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):
January
29, 2010
ATLANTIC
GREEN POWER HOLDING COMPANY
(Exact
name of registrant as specified in its charter)
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Delaware
(State
or other jurisdiction of incorporation)
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333-143352
(Commission
File Number)
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20-8901634
(IRS
Employer Identification Number)
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Bayport
One
Suite
455
8025
Black Horse Pike
West
Atlantic City, New Jersey 08232
(Address
of principal executive offices, including zip
code)
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Registrant’s telephone number,
including area code: (609) 241-6027
Lodestar
Mining, Incorporated
400
Steeprock Drive
Toronto,
Ontario, Canada M3J 2X1
(Former
name or former address, if changed since last report)
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 (see General Instruction A.2. below):
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))
Section
1 – Registrant’s Business and Operations
Item
1.01. Entry into a Material
Definitive Agreement.
On
January 29, 2010, Lodestar Mining, Incorporated (the “Company”) entered into an
Agreement and Plan of Exchange (the “Agreement and Plan of Exchange”) with
Atlantic Green Power Corporation, a privately-held New Jersey corporation
(“Atlantic”), and Ian McKinnon, the majority stockholder of the Company
(“McKinnon”), pursuant to which each issued and outstanding share of common
stock of Atlantic was exchanged for one share of the Company’s common stock, par
value $.000001 per share. The transaction described in the preceding
sentence is hereafter referred to as the “Share Exchange.” The Share
Exchange went into effect on February 3, 2010 (the “Effective
Date”). On the Effective Date, there were 38,099,250 shares of
Atlantic common stock issued and outstanding. As a result of the
Share Exchange, Atlantic became a wholly-owned subsidiary of the Company, the
Company issued 38,099,250 shares of its common stock to the former shareholders
of Atlantic, who became stockholders of the Company, and the Company changed its
corporate name to “Atlantic Green Power Holding Company.” The
Agreement and Plan of Exchange is attached hereto as Exhibit
2.1.
In
addition, as contemplated by the Agreement and Plan of Exchange, on January 29,
2010, the Company purchased all of McKinnon’s shares of the Company’s common
stock for a purchase price of $250,000 pursuant to the terms of a Stock Purchase
Agreement between the Company and McKinnon (the “Stock Purchase Agreement”), and
retired the repurchased shares. The Stock Purchase Agreement is
attached hereto as Exhibit
2.2.
Section
2 – Financial Information
Item
2.01. Completion of Acquisition or
Disposition of Assets.
On the
Effective Date, the Company acquired all of the issued and outstanding shares of
Atlantic common stock in exchange for an aggregate of 38,099,250 shares of the
Company’s common stock pursuant to the Agreement and Plan of
Exchange.
In
addition, as contemplated by the Agreement and Plan of Exchange, on January 29,
2010, the Company purchased all of McKinnon’s shares of the Company’s common
stock pursuant to the Stock Purchase Agreement.
Please
see the disclosure under Item 1.01 above.
Description
of the Company
The
Company was incorporated in the State of Delaware on October 31, 2006 under the
name “Lodestar Mining, Incorporated.” From its inception until
January 28, 2010, the Company was an exploration stage company with plans to
search for mineral deposits or reserves. As of the Effective Date of
the Share Exchange, the Company acquired all of the issued and outstanding
shares of common stock of Atlantic pursuant to the Agreement and Plan of
Exchange and thereafter changed its corporate name to “Atlantic Green Power
Holding Company.” As a result of the Share Exchange, the Company
ceased its prior operations and commenced operation of Atlantic as its sole line
of business.
2
In
addition, as contemplated by the Agreement and Plan of Exchange, on January 29,
2010, the Company purchased all of McKinnon’s shares of the Company’s common
stock pursuant to the terms of the Stock Purchase Agreement.
Description
of Atlantic
BUSINESS
Unless
otherwise indicated or the context otherwise requires, all references hereafter
to the “Company” mean Atlantic Green Power Holding Company and Atlantic Green
Power Corporation on a consolidated basis after the Share Exchange.
Overview
Atlantic’s
business strategy is to sell electrical power generated from renewable energy
sources and avail itself of federal and state economic and tax incentives, such
as subsidies, tax credits, loan guaranties, renewable portfolio standard
programs and renewable energy certificates. To that end, Atlantic
intends to develop, construct and operate a 100-Mega Watt solar farm on parcels
of undeveloped land aggregating approximately 700 acres located in Pittsgrove,
New Jersey. Atlantic’s primary business activities to date have
focused on locating and acquiring rights to one or more suitable parcels of land
for the solar farm and securing sufficient financing to enable Atlantic to lease
the necessary land for the solar farm and commence the regulatory and land use
approval process necessary for the operation of the solar farm on the leased
property. To date, Atlantic has not generated any revenue and has not
commenced any revenue-generating activities. In the future, Atlantic
may explore the possibility of generating electricity from wind energy on either
the Pittsgrove property or other properties, although Atlantic does not
currently have any plans to develop wind energy or acquire any other
properties.
Background
of Renewable Energy Industry
Renewable
energy is produced using resources that are naturally replenished, such as
sunlight, wind, geothermal heat and tides. Technologies that produce
energy from renewable sources are commonly referred to as “green” or “clean” as
they produce few pollutants, if any, that negatively impact the
environment. Comparatively, fossil fuels such as coal, natural gas
and oil are exhaustible and release greenhouse gases such as carbon dioxide and
other pollutants into the atmosphere during energy production. In
addition, reliance on fossil fuels as a source of energy increases exposure to
supply shortages and price volatility as many oil-producing countries are
situated in unstable regions of the world. As a result, the
development and implementation of renewable energy technologies has grown
rapidly in the United States and abroad in the last several
years. Certain European countries in particular have made significant
progress toward relying on energy produced from renewable sources for a
significant portion of their energy needs.
The
Company, through the operation of Atlantic, intends to generate and sell
electricity produced from solar energy and may, at a future date, generate and
sell electricity produced from wind energy.
3
Solar
Energy. The
conversion of solar energy from sunlight into electricity is referred to as the
photovoltaic effect. Solar photovoltaic cells packaged together in
weather-resistant solar panels absorb the energy from sunlight and convert the
energy into direct current electricity, which is channeled through electrical
contact points attached to the panels. An inverter connected to the
solar panels converts the direct current electricity channeled from the solar
panels into alternating current electricity, which then transfers to the local
utility grid. Although the cost of solar panels has declined with
recent advances in technology, the installation of solar panels nevertheless
represents a significant cost associated with the generation and sale of solar
energy. However, after installation, solar arrays (groups of
interconnected solar panels) are typically inexpensive to maintain relative to
other energy-producing technologies.
Wind
Energy. Wind turbines convert
the kinetic energy of wind into electricity through the use of generators housed
in the turbines. Electricity generated from the turbines is
transferred through cables from each turbine to a collection point, where it is
then transferred to a substation for voltage set-up and delivery into the
electric utility transmission network. The success of a wind farm, or
a group of wind turbines, depends on the profile of wind resources at the site
of the farm.
Electricity
generated from solar panels and wind turbines can then be sold and transferred
to local utility companies and other retail energy suppliers. See
“Access to Transmission Lines” below.
Pittsgrove
Solar Farm
Effective
November 30, 2009, Atlantic entered into a Ground Lease (the “Lease”) with
Edward Stella, Jr., an executive officer and director of the Company, for
certain undeveloped parcels of property in Pittsgrove Township, New Jersey
aggregating approximately 700 acres (the “Property”), on which the Company
intends to construct a solar farm. The Lease was negotiated between
the parties at arm’s length and the amount of rent payable under the Lease is
believed to be equal to fair market value.
The Lease
is for a term of twenty-five years, and provided Atlantic is not in default
under the Lease, Atlantic has the option to extend the Lease for four additional
periods of five years each. The Lease authorizes Atlantic to develop
and operate a renewable energy system on the Property. Base rent
under the Lease is $1,300,000 per year payable in equal monthly installments,
which shall be phased-in as construction on the Property is completed and
electricity is generated from the facilities located thereon. Until
Atlantic is required to pay the full monthly amount of the base rent, Atlantic
is required to compensate Mr. Stella for the loss of farming contract revenue
due to the Lease on an annual basis, which shall not exceed $90,000 in any
year. In addition, Mr. Stella is permitted to use those portions of
the Property on which construction has not yet commenced for farming purposes,
and is permitted a right of access through the Property in order to access other
parcels not leased to Atlantic.
4
In the
event that Atlantic is not able to obtain all regulatory approvals necessary to
begin construction of the solar farm on the Property before the expiration of
the eighteen month period following execution of the Lease (the “Approval
Period”), Atlantic shall have the option to terminate the
Lease. Atlantic shall have the right to extend the Approval Period
(i) for two additional consecutive periods of six months in exchange for a
payment of $50,000 for each such six month extension, and (ii) after the
expiration of both six month extension periods, for successive periods of three
months in exchange for a payment of $25,000 for each such three month
period. Upon Atlantic’s receipt of the requisite regulatory approvals
for the construction and operation of the solar farm, Atlantic shall pay to Mr.
Stella the sum of $7,500,000, which shall not off-set amounts otherwise owed in
rent.
Atlantic
is granted an option to purchase the Property at any time before the eighth
anniversary of the Lease for a purchase price of $29,000,000, subject to certain
credits for amounts previously paid under the Lease. Atlantic is also
granted a right of first refusal with respect to the Property if Mr. Stella
receives a bona fide offer to purchase the Property.
Access
to Transmission Lines
In order
to sell electricity generated at the Pittsgrove solar farm, we will need to
obtain access to the electric grid to transmit electricity to be sold to our
customers. The electric grid that serves New Jersey and several
surrounding states is managed by the federally-regulated regional transmission
organization PJM Interconnection, LLC (“PJM”). PJM is an independent
organization of over five hundred power generators, transmission owners,
electricity distributors, power marketers and large energy consumers that is
responsible for independently managing the regional transmission system and
wholesale electricity market. Electricity that is generated by a
generating facility, such as the Pittsgrove solar farm, is transmitted to the
PJM interconnection grid and is available for purchase by wholesale and retail
entities that are licensed to transact on the PJM grid. Atlantic’s
application to PJM for access to the interconnection grid has been accepted, and
the parties are in the process of conducting the necessary studies to determine
the optimal interconnection points to the grid.
Government
Regulation
The
Company will potentially be subject to government regulation at the federal,
state and local levels.
Under
the Federal Power Act (the “FPA”), the Federal Energy Regulatory Commission (the
“FERC”) has exclusive rate-making jurisdiction over wholesale sales of
electricity and transmission in interstate commerce. The FPA subjects
“public utilities” within the meaning of the act to, among other things, rate
and corporate regulation by the FERC. In particular, sellers of
electricity at wholesale in interstate commerce and transmitters of electricity
in interstate commerce are regulated by the FERC with respect to: the review of
the terms and conditions of wholesale electricity sales and transmission of
electricity; the need to obtain advance approval of certain dispositions of
public utility facilities, mergers, purchases of securities of other public
utilities, acquisitions of existing generation facilities and changes in
upstream ownership interests; the regulation of their borrowing and securities
issuances and assumption of liabilities; and the review of interlocking
directorates.
To date,
the Company, through the operation of Atlantic, has not made any sales of
electricity, nor has it generated any electricity, and therefore the Company is
not currently subject to the provisions of the FPA. In the event that
the Company, through the operation of Atlantic, makes any wholesale sales or
transmissions of electricity in interstate commerce, it will potentially be
subject to the provisions of the FPA and the regulation of the
FERC.
5
The
Public Utility Holding Company Act of 2005 (the “PUHCA”) provides, in relevant
part, that any entity that owns, controls or holds power to vote 10% or more of
the outstanding voting securities of a “public utility company” or a company
that is a “holding company” of a public utility company or public utility
holding company, is subject to certain regulations granting the FERC access to
books and records and oversight over certain affiliate transactions. A “public
utility company” is an “electric utility company” that owns or operates
facilities used for the generation, transmission, or distribution of electric
energy for sale. Certain exemptions are available for entities that
are holding companies solely by virtue of their ownership of “qualifying
facilities” under the Public Utility Regulatory Policies Act (the “PURPA”) and
for exempt wholesale generators. It is expected that Atlantic will
meet the definition of “public utility company,” and that the Company will be
subject to the provisions of the PUHCA.
The
Company will be subject to regulation by the New Jersey Board of Public
Utilities, which has historically had broad authority to regulate both the rates
charged by and the financial activities of electric utilities that sell
electricity at retail, and a number of other matters related to electric
utilities. New Jersey state law may also impose certain regulatory
and reporting requirements on owners and operators of generation
facilities.
In
addition, the Company will be required to obtain approvals from the local zoning
board and other permits before construction on the Pittsgrove solar farm can
begin.
Government
Incentives
Both
federal and state governments have enacted measures to encourage the development
and deployment of renewable energy technologies. Such measures
include renewable portfolio standards, renewable energy certificates, production
tax credits, investment tax credits and accelerated tax
depreciation.
Renewable
portfolio standards (“RPS”) are programs that require electric utilities and
other retail energy suppliers to produce or purchase a certain percentage of
their annual electricity consumption from renewable energy
sources. New Jersey is among the states that have adopted RPS
programs. The New Jersey RPS program provides that 22.5% of
electricity supplied by electric power suppliers to retail customers must
consist of electricity generated from renewable sources by 2021, and that 2.12%
(or approximately 1,500 MW) must consist of electricity generated from solar
energy.
A
renewable energy certificate (“REC”) is an intangible, tradable instrument that
represents the attributes associated with one Mega Watt hour of energy produced
from a renewable energy source. State governments, including New
Jersey, use RECs to monitor compliance with RPS programs. Many RPS
programs impose an “alternative compliance payment” upon energy suppliers that
fail to meet renewable energy requirements under the program. Energy
suppliers can purchase RECs as evidence of having purchased renewable energy to
avoid alternative compliance payments. RECs effectively serve as a
production subsidy for energy produced from renewable sources.
6
The
federal production tax credit provides a tax credit of 2.1 cents per
kilowatt-hour of energy generated from wind for a ten year period beginning on
the date that a wind turbine is placed into operation. The production
tax credit was extended by the American Recovery and Reinvestment Act in 2009
and is now scheduled to expire on December 31, 2012.
In lieu
of the production tax credit, wind turbine operators can elect to receive an
investment tax credit of 30% for facilities placed in operation in 2009 and
2010, and for facilities placed in operation before 2013 if construction begins
before the end of 2010. The investment tax credit is eligible for
conversion to a grant from the United States Department of the
Treasury.
Finally,
wind farm assets are deemed to have a five-year depreciable life, a
significantly shorter period than the fifteen to twenty-five-year depreciable
life of many non-renewable energy assets. The shortened useful life
for wind farm assets can result in a significantly accelerated realization of
tax depreciation for wind farm operators compared to operators of other
energy-producing facilities.
Competition
Large
utility companies, which rely primarily on traditional non-renewable energy
sources such as coal, hydro natural gas an nuclear power, dominate the energy
production industry in the United States. Electricity produced from
renewable sources, including solar and wind energies, faces competition from
these other traditional non-renewable sources as the producers of electricity
from renewable sources seek for their sources to be accepted as a viable,
cost-effective alternative to traditional non-renewable energy
sources. It is expected that the primary competition for the
renewable energy industry will continue to come from coal and other
non-renewable energy sources.
In
addition to competition from non-renewable energy sources, the Company will face
competition from other renewable energy suppliers, including from those
suppliers with operations located in New Jersey and in surrounding
states. It is expected that competition within the renewable energy
industry will intensify in the next several years as more companies enter the
market and commence operations.
Suppliers
The
Company will rely on third party suppliers to supply solar panels and other
equipment required to construct the infrastructure of the Pittsgrove solar
farm. Solar energy used to generate electricity is
naturally-occurring, but availability will be subject to meteorological and
atmospheric conditions.
Distribution
of Products
It is
anticipated that the Company will sell electricity generated from the Pittsgrove
solar farm to a public utility located in the State of New
Jersey. The Company will also sell RECs to energy
suppliers. However, a definitive plan of distribution has not been
determined as of the date of this report.
7
Employees
As of
February 3, 2010, the Company had four employees, including our three executive
officers, Robert Demos, Jr., President and Chief Executive Officer, R. Scott
Byrne, Chief Operating Officer, Secretary, and Treasurer, and Edward Stella,
Jr., Vice President of Project Development. All of our employees are
based at our corporate headquarters in West Atlantic City, New
Jersey.
Properties
Atlantic’s
principal offices are located at Bayport One, Suite 455, 8025 Black Horse Pike,
West Atlantic City, New Jersey, where Atlantic leases approximately 1,488 square
feet of commercial office space. In addition, Atlantic leases from
Edward Stella, Jr., an executive officer and director of the Company, certain
parcels of undeveloped land located in Pittsgrove, New Jersey aggregating
approximately 700 acres. Atlantic intends to develop, construct and
operate a solar farm on the property. See “Description of Business –
Pittsgrove Solar Farm” above for more information on the Pittsgrove, New Jersey
lease.
Legal
Proceedings
None.
8
RISK
FACTORS
References
to “we,” “us” and “our” in the following section refer to Atlantic Green Power
Holding Company on a consolidated basis after the Share Exchange, unless
otherwise indicated or the context otherwise requires.
Risks
Related to Our Business
We
are a development stage company and have a limited operating
history.
Atlantic
was incorporated on September 17, 2009 and commenced operation on or about that
date. We acquired all of the issued and outstanding common stock of
Atlantic upon consummation of the Share Exchange on February 3,
2010. At that time we ceased our prior operations as an exploration
stage mining company and commenced operating Atlantic as our sole line of
business. Consequently, we have a limited operating history from
which our business can be evaluated, and our prospects must be considered in
light of the risks and uncertainties encountered by development stage companies
competing in rapidly evolving industries, such as the renewable energy
industry.
Some of
these risks include our potential inability to:
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obtain
the land rights, solar panels, transmission interconnection agreements,
permits and approvals required to construct solar
farms;
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obtain
adequate financing to construct, develop and operate solar
farms;
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complete
construction of our solar farm in Pittsgrove, New Jersey within our
projected time and cost schedules;
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commence
and manage operations of the Pittsgrove solar
farm;
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recruit
and retain key personnel; and
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anticipate
and mitigate the other risks described
herein.
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If we
cannot successfully anticipate and address these risks, our business, results of
operations and financial condition may suffer.
We
have not generated any revenue to date and have generated, and will continue to
generate, net losses and negative cash flows from construction of the Pittsgrove
solar farm.
We have
not generated any revenue to date, and we do not expect to generate any revenue
at least through the 2010 fiscal year. We have funded our capital
expenditures to date using capital raised from Atlantic’s sale of shares of its
common stock prior to the Share Exchange. We expect to spend
significant resources to fund the construction and development of the Pittsgrove
solar farm, and as a result, we expect to incur substantial pre-tax losses
during the construction phase. In addition, we expect to incur
additional costs associated with operation as a public company. As a
result, our net losses and accumulated deficit may increase
significantly. No assurances can be given that we will be able to
generate any revenue once construction of the Pittsgrove solar farm is
complete.
9
We
have received a going concern qualification from our independent accounting firm
which places substantial doubt on our ability to stay in business.
Our
accompanying financial statements have been prepared on a going concern basis,
which contemplates the realization of assets and satisfaction of liabilities in
the normal course of business. Since our inception on September 17,
2009, we have been a development stage company and, accordingly, have incurred
losses from our operations. For the period from September 17, 2009
through our fiscal year end on November 30, 2009, we incurred net losses of
$25,925, and we expect to incur additional losses in the future. We
currently have no revenues. The potential future revenues we expect from our
Pittsgrove solar farm, which we do not expect to be generated until sometime
after the end of our 2010 fiscal year, will require the expenditure of
additional capital, obtaining of construction and project financing, obtaining
necessary approvals and permits from the local zoning board and other regulatory
bodies and establishing solar panel supply relationships. These
factors, among others, indicate that we may be unable to continue as a going
concern without raising additional capital.
We
have no previous experience with the construction, development and operation of
solar farms.
To date
we have not developed any solar farms that are currently operational, nor do we
have any history as an owner or operator of solar farms. Our success
in the construction and operation of the Pittsgrove solar farm will depend on
our ability to gain an adequate familiarity with and understanding of the
renewable energy industry and effectively mitigate the risks associated with the
construction, development and operation of a solar farm, including the risks
discussed herein. No assurances can be given that we will be
successful in this endeavor, and our failure to gain an adequate familiarity and
understanding of the renewable energy industry could have a material adverse
effect on our business, results of operations and financial
condition.
We
will be dependant upon the uninterrupted operation of a single solar
farm.
We
currently have plans to construct and develop a single solar farm in Pittsgrove,
New Jersey; we do not currently have plans to construct any other solar farms or
other renewable energy projects. As a result, our operations would be
subject to material interruption if our Pittsgrove solar farm is damaged or
otherwise adversely affected by one or more accidents, severe weather or other
natural disasters. The Pittsgrove solar farm may also be subject to
scheduled or unscheduled downtime for maintenance. In addition, we
may experience a material interruption in our operations if the regulatory
environment or energy market in the State of New Jersey were to change in a
manner adverse to us. An interruption of our operations for any
reason, including any of the foregoing reasons, could have a material adverse
effect on our business, results of operations and financial
condition.
10
We
may not be able to secure sufficient financing necessary to complete
construction of our solar farm facilities.
Our
business strategy requires us to raise additional capital sufficient to fund the
construction and initial operation of a solar farm in Pittsgrove, New
Jersey. As a result, our continued access to capital on acceptable
terms is necessary for the successful implementation of our business
strategy. Our operations to date have been financed by proceeds
raised from the sale of shares of common stock to our current
stockholders. We do not believe that we currently have sufficient
capital to complete the construction of the Pittsgrove solar farm, which will
require us to raise additional capital to complete the construction without
interruption.
We may
not be able to secure additional financing from banks or other financial
institutions on acceptable terms, or at all, due to adverse conditions in the
credit market. If we are not able to secure such financing through
traditional loans, we may sell additional equity securities, which will dilute
the interests of our existing stockholders. Alternatively, or in
addition to these financing strategies, we may enter into a tax equity financing
structure whereby we would receive a capital investment from a third party in
exchange for an interest in Atlantic, which will directly own and operate the
Pittsgrove solar farm. A tax equity financing would diminish our
interest in Atlantic and the economic returns generated from operation of the
Pittsgrove solar farm, if any In the absence of available or
acceptable financing, we may be required to delay the construction of the
Pittsgrove solar farm indefinitely.
We
are highly dependant upon the members of our management team.
The
success of our business depends on the experience and expertise of our
management team, including Robert Demos, Jr., R. Scott Byrne and Edward Stella,
Jr. The unavailability of either Mr. Demos, Mr. Byrne or Mr. Stella
for any reason and our inability to find adequate replacement personnel would
have a material adverse effect on our business and prospects.
Our
success also depends on our ability to attract and retain additional qualified
employees, including management, technical and sales personnel. Our
inability to attract and retain qualified personnel to meet our business needs
could have a material adverse effect on our business and prospects, and could
cause us to delay, suspend or terminate our projects, including the Pittsgrove
solar farm.
We
will depend on third parties to supply us with solar panels.
We will
purchase solar panels and other equipment necessary to construct the
infrastructure of our Pittsgrove solar farm from third party manufacturers or
distributors of such products. Prices of these products will be
subject to market fluctuations, and the prices charged by our suppliers may
increase due to changes in market conditions or other factors beyond our
control, such as increased demand for such products and shortages of
supply. Shortage in the supply of any these components for any
reason, including increased demand for such products or any shortage in the
supply of the products and materials used in their manufacture, among other
factors, could cause delays in the construction of our solar farm for an
indefinite period of time, which could have a material adverse effect on our
business, results of operations and financial condition.
11
We
will depend on third parties to provide electric transmission lines with
adequate capacity to transfer electric power generated by our solar
facilities.
We expect
that we will depend on electric transmission lines that are owned and operated
by third parties to deliver the electricity generated by our Pittsgrove solar
farm. We may not be able to secure access to the limited available
interconnection or transmission capacity on reasonable terms, or at
all. Even if we are able to secure access, a failure in the
transmission facilities could cause us to lose revenues. In addition,
transmission limitations may cause us to curtail our production of
electricity. Any such failure could have a material adverse effect on
our business, results of operations and financial condition.
We
expect to rely on a limited number of key customers.
We expect
to rely on sales of electricity generated at our Pittsgrove solar farm to a
limited number of utilities located in the State of New Jersey. We
also expect to rely on sales of RECs to certain key customers. Our
operations will be highly dependent upon such customers fulfilling their
contractual obligations under their agreements with us. Our customers
may not comply with their contractual payment obligations or may become subject
to insolvency or liquidation proceedings during the term of the relevant
contracts, and the credit support received from such customers may not be
sufficient to cover our losses in the event of a failure to
perform. An inability of failure by such customers to meet their
contractual obligations or insolvency or liquidation of any of our customers
could have a material adverse effect on our business, results of operations and
financial condition.
Factors
beyond our control could cause us to experience increased costs with respect to
our Pittsgrove solar farm.
Any one
or more of the following factors, among others, may cause us to experience
increased costs with respect to our renewable energy projects, such as the
development of the Pittsgrove solar farm, and have a material adverse effect on
our business, results of operations and financial condition:
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increases
in the costs of labor or materials;
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higher
than anticipated financing costs;
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non-performance
by third-party suppliers or
subcontractors;
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equipment
breakdowns;
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electricity
network and other utility service failures;
and
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the
occurrence of natural disasters, such as tornadoes, earthquakes or
storms.
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The cost
of repairing or replacing damaged equipment may be considerable, and repeated or
prolonged interruption may result in termination of contracts, litigation and
substantial damages or penalties for regulatory or contractual non-compliance,
reduced cash flows and increased financing costs. Moreover, these
amounts may not be recoverable under insurance policies or contractual claims
and, in relation to network failures, network service providers and market
operators may also benefit from contractual limitations of liability, which
would reduce any recovery of damages from them.
12
In
addition, our solar panels and associated equipment will also require routine
maintenance in order to continue to function properly. If the level
of maintenance and capital expenditure exceeds our projected or contracted
level, the cash flow available from the Pittsgrove solar farm and other
potential renewable energy projects will be reduced, which could have an adverse
impact on our business, results of operations and financial
condition.
We
currently do not have any contracts as a solar energy provider.
We have
not recorded any sales of electricity generated from solar energy and we
currently do not have any contracts for such sales. We expect that
the sales cycle for electricity generated from renewable sources will be long
due to the nature of the projects in which such electricity is
provided. As a result, we expect that we will be required to invest
substantial resources to pursue these markets in advance of any significant
revenue stream that may result from such investments, if any. An
unanticipated or longer than expected delay in revenue recognition from our
Pittsgrove solar farm could put a strain on our capital resources and require us
to seek additional capital. There can be no guarantee that we will
recognize revenue from our project in a timely manner, or at all, and failure to
do so could have a material adverse effect on our business, results of
operations and financial condition.
Risks
Related to the Renewable Energy Industry
Our
ability to generate electrical energy from renewable energy sources is highly
dependent upon suitable weather and seasonal conditions.
The
production of electricity generated from solar energy will be the source of
substantially all of our revenues. As a result, our results of
operations will be highly dependant upon suitable meteorological and atmospheric
conditions. These conditions can, and typically do, vary considerably
with the seasons. While we have endeavored to select a location for
our initial solar farm that will present favorable weather conditions, these
conditions are ultimately beyond our control and difficult to
predict. The absence of suitable weather conditions for the
harvesting of solar energy for any period of time could have a material adverse
effect on our business, results of operations and financial
condition.
The
federal and New Jersey state governments may decrease or eliminate incentives
and benefits related to renewable energy.
Tax
incentives offered by the federal government and the State of New Jersey make
renewable energy an attractive business opportunity, and our business strategy
depends on the continued availability of such incentives. The
reduction or elimination of these incentives would have a material adverse
effect on our business strategy and our prospects for achieving or sustaining
profitability. No assurances can be given that these incentives and
programs will be extended or renewed, or that they will not be repealed or
modified prior to their expiration.
13
Volatile
natural gas prices may adversely impact the market price of
electricity.
Natural
gas is one of the major sources of energy for the generation of electricity in
the United States. The prices for natural gas have been very volatile
in recent months and years, and it is not possible to reliably predict what the
price behavior for natural gas will be in the future. A decline in
natural gas prices would adversely impact the economics for renewableenergy, as
natural gas-based generation is a major competitor to renewable
energy.
A
sustained decline in market prices for electricity would adversely affect our
revenues and opportunities to grow our business.
Our
business strategy may not be economically successful if there is a sustained
material decline in market prices for electricity. Electricity prices
are affected by various factors and may decline for many reasons that are not
within our control, including changes in the cost or availability of fuel,
regulation and acts of governments and regulators, changes in supply of
generation capacity, changes in power transmission or fuel transportation
capacity, seasonal and weather conditions and changes in demand for
electricity. In addition, other power generators may develop
alternative technologies to produce power, including fuel cells, clean coal and
coal gasification, micro turbines, photovoltaic cells or tidal current based
generators, or improve upon traditional technologies and equipment, such as more
efficient gas turbines or nuclear or coal power plants with simplified and safer
designs, among other things. Advances in these or other technologies
could cause a sustained decline in market prices for electricity. If
there is a sustained decline in the market prices for electricity, we may not
develop and construct our Pittsgrove solar farm, which would have a material
adverse effect on our business, results of operations and financial
condition.
A
sustained decline in market prices for RECs may have a material adverse effect
on our revenues.
We expect
that a significant portion of our revenues will derive from sales of RECs to
energy suppliers. If there is a sustained decline in market prices
for RECs, we may not be able to achieve expected revenues, which could have a
material adverse effect on our business, results of operations and financial
condition.
Negative
public attitudes toward wind energy projects may adversely affect our ability to
construct and develop our project.
There has
been negative public and community response to wind energy projects in
particular in some areas of the United States, and such responses may adversely
affect our ability to construct wind turbines on our farm site. We
may face legal challenges to construction on the site of the Pittsgrove solar
farm, which could result in injunctions against such construction that would
delay construction indefinitely or permanently. In the event that we
develop plans to generate and sell electricity from wind sources, we may face
resistance in obtaining certain local government permits and approvals necessary
for such a project, and may not receive such permits and approvals at
all.
14
Our
business will potentially be subject to government regulation.
We will
potentially be subject to numerous federal and state energy laws and
regulations, including, without limitation, the FPA, the PUHCA, and the PURPA,
and we will potentially be subject to the regulation of the
FERC. Changes in applicable energy laws or regulations, or in the
interpretations of these laws and regulations, could result in increased
compliance costs or the need for additional capital expenditures. If
we fail to comply with these requirements, we could also be subject to civil or
criminal liability and the imposition of fines. Federal and state
energy policies, law and regulation supporting the creation of wholesale energy
markets is currently, and may continue to be, subject to challenges,
modifications and restructuring proposals, which may result in limitations on
the commercial strategies available to us for the sale of our
power.
We cannot
predict whether federal or state governmental entities or regulatory authorities
will adopt new laws or regulations, or modify existing ones, affecting the
electric power industry in general, or solar farms such as ours in
particular. Regulatory changes may make the continued development of
the Pittsgrove solar farm infeasible or economically disadvantageous and any
expenditures we have made to date on such project may be wholly or partially
written off. Any of these changes could significantly increase the
regulatory-related compliance and other expenses incurred by the project and
could significantly reduce or entirely eliminate any potential revenues that can
be generated by the project. There can be no guarantee that the
introductions of new laws and regulations or other future regulatory
developments, including changes to existing laws and regulations, will not have
a material adverse effect on our business, results of operations and financial
condition.
Technological
developments in the renewable energy industry could render existing technologies
uncompetitive or obsolete.
The
energy industry, and especially the renewable energy industry, is rapidly
evolving and is highly competitive. Technological advances may result
in lower costs for sources of energy, and may render existing solar and other
renewable energy projects and technologies uncompetitive or
obsolete. Our inability or failure to adopt new technologies as they
are developed could have a material adverse effect on our business, results of
operations and financial condition.
Other
companies are already engaged in our proposed line of business, and we expect
that more companies will enter this market in the future.
As of the
date of this report, several companies throughout the United States, some of
which are based on the east coast of the United States, are already operating
renewable energy facilities, including solar and wind farms, that are
fully-operational. In addition, several companies are in the process
of constructing and developing solar and wind farms that will likely become
operational in the near future, and other companies will likely begin
construction of solar and wind farms in the near future as
well. Several, if not all, of these companies may be better
capitalized than we are, be more experienced with the construction and operation
of solar and wind farms and have better connections in the
industry. As a result, it may be difficult for us to operate
competitively and be profitable in the renewable energy industry.
15
Risks
Related to Our Common Stock
There
has been no active market for shares of our common stock and an active trading
market may not develop.
Prior to
the Share Exchange, our common stock was listed for quotation on the OTC
Bulletin Board under the symbol LDST. Trading in shares of our common
stock has been limited or nonexistent, and as a result, we do not believe that
an active public trading market exists for our common stock, and no such market
may ever develop, or if one is developed, it may not be
sustained. The lack of an active market may impair our stockholders’
ability to sell their shares at the time they wish to sell them or at a price
they consider reasonable. The lack of an active market may also
reduce the market value and increase the volatility of our shares. An
inactive market may also impair our ability to raise capital by selling shares
of common stock.
We
have never declared or paid dividends, nor do we anticipate paying any dividends
in the foreseeable future.
We do not
anticipate that we will pay any cash dividends on shares of our common stock in
the near future. We have never declared any cash dividends on our
common stock, and if we were to become profitable, we expect that all of such
earnings would be retained to support our business. As a result, an
investor in our common stock will only realize income from such investment if
there is a rise in the market price of our common stock. No
assurances can be given that our stock price will increase.
We
may issue additional shares of common stock or preferred stock, or both, in the
future.
Our
Amended and Restated Certificate of Incorporation authorizes the issuance of up
to one billion (1,000,000,000) shares of our common stock, and twenty million
(20,000,000) shares of “blank check” preferred stock. Depending on
our needs for additional resources to fund our operations, we may issue
additional shares of common stock and we may issue shares of preferred stock in
the future. We may value any such additional shares on an arbitrary
basis, and we may issue shares in exchange for services. In addition,
shares of preferred stock that we issue may provide for conversion of such
shares into shares of common stock. Additional issuances of common
stock and/or preferred stock may result in substantial dilution in the
percentage of shares held by our then-existing stockholders, and might have an
adverse effect on any future trading market for our common stock.
16
Our
common stock will be subject to “penny stock” regulations of the Securities and
Exchange Commission and may be difficult to sell.
According
to regulations adopted by the Securities and Exchange Commission (the “SEC”), a
“penny stock” is defined as an equity security that has a market price of less
than $5.00 per share, subject to certain exemptions. We anticipate
that shares of our common stock will be regarded as “penny stock” as our shares
are currently listed for quotation on the OTC Bulletin Board and are not listed
on a national stock exchange or quoted on the NASDAQ Market. This
designation requires any broker or dealer selling these securities to disclose
certain information concerning the transaction, obtain a written agreement from
the purchaser and determine that the purchaser is reasonably suitable to
purchase the securities. These rules may restrict the ability of
brokers or dealers to sell our common stock and may affect the ability of
investors to sell their shares. Furthermore, investors may find it
difficult to obtain accurate quotations of our common stock and may experience a
lack of buyers to purchase such stock or a lack of market makers to support the
stock price.
Our
executive officers and directors own a majority of the issued and outstanding
shares of our common stock.
Our
executive officers and directors own approximately 50% of the issued and
outstanding shares of our common stock. As a result, these
stockholders will have the ability to control substantially all matters
submitted to our stockholders for approval, including the election and removal
of members of our board of directors, amendment of our Amended and Restated
Certificate of Incorporation and Amended and Restated By-laws, and the adoption
of measures that could delay or prevent a change in control or impede a merger,
takeover or other business combination involving the Company. In
addition, sales of significant amounts of shares by any of these individuals, or
the prospect of such sales, could adversely affect the market price for shares
of our common stock. Concentration of stock ownership in our
management may also discourage a potential acquirer from making a tender offer
or otherwise attempting to acquire us, which could have an adverse effect on our
stock price or prevent our stockholders from realizing a premium over our stock
price.
17
CAUTIONARY
LANGUAGE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA
This
report contains “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995 that involve risks and uncertainties,
many of which are beyond the Company’s control. The Company’s actual
results could differ materially and adversely from those anticipated in such
forward-looking statements as a result of certain factors, including those set
forth below and elsewhere in this report. Important factors that may
cause actual results to differ from projections include, but are not limited to,
for example:
|
·
|
adverse
economic conditions,
|
|
·
|
inability
to raise sufficient additional capital to operate the Company’s
business,
|
|
·
|
inability
to obtain the land use and regulatory approvals and permits necessary for
the development and operation of the Pittsgrove solar
farm,
|
|
·
|
unexpected
costs, lower than expected sales and revenues, and operating
defects,
|
|
·
|
changes
in applicable laws and regulations,
|
|
·
|
adverse
results of any legal proceedings,
|
|
·
|
the
volatility of the Company’s operating results and financial
condition,
|
|
·
|
inability
to attract or retain qualified senior management personnel, including
sales and marketing, and technical personnel,
and
|
|
·
|
other
specific risks that may be referred to in this
report.
|
All
statements, other than statements of historical facts, included in this report
regarding the Company’s strategy, future operations, financial position,
estimated revenue or losses, projected costs, prospects and plans and objectives
of management are forward-looking statements. When used in this
report, the words “will,” “may,” “believe,” “anticipate,” “intend,” “estimate,”
“expect,” “project,” “plan” and similar expressions are intended to identify
forward-looking statements, although not all forward-looking statements contain
such identifying words. All forward-looking statements speak only as
of the date of this report. The Company undertakes no obligation to
update any forward-looking statements or other information contained
herein. Potential investors should not place undue reliance on these
forward-looking statements. Although the Company believes that its
plans, intentions and expectations reflected in or suggested by the
forward-looking statements in this report are reasonable, the Company cannot
assure potential investors that these plans, intentions or expectations will be
achieved. The Company discloses important factors that could cause
the Company’s actual results to differ materially from its expectations under
“Risk Factors” and elsewhere in this report. These cautionary
statements qualify all forward-looking statements attributable to the Company or
persons acting on its behalf.
Information
regarding market and industry statistics contained in this current report on
Form 8-K is included based on information available to the Company that it
believes is accurate. It is generally based on academic and other
publications that are not produced for purposes of securities offerings or
economic analysis. The Company has not reviewed or included data from
all sources, and the Company cannot assure potential 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. The Company has no obligation to update forward-looking
information to reflect actual results or changes in assumptions or other factors
that could affect those statements. See “Risk Factors” for a more
detailed discussion of uncertainties and risks that may have an impact on future
results.
18
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF
FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Overview
The
Company was incorporated in the State of Delaware on October 31, 2006 under the
name “Lodestar Mining, Incorporated.” From its inception until
January 28, 2010, the Company was an exploration stage company with plans to
search for mineral deposits or reserves. On February 3, 2010, the
Company acquired all of the issued and outstanding shares of common stock of
Atlantic pursuant to the Share Exchange, and Atlantic became a wholly-owned
subsidiary of the Company. The Company issued an aggregate of
38,099,250 shares of Common Stock to the former shareholders of Atlantic, and
the Company changed its corporate name to “Atlantic Green Power Holding
Company.” As a result of the Share Exchange, the Company ceased its
prior operations with the intent of operating Atlantic as its sole line of
business.
Atlantic
was incorporated in the State of New Jersey on September 17, 2009 for the
purpose of selling electrical power generated from renewable energy sources and
avail itself of federal and state economic and tax incentives, such as
subsidies, tax credits, loan guaranties, renewable portfolio standard programs
and renewable energy certificates. To that end, Atlantic intends to
develop, construct and operate a 100-Mega Watt solar farm in Pittsgrove, New
Jersey. Atlantic intends to generate electricity from renewable solar
and possibly wind energies for sale to local utility companies and other retail
energy suppliers.
The
following discussion and analysis is intended to provide information about
Atlantic’s financial condition and results of operations for the period from
September 17, 2009 (date of inception) through Atlantic’s fiscal year end on
November 30, 2009. This information should be read in conjunction
with Atlantic’s financial statements for the period from September 17, 2009
(date of inception) through November 30, 2009, including the related notes
thereto included as an exhibit to this report.
Development
stage company
Atlantic
is a development stage company as defined by section 810-10-20 of the Financial
Accounting Standards Board Accounting Standards
Codification. Atlantic is still devoting substantially all of its
efforts on establishing the business and its planned principal operations have
not commenced. All losses accumulated since inception have been
considered as part of Atlantic’s development stage activities.
Results
of Operations
For
the period from September 17, 2009 (date of inception) through November 30,
2009
Net Loss. For the
period from September 17, 2009 through November 30, 2009, our net loss from
operations was $25,925, which was primarily attributable to professional fees
and general and administrative expenses associated with start-up and
organizational costs.
Revenues. We did
not have any revenues for the period from September 17, 2009 through November
30, 2009.
19
Expenses. Total
expenses for the period from September 17, 2009 through November 30, 2009 were
$25,925, which were primarily attributable to professional fees and general and
administrative expenses associated with start-up and organizational
costs.
Interest Income. We
did not have any interest income for the period from September 17, 2009 through
November 30, 2009.
Income Taxes. No
income tax provision has been made for the period from September 17, 2009
through November 30, 2009 as a result of our net operating loss.
Liquidity
and Capital Resources
Atlantic’s
operating and capital requirements have exceeded cash flow from operations as we
have been building its business. Since inception through November 30,
2009, net cash used in operating activities was $18,425, which was funded by
cash provided from financing activities of approximately $1,204,922 from our
stockholders during fiscal 2009. Subsequent to November 30, 2009,
Atlantic raised approximately $280,000 though the private placement of shares of
common stock. Atlantic will use these proceeds to implement its
business plan.
Cash
balance as of February 3, 2010 was approximately $960,000. Management
does not believe the current cash balance is sufficient to fund the current
minimum level of operations through 2010 fiscal year end, and that additional
revenue will be needed to advance Atlantic’s business plan.
If future
revenue is not sufficient to fund the growth of Atlantic's business,
Atlantic may need additional funds. There can be no assurance that
such funds will be available or that adequate funds for operations, whether from
debt or equity financings, will be available when needed or on satisfactory
terms. Failure to obtain adequate additional financing may require
delay or curtailment certain, or all, business efforts. Any
additional equity financing may involve substantial dilution to then-existing
stockholders.
Our
officers and directors have not, as of the date of this filing, loaned any funds
to Atlantic. There are no formal commitments or arrangements to
advance or loan funds to Atlantic or repay any such advances or
loans.
Atlantic’s
financial statements filed herewith have been prepared assuming it will continue
as a going concern. As more fully explained in the
notes to Atlantic’s financial statements, Atlantic has a working
capital deficit and has incurred losses since operations
commenced. Atlantic’s continued existence is dependent upon its
ability to obtain needed working capital through additional equity and/or debt
financing and revenue to cover expenses as it continues to incur
losses. These uncertainties raise substantial doubt about Atlantic’s
ability to continue as a going concern. Atlantic’s financial
statements do not include any adjustments that might result from the outcome of
these uncertainties should it be unable to continue as a going
concern.
20
Security
Ownership of Certain Beneficial Owners and Management
The
following table sets forth information regarding the number of shares of the
Company’s common stock beneficially owned on February 3, 2010, the Effective
Date of the Share Exchange, by each person who is known by the Company to
beneficially own 5% or more of the Company’s common stock, each of the Company’s
directors and executive officers, and all of the Company’s directors and
executive officers, as a group. Except as otherwise indicated, each
stockholder set forth below maintains a business address at the Company’s
headquarters at Bayport One, Suite 455, 8025 Black Horse Pike, West Atlantic
City, New Jersey, 08232.
|
Name
of Beneficial Owner
|
No.
of Shares(1)
|
Percentage
of Shares Outstanding
|
||||||
|
Robert
Demos, Jr. (2) (3) (4)
|
9,300,000 | 21.53 | % | |||||
|
Edward
Stella, Jr. (2) (5)
|
10,100,000 | 23.28 | % | |||||
|
R.
Scott Byrne (2) (6)
|
2,000,000 | 4.63 | % | |||||
|
Frank
D’Agostino, Jr. (7) (8)
|
3,800,000 | 8.80 | % | |||||
|
Darin
Myman (9)
|
3,525,000 | 8.16 | % | |||||
|
All
Directors and Executive Officers as a Group (3 Persons)
(4)
|
21,400,000 | 49.54 | % | |||||
|
(1)
|
In
accordance with Rule 13d-3 of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), a person is deemed to be the beneficial
owner, for purposes of this table, of any shares of the Company’s common
stock if he or she has voting or investment power with respect to such
shares. This includes shares (a) subject to options exercisable
within 60 days, and (b)(1) owned by a spouse, (2) owned by other immediate
family members, or (3) held in trust or held in retirement accounts or
funds for the benefit of the named individuals, over which shares the
person named in the table may possess voting and/or investment
power.
|
(2) Such
person serves as a director of the Company.
|
(3)
|
Mr.
Demos serves as the Chairman of the Board, President and Chief Executive
Officer of the Company.
|
|
(4)
|
Includes
200,000 shares held by Mr. Demos as custodian for his sons under the
Uniform Transfers to Minors Act. Mr. Demos disclaims beneficial
ownership of these shares.
|
|
(5)
|
Mr.
Stella serves as the Vice President of Project Development of the
Company.
|
|
(6)
|
Mr.
Byrne serves as the Chief Operating Officer, Secretary and Treasurer of
the Company.
|
21
|
(7)
|
Mr.
D’Agostino maintains a mailing address at 3 Dividing Drive, Marlton, New
Jersey 08053.
|
|
(8)
|
Includes
1,500,000 shares held by FJD Holdings, LLC, of which Mr. D’Agostino is a
principal. Mr. D’Agostino disclaims beneficial ownership of
such shares except to the extent of his interest in FJD Holdings,
LLC.
|
|
(9)
|
Mr.
Myman maintains a mailing address at 157 Broad Street, Suite 109, Red
Bank, New Jersey 07701.
|
Directors
and Executive Officers
The name,
age and positions held with the Company of each person who serves as a member of
the board of directors or executive officer of the Company
immediately following the Share Exchange is set forth below. Each
director serves as a director of the Company until the next annual meeting of
stockholders of the Company and until his successor is duly elected and
qualified. Each executive officer serves in his office(s) until such
time as his successor is appointed by the board.
|
Name
|
Age
|
Position
|
|
Robert
Demos, Jr.
|
46
|
Chairman
of the Board, President and Chief Executive Officer
|
|
Edward
Stella, Jr.
|
60
|
Vice
President of Project Development and Director
|
|
R.
Scott Byrne
|
58
|
Chief
Operating Officer, Secretary, Treasurer and
Director
|
There are
no family relationships among the directors and executive officers of the
Company. None of the directors of the Company are directors of any
company with a class of securities registered pursuant to Section 12 of the
Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act
or any company registered as an investment company under the Investment Company
Act of 1940, as amended.
Biographical
Information
Robert Demos, Jr. was
appointed as a director of the Company and as President and Chief Executive
Officer of the Company on February 3, 2010, the Effective Date of the Share
Exchange. He has over 20 years of experience in construction, land
development and project management. He has also served as President
of Shore Design and Development, LLC, a residential and commercial construction
company in Atlantic County, New Jersey since 2006. Prior to his
position at Shore Design and Development, Mr. Demos operated several automotive
wholesale and retail dealerships.
22
Edward Stella, Jr. was
appointed as a director of the Company and as Vice President of Project
Development of the Company on February 3, 2010, the Effective Date of the Share
Exchange. He has over 30 years of experience in land development,
land clearing and mulching. He is the President of Stella
Contracting, Inc., one of the largest land-clearing companies operating on the
East Coast, and the President of South Jersey Agricultural Products (SJAP), a
company engaged in the sale of top soil and mulch company which services such
clients as Scott’s, Coastal Supply, Home Depot and Lowes. Mr. Stella
has had the honor of being nominated by Ernst & Young LLP for Entrepreneur
of the Year in 2000 in the greater Philadelphia area.
R. Scott Byrne was appointed
as a director of the Company and as Chief Operating Officer, Secretary and
Treasurer of the Company on February 3, 2010, the Effective Date of the Share
Exchange. He has over 30 years experience in land development,
permitting and project finance. Mr. Byrne has served as director of
Capital and Facility Development for Basic Chemical Solutions, L.L.C., global
distributor and trader of commodity chemicals, for the last 14
years. Mr. Byrne previously served as President of Byrne Construction
Group, Inc., a land development company.
Executive
Compensation
The
following table sets forth information concerning all compensation paid by
Atlantic to its principal executive officer for services in all capacities to
Atlantic for the fiscal year ended November 30, 2009. Robert Demos,
Jr. was the principal executive officer of Atlantic during this period and
served as its President and Chief Executive Officer. No executive
officer of Atlantic received compensation in excess of $100,000 during this
period.
|
SUMMARY COMPENSATION
TABLE
|
|||||||||
|
Name
and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards ($)
|
Option
Awards ($)
|
Non-Equity
Incentive Plan Compensation ($)
|
Nonqualified
Deferred Compensation Earnings ($)
|
All
Other Compensation ($)
|
Total
($)
|
|
Robert
Demos, Jr., President and Chief Executive Officer
|
2009
(1)
|
$ --
|
$ --
|
$ --
|
$ --
|
$ --
|
$ --
|
$ --
|
$ --
|
|
(1)
|
Atlantic
was incorporated in the State of New Jersey on September 17,
2009. The information in this table relates to compensation
from this date through Atlantic’s fiscal year end on November 30,
2009.
|
Outstanding
Equity Awards at Fiscal Year End
Atlantic
did not have any outstanding equity awards as of November 30, 2009.
Securities
Authorized for Issuance under Equity Compensation Plans
Atlantic
did not have any securities authorized for issuance under any equity
compensation plans as of November 30, 2009.
23
Employment
Agreements
Atlantic
has not entered into an employment agreement with any of its executive
officers.
Director
Compensation
The
following table sets forth information concerning the compensation paid by
Atlantic to its directors for the fiscal year ended November 30,
2009:
|
Name
(1)
|
Fees
Earned or Paid in Cash
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-Equity
Incentive Plan Compensation ($)
|
Nonqualified
Deferred Compensation Earnings
($)
|
All
Other Compensation ($)
|
Total
($)
|
|
Edward
Stella, Jr.
|
$ --
|
$ --
|
$ --
|
$ --
|
$ --
|
$ --
|
$ --
|
|
R.
Scott Byrne
|
$ --
|
$ --
|
$ --
|
$ --
|
$ --
|
$ --
|
$ --
|
|
(1)
|
See
the Summary Compensation Table above for information regarding
compensation paid to Robert Demos, Jr. in connection with his membership
on the board of directors of
Atlantic.
|
Certain
Relationships and Related Transactions
Effective
November 30, 2009, Atlantic entered into a Ground Lease Agreement (the “Lease”)
with Edward Stella, Jr., an executive officer and director of the Company, for
certain parcels of undeveloped land located in Pittsgrove, New Jersey
aggregating approximately 700 acres. Atlantic intends to use this
property as the site of its 100-Mega Watt solar farm. The Lease is
for a term of twenty-five years with an annual base rent of $1.3 million, which
will be phased-in as construction of the solar farm facilities progresses as
provided in the Lease. Atlantic has the option to extend the Lease
for four successive periods of five years each beyond the initial twenty-five
year term. See “Description of Business – Pittsgrove Solar
Farm.”
Director
Independence
Upon the
consummation of the Share Exchange on February 3, 2010, all of the members of
the Company’s board of directors resigned their positions as directors and each
of Robert Demos, Jr., Edward Stella, Jr. and R. Scott Byrne were appointed to
the Company’s board of directors. None of the current directors
qualifies as an “independent director” under the NASDAQ Rules.
Market
Price of and Dividends on the Registrant’s Common Equity and Related Stockholder
Matters
Prior to
the consummation of the Share Exchange on February 3, 2010, the Company’s common
stock was listed for quotation on the OTC Bulletin Board under the symbol
LDST. As a result of the Company’s name change to “Atlantic Green
Power Holding Company,” the Company will be provided a new symbol in the near
future. As of the date of this report, no active public trading
market for shares of the common stock existed.
24
As of
February 3, 2010, there were 43,199,750 shares of the Company’s common stock
outstanding and approximately 40 holders of the common stock.
The
Company did not pay any dividends on shares of the common stock in the last two
fiscal years, and the Company does not anticipate that it will pay any dividends
in the foreseeable future.
Recent
Sales of Unregistered Securities
Upon the
consummation of the Share Exchange on February 3, 2010, the Company issued an
aggregate of 38,099,250 shares of common stock in exchange for all of the issued
and outstanding shares of Atlantic common stock in reliance upon the exemption
from registration provided under Section 4(2) of the Securities Act of 1933, as
amended (the “Securities Act”), and Rule 506 promulgated
thereunder.
Description
of Securities
The
Company is authorized to issue a total of one billion twenty million
(1,020,000,000) shares of capital stock, consisting of one billion
(1,000,000,000) shares of common stock, par value $.000001 per share, and twenty
million (20,000,000) shares of “blank check” preferred stock, par value $.000001
per share.
The
shares of common stock have equal rights and privileges with respect to voting,
liquidation and dividend rights. Each share of common stock entitles
the holder thereof (a) to one vote for each share held of record on all matters
submitted to a vote of the stockholders; (b) to participate in and to receive
any and all such dividends as may be declared by the Company’s board of
directors in proportion to the amounts paid upon the shares; and (c) to
participate pro rata in any distribution of assets available for distribution
upon liquidation, after payment shall have been made to the holders of shares of
the preferred stock of the full amount to which they are
entitled. Holders of shares of common stock do not have preemptive
rights to acquire additional shares of common stock or any other securities of
the Company. The shares of common stock are not subject to redemption
and carry no subscription or conversion rights.
The
preferred stock may from time to time be divided into and issued in
series. The different series of preferred stock shall be established
and designated, and the variations in the relative rights and preferences as
between the different series shall be fixed and determined, by the Company’s
board of directors. As of the date of this report, the Company’s
board of directors had not established any series of preferred stock, there were
no shares of preferred stock issued and outstanding, and no active public
trading market for shares of the preferred stock existed.
25
Indemnification
of Directors and Officers
As
permitted by the provisions of the Delaware General Corporation Law (the
“DGCL”), the Company has the power to indemnify any person made a party or
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
except an action by or in the right of the Company, by reason of the fact that
he or she is or was a director, officer, employee or agent of the Company, or
was serving at the request of the Company as a director, officer, employee or
agent of another corporation or other enterprise, against expenses, including
attorneys’ fees, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him or her in connection with the action, suit or
proceeding if he or she acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the Company, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his or her conduct was unlawful. Termination of any action, suit or
proceeding by judgment, order, settlement, conviction or upon a plea of nolo
contendere or its equivalent, does not, of itself, create a presumption that the
he or she did not act in good faith and in a manner which he or she reasonably
believed to be in or not opposed to the Company’s best interests, and, in any
criminal action or proceeding, he or she had reasonable cause to believe the
conduct was unlawful.
The
Company must indemnify a director, officer, employee or agent who is successful,
on the merits or otherwise, in the defense of any action, suit or proceeding, or
in defense of any claim, issue or matter in the proceeding, to which he or she
is a party because he or she is or was a director, officer, employee or agent,
against expenses actually and reasonably incurred by him or her in connection
with the defense.
The
Company may provide to pay the expenses of officers and directors incurred in
defending a civil or criminal action, suit or proceeding as the expenses are
incurred and in advance of the final disposition of the action, suit or
proceeding, upon receipt of an undertaking by or on behalf of the director or
officer to repay the amount if it is ultimately determined by a court of
competent jurisdiction that he or she is not entitled to be indemnified by the
Company.
The DGCL
also permits a corporation to purchase and maintain liability insurance or make
other financial arrangements on behalf of any person who is or was:
|
·
|
a
director, officer, employee or agent of the corporation;
or
|
|
·
|
serving
at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise.
|
Such
coverage may be for any liability asserted against him or her and liability and
expenses incurred by him or her in the capacity as a director, officer, employee
or agent, or arising out of status as such, whether or not the corporation has
the authority to indemnify him or her against such liability and
expenses.
Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to officers, directors or persons controlling the Company pursuant to
the foregoing provisions, the Company has been informed that in the opinion of
the SEC such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
26
Financial
Statements and Supplementary Data
See the
financial statements of Atlantic attached hereto as Exhibit
99.1.
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
Not
applicable.
Section
3 – Securities and Trading Markets
Item 3.02. Unregistered Sales of Equity
Securities.
Upon the
consummation of the Share Exchange on February 3, 2010, the Company issued an
aggregate of 38,099,250 shares of its common stock in exchange for all of the
issued and outstanding shares of Atlantic common stock in reliance upon the
exemption from registration provided under Section 4(2) of the Securities Act
and Rule 506 promulgated thereunder.
Section
5 – Corporate Governance and Management
Item 5.01. Changes in Control of
Registrant.
Upon the
consummation of the Share Exchange on February 3, 2010, the Company acquired all
of the issued and outstanding shares of common stock of Atlantic and issued an
aggregate of 38,099,250 shares of its common stock to the former shareholders of
Atlantic. In addition, on January 29, 2010, as contemplated by the
Agreement and Plan of Exchange, the Company purchased all of McKinnon’s shares
of common stock for a purchase price of $250,000 pursuant to the terms of the
Stock Purchase Agreement, and retired the repurchased shares. Prior
to the repurchase, McKinnon owned approximately 75% of the issued and
outstanding shares of common stock of the Company. As a result of
these transactions, the former shareholders of Atlantic acquired approximately
88% of the issued and outstanding shares of common stock of the
Company.
In
connection with the Share Exchange, (i) the then-current officers of the Company
resigned, and the Company’s board of directors appointed Robert Demos, Jr. as
President and Chief Executive Officer of the Company and R. Scott Byrne as Chief
Operating Officer, Secretary and Treasurer; and (ii) the stockholders of the
Company elected each of Robert Demos, Jr., Edward Stella, Jr. and R. Scott Byrne
to the board of directors, and the then-current directors of the Company
resigned. In addition, effective February 3, 2010, Edward Stella, Jr.
was appointed Vice President of Project Development.
27
The
information set forth under Item 1.01 above 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.
|
In
connection with the Share Exchange, as of February 3, 2010, each of the
directors and officers of the Company, including McKinnon, its President and
Chief Executive Officer, resigned. On the same date, Robert Demos,
Jr. was appointed President and Chief Executive Officer of the Company and R.
Scott Byrne was appointed Chief Operating Officer, Secretary and Treasurer, and
each of Robert Demos, Jr., Edward Stella, Jr. and R. Scott Byrne was elected to
the Board. In addition, effective February 3, 2010, Edward Stella,
Jr. was appointed Vice President of Project Development. See Item
2.01 for information with regard to Messrs. Demos, Stella and
Byrne.
Item
5.03. Amendments to Articles of
Incorporation or Bylaws; Change in Fiscal Year.
On
February 4, 2010, the Company amended and restated its Certificate of
Incorporation in its entirety to (i) change its corporate name to “Atlantic
Green Power Holding Company,” (ii) outline the respective rights of holders of
shares of the Company’s common stock and preferred stock, and (iii) provide for
the exculpation of the Company’s directors from personal liability to the
Company and the Company’s stockholders to the extent permitted under the
DGCL. The Company’s Amended and Restated Certificate of Incorporation
is attached hereto as Exhibit
3.1.
In
addition, on the same date, the Company amended and restated its By-laws in
their entirety to, among other things, (i) provide that the presence, in person
or by proxy, of a majority of the outstanding shares of the Company’s common
stock shall constitute a quorum, (ii) provide for the indemnification of
officers, directors, employees and agents of the Company as permitted under the
provisions of the DGCL, (iii) to provide that special meetings of the
stockholders of the Company may be called by the Chairman of the Board or the
President, and shall be called by the President or the Secretary upon the
written request of a majority of the directors, and (iv) to provide the address
of the registered office and the name of the registered agent of the Company in
the State of Delaware. Other changes to the Company’s by-laws are
nonsubstantive in nature and do not materially affect the rights of the
Company’s stockholders, directors and officers. The Company’s Amended
and Restated By-laws are attached hereto as Exhibit
3.2.
Item
5.06. Change in Shell Company
Status.
See Item
1.01 and Item 2.01 above.
28
Section
9 – Financial Statements and Exhibits
Item
9.01. Financial Statements and
Exhibits.
(a) Financial
statements of businesses acquired.
Financial
statements of Atlantic are attached hereto as Exhibit
99.1.
(b) Pro
forma financial information.
Pro forma
financial information of the Company giving effect to the acquisition of
Atlantic is attached hereto as Exhibit
99.2.
(d) Exhibits.
|
Exhibit No.
|
Description
|
|
2.1
|
Agreement
and Plan of Exchange by and among Lodestar Mining, Incorporated, Atlantic
Green Power Corporation and Ian McKinnon, dated January 29,
2010.
|
|
2.2
|
Stock
Purchase Agreement by and between Lodestar Mining, Incorporated and Ian
McKinnon, dated January 29, 2010.
|
|
3.1
|
Amended
and Restated Certificate of Incorporation of Lodestar Mining,
Incorporated.
|
|
3.2
|
Amended
and Restated By-laws of Atlantic Green Power Holding
Company.
|
|
10.1
|
Atlantic
Green Power Holding Company Equity Incentive Plan.
|
|
99.1
|
Financial
statements of Atlantic Green Power Corporation for the period from
September 17, 2009 (date of inception) through November 30,
2009.
|
|
99.2
|
Pro
forma financial information.
|
29
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
| ATLANTIC GREEN POWER HOLDING COMPANY | ||
| (Registrant) | ||
| By: | /s/ Robert Demos Jr. | |
| Robert Demos, Jr. | ||
| President and Chief Executive Officer | ||
Date: February
4,
2010
30
EXHIBIT
INDEX
|
Exhibit No.
|
Description
|
|
2.1
|
Agreement
and Plan of Exchange by and among Lodestar Mining, Incorporated, Atlantic
Green Power Corporation and Ian McKinnon, dated January 29,
2010.
|
|
2.2
|
Stock
Purchase Agreement by and between Lodestar Mining, Incorporated and Ian
McKinnon, dated January 29, 2010.
|
|
3.1
|
Amended
and Restated Certificate of Incorporation of Lodestar Mining,
Incorporated.
|
|
3.2
|
Amended
and Restated By-laws of Atlantic Green Power Holding
Company.
|
|
10.1
|
Atlantic
Green Power Holding Company Equity Incentive Plan.
|
|
99.1
|
Financial
statements of Atlantic Green Power Corporation for the period from
September 17, 2009 (date of inception) through November 30,
2009.
|
|
99.2
|
Pro
forma financial information.
|
31