Attached files
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
____________________________________________________________
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
___________________________________________________________________
Date of
Report (Date of earliest event reported): December 31,
2009
Magnolia Solar
Corporation
(Exact
Name of Registrant as Specified in Charter)
Nevada | 333-151633 | |
(State
or other jurisdiction
of
incorporation)
|
(Commission File Number) | (IRS
Employer
Identification
No.)
|
54
Cummings Park
Suite
316
Woburn,
MA
|
01801
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Registrant’s
telephone number, including area code: (781) 497-2900
Mobilis
Relocation Services Inc.
527
15th
Avenue, Suite 410, Calgary, Alberta, TR 1R5,
Canada
|
(Former
name or former address, if changed since last report)
|
Copies
to:
Andrea
Cataneo, Esq.
Sean
F. Reid, Esq.
Sichenzia
Ross Friedman Ference LLP
61
Broadway, 32nd
Floor
New
York, New York 10006
Telephone:
(212) 930-9700
|
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
o |
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|
o |
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
o |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
|
o |
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
|
CURRENT
REPORT ON FORM 8-K
MAGNOLIA
SOLAR CORPORATION
TABLE
OF CONTENTS
Page | ||
Item 2.01 | Completion of Acquisition or Disposition of Assets | 1 |
The Merger | 1 | |
Description of Our Company | 2 | |
Description of Our Business | 3 | |
Forward-Looking Statements | 8 | |
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 8 | |
Risk Factors | 14 | |
Security Ownership of Certain Beneficial Owners and Management | 23 | |
Executive Officers and Directors | 23 | |
Certain Relationships and Related Transactions | 26 | |
Item 3.02 | Unregistered Sales of Equity Securities | 27 |
Description of Capital Stock | 28 | |
Item 4.01 | Change in Registrant's Certifying Accountant | 30 |
Item 5.01 | Changes in Control of Registrant | 30 |
Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers | 30 |
Item 5.03 | Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year | 30 |
Item 5.06 | Change in Shell Company Status | 30 |
Item 9.01 | Financial Statements and Exhibits | 30 |
Item
2.01 Completion of
Acquisition or Disposition of Assets
On
December 31, 2009, Mobilis Relocation Services Inc. (the “Company”) filed a
Certificate of Change to its Articles of Incorporation in order to affect a
forward split of the number of authorized shares of common stock which we are
authorized to issue, and of our issued and outstanding shares in a ratio of
1.3157895:1. On December 31, 2009, the Company’s wholly-owned
subsidiary, Magnolia Solar Corporation, a Nevada corporation, was merged into
and with the Company. In connection with the merger, the Company’s
name was changed from “Mobilis Relocation Services Inc.” to “Magnolia Solar
Corporation.” Unless otherwise noted herein, all share and per share
amounts contained herein are on a pre-forward split basis.
The
Merger
On
December 31, 2009, we entered into an Agreement of Merger and Plan of
Reorganization (the “Merger Agreement”) with Magnolia Solar, Inc., a privately
held Delaware corporation (“Magnolia Solar”), and Magnolia Solar Acquisition
Corp., our newly formed, wholly-owned Delaware subsidiary (“Acquisition Sub”).
Upon closing of the transaction contemplated under the Merger Agreement (the
“Merger”), Acquisition Sub merged with and into Magnolia Solar, and Magnolia
Solar, as the surviving corporation, became a wholly-owned subsidiary of the
Company.
Pursuant
to the terms and conditions of the Merger Agreement:
·
|
At
the closing of the Merger, each share of Magnolia Solar’s common stock
issued and outstanding immediately prior to the closing of the Merger was
exchanged for the right to receive 0.76 shares of our common stock. To the
extent that there are fractional shares, such fractional shares will be
rounded to the nearest whole share. Accordingly, an aggregate
of 16,210,800 shares of our common stock were issued to the holders of
Magnolia Solar’s common stock.
|
·
|
Following
the closing of the Merger, the Company issued 26.6 units in a private
placement (the “Private Placement”), consisting of an aggregate of
$2,660,000 of Original Issue Discount Senior Secured Convertible Notes and
five-year callable warrants to purchase an aggregate of 2,021,600 shares
of common stock exercisable at $1.65 per share, for $50,000 per unit for
aggregate proceeds to the Company of $990,000. The notes were
issued at an original issue discount of 50%. Midtown Partners & Co.,
LLC (the “Placement Agent”) served as the Company’s placement agent for
certain of the investors in the Private Placement and each received
seven-year warrants to purchase a number of shares of common stock equal
to 10% of the purchase price of the Units purchased through such Placement
Agent, exercisable at $1.05 per share. The notes are secured by a
first-priority security interest in the assets of the
Company. Holders of the notes and warrants issued in the
Private Placement also have the right to seek “piggyback” registration of
the shares underlying the notes and
warrants.
|
·
|
Upon
the closing of the Merger, Zacharey Zenith resigned as our sole officer
and simultaneously with the Merger a new director and new officers were
appointed.
|
·
|
Immediately
following the closing of the Merger and the Private Placement, under an
Agreement of Conveyance, Transfer and Assignment of Assets and Assumption
of Obligations (the “Conveyance Agreement”), we also transferred all of
our pre-Merger assets and liabilities to our wholly-owned subsidiary,
Mobilis Relocation Services Holdings, Inc. (“SplitCo”). Thereafter
pursuant to a stock purchase agreement (the “Stock Purchase Agreement”),
we transferred all of the outstanding capital stock of SplitCo to certain
of our stockholders in exchange for the cancellation of 1,500,000 shares
of our common stock (the “Split-Off”), with 1,900,000 shares of common
stock held by persons who were stockholders of ours prior to the Merger
remaining outstanding. These 1,900,000 shares constitute our
“public float” and are our only shares of registered common stock and
accordingly are our only shares available for resale without further
registration.
|
The
foregoing description of certain changes to our Articles of Incorporation, the
Merger and the Split-Off does not purport to be complete and is qualified in its
entirety by reference to the complete text of (i) the Amended and Restated
Articles of Incorporation, which is filed as Exhibit 3.1 hereto, (ii) the Merger
Agreement, which is filed as Exhibit 2.1 hereto, and (v) the Stock Purchase
Agreement, which is filed as Exhibit 10.7 hereto, each of which is incorporated
herein by reference.
The
foregoing description of the Private Placement does not purport to be complete
and is qualified in its entirety by reference to the complete text of the (i)
Form of Subscription Agreement, which is filed as Exhibit 10.1 hereto, (ii) Form
of Warrant, which is filed as Exhibit 10.2 hereto, (iii) Form of Placement Agent
Warrant, which is filed as Exhibit 10.5 hereto, and (iv) Form of Original Issue
Discount Senior Secured Convertible Note, which is filed as Exhibit 10.3 hereto,
and (v) Form of Security Agreement, which is filed as Exhibit 10.9 hereto,
and (vi) Form of Subsidiary Guarantee, which is filed as Exhibit 10.10
hereto, each of which is incorporated herein by reference.
Following
(i) the closing of the Merger, (ii) the closing of the Private Placement and
(iii) the cancellation of 1,500,000 shares in the Split-Off, there were
18,110,800 shares of common stock issued and
outstanding. Approximately 90% of such issued and outstanding shares
were held by the former stockholders of Magnolia Solar. The foregoing
percentages excludes shares underlying the notes andwarrants to purchase the
common stock issued to investors and the Placement Agents in connection with the
Private Placement.
The
shares of our common stock issued to former holders of Magnolia Solar’s stock in
connection with the Merger, and notes and warrants issued in the Private
Placement, were not registered under the Securities Act of 1933, as amended (the
“Securities Act”), in reliance upon an exemption from registration provided by
Section 4(2) under the Securities Act and Regulation D promulgated thereunder.
These securities may not be transferred or sold absent registration under the
Securities Act or an applicable exemption therefrom.
Changes to the
Business. We intend to carry on the business of Magnolia Solar
as our sole line of business. Upon closing of the Merger, we relocated our
executive offices to 54 Cummings Park, Suite 316, Woburn, MA 01801 and our
telephone number is (781) 376-1505.
Under
Delaware law, Magnolia Solar’s stockholders who did not vote in favor of the
Merger may under certain circumstances seek to be paid the fair value of their
shares determined by judicial proceeding by exercising statutory rights reserved
for dissenters of certain major actions. Determination of fair value is based on
many relevant factors, except that a court may disregard any appreciation or
depreciation resulting from the anticipation or accomplishment of an event such
as the Merger. As of December 31, 2009, no holder of Magnolia Solar’s common
stock had notified the company of their intention to seek to exercise the right
to seek appraisal of their shares.
1
Changes to the Board of Directors and
Executive Officers. Upon the closing of the
Merger, Ashok Sood was appointed as a director of the Company. In
addition, upon the closing of the Merger, each of the officers of the Company
resigned and certain officers of Magnolia Solar prior to the Merger were
appointed as the officers of the Company.
Our board
of directors consists of between one and three persons, fixed from time to time
by the board or our stockholders. A vacancy on our board of directors
may be filled by the vote of a majoprity of the directors holding
office. All directors hold office for one-year terms until the
election and qualification of their successors. Officers are
appointed by the board of directors and serve at the discretion of the
board.
Accounting Treatment. The
Merger is being accounted for as a reverse-merger and recapitalization. Magnolia
Solar is the acquirer for financial reporting purposes and the Company is the
acquired company. Consequently, the assets and liabilities and the operations
that will be reflected in the historical financial statements prior to the
Merger will be those of Magnolia Solar and will be recorded at the historical
cost basis of Magnolia, and the consolidated financial statements after
completion of the Merger will include the assets and liabilities of the Company
and Magnolia Solar, historical operations of Magnolia Solar and operations of
the Company from the closing date of the Merger.
Tax Treatment; Small Business
Issuer. The Merger is intended to constitute a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the “Code”), or such other tax free reorganization exemptions that may
be available under the Code. The Split-Off will result in taxable
income to the Company in an amount equal to the difference between the fair
market value of the assets transferred and the Company’s tax basis in the
assets. Any gain recognized, to the extent not offset by the Company’s net
operating losses carry-forwards, if any, will be subject to federal and state
income tax at regular corporate income tax rates.
Following
the Merger, the Company will continue to be a “smaller reporting company,” as
defined in Item 10(f)(1) of Regulation S-K, as promulgated by the
SEC.
Description
of Our Company
The
Company was incorporated as a Nevada corporation on November 19, 2007 with a
mission of becoming a leading resource for an individual or family’s relocation
/ moving needs. On December 31, 2009, immediately following the closing of the
Merger, we amended our articles of incorporation in order to to affect a
1.3157895:1 forward split of our authorized and issued and outstanding shares of
common stock. On December 31, 2009, the Company’s wholly-owned
subsidiary, Magnolia Solar Corporation, a Nevada corporation, was merged into
and with the Company. In connection with the merger, the Company’s
name was changed from “Mobilis Relocation Services Inc.” to “Magnolia Solar
Corporation.” Immediately following the Merger and the Private
Placement, our pre-Merger assets and liabilities were disposed of pursuant to
the Split-Off.
Magnolia
Solar, Inc. is a development-stage company that was formed in Delaware in
January 2008. Since its inception, Magnolia has focused on the
development of thin film, high efficiency solar cells. Magnolia’s
technology is being developed to be utilized in power generation for electrical
grids as well as local applications including lighting, heating, traffic
control, irrigation, water distillation, and other residential, agricultural and
commercial applications. Magnolia intends to become a highly competitive, low
cost provider of terrestrial photovoltaic cells for both civilian and military
applications. These cells will be based on low cost substrates such
as glass and polymers. Magnolia’s primary goal is to introduce a product which
offers significant cost savings per watt over traditional silicon based solar
cells. To date, Magnolis Solar has not generated material
revenues or earnings as a result of its activities. As a result of the
Merger, Magnolia Solar became a wholly-owned subsidiary of the Company and the
Company succeeded to the business of Magnolia Solar as its sole line of
business.
2
Description
of Our Business
Magnolia
Solar’s mission is to commercialize its nanotechnology-based, high efficiency,
thin film technology that can be deposited on glass and other flexible
structures. This technology has the ability to capture a larger part of the
solar spectrum to produce high efficiency solar cells, and incorporates a unique
nanostructure-based antireflection coating technology to further increase the
solar cell’s efficiency thereby reducing the cost per watt.
Magnolia
Solar is in the process of filing patents to protect its intellectual property
and adding key technical personnel to validate and commercialize these solar
cell technologies. Magnolia Solar's goal is to increase its solar cells’
efficiency from the present thin film solar cell efficiency of 8%-10% to greater
than 15% in a commercial environment at less than $1 per watt.
Magnolia
Solar has been very successful in attracting government funding to develop
advanced solar cell technology. We have been selected for several awards and
expect to be under contract by mid-to-late August 2009. Once under contract,
Magnolia Solar will provide further information on the awards through company
press releases.
Magnolia
Solar has several pending proposals with the U.S. Department of Energy and we
continue to work with various federal agencies to fund advances in solar cell
technology development and to continue to improve solar cell performance and
stay ahead of the competition using federal and state funds.
In
addition, Magnolia Solar will benefit from the critical technologies being
developed by Magnolia Optical Technologies, Inc. ("Magnolia Optical"). Magnolia
Optical has been at the forefront of pioneering the development of thin film,
optical, and advanced solar cell technologies for high efficiency solar cells
using nano-materials and technologies. Magnolia Optical, a Delaware Corporation,
has been in business since May 2000 and is a Government-approved contractor for
advanced technology developments.
Magnolia
Optical has, to date, received over $6 million funding support from Defense
Advanced Research Projects Agency (DARPA) and other Department of Defense (DOD)
agencies, NASA and NSF to fund the development of the advanced
nanostructure-based technologies for optical and solar cell
applications.
Magnolia
Optical has an agreement with Magnolia Solar for a no-cost license for solar
cell applications. In return, Magnolia Optical shareholders received an equity
stake in Magnolia Solar.
This
arrangement will allow Magnolia Solar to develop and commercialize the high
efficiency solar cells for terrestrial and defense applications. At the same
time, Magnolia Solar will continue to benefit from the technology pipeline from
Magnolia Optical of future product improvements.
3
Magnolia
Technology
Magnolia
Solar has developed thin film-based technology that also uses
nanotechnology-based components to substantially enhance solar cell efficiency.
Magnolia Solar plans to use low-cost substrates for solar cell fabrication
that are substantially cheaper than conventional silicon
substrates. Magnolia Solar plans to use glass and polymer-based
flexible substrates that are low cost and are available in large sizes, thereby
bringing down the cost of thin film solar cells compared to those with silicon
substrates. This technology will utilize higher absorption of the solar spectrum
to produce high-efficiency solar cells. Magnolia Solar's goal is to increase
solar cell efficiency while using the lower cost processes to keep the future
production costs low with a goal of one dollar per watt. Magnolia Solar is in
the process of filing patents to protect its intellectual property and add key
technical personnel to validate and commercialize these solar cell
technologies.
Industry
Overview and Market Opportunity
Solar electric power or
photovoltaic (PV)
technology is the conversion of sunlight directly into electricity. The solar
cells available
today use semiconducting materials (similar to those used in computer chips and
flat panel displays) such as silicon. These cells are the basic
building blocks of complete systems. To provide useful amounts of
power, the cells are wired together in varying numbers to create solar modules
(also called panels).
A typical
rooftop residential system may have one or two dozen modules. PV
converts sunlight into electricity, with no moving parts, consuming no fuel, and
creating no pollution. It is a distributed energy resource that can
improve grid reliability, lower distribution and transmission costs, and be
sited at the point of use with minimal or no environmental
impact. Currently, over 2,000 MW of modules are being manufactured
annually worldwide. More than 90% of these are made from
silicon. Magnolia Solar intends to be the premier commercial
manufacturer of thin film PV modules.
Solar
Cell Technology Overview
The solar
market consists of two major technology segments—crystalline silicon solar cells
and thin film solar cells. This section provides a brief overview of the
crystalline silicon solar cells and thin film solar cells on the market
today.
Cyrstalline
Silicon Solar Cells
The solar
photovoltaic market is dominated by the crystalline silicon (c-Si) technology
that was developed in the '60s for the space race and then converted for
commercial use during the energy crunch of the '70s. Today, over 85 percent of
solar cells and solar panels are made with silicon wafers. There are several
different types of silicon that are being used in solar cell and panel
production. These include single crystal silicon, poly-crystalline cells and
ribbon silicon solar cells. Representative companies employing varying types of
crystal silicon material can be broken down as follows:
–
|
Single
Crystal Silicon (Sun power, Suntech Power
etc.)
|
–
|
Poly-crystalline
Cells (Canadian Solar etc.)
|
–
|
Ribbon
Silicon cells ( Schott Solar, Evergreen
Solar)
|
One of
the serious limitations faced by manufacturers of crystalline silicon based
solar cells is the shortage of raw silicon material. These companies are
competing against microprocessor and electronic circuit device manufacturer for
silicon wafers. Even though there are efforts underway to expand the silicon
output, it does appear that it will be many years before enough capacity is in
place for supply to match demand in the marketplace. The silicon solar cells
quality depends on the efficiency which ranges from 14 to 18 percent, with
higher performance obtained by using higher quality crystalline silicon.
Energetic
radiation from the sun, reaching the Earth’s surface, includes ultra-violet,
infrared and visible light. Silicon technology chiefly allows absorption of the
visible part of the spectrum. Magnolia Solar's thin film solar
cell design is being designed to enhance absorption in the UV spectrum and will
be able to provide electricity more efficiently in hazy weather and very hot
days using IR energy.
4
Thin
Film Solar Cells
Thin film solar cells are gaining
popularity owing to their ability to tailor the spectrum performance to take
advantage of a broader range of the sun’s spectrum than silicon can utilize.
There are several different thin film technologies that are under development
for both the military satellite market and the terrestrial market. The varieties
of thin film solar technologies undergoing commercialization
include:
–
|
Multi-junction
GaAs cells for space ( Boeing,
Emcore)
|
–
|
CIGS
Cells ( Ascent Solar, Daystar,
Nanosolar)
|
–
|
CdTe
/CdS Cells ( First Solar)
|
–
|
Amorphous-silicon
thin film solar cells (Energy Conversion
Devices)
|
There are
second-generation, thin-film technologies that are under development that can
provide higher solar cell efficiency. Thin-film solar cell technologies have
steadily gained market share from the incumbent crystalline silicon producers
owing to low manufacturing cost. Forbes reports that “Shipments of thin-film
photovoltaic modules more than doubled between 2004 and 2005, by EIA estimates.
Meanwhile, RBC projects thin film solar panels will continue to increase their
market share from 6.5% today to 19% by 2011.
Magnolia
Solar Cell Approach
We have
pioneered the development of thin film, highly efficient, solar cells that will
be utilized to produce low cost, renewable energy. Our proprietary technology
incorporates nano-materials and technologies that were developed under
sponsorship by DARPA, NASA and the Department of Defense. We utilize a
nanostructure-based approach in the development of high-efficiency thin film
solar cells. Our technology is designed to permit absorption across a
broader spectrum of light.
We start
with a “substrate” of Transparent Conducting Oxides (“TCO’) -coated glass. An
anti-reflection coating technology being developed will be incorporated on the
top surface of the glass to minimize reflection losses at the air interface. The
TCO layer requires both high optical transmission and low sheet resistance and
acts as a top contact for the solar cell.
Light trapping can
dramatically improve solar cell performance by increasing the optical path
length of photons within the thin film absorber layers. An ideal middle coating
would be transparent, highly conductive, and minimize reflection losses due to
differences in the index of refraction between the TCO-coated glass and silicon
thin film. Moreover, it would increase the optical path length by diffusing
light entering the thin film and reflecting light trying to escape the absorber
layers. Textured TCO films can act as a light diffuser. Prof. Schubert’s work is
being leveraged to create a film that acts as an anti-reflective (AR) coating in
one direction and as a reflector in the opposite direction.
To
further enhance the performance of the thin film solar cell, bottom contact
should also reflect unabsorbed light back into the silicon-Germanium (SiGe) thin
film. This will diffuse the light as well, maximizing the optical path length in
the absorber layers. Silicon thin film layers could contain both amorphous and
microcrystalline layers. The p-type layer is almost always placed next to the
TCO layer because of ultra-low hole mobility in amorphous silicon. In addition
to changes in crystalline content, band gap engineering can be accomplished by
adding Germanium or carbon to the silicon. SiGe alloys have a lower energy-gap
and are anticipated to increase absorption.
We
believe that SiGe based thin film solar cells will be superior to both amorphous
silicon and thin crystalline silicon solar cells. Our approach of
using SiGe thin films will extend the absorption range of the solar cells to
include infrared bands and potentially up to 1.6 micrometers in the infrared
compared with Silicon that only absorbs up to 0.9 micrometers. We expect that
with SiGe thin film solar cells, we will be able to achieve efficiencies to
14-15 percent, comparable to crystalline silicon solar cells that use bulk
silicon. Our use of TCO glass as substrate will allow for low cost ways of
achieving high efficiency thin film solar cells.
5
Customers
As we
commence the production of our solar cells, we expect to target federal civilian
and military agencies and institutional commercial customers including large
corporations, non-governmental organizations, universities and solar powered
electric generating stations. We anticipate that the federal government will be
a key customer as a result of government mandates that require federal agencies
to improve their energy efficiency.
Federal
Mandates
Federal
agencies must meet energy management and renewable energy guidelines set forth
in the Energy Policy Act of 2005 ("EPACT"), Executive Order 13423 "Strengthening
Federal Environmental, Energy and Transportation Management" ("EO 13423") and
related regulations. In particular, EPACT directs that the following percentages
of an agency's energy consumption come from renewable energy
sources:
·
|
3%
or more in fiscal years 2007 through
2009
|
·
|
5%
or more in fiscal years 2010 through 2012,
and
|
·
|
7.5%
or more by 2013.
|
EO 13423,
on the other hand, orders federal agencies to improve energy efficiency and
reduce greenhouse gas emissions by 3% annually through fiscal year 2015 or by
30% by fiscal year 2015, relative to their energy use and emissions in fiscal
year 2003. EO 13423 also mandates that federal agencies use sustainable
practices when purchasing products and services. Implementing instructions
issued by the Department of Energy require that agencies give preference in
their procurement and acquisition programs to energy produced from renewable
sources. At least half of the renewable energy consumed by an agency must come
from renewable power sources placed into service after January 1,
1999.
Environmental,
Health and Safety Regulations
We will
use, generate and discharge toxic, volatile or otherwise hazardous chemicals and
wastes in our manufacturing activities. We are subject to a variety of federal,
state and local governmental laws and regulations related to the purchase,
storage, use and disposal of hazardous materials. We are also subject to
occupational health and safety regulations designed to protect worker health and
safety from injuries and adverse health effects from exposure to hazardous
chemicals and working conditions. If we fail to comply with present or future
environmental laws and regulations, we could be subject to fines, suspension of
production or a cessation of operations. In addition, under some federal, state
and local statutes and regulations, a governmental agency may seek recovery and
response costs from operators of property where releases of hazardous substances
have occurred or are ongoing, even if the operator was not responsible for the
release or otherwise was not at fault.
6
Any
failure by us to control the use of, or to restrict adequately the discharge of,
hazardous substances could subject us to substantial financial liabilities,
operational interruptions and adverse publicity, any of which could materially
and adversely affect our business, results of operations and financial
condition.
Solar
Energy Industry
We
believe that economic and national security issues, technological advances,
environmental regulations seeking to limit emissions by fossil fuel, air
pollution regulations restricting the release of greenhouse gasses, aging
electricity transmission infrastructure and depletion and limited supply of
fossil fuels, has made reliance on traditional sources of fuel for generating
electricity less attractive. Government policies, in the form of both regulation
and incentives, have accelerated the adoption of solar technologies by
businesses and consumers. For example, in the U.S., EPACT enacted a 30%
investment tax credit for solar, and in January 2006 California approved the
largest solar program in the country's history that provides for long term
subsidies in the form of rebates to encourage use of solar energy where
possible.
Government
Subsidies and Incentives
Various
subsidies and tax incentive programs exist at the federal and state level to
encourage the adoption of solar power including capital cost rebates,
performance-based incentives, feed-in tariffs, tax credits and net metering.
Capital cost rebates provide funds to customers based on the cost of size of a
customer's solar power system. Performance-based incentives provide funding to a
customer based on the energy produced by their solar system. Under a feed-in
tariff subsidy, the government sets prices that regulated utilities are required
to pay for renewable electricity generated by end-users. The prices are set
above market rates and may be differentiated based on system size or
application. Feed-in tariffs pay customers for solar power system generation
based on kilowatt-hours produced, at a rate generally guaranteed for a period of
time. Tax credits reduce a customer's taxes at the time the taxes are due. Under
net metering programs, a customer can generate more energy than used, during
which periods the electricity meter will spin backwards. During these periods,
the customer "lends" electricity to the grid, retrieving an equal amount of
power at a later Net time metering programs enable end-users to sell excess
solar electricity to their local utility in exchange for a credit against their
utility bills. Net metering programs are usually combined with rebates, and do
not provide cash payments if delivered solar electricity exceeds their utility
bills. In addition, several states have adopted renewable portfolio standards,
which mandate that a certain portion of electricity delivered to customers come
from a set of eligible renewable energy resources. Under a renewable portfolio
standard, the government requires regulated utilities to supply a portion of
their total electricity in the form of renewable electricity. Some programs
further specify that a portion of the renewable energy quota must be from solar
electricity.
Despite
the benefits of solar power, there are also certain risks and challenges faced
by solar power. Solar power is heavily dependent on government subsidies to
promote acceptance by mass markets. We believe that the near-term growth in the
solar energy industry depends significantly on the availability and size of
these government subsidies and on the ability of the industry to reduce the cost
of generating solar electricity. The market for solar energy products is, and
will continue to be, heavily dependent on public policies that support growth of
solar energy. There can be no assurances that such policies will continue.
Decrease in the level of rebates, incentives or other governmental support for
solar energy would have an adverse affect on our ability to sell our
products.
7
Employees
We
currently have 3 employees. We consider our employees relations to be
excellent.
Legal
Proceedings
We are
not a party to any legal proceedings
Forward-Looking
Statements
This
Current Report on Form 8-K and other written and oral statements made from time
to time by us may contain so-called “forward-looking statements,” all of which
are subject to risks and uncertainties. Forward-looking statements
can be identified by the use of words such as “expects,” “plans,” “will,”
“forecasts,” “projects,” “intends,” “estimates,” and other words of similar
meaning. One can identify them by the fact that they do not relate
strictly to historical or current facts. These statements are likely
to address our growth strategy, financial results and product and development
programs. One must carefully consider any such statement and should
understand that many factors could cause actual results to differ from our
forward looking statements. These factors may include inaccurate
assumptions and a broad variety of other risks and uncertainties, including some
that are known and some that are not. No forward looking statement
can be guaranteed and actual future results may vary materially.
Information
regarding market and industry statistics contained in this Report is included
based on information available to us that we believe is accurate. It
is generally based on industry and other publications that are not produced for
purposes of securities offerings or economic analysis. We have not
reviewed or included data from all sources, and cannot assure investors of the
accuracy or completeness of the data included in this
Report. Forecasts and other forward-looking information obtained from
these sources are subject to the same qualifications and the additional
uncertainties accompanying any estimates of future market size, revenue and
market acceptance of products and services. We do not assume any
obligation to update any forward-looking statement. As a result,
investors should not place undue reliance on these forward-looking
statements.
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
This
discussion should be read in conjunction with the other sections of this Current
Report on Form 8-K, including “Risk Factors,” “Description of Our Business” and
the Financial Statements attached hereto as Item 9.01 and the related
exhibits. The various sections of this discussion contain a number of
forward-looking statements, all of which are based on our current expectations
and could be affected by the uncertainties and risk factors described throughout
this Report as well as other matters over which we have no
control. See “Forward-Looking Statements.” Our actual results may
differ materially.
Overview
Magnolia
Solar, Inc. is a development-stage company that was formed in Delaware in
January 2008. Since its inception, Magnolia Solar has focused on the
development of thin film, high efficiency solar cells. Magnolia
Solar's technology is being developed to be utilized in power generation
for electrical grids as well as local applications including lighting, heating,
traffic control, irrigation, water distillation, and other residential,
agricultural and commercial applications. Magnolia Solar intends to become a
highly competitive, low cost provider of terrestrial photovoltaic cells for both
civilian and military applications. These cells will be based on low
cost substrates such as glass and polymers. Magnolia Solar's primary goal
is to introduce a product which offers significant cost savings per watt over
traditional silicon based solar cells. To date, Magnolis Solar
has not generated material revenues or earnings as a result of its
activities. As a result of the Merger, Magnolia Solar became a
wholly-owned subsidiary of the Company and the Company succeeded to the business
of Magnolia Solar as its sole line of business.
8
Results
of Operations
Nine
Months Ended September 30, 2009 as Compared to Period January 8, 2008
(Inception) Through September 30, 2008
Revenues
Currently
the Company is in its development stage and has no revenues for the nine months
ended September 30, 2009 or the period January 8, 2008 (Inception) through
September 30, 2008.
Cost of revenues for the nine months
ended September 30, 2009 were $3,360 as compared to $0 for the period January 8,
2009 (inception) through September 30, 2008. Cost of revenues for the
nine months ended September 30, 2009 were comprised of direct
labor.
Operating
Expenses
Indirect Labor and
Benefits
Indirect
labor and benefits expenses for the nine months ended September 30, 2009 were
$6,248 as compared to $0 for the period January 8, 2009 (inception) through
September 30, 2008. Indirect labor and benefits for the nine months
ended September 30, 2009 were comprised of wages for the administrative staff,
payroll taxes, and provision for vacation time.
Professional
Fees
Professional
fees for the nine months ended September 30, 2009 were $90,420 as compared to
$5,000 for the period January 8, 2009 (inception) through September 30, 2008, an
increase of $85,420. Professional Fees for the nine months ended
September 30, 2009 were comprised of accounting and legal fees associated with
the reverse merger.
Amortization
Expense
Amortization
expense for the nine months ended September 30, 2009 were $26,737 as compared to
$14,854 for the period January 8, 2009 (inception) through September 30, 2008,
an increase of $11,883. Amortization expense for the nine months
ended September 30, 2009 were comprised of amortization of the license fee paid
for the technology license.
Net
Loss
Our net
loss increased by $(108,702) to $128,558 for the nine months ended September 30,
2009, compared to January 8, 2008 (Inception) through September 30, 2008. This
is due to costs associated with acquiring technology license and the accounting
and legal fees associated with the reverse merger.
Liquidity
and Capital Resources
As of
September 30, 2009, we had $0 of working capital as compared to $(111,958) from
January 8, 2008 (Inception) through September 30, 2008. This decrease of
$111,958 in working capital was due primarily to accounts payable for
professional services and promissory note related to the reverse
merger.
Net cash
used in operating activities was $17,245 for the nine months ended September 30,
2009, as compared to $5,000 from January 8, 2008 (Inception) through September
30, 2008. The Company is in the development stage and has generated no
revenues.
Net cash
used in investing activities was $20,000 for the nine months ended September 30,
2009, as compared to $0 from January 8, 2008 (Inception) through September 30,
2008. The increase of cash used by investing activities was due primarily to a
deposit made in connection with the proposed reverse merger.
Net cash
flows provided from financing activities was $75,000 for the nine months ended
September 30, 2009, as compared to $10,000 from January 8, 2008 (Inception)
through September 30, 2008. There was an increase in cash provided from
financing activities due to a loan received from a related party and due to a
promissory note.
We
require substantial working capital to fund our business. We cannot predict
whether additional financing will be available to us on favorable terms when
required, or at all. Since our inception, we have experienced negative cash flow
from operations and expect to experience significant negative cash flow from
operations in the future.
On
December 31, 2009, we accepted subscriptions for a total of 26.6 units in the
Private Placement, consisting of an aggregate of $2,660,000 of original issue
discount senior secured convertible notes and warrants to purchase an aggregate
of 2,021,600 shares of common stock at an exercise price of $1.65 per share, for
a per unit purchase price of $50,000. We received gross proceeds from
such closing of the Private Placement of $990,000, which includes the $340,000
of bridge notes that were converted in the Private Placement. The
Private Placement was made solely to “accredited investors,” as that term is
defined in Regulation D under the Securities Act. The securities sold in the
Private Placement were not registered under the Securities Act, or the
securities laws of any state, and were offered and sold in reliance on the
exemption from registration afforded by Section 4(2) and Regulation D (Rule 506)
under the Securities Act and corresponding provisions of state securities laws,
which exempt transactions by an issuer not involving any public
offering.
9
Off-Balance
Sheet Arrangements
Since our
inception, except for standard operating leases, we have not engaged in any
off-balance sheet arrangements, including the use of structured finance, special
purpose entities or variable interest entities.
Critical
Accounting Policies and Estimates
Those
material accounting policies that we believe are the most critical to an
investor’s understanding of our financial results and condition are discussed
below. Four of these policies, discussed immediately below, are particularly
important to the portrayal of our financial position and results of operations
and require the application of significant judgment by our management to
determine the appropriate assumptions to be used in the determination of certain
estimates.
Development Stage
Company
The Company is considered to be in the
development stage as defined in ASC 915, “Accounting and Reporting by
Development Stage Enterprises”. The Company has devoted substantially all
of its efforts to the corporate formation, the raising of capital and attempting
to generate customers for the sales of the Company’s products.
Use of
Estimates
The preparation of financial statements
in conformity with accounting principles generally accepted in the United States
of America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenue and expenses during the reporting period. Actual results could differ
from those estimates.
Cash and Cash
Equivalents
The Company considers all highly liquid
debt instruments and other short-term investments with maturity of three months
or less, when purchased, to be cash equivalents.
The
Company maintains cash and cash equivalent balances at one financial institution
that is insured by the Federal Deposit Insurance Corporation.
10
Fixed
Assets
Although the Company does not have any
fixed assets at this point. Any fixed assets acquired in the future
will be stated at cost, less accumulated depreciation. Depreciation will be
provided using the straight-line method over the estimated useful lives of the
related assets. Costs of maintenance and repairs will be charged to expense as
incurred.
Recoverability of Long-Lived
Assets
Although the Company does not have any
long-lived assets at this point, for any long-lived assets acquired in the
future the Company will review their recoverability on a periodic basis whenever
events and changes in circumstances have occurred which may indicate a possible
impairment. The assessment for potential impairment will be based primarily on
the Company’s ability to recover the carrying value of its long-lived assets
from expected future cash flows from its operations on an undiscounted basis. If
such assets are determined to be impaired, the impairment recognized is the
amount by which the carrying value of the assets exceeds the fair value of the
assets. Fixed assets to be disposed of by sale will be carried at the lower of
the then current carrying value or fair value less estimated costs to
sell
Fair Value of Financial
Instruments
The carrying amount reported in the
balance sheets for cash and cash equivalents, accounts payable, and accrued
expenses approximate fair value because of the immediate or short-term maturity
of these financial instruments. The Company does not utilize derivative
instruments.
Income
Taxes
The Company accounts for income taxes
utilizing the liability method of accounting. Under the liability
method, deferred taxes are determined based on differences between financial
statement and tax bases of assets and liabilities at enacted tax rates in effect
in years in which differences are expected to reverse. Valuation
allowances are established, when necessary, to reduce deferred tax assets to
amounts that are expected to be realized.
Revenue
Recognition
The Company will generate revenue from
sales as follows:
1) Persuasive
evidence of an arrangement exists;
2) Delivery
has occurred or services have been rendered;
3) The
seller’s price to the buyer is fixed or determinable, and
4) Collectable
is reasonably assured.
11
Recently
Issued Accounting Pronouncements
In
September 2006, ASC issued 820, Fair Value Measurements. ASC
820 defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles, and expands disclosure about fair
value measurements. This statement is effective for financial statements issued
for fiscal years beginning after November 15, 2007. Early adoption is
encouraged. The adoption of ASC 820 is not expected to have a material impact on
the financial statements.
In
February 2007, ASC issued 825-10, The Fair Value Option for Financial
Assets and Financial Liabilities – Including an amendment of ASC 320-10,
(“ASC 825-10”) which permits entities to choose to measure many financial
instruments and certain other items at fair value at specified election dates. A
business entity is required to report unrealized gains and losses on items for
which the fair value option has been elected in earnings at each subsequent
reporting date. This statement is expected to expand the use of fair value
measurement. ASC 825-10 is effective for financial statements issued for fiscal
years beginning after November 15, 2007, and interim periods within those fiscal
years.
In December 2007, the ASC issued ASC
810-10-65, Noncontrolling
Interests in Consolidated Financial Statements. ASC 810-10-65 establishes
accounting and reporting standards for ownership interests in subsidiaries held
by parties other than the parent, changes in a parent’s ownership of a
noncontrolling interest, calculation and disclosure of the consolidated net
income attributable to the parent and the noncontrolling interest, changes in a
parent’s ownership interest while the parent retains its controlling financial
interest and fair value measurement of any retained noncontrolling equity
investment.
12
ASC
810-10-65 is effective for financial statements issued for fiscal years
beginning after December 15, 2008, and interim periods within those fiscal
years. Early adoption is prohibited. Management is determining the impact that
the adoption of ASC 810-10-65 will have on the Company’s financial position,
results of operations or cash flows.
In
December 2007, the Company adopted ASC 805, Business Combinations (“ASC
805”). ASC 805 retains the fundamental requirements that the acquisition method
of accounting be used for all business combinations and for an acquirer to be
identified for each business combination. ASC 805 defines the acquirer as the
entity that obtains control of one or more businesses in the business
combination and establishes the acquisition date as the date that the acquirer
achieves control. ASC 805 will require an entity to record separately
from the business combination the direct costs, where previously these costs
were included in the total allocated cost of the acquisition. ASC 805
will require an entity to recognize the assets acquired, liabilities assumed,
and any non-controlling interest in the acquired at the acquisition date, at
their fair values as of that date.
ASC 805
will require an entity to recognize as an asset or liability at fair value for
certain contingencies, either contractual or non-contractual, if certain
criteria are met. Finally, ASC 805 will require an entity to
recognize contingent consideration at the date of acquisition, based on the fair
value at that date. This will be effective for business combinations
completed on or after the first annual reporting period beginning on or after
December 15, 2008. Early adoption is not permitted and the ASC is to
be applied prospectively only. Upon adoption of this ASC, there would
be no impact to the Company’s results of operations and financial condition for
acquisitions previously completed. The adoption of ASC 805 is not
expected to have a material effect on the Company’s financial position, results
of operations or cash flows.
In March
2008, ASC issued ASC 815, Disclosures about Derivative
Instruments and Hedging Activities”, (“ASC 815”). ASC 815 requires
enhanced disclosures about an entity’s derivative and hedging activities. These
enhanced disclosures will discuss: how and why an entity uses derivative
instruments; how derivative instruments and related hedged items are accounted
for and its related interpretations; and how derivative instruments and related
hedged items affect an entity’s financial position, financial performance, and
cash flows. ASC 815 is effective for financial statements issued for fiscal
years and interim periods beginning after November 15, 2008. The Company does
not believe that ASC 815 will have an impact on their results of operations or
financial position.
13
Risk
Factors
There
are numerous and varied risks, known and unknown, that may prevent us from
achieving our goals. If any of these risks actually occur, our
business, financial condition or results of operation may be materially
adversely affected. In such case, the trading price of our common
stock could decline and investors could lose all or part of their
investment.
Risks
Related to our Business
We
have a limited operating history upon which an evaluation of our prospects can
be made. We may never achieve profitability.
We were
organized on January 8, 2008, and have had only limited operations since our
inception upon which to evaluate our business prospects. As a result, investors
do not have access to the same type of information in assessing their proposed
investment as would be available to purchasers in a company with a history of
prior operations. Although the technology for solar cells we are commercializing
has been developed by the licensing company under federal funding over the last
nine years, we face all the risks inherent in a new business, including the
expenses, difficulties, complications and delays frequently encountered in
connection with conducting operations, including capital requirements and
management’s potential underestimation of initial and ongoing costs. We also
face the risk that we may not be able to effectively implement our business
plan. If we are not effective in addressing these risks, we will not operate
profitably and we may not have adequate working capital to meet our obligations
as they become due.
We
will need significant additional capital, which we may be unable to
obtain.
We have
very limited funds. Our ultimate success may depend upon our ability to raise
additional capital. There can be no assurance that additional funds will be
available when needed from any source or, if available, will be available on
terms that are acceptable to us.
We may be
required to pursue sources of additional capital through various means,
including joint venture projects and debt or equity financings. Future
financings through equity investments are likely to be dilutive to existing
stockholders. Also, the terms of securities we may issue in future capital
transactions may be more favorable for our new investors. Newly issued
securities may include preferences, superior voting rights, the issuance of
warrants or other derivative securities, and the issuances of incentive awards
under equity employee incentive plans, which may have additional dilutive
effects. Further, we may incur substantial costs in pursuing future capital
and/or financing, including investment banking fees, legal fees, accounting
fees, printing and distribution expenses and other costs. We may also be
required to recognize non-cash expenses in connection with certain securities we
may issue, such as convertible notes and warrants, which will adversely impact
our financial condition.
Our
ability to obtain needed financing may be impaired by such factors as the
capital markets, both generally and specifically in the renewable energy
industry, and the possibility that we may not be profitable during the early
years due to spending on the process development for our technology, which could
impact the availability or cost of future financings. If the amount of capital
we are able to raise from financing activities, together with our revenues from
operations, is not sufficient to satisfy our capital needs, even to the extent
that we reduce our operations accordingly, we may be required to cease
operations.
14
If
our strategy is unsuccessful, we will not be profitable and our stockholders
could lose their investment.
There is no guarantee that our strategy
will be successful or profitable. If our strategy is unsuccessful, we may fail
to meet our objectives and not realize the revenues or profits from the business
we pursue, which may cause the value of the Company to decrease, thereby
potentially causing our stockholders to lose their investment.
We
may not be able to effectively control and manage our growth, which would
negatively impact our operations.
If our business and markets grow and
develop it will be necessary for us to finance and manage expansion in an
orderly fashion. We may face challenges in managing expansion of manufacturing
operations to meet projected demand. Such eventualities will increase demands on
our existing management, workforce and facilities. Failure to satisfy increased
demands could interrupt or adversely affect our operations and cause
administrative inefficiencies.
We
are dependent upon key personnel whose loss may adversely impact our
business.
We rely
heavily on the expertise, experience and continued services of our senior
management, especially Dr. Ashok K. Sood, our President and Chief Executive
Officer and Dr. Yash R. Puri, our Executive Vice President and Chief Financial
Officer. The loss of either Dr. Sood or Dr. Puri, or an inability to attract or
retain other key individuals, could materially adversely affect us. We seek to
compensate and motivate our executives, as well as other employees, through
competitive salaries and bonus plans, but there can be no assurance that these
programs will allow us to retain key employees or hire new key employees.
Although we have employment contracts with Dr. Sood and Dr. Puri, if either left
us, we could face substantial difficulty in hiring a qualified successor and
could experience a loss in productivity while any such successor obtains the
necessary training and experience.
We
may be unable to complete our development, manufacturing and commercialization
plans, and the failure to do so will significantly harm our business plans,
prospects, results of operations and financial condition.
Commercializing
our planned solar modules and processes depends on a number of factors,
including but not limited to:
·
|
further
product and manufacturing process
development;
|
·
|
development
of certain critical tools and large scale production
capabilities;
|
·
|
completion,
refinement and management of our supply
chain;
|
·
|
completion,
refinement, and management of our distribution
channels;
|
·
|
demonstration
of efficiencies that will make our products attractively priced;
and
|
developing
an adequate sales force and sales channels necessary to distribute our products
and achieve our desired revenue goals.
We do not
have any history in carrying out any of the foregoing tasks although the
management team has experience in managing these factors in other companies.,
and, as such, we cannot assure investors that the strategies we intend to employ
will enable us to support the large-scale manufacturing of commercially
desirable solar modules.
15
We
may not be able to effectively control and manage our growth.
Our
strategy envisions a period of potentially rapid growth. We currently maintain
nominal administrative and personnel capacity due to the startup nature of our
business, and our expected growth may impose a significant burden on our future
planned administrative and operational resources. The growth of our business may
require significant investments of capital and increased demands on our
management, workforce and facilities. We will be required to substantially
expand our administrative and operational resources and attract, train, manage
and retain qualified management and other personnel. Failure to do so or satisfy
such increased demands would interrupt or would have a material adverse effect
on our business and results of operations.
Our
products have never been sold on a mass market commercial basis, and we do not
know whether they will be accepted by the market.
According
to the International Energy Agency, global production of electricity was about
19,000 terawatt hours in 2006 of which less than 1 percent came from solar
photovoltaic sources. Solarbuzz reports in the MarketbuzzTM 2008
and 2009 reports that new installations to produce electricity from solar
photovoltaics grew at 62% in 2007 to 2,826 MW and at 110% in 2008 to 5.95 GW.
Even with this high growth rates of new installations, the total solar
electricity production capacity remains well below one percent of the world
consumption of electricity. Thus, the solar energy market is at a relatively
early stage of development and the extent to which solar modules will be widely
adopted is uncertain. If our products are not accepted by the market, our
business plans, prospects, results of operations and financial condition will
suffer. Moreover, demand for solar modules in our targeted markets may not
develop or may develop to a lesser extent than we anticipate. The development of
a successful market for our proposed products and our ability to sell our
products at a lower price per watt may be affected by a number of factors, many
of which are beyond our control, including, but not limited to:
·
|
failure
to produce solar power products that compete favorably against other solar
power products on the basis of cost, quality and
performance;
|
·
|
competition
from conventional energy sources and alternative distributed generation
technologies, such as wind energy;
|
·
|
failure
to develop and maintain successful relationships with suppliers,
distributors and strategic partners;
and
|
·
|
customer
acceptance of our products.
|
If our
proposed products fail to gain sufficient market acceptance, our business plans,
prospects, results of operations and financial condition will
suffer.
We
could become involved in intellectual property disputes that create a drain on
our resources and could ultimately impair our assets.
We rely
on our own proprietary technology for solar celss, trade secrets, and our
industry expertise and knowhow for our product. We do not knowingly infringe on
patents, copyrights or other intellectual property rights owned by other
parties; however, in the event of an infringement claim, we may be required to
spend a significant amount of money to defend a claim, develop a non-infringing
alternative or to obtain licenses. We may not be successful in developing such
an alternative or obtaining licenses on reasonable terms, if at all. Any
litigation, even if without merit, could result in substantial costs and
diversion of our resources and could materially and adversely affect our
business and operating results.
16
We
are exposed to risks associated with product liability claims in the event that
the use or installation of our products results in injury or damage, and we have
limited insurance coverage to protect against such claims.
Since our
products are electricity-producing devices, it is possible that users could be
injured or killed by our products, whether by product malfunctions, defects,
improper installation or other causes. As a planned manufacturer of products
that will be used by consumers, we will face an inherent risk of exposure to
product liability claims or class action suits in the event that the use of the
solar power products we sell or install results in injury or damage. 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, to the extent that a claim is brought against us we may not have
adequate resources 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 which could have a materially adverse effect on our
financial results.
Environmental
obligations and liabilities could have a substantial negative impact on our
financial condition, cash flows and profitability.
Our end
products have no toxic materials. However, we use chemicals in the manufacturing
process that are widely used by the semiconductor and other industries in
producing our finished product. Therefore, we are subject to a variety of
federal, state, local and foreign laws and regulations relating to the
protection of the environment, including those governing the use, handling,
generation, processing, storage, transportation and disposal of, or human
exposure to, hazardous and toxic materials, the discharge of pollutants into the
air and water, and occupational health and safety. We are also subject to
environmental laws that allow regulatory authorities to compel, or seek
reimbursement for, cleanup of environmental contamination at sites now or
formerly owned or operated by us and at facilities where our waste is or has
been disposed. We may 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. Also, future
developments such as more aggressive enforcement policies, the implementation of
new, more stringent laws and regulations, or the discovery of presently unknown
environmental conditions or non-compliance may require expenditures that could
have a material adverse effect on our business, results of operations and
financial condition. Further, greenhouse gas emissions have increasingly become
the subject of international, national, state and local attention. Although
fixture regulations could potentially lead to an increased use of alternative
energy, there can be no guarantee that such future regulations will encourage
solar technology. Given our limited history of operations, it is difficult to
predict future environmental expenses.
Risks
Relating to Our Industry
The reduction or elimination of
government subsidies and economic incentives for on-grid solar electricity
applications could reduce demand for our solar modules, lead to a reduction in
our net sales and harm our operating results.
The
reduction, elimination or expiration of government subsidies and economic
incentives for solar electricity could result in the diminished competitiveness
of solar energy relative to conventional and non-solar renewable sources of
energy, which would negatively affect the growth of the solar energy industry
overall and our net sales specifically. We believe that the near-term growth of
the market for on-grid applications, where solar energy is used to supplement
the electricity a consumer purchases from the utility network, depends
significantly on the availability and size of government and economic
incentives. Currently the cost of solar electricity substantially exceeds the
retail price of electricity in every significant market in the world. As a
result, federal, state and local governmental bodies in many countries have
provided subsidies in the form of tariffs, rebates, tax write-offs and other
incentives to end-users, distributors, systems integrators and manufacturers of
photovoltaic products. Many of these government incentives could expire,
phase-out over time, exhaust the allocated funding or require renewal by the
applicable authority. Even though the price of electricity from conventional
sources continues to rise, a reduction, elimination or expiration of government
subsidies and economic incentives for solar electricity could result in the
diminished competitiveness of solar energy, which would in turn hurt our sales
and financial condition.
17
Technological
changes in the solar power industry could render our solar power products
uncompetitive or obsolete, which could reduce our market share and cause our
revenues to decline.
The solar
power market is characterized by continually changing technology requiring
improved features, such as increased efficiency, higher power output and lower
price. Our failure to further refine our technology and develop and introduce
new solar power products could cause our products to become uncompetitive or
obsolete, which could reduce our market share and cause our revenues to decline.
The solar power industry is rapidly evolving and competitive. We will need to
invest significant financial resources in research and development to keep pace
with technological advances in the solar power industry and to effectively
compete in the future. A variety of competing solar power technologies are under
development by other companies that could result in lower manufacturing costs or
higher product performance than those expected for our solar power products. Our
development efforts may be rendered obsolete by the technological advances of
others, and other technologies may prove more advantageous for the
commercialization of solar power products.
If
solar power technology is not suitable for widespread adoption or sufficient
demand for solar power products does not develop or takes longer to develop than
we anticipate, our revenues would not significantly increase and we would be
unable to achieve or sustain profitability.
Solarbuzz
reports in the MarketbuzzTM 2008
and 2009 reports that new installations to produce electricity from solar
photovoltaics grew at 62% in 2007 to 2,826 MW and at 110% in 2008 to 5.95 GW.
However, the global solar electricity production capacity remains well below one
percent of the world consumption of electricity. Thus, the market for solar
power products is emerging and rapidly evolving, and its future success is
uncertain. If solar power technology proves unsuitable for widespread commercial
deployment or if demand for solar power products fails to develop sufficiently,
we would be unable to generate enough revenues to achieve and sustain
profitability. In addition, demand for solar power products in the markets and
geographic regions we target may not develop or may develop more slowly than we
anticipate. Many factors will influence the widespread adoption of solar power
technology and demand for solar power products, including:
·
|
cost-effectiveness
of solar power technologies as compared with conventional and non-solar
alternative energy technologies;
|
·
|
performance
and reliability of solar power products as compared with conventional and
non-solar alternative energy
products;
|
·
|
success
of alternative distributed generation technologies such as fuel cells,
wind power and micro turbines;
|
·
|
fluctuations
in economic and market conditions that impact the viability of
conventional and non-solar alternative energy sources, such as increases
or decreases in the prices of oil and other fossil
fuels;
|
·
|
capital
expenditures by customers that tend to decrease when the United States or
global economy slows;
|
·
|
continued
deregulation of the electric power industry and broader energy industry;
and
|
·
|
availability
of government subsidies and
incentives.
|
18
We
face intense competition, and many of our competitors have substantially greater
resources than we do.
We
operate in a competitive environment that is characterized by price fluctuation
and technological change. We compete with major international and domestic
companies. Some of our current and potential competitors have greater market
recognition and customer bases, longer operating histories and substantially
greater financial, technical, marketing, distribution, purchasing,
manufacturing, personnel and other resources than we do. In addition, many of
our competitors are developing and are currently producing products based on new
solar power technologies that may ultimately have costs similar to, or lower
than, our projected costs. As a result, they may be able to respond more quickly
to changing customer demands or to devote greater resources to the development,
promotion and sales of solar and solar-related products than we
can.
Our
business plan relies on sales of our solar power products and our competitors
with more diversified product offerings may be better positioned to withstand a
decline in the demand for solar power products. Some of our competitors own,
partner with, have longer term or stronger relationships with solar cell
providers that could result in them being able to obtain solar cells on a more
favorable basis than us. It is possible that new competitors or alliances among
existing competitors could emerge and rapidly acquire significant market share,
which would harm our business. If we fail to compete successfully, our business
would suffer and we may lose or be unable to gain market share.
We
may be vulnerable to the efforts of electric utility companies lobbying to
protect their revenue streams and from competition from solar power
systems.
Electric
utility companies could lobby for a change in the relevant legislation in their
markets to protect their current revenue streams. Any adverse changes to the
regulations and policies of the solar energy industry could deter end-user
purchases of solar power products and investment in the research and development
of solar power technology. In addition, electricity generated by solar power
systems mostly competes with expensive peak hour electricity, rather than the
less expensive average price of electricity. Even though new conventional power
plants to meet peak hour electricity demand may require lengthy permitting and
construction process, utilities could modify their peak hour pricing policies to
such as flat rate pricing. This would require solar power systems to
achieve lower prices in order to compete with the price of electricity. Any
changes to government regulations or utility policies that favor electric
utility companies could reduce our competitiveness and cause a significant
reduction in demand for our products.
A
drop in the retail price of conventional energy or non-solar alternative energy
sources may negatively impact our profitability.
There is
a general global awareness to reduce emission of carbon dioxide and other
greenhouse gases that harm the environment which is driving the demand for
renewable sources of energy. In spite of that, we believe that a customer’s
decision to purchase or install solar power capabilities is primarily driven by
the cost of electricity from other sources and their anticipated return on
investment resulting from solar power systems. Fluctuations in economic and
market conditions that impact the prices of conventional and non-solar
alternative energy sources, such as decreases in the prices of oil and other
fossil fuels, could cause the demand for solar power systems to decline, which
would have a negative impact on our profitability. Changes in utility electric
rates or net metering policies could also have a negative effect on our
business.
Existing regulations and changes to
such regulations concerning the electrical utility industry may present technical, regulatory and
economic barriers to the purchase and use of solar power products, 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 internal policies and regulations
promulgated by electric utilities. These regulations and policies often relate
to electricity pricing and technical interconnection of customer-owned
electricity generation. In the U.S. and in a number of other countries, these
regulations and policies are being modified and may continue to be modified.
Customer purchases of; or further investment in the research and development of;
alternative energy sources, including solar power technology, could be deterred
by these regulations and policies, which could result in a significant reduction
in the potential demand for our solar power products. For example, utility
companies commonly charge fees to larger, industrial customers for disconnecting
from the electric gild or for having the capacity to use power from the electric
grid for back-up purposes. These fees could increase the cost to our customers
of using our solar power products and make them less desirable, thereby harming
our business, prospects, results of operations and financial
condition.
We
anticipate that our solar power products and their installation will be subject
to oversight and regulation in accordance with national, state and local laws
and ordinances relating to building codes, safely, environmental protection,
utility interconnection and metering and related matters. There is also a burden
in having to track the requirements of individual states and design equipment to
comply with the varying standards. Any new government regulations or utility
policies pertaining to our solar power products may result in significant
additional expenses to us and our resellers and their customers and, as a
result, could cause a significant reduction in demand for our solar power
products.
19
Risks
Relating to our Organization and our Common Stock
As
a result of the Merger, Magnolia Solar became a subsidiary of ours and since we
are subject to the reporting requirements of federal securities laws, this can
be expensive and may divert resources from other projects, thus impairing its
ability grow.
As a
result of the Merger, Magnolia Solar became a subsidiary of ours and,
accordingly, is subject to the information and reporting requirements of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), and other
federal securities laws, including compliance with the Sarbanes-Oxley Act of
2002 (the “Sarbanes-Oxley Act”). The costs of preparing and filing
annual and quarterly reports, proxy statements and other information with the
SEC (including reporting of the Merger) and furnishing audited reports to
stockholders will cause our expenses to be higher than they would have been if
Magnolia Solar had remained privately held and did not consummate the
Merger. In addition, we will incur substantial expenses in connection
with the preparation of the registration statement and related documents
required under the terms of the Private Placement that require us to register
the shares of common stock included in the units and the Warrant
Shares.
It may be
time consuming, difficult and costly for us to develop and implement the
internal controls and reporting procedures required by the Sarbanes-Oxley
Act. We will need to hire additional financial reporting, internal
controls and other finance personnel in order to develop and implement
appropriate internal controls and reporting procedures. If we are
unable to comply with the internal controls requirements of the Sarbanes-Oxley
Act, then we may not be able to obtain the independent accountant certifications
required by such act, which may preclude us from keeping our filings with the
SEC current and interfere with the ability of investors to trade our securities
and for our shares to continue to be quoted on the OTC Bulletin Board or to list
on any national securities exchange.
If
we fail to establish and maintain an effective system of internal control, we
may not be able to report our financial results accurately or to prevent
fraud. Any inability to report and file our financial results
accurately and timely could harm our reputation and adversely impact the trading
price of our common stock.
Effective
internal control is necessary for us to provide reliable financial reports and
prevent fraud. If we cannot provide reliable financial reports or
prevent fraud, we may not be able to manage our business as effectively as we
would if an effective control environment existed, and our business and
reputation with investors may be harmed. As a result, our small size
and any current internal control deficiencies may adversely affect our financial
condition, results of operation and access to capital. We have not
performed an in-depth analysis to determine if historical un-discovered failures
of internal controls exist, and may in the future discover areas of our internal
control that need improvement.
Public
company compliance may make it more difficult to attract and retain officers and
directors.
The
Sarbanes-Oxley Act and rules implemented by the SEC have required changes in
corporate governance practices of public companies. As a public
company, we expect these rules and regulations to increase our compliance costs
in 2009 and beyond and to make certain activities more time consuming and
costly. As a public company, we also expect that these rules and
regulations may make it more difficult and expensive for us to obtain director
and officer liability insurance and we may be required to accept reduced policy
limits and coverage or incur substantially higher costs to obtain the same or
similar coverage. As a result, it may be more difficult for us to
attract and retain qualified persons to serve on our board of directors or as
executive officers, and to maintain insurance at reasonable rates, or at
all.
Because
we became public by means of a reverse merger, we may not be able to attract the
attention of major brokerage firms.
There may
be risks associated with us becoming public through a “reverse
merger.” Securities analysts of major brokerage firms may not provide
coverage of us since there is no incentive to brokerage firms to recommend the
purchase of our common stock. No assurance can be given that
brokerage firms will, in the future, want to conduct any offerings on behalf of
our post-Merger company.
Our
stock price may be volatile.
The
market price of our common stock is likely to be highly volatile and could
fluctuate widely in price in response to various factors, many of which are
beyond our control, including the following:
·
|
changes
in our industry;
|
·
|
competitive
pricing pressures;
|
·
|
our
ability to obtain working capital
financing;
|
·
|
additions
or departures of key personnel;
|
·
|
limited
“public float” following the Merger, in the hands of a small number of
persons whose sales or lack of sales could result in positive or negative
pricing pressure on the market price for our common
stock;
|
·
|
sales
of our common stock (particularly following effectiveness of the resale
registration statement required to be filed in connection with the Private
Placement);
|
·
|
our
ability to execute our business
plan;
|
·
|
operating
results that fall below
expectations;
|
·
|
loss
of any strategic relationship;
|
·
|
regulatory
developments;
|
·
|
economic
and other external factors;
|
·
|
period-to-period
fluctuations in our financial results;
and
|
·
|
inability
to develop or acquire new or needed
technology.
|
20
In
addition, the securities markets have from time to time experienced significant
price and volume fluctuations that are unrelated to the operating performance of
particular companies. These market fluctuations may also materially
and adversely affect the market price of our common stock.
We
have not paid dividends in the past and do not expect to pay dividends in the
future. Any return on investment may be limited to the value of our
common stock.
We have
never paid cash dividends on our common stock and do not anticipate doing so in
the foreseeable future. The payment of dividends on our common stock
will depend on earnings, financial condition and other business and economic
factors affecting us at such time as our board of directors may consider
relevant. If we do not pay dividends, our common stock may be less
valuable because a return on your investment will only occur if our stock price
appreciates.
Our
shares of common stock are very thinly traded, and the price may not reflect our
value and there can be no assurance that there will be an active market for our
shares of common stock either now or in the future.
Our
shares of common stock are very thinly traded, only a small percentage of our
common stock is available to be traded and is held by a small number of holders
and the price, if traded, may not reflect our actual or perceived value. There
can be no assurance that there will be an active market for our shares of common
stock either now or in the future. The market liquidity will be dependent on the
perception of our operating business, among other things. We will take
certain steps including utilizing investor awareness campaigns, press releases,
road shows and conferences to increase awareness of our business and any
steps that we might take to bring us to the awareness of investors may require
we compensate consultants with cash and/or stock. There can be no assurance that
there will be any awareness generated or the results of any efforts will result
in any impact on our trading volume. Consequently, investors may not be able to
liquidate their investment or liquidate it at a price that reflects the value of
the business and trading may be at an inflated price relative to the performance
of our company due to, among other things, availability of sellers of our
shares. If a market should develop, the price may be highly volatile. Because
there may be a low price for our shares of common stock, many brokerage firms or
clearing firms may not be willing to effect transactions in the securities or
accept our shares for deposit in an account. Even if an investor finds a broker
willing to effect a transaction in the shares of our common stock, the
combination of brokerage commissions, transfer fees, taxes, if any, and any
other selling costs may exceed the selling price. Further, many lending
institutions will not permit the use of low priced shares of common stock as
collateral for any loans.
A
significant number of shares have been issued to our counsel and others as
payment for services. In the aggregate, approximately 1.5 million
shares of freely trading stock will be available for trading immediately
following closing of the Merger.
There
is currently no liquid trading market for our common stock and we cannot ensure
that one will ever develop or be sustained.
To date
there has been no liquid trading market for our common stock. We
cannot predict how liquid the market for our common stock might
become. We anticipate having our common stock continue to be quoted
for trading on the OTC Bulletin Board, however, we cannot be sure that such
quotations will continue. As soon as is practicable, we anticipate
applying for listing of our common stock on either the NYSE Amex, The NASDAQ
Capital Market or other national securities exchange, assuming that we can
satisfy the initial listing standards for such exchange. We currently
do not satisfy the initial listing standards, and cannot ensure that we will be
able to satisfy such listing standards or that our common stock will be accepted
for listing on any such exchange. Should we fail to satisfy the
initial listing standards of such exchanges, or our common stock is otherwise
rejected for listing and remain listed on the OTC Bulletin Board or suspended
from the OTC Bulletin Board, the trading price of our common stock could suffer
and the trading market for our common stock may be less liquid and our common
stock price may be subject to increased volatility.
Furthermore,
for companies whose securities are traded in the OTC Bulletin Board, it is more
difficult (1) to obtain accurate quotations, (2) to obtain coverage for
significant news events because major wire services generally do not publish
press releases about such companies, and (3) to obtain needed
capital.
We are
not required to register for sale the warrants, and do not intend to register
the warrants for resale by the holders. As a result, the only value
in the warrants will be in the “spread” between the trading price of our common
stock and the exercise price of the warrants.
Our
common stock may be deemed a “penny stock,” which would make it more difficult
for our investors to sell their shares.
Our
common stock may be subject to the “penny stock” rules adopted under Section
15(g) of the Exchange Act. The penny stock rules generally apply to
companies whose common stock is not listed on The NASDAQ Stock Market or other
national securities exchange and trades at less than $4.00 per share, other than
companies that have had average revenue of at least $6,000,000 for the last
three years or that have tangible net worth of at least $5,000,000 ($2,000,000
if the company has been operating for three or more years). These
rules require, among other things, that brokers who trade penny stock to persons
other than “established customers” complete certain documentation, make
suitability inquiries of investors and provide investors with certain
information concerning trading in the security, including a risk disclosure
document and quote information under certain circumstances. Many
brokers have decided not to trade penny stocks because of the requirements of
the penny stock rules and, as a result, the number of broker-dealers willing to
act as market makers in such securities is limited. If we remain
subject to the penny stock rules for any significant period, it could have an
adverse effect on the market, if any, for our securities. If our
securities are subject to the penny stock rules, investors will find it more
difficult to dispose of our securities.
Offers
or availability for sale of a substantial number of shares of our common stock
may cause the price of our common stock to decline.
If our
stockholders sell substantial amounts of our common stock in the public market,
including shares issued in the Private Placement upon the effectiveness of the
registration statement required to be filed, or upon the expiration of any
statutory holding period, under Rule 144, or upon expiration of lock-up periods
applicable to outstanding shares, or issued upon the exercise of outstanding
options or warrants, it could create a circumstance commonly referred to as an
“overhang” and in anticipation of which the market price of our common stock
could fall. The existence of an overhang, whether or not sales have
occurred or are occurring, also could make more difficult our ability to raise
additional financing through the sale of equity or equity-related securities in
the future at a time and price that we deem reasonable or
appropriate. In addition, the shares of common stock underlying the
notes and warrants sold in the private placement will be freely tradable upon
the earlier of: (i) effectiveness of a registration statement covering such
shares and (ii) the date on which such shares may be sold without registration
pursuant to Rule 144 (or other applicable exemption) under the Securities
Act.
21
We
may apply the proceeds of the Private Placement to uses that ultimately do not
improve our operating results or increase the value of your
investment.
We intend
to use a portion of the net proceeds from the Private Placement, including
proceeds received upon the exercise of the warrants, for general working capital
purposes. Therefore, our management will have broad discretion in how
we use these proceeds. These proceeds could be applied in ways that
do not ultimately improve our operating results or otherwise increase the value
of the investment in units sold in the Private Placement.
Because
our directors and executive officers are among our largest stockholders, they
can exert significant control over our business and affairs and have actual or
potential interests that may depart from those of our other
stockholders.
Our
directors and executive officers will own or control a significant percentage of
the common stock following the Merger and completion of the Private
Placement. Additionally, the holdings of our directors and executive
officers may increase in the future upon vesting or other maturation of exercise
rights under any of the options or warrants they may hold or in the future be
granted or if they otherwise acquire additional shares of our common
stock. Following the Merger, our current officers and directors own
an aggregate of 12,312,000 shares of our common stock or a total of
approximately 67.98% of the voting power of all our outstanding shares of
stock. The interests of such persons may differ from the interests of
our other stockholders, including purchasers of units in the Private
Placement. As a result, in addition to their board seats and offices,
such persons will have significant influence over and control all corporate
actions requiring stockholder approval, irrespective of how the Company’s other
stockholders, including purchasers in the Private Placement, may vote, including
the following actions:
●
|
to
elect or defeat the election of our
directors;
|
●
|
to
amend or prevent amendment of our Certificate of Incorporation or
By-laws;
|
●
|
to
effect or prevent a merger, sale of assets or other corporate transaction;
and
|
●
|
to
control the outcome of any other matter submitted to our stockholders for
vote.
|
In
addition, such persons’ stock ownership may discourage a potential acquirer from
making a tender offer or otherwise attempting to obtain control of the Company,
which in turn could reduce our stock price or prevent our stockholders from
realizing a premium over our stock price.
Exercise
of options and warrants may have a dilutive effect on our common
stock.
If the
price per share of our common stock at the time of exercise of any warrants,
options, or any other convertible securities is in excess of the various
exercise or conversion prices of such convertible securities, exercise or
conversion of such convertible securities would have a dilutive effect on our
common stock. As of December31, 2009, we had (i) outstanding warrants to
purchase 2,021,600 shares of our common stock at an exercise price of $1.65 per
share, (ii) outstanding placement agent warrants to purchase 566,428 shares of
our common stock (404,320 of which were issued in connection with the Private
Placement and 162,108 of which were issued in connection with the engagement of
the placement gent) at an exercise price of $1.05 per share, and (iii)
outstanding notes which are convertible into an aggregate of 2,021,600 shares of
our common stock at a conversion price of $1.3157895 per share. Further, any
additional financing that we secure may require the granting of rights,
preferences or privileges senior to those of our common stock and which result
in additional dilution of the existing ownership interests of our common
stockholders.
22
Security
Ownership of Certain Beneficial Owners and Management
The
following tables set forth certain information as of December 31, 2009 regarding
the beneficial ownership of our common stock, taking into account the
consummation of the Merger, the Private Placement and the Split-Off, by (i) each
person or entity who, to our knowledge, owns more than 5% of our common stock;
(ii) our executive officers named in the Summary Compensation Table below; (iii)
each director; and (iv) all of our executive officers and directors as a group.
Unless otherwise indicated in the footnotes to the following table, each person
named in the table has sole voting and investment power and that person’s
address is c/o Magnolia Solar Corporation, 54 Cummings Park, Suite 316, Woburn,
MA 01801. Shares of common stock subject to options, warrants, or
other rights currently exercisable or exercisable within 60 days of December 31,
2009, are deemed to be beneficially owned and outstanding for computing the
share ownership and percentage of the stockholder holding such options, warrants
or other rights, but are not deemed outstanding for computing the percentage of
any other stockholder.
Name
of
Beneficial
Owner
|
Number
of Shares Beneficially Owned
|
Percentage
Beneficially
Owned (1)
|
||||||
5%
Owners:
|
||||||||
East
Inlet Partners
113
East Inlet Drive
Palm
Beach, FL 33480
Mill
Valley, CA 94941
|
1,232,000 | 6.80 | % | |||||
Executive Officers and
Directors:
|
||||||||
Ashok
Sood
|
6,156,000 | 33.99 | % | |||||
Yash
Puri
|
6,156,000 | 33.99 | % | |||||
All
executive officers and directors as a group (two persons)
|
12,312,000 | 67.98 | % |
____________________
(1)
|
Based
on 18,110,800 shares of our common stock issued and outstanding prior to
the effectuation of the forward
split.
|
Executive
Officers and Directors
The
following persons became our executive officers and directors on December 31,
2009, upon effectiveness of the Merger, and hold the positions set forth
opposite their respective names.
Name
|
Age
|
Position
with the Company
|
||
Dr.
Ashok Sood
|
62
|
President,
Chief Executive Officer and Director
|
||
Dr.
Yash Puri
|
62
|
Executive
Vice President and Chief Financial
Officer
|
23
Biographies
Dr.
Ashok K. Sood, President and CEO, Magnolia Solar Inc
Dr. Ashok
Sood was appointed as President, Chief Executive Officer and as a Director of
the Company upon closing of the Merger. He is a 30-year industry veteran with
experience that includes developing and managing solar cells, optical, and
optoelectronics technology products for several major corporations, including
Lockheed-Martin, BAE Systems, Loral, Honeywell, and Tyco International. Dr. Sood
was instrumental in development and managed optical and optoelectronics
technology for these companies as a manager in the optoelectronics group and
worked to develop ribbon silicon solar cells, CdTe, CdS and HgCdTe, GaN/AlGaN,
ZnO semiconductor devices. Many of the technologies and products developed have
become large product lines at these companies.
Dr Sood
was involved in design and development of solar cells at Mobil-Tyco Solar Energy
Corporation now under the management of RWE-Schott Solar. He contributed to
design and development of Silicon Ribbon solar cells and was instrumental in
design improvements to enhance the solar cell efficiency of EFG ribbon solar
cells. Dr Sood was also Senior Engineer at Tyco Laboratories, Inc., (Now Tyco
International) where he built and set up optical and electronic measurement
facilities for silicon p-n junction solar cells and developed processes for
building high efficiency solar cells for space applications. This
work led to a joint venture with Kyoto Ceramics in Japan.
Dr. Sood
has also led the development of optoelectronics and imaging devices using CdTe,
HgCdTe, GaN and ZnO for various defense applications, including EO, IR and UV
imaging, secure communications, and self-protection applications. Dr. Sood has
led the efforts resulting in DARPA sponsorship of several Magnolia
projects. He has also led various industry and University teams
bridging centers of excellence for material sciences across the United
States.
Dr. Sood
received his Ph.D. and M.S. in Engineering from the University of Pennsylvania
and has an M.S. and a B.S. in Physics (Honors) from Delhi University in
India. At the University of Pennsylvania, he was part of the
Optical/Semiconductor Materials technology group, where he attended Physics
courses given by two Nobel Laureates. His Ph.D. dissertation was on
the study of optoelectronic properties of PbS/CdS for detector and laser
applications in the visible to near infrared spectral bands. Dr. Sood
has also taken several management courses and also attended professional
development programs organized by the Wharton School at the University of
Pennsylvania. Dr. Sood is a member of IEEE and the SPIE. He has
chaired sessions on optical and nanotechnology at conferences of those
organizations. He has also been on several expert panels for future direction of
Thin Film Solar Cells.
Dr.
Yash R. Puri, Executive Vice President and CFO
Dr. Yash
R. Puri was appointed Executive Vice President and Chief Financial Officer
of the Company upon closing of the Merger He brings many years of photovoltaic
technology and applications experience both in the private sector and in the
academia. Dr. Puri brings experience in startup environment and growth
management to the Magnolia team.
24
Previously
Dr. Puri was VP of Finance for GT Equipment Technologies, Inc., (presently known
as GT Solar, Inc., NASDAQ: SOLR), a privately held equipment manufacturer
serving the semiconductor and the photovoltaic industries. He helped this high
technology startup, formed in 1994, to grow to revenue of about $20 million. The
company won many rewards and much recognition; it was a New England finalist in
the Ernst & Young Entrepreneur of the Year award. In this position, he was
actively involved in running a high-technology business, and he successfully
negotiated a $3.5 million line of credit with a major bank, established an audit
relationship with one of the big-five accounting firms, established a foreign
sales corporation, implemented a R&D credit program to reduce tax
liabilities, and established company-wide management software to integrate
manufacturing and financial operations. Near the end of his term there, he also
successfully negotiated the company’s first subordinated debt
issue.
Dr. Puri
is also a Professor of Finance at the University of Massachusetts. Dr. Puri was
Principal Investigator of a photovoltaic commercialization project as well as
several other grants, and has been a director of a technology commercialization
program for engineering students, Chairman of the Management and Finance
Department, and acting Associate Dean. In these positions, he successfully
managed several externally funded projects and developed many years of
experience in technology and growth management.
Dr. Puri
holds a B.S. in Physics, a M.S. in Solid State Physics, and a M.B.A. from the
University of Delhi. He also holds a M.B.A. in Finance and a D.B.A.
in International Business from Indiana University, Bloomington. He has published
many papers and has made numerous conference presentations.
Executive
Compensation
We have
not had compensation arrangements in place for our executive officers and have
not finalized any plan to compensate our executive officers in the future for
their services. We intend to enter into employment agreements with our executive
officers in the near future We expect that the compensation arrangements may be
comprised of a combination of cash and/or equity awards.
Outstanding
Equity Awards at Fiscal Year-End
There
were no outstanding equity awards issued to our chief executive officer as of
December 31, 2008.
Director
Compensation
We have
not had compensation arrangements in place for members of our Board of Directors
and have not finalized any plan to compensate directors in the future for their
services as directors. We may develop a compensation plan for our independent
directors in order to attract qualified persons and to retain them. We expect
that the compensation arrangements may be comprised of a combination of cash
and/or equity awards.
25
Directors’
and Officers’ Liability Insurance
We are in
the process of obtaining directors’ and officers’ liability insurance insuring
our directors and officers against liability for acts or omissions in their
capacities as directors or officers, subject to certain
exclusions. Such insurance also insures us against losses which we
may incur in indemnifying our officers and directors. In addition, we
have entered into indemnification agreements with key officers and directors and
such persons shall also have indemnification rights under applicable laws, and
our certificate of incorporation and bylaws.
Board
Independence
We do not
believe that any of our directors is an “independent director,” as that term is
defined by listing standards of the national exchanges and SEC rules, including
the rules relating to the independence standards of an audit committee and the
non-employee director definition of Rule 16b-3 promulgated under the Exchange
Act.
Certain
Relationships and Related Transactions
Except as
set forth below, during the past three years, there have been no transactions,
whether directly or indirectly, between the Company and any of its officers,
directors or their family members.
Loan
Payable to Magnolia Optical Technologies, Inc.
Magnolia
Solar has an unsecured, loan payable outstanding with Magnolia Optical
Technologies, Inc., (“Optical”) a related party through common ownership.
Optical provided necessary working capital for the Company in their initial
period to assist them in the payment of certain consulting expenses. Optical
advanced $20,000 to the Company from September 2008 through December 2008 and an
additional $50,000 in September 2009. The $70,000 remains outstanding as of
September 30, 2009.
These
amounts accrue interest at three and one-half percent (3.50%) per annum.
Interest for the nine months ended September 30, 2009 amounted to $552 and is
reflected in the financial statements. Accrued interest as of September 30, 2009
on these loans is $659. There was $2 interest for the period January 8, 2008
(inception) through September 30, 2008 as there was $5,000 outstanding for an
advancement made September 26, 2008.
License
Agreement with Magnolia Optical Technologies, Inc.
Magnolia
Solar entered into a 10-year, renewable, exclusive license with Optical on April
30, 2008 for the exclusive rights of the patented technology related to the
application of Optical’s solar cell technology. Magnolia Solar in return for
this license issued to the shareholders 7,130,000 shares of its common
stock.
Magnolia
Solar is amortizing the license fee over the 120 month term of the Agreement.
Amortization expense through September 30, 2009 amounted to $50,504. The Company
anticipates amortizing $35,650 per year. Magnolia Solar’s management has
determined that the fair value of the license exceeds the book value and thus no
further impairment or amortization is necessary as of September 30, 2009.
Amortization expense for the nine months ended September 30, 2009 and period
January 8, 2008 (inception) through September 30, 2008 was $26,737 and $14,854,
respectively.
26
Item
3.02Unregistered Sales of Equity
Securities
Sales
by Magnolia Solar
During 2008, Mannolia Solar issued an
aggregate of 14,200,000 to its founders for proceeds of $5,000. On
April 30, 2008, Magnolia Solar entered into a 10-year renewable,
exclusive license agreement with Optical, pursuant to which it issued
an aggregate of 7,130,000 shares of common stock to the shareholders,
optionholders and warrant holders of Optical in exchange for the grant of the
license. Thelicense was valued at $356,500. The
shares were issued in a transaction that was exempt from the registration
requirements of the Securities Act pursuant to Section 4(2) of the Securities
Act, which exempts transactions by an issuer not involving a public
offering.
From June
2009 through December 2009, Magnolia Solar sold an aggregate of $340,000
principal amount of 8% secured promissory notes (“Bridge Notes”) in a private
placement transaction. The purchasers of Bridge Notes paid an aggregate gross
purchase price of $340,000 for such Bridge Notes. The Bridge Notes
are due and payable upon the earlier of (i) crtain dates in 2010 or (ii) the
date that Magnolia Solar, or an affiliate such as the Company, consummates an
offering or offerings raising gross proceeds of at least ceratin amounts ranging
from $750,000 tp $1,500,000 (a “Subsequent Financing”). The Private
Placement will result in the Bridge Notes becoming due. The Bridge Notes also
provide that, upon the consummation of a Subsequent Financing, the holders shall
have the right to exchange such Bridge Notes for an amount of securities that
could be purchased in such Subsequent Financing for a purchase price equal to
50% of the Subsequent Financing offering price. The private placement
was made solely to “accredited investors,” as that term is defined in Regulation
D under the Securities Act. The securities sold in the private
placement were not registered under the Securities Act, or the securities laws
of any state, and were offered and sold in reliance on the exemption from
registration afforded by Section 4(2) and Regulation D (Rule 506) under the
Securities Act and corresponding provisions of state securities laws, which
exempt transactions by an issuer not involving any public offering.
In
addition, according to the terms of the Bridge Notes, in the event Magnolia
Solar enters into a reverse merger transaction that has a capital raising
transaction in connection therewith (the “Reverse Merger Financing”), (i) the
holders of $340,000 of Bridge Notes will have the option to exchange such Bridge
Notes for an amount of securities that could be purchased in such Reverse Merger
Financing for a purchase price equal to 50% of the Reverse Merger Financing
offering price. The Private Placement will constitute a Reverse Merger Financing
and, therefore, each holder of Bridge Notes will either be entitled to exchange
the outstanding principal and interest amount of its Bridge Notes for units sold
in the Private Placement. If the holders of all of the Bridge Notes elect to
exchange such Bridge Notes for units in the Private Placement, then the Company
will be required to issue an aggregate of $1,360,000 in Notes and warrants to
purchase an aggregate of 1,033,600 shares of common stock.
Upon the
closing of the Merger, Bridge Notes in the principal amount of $340,000
converted in the Private Placement.
Sales
by the Company
On
January 10, 2008, we issued 1,500,000 shares of our common stock to Zacharey
Zenith, our sole officer and director at that time, at a price of $0.001 per
share.
On March
31, 2008, we issued 1,900,000 shares of common stock to 29 investors in a
private placement pursuant to the exemption from the registration requirements
of the Securities Act provided by Regulation S, (the “2008 Private Placement”).
The aggregate consideration paid for such shares was $38,000. All investors in
such private placement were non-US persons (as defined under SEC
Regulations).
On
December 31, 2009, we accepted subscriptions for a total of 26.6 units in
the Private Placement, consisting of an aggregate of $2,660,000 of original
issue discount senior secured convertible notes and warrants to purchase an
aggregate of 2,021,600 shares of common stock at an exercise price of $1.65 per
share, for a per unit purchase price of $50,000. We received gross
proceeds from such closing of the Private Placement of $990,000, which includes
the $340,000 of bridge notes that were converted in the Private
Placement. The Private Placement was made solely to “accredited
investors,” as that term is defined in Regulation D under the Securities Act.
The securities sold in the Private Placement were not registered under the
Securities Act, or the securities laws of any state, and were offered and sold
in reliance on the exemption from registration afforded by Section 4(2) and
Regulation D (Rule 506) under the Securities Act and corresponding provisions of
state securities laws, which exempt transactions by an issuer not involving any
public offering.
Midtown
Partners & Co., LLC acted as our Placement Agent and received (i) a cash fee
of $154,000, and (ii) seven-year warrants to purchase an aggregate of 404,320
shares of common stock, equal to 10% of the number of shares issuable upon
conversion of the notes and 10% of the shares issuable upon conversion of the
warrants, for an exercise price of $1.05 per share. In addition,
Midtown received seven-year warrants to purchase an additional 152,108 shares of
common stock at an exercise price of $1.05 per share pursuant to their retainer
agreement.
27
Description
of Capital Stock
Authorized
Capital Stock
We have
authorized 75,000,000 shares of common stock, par value $0.001per
share.
Capital
Stock Issued and Outstanding
After
giving effect to the Merger, the issuance of 26.6 units in connection with the
Private Placement and the Split-Off, we have issued and outstanding securities
on a fully diluted basis:
·
|
18,110,800
shares of common stock; and
|
·
|
Outstanding
warrants to purchase 2,588,028 shares of common stock, of which (i)
five-year callable warrants to purchase 2,021,600 shares of common stock
at an exercise price of $1.65 per share were issued to investors in the
Private Placement and (ii) seven -year warrants to purchase 566,428 shares
of common stock at an exercise price of $1.05 per share were issued to the
Placement Agents in connection with the Private Placement;
and
|
·
|
Outstanding
notes which are convertible into 2,021,600 shares of common
stock.
|
Common
Stock
The
holders of our common stock are entitled to one vote per share. In addition, the
holders of our common stock will be entitled to receive ratably such dividends,
if any, as may be declared by our board of directors out of legally available
funds; however, the current policy of our board of directors is to retain
earnings, if any, for operations and growth. Upon liquidation, dissolution or
winding-up, the holders of our common stock will be entitled to share ratably in
all assets that are legally available for distribution. The holders of our
common stock will have no preemptive, subscription, redemption or conversion
rights. The rights, preferences and privileges of holders of our common stock
will be subject to, and may be adversely affected by, the rights of the holders
of any series of preferred stock, which may be designated solely by action of
our board of directors and issued in the future.
Warrants
We issued
five-year warrants to purchase 2,021,600 shares of our common stock, at an
initial exercise price of $1.65 per share to investors in the Private
Placement. We also issued seven-year warrants to the Placement Agents
to purchase an aggregate of 566,428 shares of our common stock, at an initial
cash exercise price of $1.05 per share, in connection with their efforts as
placement agents in connection with the Private Placement. We are
prohibited from effecting the exercise of the warrants to the extent that as a
result of such exercise the holder of the exercised warrants beneficially owns
more than 4.99% in the aggregate of the issued and outstanding shares
of our common stock calculated immediately after giving effect to the issuance
of shares of common stock upon the exercise of the warrants. If at any time
after the 12 month anniversary date of the issuance of the warrants there is no
effective registration statement registering ths shares underlying the warrants,
then the investors have a cashless exercise option upon exercising their
warrants. In addition, so long as the underlying shares of
common stock are registered in an effective registration statement, if and when
shares of the common stock are trading at or above 200% of the exercise price of
the warrants for each of the 60 consecutive trading days and in excess of
200,000 shares of the Company’s common stock has traded for 60 consecutive
trading days, we will have the option to redeem the three-year warrants from the
investors for a purchase price of $0.001 per share. A holder of five-year
warrants will have 10 days following notice to convert their warrants or we may
retire such warrants upon the payment of $0.001 per share underlying each
warrant.
The
warrants contain provisions that protect the holders against dilution by
adjustment of the purchase price in certain events such as stock dividends,
stock splits and other similar events. In addition, the warrants have
anti-dilution protection in the event we issue securities at a value less than
the exercise price of the warrants. No fractional shares will be
issued upon exercise of the warrants. If, upon exercise of the
warrants, a holder would be entitled to receive a fractional interest in a
share, we may, in our discretion, upon exercise, round up to the nearest whole
number the number of shares of our common stock to be issued to the warrant
holder or otherwise equitably adjust the exercise amount and exercise price per
share.
Original
Issue Discount Senior Secured Convertible Promissory Notes
The Company has authorized the issuance
of up to $6,000,000 of Notes, which shall be issued at an original issue
discount of 50%. The principal amount of the Notes shall be due
within 24 months from the date of issuance of the Notes (the “Maturity Date”),
unless the Notes are converted to shares of the Company’s common stock prior to
the maturity date. The Notes are convertible, at the option of the
Holder, into shares of the Company’s common stock at the initial conversion rate
of $1.3157895 ($1.00 on a post-Forward Split basis) for every $1.00 in principal
amount of the Notes. The Notes are secured by a first priority
security interest in the assets of the Company.
28
Dividend
Policy
We have
not previously paid any cash dividends on our common stock and do not anticipate
or contemplate paying dividends on our common stock in the foreseeable
future. We currently intend to utilize all available funds to develop
our business. We can give no assurances that we will ever have excess
funds available to pay dividends.
Registration
Rights
In
connection with the Private Placement, we granted the investors piggy-back
registration rights which permit the investors to “piggy-back” onto other
registration statements that are filed by the Company, with certain
exceptions.
Indemnification
of Directors and Officers
In
accordance with the provisions in our articles of incorporation, we will
indemnify an officer, director, or former officer or director, to the full
extent permitted by law.
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 foregoing provisions, 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 a claim for indemnification against
such liabilities (other than the payment by us of expenses incurred or paid by a
director, officer or controlling person of us in the successful 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 our counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
Trading
Information
Our
common stock is currently approved for quotation on the OTC Bulletin Board
maintained by the Financial Industry Regulatory Authority, Inc. (FINRA) under
the symbol MBSV.OB. We have notified the OTC Bulletin Board of our name change
and will obtain a new symbol upon approval of the Merger and our name
change.
The
transfer agent for our common stock is Island Stock Transfer. We will serve as
warrant agent for the outstanding warrants.
29
Item
4.01 Change in
Registrant’s Certifying Accountant.
On December 31, 2009, the board of
directors of the Company approved the dismissal of John Kinross-Kennedy,
Certified Public Accountant (“Kinross Kennedy”) as the Company’s independent
registered public accounting firm. Kinross-Kennedy’s dismissal was
effective immediately. In addition, the board of directors of the
Company approved a change in fiscal year of the Company from March 31 to
December 31.
During
the fiscal years ended March 31, 2009 and 2008, Kinross-Kennedy’s reports on the
Company's financial statements did not contain an adverse opinion or disclaimer
of opinion, and was not qualified or modified as to uncertainty, audit scope or
accounting principles except, Kinross-Kennedy’s audit reports for the years
ended March 31, 2009 and 2008 stated that several factors raised substantial
doubt about the Company’s ability to continue as a going concern and that the
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
During
the fiscal years ended March 31, 2009 and 2008 and the subsequent period through
December 31, 2009, (i) there were no disagreements between the Company and
Kinross-Kennedy on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure which, if not resolved to
the satisfaction of Kinross-Kennedy would have caused Kinross-Kennedy to make
reference to the matter in its reports on the Company's financial statements;
and (ii) there were no reportable events as the term described in
Item 304(a)(1)(iv) of Regulation S-K.
On
January 5, 2010, the Company provided Kinross-Kennedy with a copy of the
disclosures it is making in response to Item 4.01 on this Form 8-K, and has
requested that Kinross-Kennedy furnish it with a letter addressed to the
Securities and Exchange Commission stating whether it agrees with the above
statements. A copy of the letter, dated January 6, 2009, is filed as
Exhibit 16.1 (which is incorporated by reference herein) to this Current Report
on Form 8-K.
On
December 31, 2009, the Company engaged KBL LLP (“KBL”) as its independent
registered public accounting firm for the Company’s fiscal year ended December
31, 2009. The change in the Company’s independent registered public accounting
firm was approved by the Company’s Board of Directors on December 31,
2009.
During
the years ended March 31, 2009 and 2008 and the subsequent interim period
through December 31, 2009, the Company did not consult with KBL regarding either
(i) the application of accounting principles to a specific completed or
contemplated transaction, or the type of audit opinion that might be rendered on
the Company’s financial statements or (ii) any matter that was either the
subject of a disagreement or event identified in response to (a)(1)(iv) of Item
304 of Regulation S-K.
Item 5.01 Changes in Control of Registrant
Reference
is made to the disclosure set forth under Item 2.01 of this Current Report on
Form 8-K, which disclosure is incorporated herein by reference.
Item
5.02 Departure of
Directors or Certain Officers; Election of Directors; Appointment of Certain
Officers; Compensatory Arrangements of Certain Officers
Our
officers resigned as of December 31, 2009, effective upon the closing of the
Merger. Reference is made to the disclosure set forth under Item 2.01
of this Current Report on Form 8-K, which disclosure is incorporated herein by
reference.
Item
5.03 Amendments to
Articles of Incorporation or Bylaws; Change in Fiscal Year
On
December 31, 2009, our board of directors approved the filing of a Certificate
of Change to our Articles of Incorporation in order to affect a 1.3157895:1
forward split of our authorized and issued and outstanding shares of common
stock. In addition,
our board of directors approved a change in the fiscal year of the Company from
March 31 to December 31 and the adoption of amended and restated
bylaws. On December 31, 2009, the Company’s wholly-owned subsidiary,
Magnolia Solar Corporation, a Nevada corporation, was merged into and with the
Company. In connection with the merger, the Company’s name was
changed from “Mobilis Relocation Services Inc.” to “Magnolia Solar
Corporation.”
Item
5.06 Change in Shell
Company Status
As a
result of the consummation of the Merger described in Item 2.01 of this Current
Report on Form 8-K, we believe that we are no longer a shell corporation as that
term is defined in Rule 405 of the Securities Act and Rule 12b-2 of the Exchange
Act.
Item
9.01 Financial Statements
and Exhibits
(a) Financial Statements of Businesses
Acquired. In accordance with Item 9.01(a), (i) Magnolia
Solar’s audited financial statements for the fiscal years ended December 31,
2008 and 2007, and (ii) Magnolia Solar’s unaudited financial statements for the
nine-month interim period ended September 30, 2009, are filed in this Current
Report on Form 8-K as Exhibit 99.1 and Exhibit 99.2, respectively.
(b) Pro Forma Financial
Information. In accordance with Item 9.01(b), our pro forma
financial statements are filed in this Current Report on Form 8-K as Exhibit
99.3.
30
(d) Exhibits.
The
exhibits listed in the following Exhibit Index are filed as part of this Current
Report on Form 8-K.
Exhibit No.
|
Description
|
|
2.1
|
Agreement
and Plan of Merger, dated as of December 31, 2009, by and among Mobilis
Relocation Services, Inc., Magnolia Solar, Inc.. and Magnolia
Solar Acquisition Corp.
|
|
2.2
|
Certificate
of Merger, dated December 31, 2009 merging Magnolia Solar Acquisition
Corp. with and into Magnolia Solar, Inc.
|
|
2.3
|
Articles
of Merger, dated December 31, 2009 merging Magnolia Solar Corporation into
and with Mobilis Relocation Services Inc.
|
|
3.1
|
Certificate
of Change
|
|
3.2
|
Amended
and Restated Bylaws
|
|
10.1
|
Form
of Subscription Agreement
|
|
10.2
|
Form
of Investor Warrant
|
|
10.3
|
Form
of Original Issue Discount Senior Secured Convertible
Note
|
|
10.4
|
Placement
Agent Agreement, dated September 5, 2009, between Magnolia Solar, Inc. and
Midtown Partners & Co., LLC
|
|
10.5
|
Form
of Placement Agent Warrant
|
|
10.6
|
Agreement
of Conveyance, Transfer and Assignment of Assets and Assumption of
Obligations, dated as of December 31, 2009, by and between Magnolia Solar
Corporation. and Magnolia Solar, Inc.
|
|
10.7
|
Stock
Purchase Agreement, dated as of December 31, 2009, by and between Magnolia
Solar Corporation. and the shareholders listed therein
|
|
10.8
|
Master
License Agreement by and between Magnolia Solar, Inc. and Magnolia Optical
Technologies, Inc. dated April 30, 2008
|
|
10.9 | Form of Security Agreement | |
10.10 | Form of Subsidiary Guarantee | |
10.11 | Placement Agent Agreement Extension Letter | |
16.1 | Letter from John Kinross-Kennedy, Certified Public Accountant dated January 6, 2010. | |
21
|
List
of Subsidiaries
|
|
99.1
|
Magnolia
Solar, Inc. audited financial statements for the years ended December 31,
2008 and for the period January 8, 2008 through December 31,
2008
|
|
99.2
|
Magnolia
Solar, Inc. unaudited financial statements for the nine months ended
September 30, 2009 and the period January 8, 2008 through September 30,
2008
|
|
99.3
|
Pro
forma unaudited consolidated financial statements for the nine months
ended September 30, 2009 and for the year ended December 31,
2008
|
31
SIGNATURES
Pursuant
to the requirements 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.
Date: January
6, 2010
MAGNOLIA SOLAR CORPORATION | |||
|
By:
|
/s/ Yash Puri | |
Name: Yash Puri | |||
Title: Executive Vice-President and Chief Financial Officer | |||
32
INDEX
TO EXHIBITS
Exhibit No.
|
Description
|
|
2.1
|
Agreement
and Plan of Merger, dated as of December 31, 2009, by and among Mobilis
Relocation Services, Inc., Magnolia Solar, Inc.. and Magnolia
Solar Acquisition Corp.
|
|
2.2
|
Certificate
of Merger, dated December 31, 2009 merging Magnolia Solar Acquisition
Corp. with and into Magnolia Solar, Inc.
|
|
2.3
|
Articles
of Merger, dated December 31, 2009 merging Magnolia Solar Corporation into
and with Mobilis Relocation Services Inc.
|
|
3.1
|
Certificate
of Change
|
|
3.2
|
Amended
and Restated Bylaws
|
|
10.1
|
Form
of Subscription Agreement
|
|
10.2
|
Form
of Investor Warrant
|
|
10.3
|
Form
of Original Issue Discount Senior Secured Convertible
Note
|
|
10.4
|
Placement
Agent Agreement, dated September 5, 2009, between Magnolia Solar, Inc. and
Midtown Partners & Co., LLC
|
|
10.5
|
Form
of Placement Agent Warrant
|
|
10.6
|
Agreement
of Conveyance, Transfer and Assignment of Assets and Assumption of
Obligations, dated as of December 31, 2009, by and between Magnolia Solar
Corporation. and Magnolia Solar, Inc.
|
|
10.7
|
Stock
Purchase Agreement, dated as of December 31, 2009, by and between Magnolia
Solar Corporation. and the shareholders listed therein
|
|
10.8
|
Master
License Agreement by and between Magnolia Solar, Inc. and Magnolia Optical
Technologies, Inc. dated April 30, 2008
|
|
10.9 | Form of Security Agreement | |
10.10 | Form of Subsidiary Guarantee | |
10.11 | Placement Agent Agreement Extension Letter | |
16.1 | Letter from John Kinross-Kennedy, Certified Public Accountant dated January 6, 2010. | |
21
|
List
of Subsidiaries
|
|
99.1
|
Magnolia
Solar, Inc. audited financial statements for the years ended December 31,
2008 and for the period January 8, 2008 through December 31,
2008
|
|
99.2
|
Magnolia
Solar, Inc. unaudited financial statements for the nine months ended
September 30, 2009 and the period January 8, 2008 through September 30,
2008
|
|
99.3
|
Pro
forma unaudited consolidated financial statements for the nine months
ended September 30, 2009 and for the year ended December 31,
2008
|