, 2011 to $311,640 for the three months ended September 30,
2012. This increase was due to the addition of direct sales staff, the hiring of
a CFO, and compensation to the Board of Directors which increased from two
members to nine members being recorded quarterly, while in the past it was
recorded at the end of each year.
General and administrative expenses increased from $208,116 for the three months
ended September 30, 2011 to $249,008 for the three months ended September 30,
2012. This increase was due to the addition of direct sales person, and
compensation to the Board of Directors which increased from two members to six
members being recorded quarterly, while in the past it was recorded at the end
of each year. The compensation to the Board of Directors is in the form of stock
and options and not cash payments.
27
Selling and marketing expenses decreased slightly from $66,807 for the three
months ended September 30, 2011 to $24,376 for the three months ended September
30, 2012.
Research and Development expenses increased from $223 for the three months ended
September 30, 2011 to $38,255 for the three months ended September 30, 2012.
INCOME TAXES. For the three months ended September 30, 2012, management has
decided not to record the tax benefit.
RESULTS OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 2012 COMPARED TO NINE
MONTHS ENDED SEPTEMBER 30, 2011
NET SALES. Net sales decreased from $823,139 for the nine months ended September
30, 2011 to $500,849 for the nine months ended September 30, 2012. This decrease
in sales was due to an interruption in our product supply due to the transition
by the company that manufacturers our GPS Controller which closed its factory
near Houston where they were making our product to their factory in Phoenix. As
a result of this transition, the company did not receive any new product from
July 1, 2012 until August 30, 2012 when it received its first shipment in the
quarter. As a result of this interruption and concerns over production errors
made by the manufacturer, Ciralight in mid September terminated its relationship
with the manufacturer and elected to move production of its GPS Controllers to a
new supplier. The new manufacturer is expected to be in full production in the
fourth quarter and will be able to fill back orders that have accumulated. With
the back order of sales to be fulfilled in the fourth quarter we expect that
fourth quarter sales will be sufficient to overcome this decrease in sales and
by the end of the 2012 the company should exceed 2011 total sales.
COST OF SALES. Cost of sales decreased from $586,974 for the nine months ended
September 30, 2011 to $441,163 for the nine months ended September 30, 2012.
Cost of sales consists of the cost of our products with related shipping costs.
The decrease in our third quarter cost of sales is due to the interruption in
product availability experienced as a result of a transition by our GPS
Manufacturer which closed the factory where they made our product. The
interruption in product availability caused a decrease in sales which decreased
our cost of sales.
GROSS PROFIT. Gross profit decreased from $236,166 for the nine months ended
September 30, 2011 to $59,686 for the nine months ended September 30, 2012. This
decrease in gross profit was due to an interruption in our product supply due to
the transition by the company that manufacturers our GPS Controller which closed
its factory near Houston where they were making our product to their factory in
Phoenix. As a result of this transition, the company did not receive any new
product from July 1, 2012 until August 30, 2012 when it received its first
shipment in the quarter. As a result of this interruption and concerns over
production errors made by the manufacturer, Ciralight in mid September
terminated its relationship with the manufacturer and elected to move production
28
of its GPS Controllers to a new supplier. The new manufacturer is expected to be
in full production in the fourth quarter and will be able to fill back orders
that have accumulated. With the back order of sales to be fulfilled in the
fourth quarter we expect that fourth quarter sales will be sufficient to
overcome this decrease in sales and by the end of the 2012 the company should
exceed 2011 total sales.
OPERATING EXPENSES. Our operating expenses consist of research and development
expenses, selling and marketing expenses and general and administrative
expenses. Total operating expenses increased from $784,020 for the nine months
ended September 30, 2011 to $882,696 for the nine months ended September 30,
2012.
General and administrative expenses increased from $582,534 for the nine months
ended September 30, 2011 to $706,997 for the nine months ended September 30,
2012. This increase was due to the addition of direct sales person, and
compensation to the Board of Directors which increased from two members to six
members being recorded quarterly, while in the past it was recorded at the end
of each year. The compensation to the Board of Directors is in the form of stock
and options and not cash payments.
Selling and marketing expenses decreased slightly from $169,653 for the nine
months ended September 30, 2011 to $122,875 for the nine months ended September
30, 2012.
Research and Development expenses increased from $31,833 for the nine months
ended September 30, 2011 to $52,824 for the nine months ended September 30,
2012.
INCOME TAXES. For the nine months ended September 30, 2012, management has
decided not to record the tax benefit.
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOWS - FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 2012 and 2011.
Net cash used in operating activities was $517,164 for the nine months ended
September 30, 2012 and resulted primarily from a net loss of $851,548 partially
offset by sales, collection of receivables, increases in other payables,
collection of deferred revenue and increases in accounts payable. Net cash used
in operating activities was $579,106 for the nine month period ended September
30, 2011 and resulted primarily from a net loss of $576,326 partially offset by
decreases in accounts receivable and related party notes receivable and an
increase in deferred revenues.
Net cash used in investing activities was $21,710 for the nine months ended
September 30, 2012. This was for expenditures toward the patents for the company
products. Net cash used in investing activities was $4,262 for the nine months
ended September 30, 2011 for the acquisition of property and assets.
29
Net cash provided by financing activities was $460,000 for the nine months ended
September 30, 2012 and resulted primarily from net proceeds from related party
notes payable and line of credit of $170,000 and the sale of stock in the amount
of $300,000. Net cash provided by financing activities was $444,742 for the nine
month period ended September 30, 2011 and resulted from the sale of common
stock.
The Company had net losses of $851,548, and $576,326 for the nine months ended
September 30, 2012 and 2011 respectively. As of September 30, 2012, the Company
had cash of approximately $18,569. In addition, the Company had accounts
receivable of approximately $99,600, inventory on hand at a cost valuation of
approximately $201,987, and accounts payable of approximately $135,478.
The Company has experienced losses primarily attributable to an interruption in
the product supply during the third quarter, as well as increased research,
development, marketing and other costs associated with the strategic plan to
position the company as a world class supplier of sustainable lighting
technologies. Cash flows from operations have not been sufficient to meet our
obligations. Therefore, we have had to raise funds through several financing
transactions. At least until we reach breakeven volume in sales and develop
and/or acquire the capability to manufacture and sell our products profitably,
we will need to continue to rely on cash from external financing sources. Our
operations during the quarter ended September 30, 2012 and the year ended
December 31, 2011 were financed by product sales contracts, common stock
issuances, as well as from working capital reserves. In addition, on March 23,
2012, the company entered into a revolving line of credit with the Adams family,
a related party, in the amount of up to $500,000. The line of credit is for a
period of six months at an interest rate of prime plus 2%.
In addition the company was recently approved by the Export-Import Bank of the
United States ("Ex-Im") to insure and finance transactions for international
Distributors and Dealers. This provides up to $270,000 in financing. Under this
Ex-Im program, the company will receive 90% of an international sale at the time
the order ships thus improving the company's cash flow. The international
Distributor and Dealer than have 90 days, instead of 21 days to pay back the
Ex-Im which is a good incentive for our Distributors and Dealers to sell more
product. When the Distributor or Dealer pays back Ex-Im, the balance of the
order is remitted to the Company. In addition, The company will continue to
obtain working capital by accessing capital markets. The company has orders in
hand at the start of the fourth quarter that total approximately $760,000. As
these orders ship the company will have a positive cash flow in the fourth
quarter. Management believes that with the increased level of sales, and the
Ex-Im financing the company will have sufficient liquidity to carry on
operations for the next twelve months. However, there can be no assurance that
management will be able to fully deliver on its business plans.
30
CONTRACTUAL OBLIGATIONS AND OFF-BALANCE SHEET ARRANGEMENTS
CONTRACTUAL OBLIGATIONS
We have certain fixed contractual obligations and commitments that include
future estimated payments. Changes in our business needs, cancellation
provisions, changing interest rates, and other factors may result in actual
payments differing from the estimates. We cannot provide certainty regarding the
timing and amounts of payments. We have presented below a summary of the most
significant assumptions used in our determination of amounts presented in the
tables, in order to assist in the review of this information within the context
of our consolidated financial position, results of operations and cash flows.
The following table summarizes our contractual obligations as of September 30,
2012, and the effect these obligations are expected to have on our liquidity and
cash flows in future periods.
Payments Due by Period
--------------------------------------------------------------
Less than
Total 1 year 1-3 Years 3-5 Years 5 years +
-------- -------- --------- --------- ---------
Contractual Obligations:
Advances payable - related parties $503,000 $503,000 $ -- $ -- $ --
Interest Payments (1) 23,078 23,078 -- -- --
Operating Leases 43,800 43,800 -- -- --
Commitments to Purchase Inventory 253,687 253,687 -- -- --
-------- -------- -------- -------- ---------
Totals: $823,565 $823,565 $ -- $ -- $ --
======== ======== ======== ======== =========
(1) Advances payable - related parties bear interest at the rate of Prime Rate
(as quoted in the Wall Street Journal) plus 2% per annum and estimated
interest payments are expected to be paid upon payment or satisfaction of
the advances.
OFF-BALANCE SHEET ARRANGEMENTS
We have not entered into any other financial guarantees or other commitments to
guarantee the payment obligations of any third parties. We have not entered into
any derivative contracts that are indexed to our shares and classified as
stockholders' equity or that are not reflected in our financial statements.
Furthermore, we do not have any retained or contingent interest in assets
transferred to an unconsolidated entity that serves as credit, liquidity or
market risk support to such entity. We do not have any variable interest in any
unconsolidated entity that provides financing, liquidity, market risk or credit
support to us or engages in leasing, hedging or research and development
services with us.
31
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures.
As of the end of the period covered by this report, we carried out an
evaluation, under the supervision and with the participation of our management,
including our Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures (as defined in the Securities Exchange Act Rules 13a-15(e) and
15d-15(e)). Based on that evaluation, our Chief Executive Officer and Chief
Financial Officer concluded that as of the end of the period covered by this
report, our disclosure controls and procedures were effective to ensure that
information required to be disclosed by us in reports we file or submit under
the Exchange Act is (1) recorded, processed, summarized and reported within the
time periods specified in SEC rules and forms, and (2) accumulated and
communicated to our management, including our Chief Executive Officer and Chief
Financial Officer, to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting.
There have not been changes in our internal controls over financial reporting
during the period covered by this report that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
We have no legal matters pending against us. On August 15, 2011 we filed a
collection action against Nature's Lighting for their failure to pay for product
purchased from us. The amount owed to us is $39,000 plus legal fees and costs.
On January 30, 2012 we were successful in obtaining a default judgment and now
are proceeding to collect the balance owed to us.
The Company is not aware of any other threatened or pending litigation against
the Company.
ITEM 1A. RISK FACTORS.
Not applicable.
32
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
During the three month period ended March 31, 2012, a total of 21,500 shares of
common stock were issued at $0.55 per share for services rendered.
During the three month period ended June 30, 2012 a total of 181,818 shares of
common stock were issued at $.55 per share to a new distributor in Japan
pursuant to a Private Placement Offering.
During the three month period ended September 30, 2012 a total of 400,000 shares
of common stock were issued at $.50 per unit which included a share of common
stock and a warrant to buy additional stock at $.50 for five years pursuant to a
Private Placement Offering. In addition, one of our engineers was compensated
with 18,182 of stock in exchange for the acquisition of the source code which
was recorded as an intangible asset.
The above shares were issued in reliance on the exemption from registration
requirements of the Securities Act of 1933, as amended ("33 Act"), provided by
Section 4(2) of the 33 Act.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS.
See Exhibit Index below for exhibits required by Item 601 of regulation S-K.
33
EXHIBIT INDEX
List of Exhibits attached or incorporated by reference pursuant to Item 601 of
Regulation S-K:
Exhibit No. Description
----------- -----------
3(i).1* Articles of Incorporation of Ciralight West, Inc. filed February
26, 2009, with the Secretary of State of Nevada
3(i).2* Certificate of Amendment to the Articles of Incorporation filed on
March 13, 2009, with the Secretary of State of Nevada (changing
name to Ciralight Global, Inc.).
3(i).3* Certificate of Amendment to the Articles of Incorporation filed on
April 22, 2009, with theSecretary of State of Nevada.
3(ii)* By-Laws of Ciralight Global, Inc.
4.1* Certificate of Designation of Series A Preferred Stock filed on
July 22, 2009, with the Secretaryof State of Nevada
10.1* Exchange of Stock for Assets Agreement dated as of April 1, 2009,
by and between Ciralight Global, Inc. and George Adams, Sr.
10.2* Amendment to Exchange of Stock for Assets Agreement by and between
Ciralight Global,Inc. and George Adams, Sr. dated December 15,
2009.
10.3* Assignment of Issued United States Patent and Pending United
States Patent Application dated December 17, 2009
10.4* Domestic Non-Exclusive Dealer Agreement(undated and unsigned
prototype)
10.5* Domestic Non-Exclusive Distribution Agreement(undated and unsigned
prototype)
10.6* Domestic Non-Exclusive Dealer Agreement by and between Ciralight
Global, Inc. and Chaparral Green Energy Solutions, LLC dated as of
January 1, 2010
10.7* Domestic Non-Exclusive Dealer Agreement dated December 1, 2009, by
and between Ciralight Global, Inc. and Green Tech Design-Build,
Inc.
10.8* International Distribution Agreement dated January 15, 2010, by
and between Ciralight Global, Inc. and ZEEV Shimon & Sons, Ltd.
10.9* International Dealership Agreement dated June 18, 2009, by and
between Ciralight Global, Inc. and RSB Construction LTD.
10.10* Domestic Non-Exclusive Dealer Agreement dated April 1, 2010, by
and between Ciralight Global, Inc. and J-MACS Consulting, LLC.
34
10.11* Domestic Non-Exclusive Dealer Agreement dated April 15, 2010, by
and between Ciralight Global, Inc. and The Energy Solutions Group
Worldwide, LLC.
10.12* Domestic Non-Exclusive Dealer Agreement dated April 15, 2010, by
and between Ciralight Global, Inc. and Kemper & Associates, Inc.,
d/b/a Total Roofing & Reconstruction.
10.13* Domestic Non-Exclusive Dealer Agreement dated December 1, 2009, by
and between Ciralight Global, Inc. and Eco-Smart, Inc.
10.14* Commercial Lease Agreement dated April 1, 2010, by and between
Ciralight Global, Inc. and Frederick Feck.
10.15* Material Liability Agreement dated September 3, 2009, by and
between Ciralight Global, Inc. and Suntron Corporation.
10.16* Material Terms and Conditions of Verbal Office Lease for Executive
Offices in Irvine, California.
10.17* Material Terms and Conditions of Verbal Office Lease for
Warehouse/Offices in Corona, California
14* Code of Business Conduct and Ethics
21* Subsidiaries.
31.1** Certification of Principal Executive Officer, Certification Under
Section 302 of Sarbanes-oxley Act of 2002, Jeff Brain, CEO
31.2** Certification of Principal Financial Officer, Certification Under
Section 302 of Sarbanes-oxley Act of 2002, Jarett Fenton, CFO
32.1** Certification Pursuant to 18 U.s.c. Section 1350, Section 906 of
the Sarbanes-oxley Act of 2002, Jeff Brain, CEO
32.2** Certification Pursuant to 18 U.s.c. Section 1350, Section 906 of
the Sarbanes-oxley Act of 2002, Jarett Fenton, CFO
101*** Interactive data files pursuant to Rule 405 of Regulation S-T.
----------
* Exhibits incorporated by reference to Registrant's Form S-1 Registration
Statement, Registration No. 333-165638.
** Filed herewith.
*** To be filed by amendment.
35
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
CIRALIGHT GLOBAL, INC.
Date: November 19, 2012 /s/ Jeffrey S. Brain
----------------------------------
Jeffrey S. Brain
President, Chief Executive Officer
36