Attached files
file | filename |
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EX-5.1 - SEV, INC. | ex5-1.htm |
EX-23.1 - SEV, INC. | ex23-1.htm |
EX-10.5 - SEV, INC. | ex10-5.htm |
EX-10.4 - SEV, INC. | ex10-4.htm |
As filed
with the Securities and Exchange Commission on March
5, 2010
Registration
No. 333-163623
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
S-1/A
Amendment
No. 1
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
SEV,
INC.
(Name of
registrant in its charter)
Nevada
|
3565
|
26-2541146
|
(State
or jurisdiction
of
incorporation or organization)
|
(Primary
Standard
Industrial
Classification Code Number)
|
(IRS
Employer Identification No.)
|
5 Blind
Brook Lane
Rye, New
York 10580
(914)
967-0960
(Address
and telephone number of principal executive offices and principal
place
of
business or intended principal place of business)
David W.
Mooney, Jr., AIA
Chief
Executive Officer
5 Blind
Brook Lane
Rye, New
York 10580
(914)
967-0960
(Name,
address and telephone number of agent for service)
Copies
to:
David
M. Loev
|
John
S. Gillies
|
|
The
Loev Law Firm, PC
|
The
Loev Law Firm, PC
|
|
6300
West Loop South, Suite 280
|
&
|
6300
West Loop South, Suite 280
|
Bellaire,
Texas 77401
|
Bellaire,
Texas 77401
|
|
Phone:
(713) 524-4110
|
Phone:
(713) 524-4110
|
|
Fax:
(713) 524-4122
|
Fax:
(713) 456-7908
|
Approximate
date of proposed sale to the public:
as soon
as practicable after the effective date of this Registration
Statement.
If any of
the Securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, check
the following box. þ
If this
Form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, please check the following box and list the
Securities Act registration statement number of earlier effective registration
statement for the same offering. [ ]
If this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. [ ]
If this
Form is a post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. [ ]
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.
Large
accelerated filer [ ]
|
Accelerated
filer [ ]
|
Non-accelerated
filer [ ]
|
Smaller
reporting company þ
|
CALCULATION OF REGISTRATION
FEE
Title
of Each Class of Securities To be Registered
|
Amount
Being
Registered
|
Proposed
Maximum Price Per Share(1)
|
Proposed
Maximum Aggregate Price(1)
|
Amount
of Registration Fee
|
Common
Stock
|
347,250
|
$0.10
|
$34,725
|
$2.48
|
Total
|
347,250
|
$0.10
|
$34,725
|
$2.48
|
(1) The
Offering price is the stated, fixed price of $0.10 per share until the
securities are quoted on the OTC Bulletin Board for the purpose of calculating
the registration fee pursuant to Rule 457. This amount is only for purposes of
determining the registration fee, the actual amount received by a selling
shareholder will be based upon fluctuating market prices once the securities are
quoted on the OTC Bulletin Board.
The
Registrant hereby amends its Registration Statement, on such date or dates as
may be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until the Registration Statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
PROSPECTUS
SEV,
INC.
RESALE
OF
347,250
SHARES OF COMMON STOCK
The
selling stockholders listed on page 40 may offer
and sell up to 347,250 shares of our common stock under this Prospectus for
their own account.
We
currently lack a public market for our common stock. Selling shareholders will
sell at a price of $0.10 per share until our shares are quoted on the OTC
Bulletin Board and thereafter at prevailing market prices or privately
negotiated prices.
A current
Prospectus must be in effect at the time of the sale of the shares of common
stock discussed above. The selling stockholders will be responsible for any
commissions or discounts due to brokers or dealers. We will pay all of the other
Offering expenses.
Each
selling stockholder or dealer selling the common stock is required to deliver a
current Prospectus upon the sale. In addition, for the purposes of the
Securities Act of 1933, as amended, selling stockholders may be deemed
underwriters.
The
information in this Prospectus is not complete and may be changed. We may not
sell these securities until the Registration Statement filed with the Securities
and Exchange Commission is effective. This Prospectus is not an offer to sell
these securities and it is not soliciting an offer to buy these securities in
any state where the offer or sale is not permitted.
THIS
INVESTMENT INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD PURCHASE SHARES ONLY IF
YOU CAN AFFORD A COMPLETE LOSS. WE URGE YOU TO READ THE "RISK FACTORS" SECTION
BEGINNING ON PAGE 9 ,
ALONG WITH THE REST OF THIS PROSPECTUS BEFORE YOU MAKE YOUR INVESTMENT
DECISION.
NEITHER
THE SECURITIES AND EXCHANGE COMMISSION (“SEC”) NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES, OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE
OF THIS PROSPECTUS IS _________, 2010
TABLE
OF CONTENTS
Prospectus
Summary
|
5
|
Summary
Financial Data
|
7
|
Risk
Factors
|
9
|
Use
of Proceeds
|
19
|
Dividend
Policy
|
19
|
Legal
Proceedings
|
19
|
Directors,
Executive Officers, Promoters and Control Persons
|
19
|
Executive
Compensation
|
23
|
Security
Ownership of Certain Beneficial Owners and Management
|
25
|
Interest
of Named Experts and Counsel
|
25
|
Indemnification
of Directors and Officers
|
26
|
Description
of Business
|
27
|
Description
of Property
|
30
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations
|
31
|
Certain
Relationships and Related Transactions
|
36
|
Corporate
Governance
|
37
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
|
38
|
Descriptions
of Capital Stock
|
38
|
Shares
Available for Future Sale
|
39
|
Plan
of Distribution and Selling Stockholders
|
40
|
Market
for Common Equity and Related Stockholder Matters
|
42
|
Additional
Information
|
42
|
Legal
Matters
|
43
|
Financial
Statements
|
F-1
|
PART
I - INFORMATION REQUIRED IN PROSPECTUS
PROSPECTUS
SUMMARY
The
following summary highlights material information found in more detail elsewhere
in the Prospectus. It does not contain all of the information you should
consider. As such, before you decide to buy our common stock, in addition to the
following summary, we urge you to carefully read the entire Prospectus,
especially the risks of investing in our common stock as discussed under "Risk
Factors." In this Prospectus, the terms "we," "us," "our," "Company," and "SEV"
refer to SEV, Inc., a Nevada corporation. "Common Stock" refers to
the Common Stock, par value $0.001 per share, of SEV,
Inc. Additionally, unless otherwise stated all amounts listed herein
are in United States dollars.
We are a
development stage company, operating under the business name of Solar Energy
Ventures in New York and Texas. We plan to provide services in South
Texas, Vermont, Connecticut, the New York suburban markets and Northern New
Jersey. We plan to provide full-service design consulting, construction
management and general contracting services and support for the design and
installation of large and small solar panel arrays on commercial
buildings.
Our
principal executive offices are located at 5 Blind Brook Lane, Rye, New York
10580; our telephone number is (914) 967-0960 and our fax number is (210)
481-5177.
We have
generated no revenues since our inception in May 2008, had a working capital
deficit of $7,576 as of October 31, 2009, had a net loss of $22,828 for the year
ended July 31, 2009, and had a net loss of $1,618 for the three months ended
October 31, 2009. We had a deficit accumulated during the development
stage of $24,846 as of October 31, 2009. We have budgeted the need for
approximately $100,000 of additional funding during the next 12 months to
continue our business operations, pay costs and expenses associated with our
filing requirements with the Securities and Exchange Commission (assuming the
Registration Statement, of which this Prospectus is a part is declared
effective) and conduct our business activities as planned, and such funding may
not be able to be raised on favorable terms, if at all. We believe we can
continue our operations for approximately the next 12 months if no additional
financing is raised, with funds advanced to us by our officers, Directors and
significant shareholders pursuant to their Line of Credits, as described
below. If we are unable to raise adequate working capital for the remainder
of fiscal 2010 and throughout 2011, we will be restricted in the implementation
of our development plan. If this were to happen, the value of
our securities would diminish and we may be forced to change our business plan
for fiscal 2010 or 2011, which would result in the value of our securities
declining in value and/or becoming worthless. If we raise an adequate
amount of working capital to implement our business plan, we anticipate
incurring net losses until we obtain a sufficient number of customers to support
our expenses and start up costs, if ever.
The
shares of common stock offered herein represent 172,250 shares sold by the
Company to 27 private investors in a private placement from October 2008 to
March 2009, at $0.08 per share, pursuant to an exemption from registration
provided by Rule 506 of the Securities Act of 1933, as amended (the “Act”) and
an aggregate of 175,000 shares of common stock issued to six consultants of the
Company in July 2008, in consideration for services rendered, which shares were
issued pursuant to an exemption from registration provided by Section 4(2) of
the Act.
We have
no revenues, have achieved significant losses since inception, have had only
limited operations, and have been issued a going concern opinion by our
auditors. We rely upon the sale of our securities to fund operations
or interim loans from our shareholders; however, there can be no assurance that
either of these sources of financing will be available in the near future, if at
all.
The
following summary is qualified in its entirety by the detailed information
appearing elsewhere in this Prospectus. The securities offered hereby are
speculative and involve a high degree of risk. See "Risk Factors."
-5-
SUMMARY OF THE
OFFERING:
Common
Stock Offered:
|
347,250
shares by selling stockholders
|
Common
Stock Outstanding Before The Offering:
|
2,447,250
shares
|
Common
Stock Outstanding After The Offering:
|
2,447,250 shares
|
Use
Of Proceeds:
|
We
will not receive any proceeds from the shares offered by the selling
stockholders in this Offering.
|
Offering
Price:
|
The
Offering price of the shares has been arbitrarily determined by us based
on estimates of the price that purchasers of speculative securities, such
as the shares, will be willing to pay considering the nature and capital
structure of our Company, the experience of our officers and Directors and
the market conditions for the sale of equity securities in similar
companies. The Offering price of the shares bears no relationship to the
assets, earnings or book value of us, or any other objective standard of
value. We believe that no shares will be sold by the selling shareholders
prior to us becoming a publicly-traded company, at which time the selling
shareholders will sell shares based on the market price of such shares. We
are not selling any shares of our common stock, and are only registering
the re-sale of shares of common stock previously sold by
us.
|
No
Market:
|
No
assurance is provided that a market will be created for our securities in
the future, or at all. If in the future a market does exist for our
securities, it is likely to be highly illiquid and
sporadic.
|
Need
for Additional Financing:
|
We
have generated no revenues to date. We have budgeted the need for
approximately $100,000 of additional funding during the next 12 months to
continue our business operations, pay costs and expenses associated with
our filing requirements with the Securities and Exchange Commission
(assuming the Registration Statement, of which this Prospectus is a part
is declared effective) and conduct our business activities as planned, and
such funding may not be able to be raised on favorable terms, if at
all. We believe we can continue our operations for approximately the
next 12 months if no additional financing is raised, with funds advanced
to us by our officers, Directors and significant shareholders pursuant to
their Line of Credits, as described below. If we are unable to
raise the additional funding, the value of our securities, if any, would
likely become worthless and we may be forced to abandon our business
plan. Even assuming we raise the additional capital we require
to continue our business operations, we will require substantial fees and
expenses associated with this Offering, and we anticipate incurring net
losses for the foreseeable future.
|
Going
Concern:
|
Because
of our need for additional funding (as described above), as well as other
factors, our independent accountants have issued a going concern opinion
as described in greater detail in our audited financial statements filed
herewith.
|
Address:
|
5
Blind Brook Lane, Rye, New York 10580
|
Telephone
Number:
|
(914)
967-0960
|
-6-
SUMMARY
FINANCIAL DATA
You
should read the summary financial information presented below as of October 31,
2009 and July 31, 2009, and for the three months ended October 31, 2009 and
2008, the year ended July 31, 2009 and the period from inception through July
31, 2008 and 2009. We derived the summary financial information from our
unaudited financial statements for the three months ended October 31, 2009 and
2008 and the audited financial statements for the year ended July 31, 2009 and
the period from inception (May 28, 2008) through July 31, 2008, appearing
elsewhere in this Prospectus. You should read this summary financial information
in conjunction with our plan of operation, financial statements and related
notes to the financial statements, each appearing elsewhere in this
Prospectus.
BALANCE
SHEET SUMMARY INFORMATION
October
31, 2009 (Unaudited)
|
July
31, 2009
(Audited)
|
July
31, 2008
(Audited)
|
||||||||
ASSETS
|
||||||||||
Current
Assets
|
||||||||||
Cash
|
$ | 88 | $ | 145 | $ | 100 | ||||
Total
Current Assets
|
88 | 145 | $ | 100 | ||||||
TOTAL
ASSETS
|
$ | 88 | $ | 145 | $ | 100 | ||||
LIABILITIES
AND SHAREHOLDERS' EQUITY (Deficit)
|
||||||||||
Current
Liabilities
|
||||||||||
Note
Payable to Officers & Directors
|
$ | 2,354 | $ | 2,354 | $ | - | ||||
Notes
Payable to Related Party
|
5,000 | 4,000 | - | |||||||
Accrued
Interest to Related Party Notes
|
310 | 310 | - | |||||||
Total
Current Liabilities
|
7,664 | 6,664 | - | |||||||
Shareholders'
Equity
|
||||||||||
Common
Stock, $.001 par, 140,000,000 authorized
|
||||||||||
2,447,250
issued and outstanding at October 31, 2009
|
2,447 | 2,447 | 2,275 | |||||||
&
July 31, 2009
|
||||||||||
Preferred
stock, $.001 par, 10,000,000 authorized
|
||||||||||
None
issued and outstanding
|
- | - | ||||||||
Additional
Paid in Capital
|
14,823 | 14,262 | (1,775) | |||||||
Deficit
accumulated during the development stage
|
(24,846 | ) | (23,228 | ) | (400) | |||||
Total
Shareholders' Equity (Deficit)
|
(7,576 | ) | (6,519 | ) | 100 | |||||
TOTAL
LIABILITIES & SHAREHOLDERS' EQUITY (Deficit)
|
$ | 88 | $ | 145 | $ | 100 |
-7-
STATEMENT OF OPERATIONS SUMMARY
INFORMATION
Three
months ended October 31, 2009
|
Three
months ended October 31, 2008
|
Twelve
Months
|
Inception
(May 28,
|
Inception (May 28, | |||||||||||
ended
July 31,
|
2008)
through
|
2008) through | |||||||||||||
2009 |
July
31, 2008
|
October 31, 2009 | |||||||||||||
Revenues
|
$ | - | $ | - | $ | - | $ | - | $ | - | |||||
Total
Operating expenses
|
1,507 | 14,228 | 22,828 | 400 | 24,846 | ||||||||||
Net
Operating gain/(loss)
|
(1,507 | ) | (14,228 | ) | (22,828 | ) | (400 | ) | (24,846 | ) | |||||
Other
Income (Expense)
|
- | - | - | - | - | ||||||||||
Interest
Income (Expense)
|
(111 | ) | (237 | ) | - | - | - | ||||||||
Net
gain/(loss)
|
$ | (1,618 | ) | $ | (14,465 | ) | $ | (22,828 | ) | $ | (400 | ) | (24,846 | ) | |
-8-
RISK
FACTORS
The
securities offered herein are highly speculative and should only be purchased by
persons who can afford to lose their entire investment in us. You should
carefully consider the following risk factors and other information in this
Prospectus before deciding to become a holder of our common stock. If any of the
following risks actually occur, our business and financial results could be
negatively affected to a significant extent.
The
Company's business is subject to the following Risk Factors (references to
"our," "we," "SEV" and words of similar meaning in these Risk Factors refer to
the Company):
General
WE HAVE FUTURE CAPITAL NEEDS
AND WITHOUT ADEQUATE CAPITAL WE MAY BE FORCED TO CEASE OR CURTAIL OUR BUSINESS
OPERATIONS.
Our
growth and continued operations could be impaired by limitations on our access
to capital markets. The limited capital we have raised, the
revenue we hope to generate and the additional capital which may be available to
us from our principals, if any, may not be adequate for our long-term
growth. If financing is available, it may involve issuing securities
senior to our common stock or equity financings, which are dilutive to holders
of our common stock. In addition, in the event we do not raise
additional capital from conventional sources, such as our existing investors or
commercial banks, there is every-likelihood that our growth will be restricted
and we may be forced to scale back or curtail implementing our business
plan.
Even if
we are successful in raising capital in the future, we will likely need to raise
additional capital to continue and/or expand our operations. If we do
not raise the additional capital, the value of any investment in our Company may
become worthless. In the event we do not raise additional capital from
conventional sources, it is likely that we may need to scale back or curtail
implementing our business plan.
WE HAVE NOT GENERATED ANY
REVENUES SINCE OUR INCEPTION IN MAY 2008.
Since our
inception in May 2008, we have yet to generate any revenues, and currently have
only limited operations, as we are presently in the development stage of our
business development. We may be able to generate any revenues in the
future and/or may be forced to change or abandon our business plan in the
future.
SHAREHOLDERS WHO HOLD
UNREGISTERED SHARES OF OUR COMMON STOCK ARE SUBJECT TO RESALE RESTRICTIONS
PURSUANT TO RULE 144, DUE TO OUR STATUS AS A “SHELL
COMPANY.”
Pursuant
to Rule 144 of the Securities Act of 1933, as amended (“Rule 144”), a “shell
company” is defined as a company that has no or nominal operations; and, either
no or nominal assets; assets consisting solely of cash and cash equivalents; or
assets consisting of any amount of cash and cash equivalents and nominal other
assets. As such, we are a “shell company” pursuant to Rule 144, and
as such, sales of our securities pursuant to Rule 144 are not able to be made
until 1) we have ceased to be a “shell company; 2) we are subject to Section 13
or 15(d) of the Securities Exchange Act of 1934, as amended, and have filed all
of our required periodic reports for at least the previous one year period prior
to any sale pursuant to Rule 144; and a period of at least twelve months has
elapsed from the date “Form 10 information” (i.e., information similar to what
is required in a Form 10 Registration Statement with the SEC) has been filed
with the Commission reflecting the Company’s status as a non-“shell
company.” Because none of our non-registered securities can be sold
pursuant to Rule 144, until at least a year after we cease to be a “shell
company”, any non-registered securities we sell in the future or issue to
consultants or employees, in consideration for services rendered or for any
other purpose will have no liquidity until and unless such securities are
registered with the Commission and/or until a year after we cease to be a “shell
company” and have complied with the other requirements of Rule 144, as described
above. As a result, it may be harder for us to fund our operations
and pay our consultants with our securities instead of
cash. Furthermore, it will be harder for us to raise funding through
the sale of debt or equity securities unless we agree to register such
securities with the Commission, which could cause us to expend additional
resources in the future. Our status as a “shell company” could
prevent us from raising additional funds, engaging consultants, and using our
securities to pay for any acquisitions (although none are currently planned),
which could cause the value of our securities, if any, to decline in value or
become worthless.
-9-
THERE IS SUBSTANTIAL DOUBT
AS TO WHETHER WE CAN CONTINUE AS A GOING CONCERN.
We have
generated no revenues since our inception in May 2008, had a working capital
deficit of $7,576 as of October 31, 2009, had a net loss of $22,828 for the year
ended July 31, 2009, and had a net loss of $1,618 for the three months ended
October 31, 2009. We had a deficit accumulated during the development
stage of $24,846 as of October 31, 2009. These factors among
others indicate that we may be unable to continue as a going concern,
particularly in the event that we cannot obtain additional financing and/or
attain profitable operations. The accompanying financial statements
do not include any adjustments that might result from the outcome of this
uncertainty and if we cannot continue as a going concern, your investment could
become devalued or even worthless.
WE CURRENTLY HAVE NO MAJOR
CUSTOMERS NOR CONTRACTS AND HAVE GENERATED NO REVENUES TO
DATE.
As stated
above, we have generated no revenues since our inception and have only solicited
our services to a few potential clients and customers, which we hope to market
and sell to in the future. If we are unable to gain any customers in
the future and/or unable to generate any revenues moving forward, any investment
in us could become worthless.
WE DEPEND ON DAVID W.
MOONEY, JR., OUR CHIEF EXECUTIVE OFFICER AND PRESIDENT, AND IF WE LOSE HIM, WE
WILL FACE SIGNIFICANT HURDLES TO CONTINUING OUR OPERATIONS
Our
performance is substantially dependent upon the performance of David W. Mooney,
Jr., AIA, our Chief Executive Officer and President. In addition, we
rely on Mr. Mooney’s discretion in the direction of our business and guidance
regarding the agreements we enter into. The loss of the services of Mr. Mooney
will have a material adverse effect on our business, results of operations, and
financial condition. In addition, the absence of Mr. Mooney will
force us to seek a replacement who may have less experience or who may not
understand our business as well, or we may not be able to find a suitable
replacement. Without the expertise of Mr. Mooney, or an immediate and
qualified successor, we may be forced to curtail operations or close the
business entirely, making the value of any investment in us
worthless. The Company does not have an employment agreement with or
any “key man” insurance on Mr. Mooney and Mr. Mooney can resign at any
time.
TWO OF OUR OFFICERS AND
DIRECTORS POSSESS MAJORITY VOTING CONTROL OVER THE COMPANY, AND BECAUSE OF THIS
MAY CHOOSE A PLAN OF ACTION WHICH WILL DEVALUE OUR OUTSTANDING
SECURITIES.
Our Chief
Executive Officer, President and Director, David W. Mooney, Jr., AIA, and our
Chief Financial Officer, Vice President and Director, Carey G. Birmingham, each
own 700,000 shares of our common stock. As a result, Mr. Mooney and
Mr. Birmingham each individually hold 28.6% of our outstanding shares of common
stock and collectively hold 57.2% of our outstanding shares of common stock.
Accordingly, Mr. Mooney and Mr. Birmingham possess significant influence over
the matters submitted to the stockholders for approval. These matters
include the election of Directors, mergers, consolidations, the sale of all or
substantially all of our assets, and also the power to prevent or cause a change
in control. This level of control by Mr. Mooney and Mr. Birmingham
give them substantial ability to determine our future as a business, and as
such, they may elect to close the business, change the business plan or make any
number of other major business decisions. These changes may not be in
the best interests of the Company’s shareholders and/or may eventually make the
value of any investment in us worthless. Any investor who purchases shares in
the Company will be a minority shareholder and as such will have little to no
say in the direction of the Company and the election of Directors. Additionally,
it will be difficult if not impossible for investors to remove Mr. Mooney or Mr.
Birmingham as Directors of the Company, which will mean they will remain in
control of who serves as officers of the Company as well as whether any changes
are made in the Board of Directors. As a potential investor in the Company, you
should keep in mind that even if you own shares of the Company's common stock
and wish to vote them at annual or special shareholder meetings, your shares
will likely have little effect on the outcome of corporate
decisions.
-10-
OUR PRESIDENT AND DIRECTOR
HAS OTHER EMPLOYMENT OUTSIDE OF THE COMPANY, AND AS SUCH, MAY NOT BE ABLE TO
DEVOTE SUFFICIENT TIME TO OUR OPERATIONS.
Our
President and Director, David W. Mooney, Jr., AIA, is the principal of and
operates David W. Mooney, Jr., Architects on a day-to-day basis. He
will continue to do so while he is attempting to operate and seek new business
for our Company. Mr. Mooney currently anticipates being able to spend
approximately 20 hours per week on Company matters. There can be no
assurance that Mr. Mooney’s concentration on David W. Mooney, Jr. Architects
will not significantly detract from his efforts to grow our Company and that his
work for his firm will not take precedence over his work for our
Company. In the event Mr. Mooney’s concentration on David W. Mooney,
Jr. Architects should distract him from his work efforts on our Company to the
extent where our revenues suffer, any investment in our company could become
worthless.
WE LACK AN OPERATING HISTORY
WHICH YOU CAN USE TO EVALUATE US, MAKING ANY INVESTMENT IN OUR COMPANY
RISKY.
We lack
an operating history which investors can use to evaluate our previous earnings,
as we were only incorporated in May 2008. Therefore, an investment in us is
risky because we have no business history and it is hard to predict what the
outcome of our business operations will be in the future.
OUR GROWTH WILL PLACE
SIGNIFICANT STRAINS ON OUR RESOURCES.
Our
growth is expected to place a significant strain on our managerial, operational
and financial resources, as David W. Mooney, Jr., AIA and Carey Birmingham, our
sole officers and Directors are our only employees. Further, assuming
we receive contracts and orders in the future, we will be required to manage
multiple relationships with various customers and other third
parties. These requirements will be exacerbated in the event of our
further growth or increases in the number of our contracts. Our systems,
procedures or controls may not be adequate to support our operations or able to
achieve the rapid execution necessary to successfully offer our services and
implement our business plan in the event of future growth. Our future
operating results will also depend on our ability to add additional personnel
commensurate with the growth of our business. If we are unable to
manage growth effectively, our business, results of operations and financial
condition will be adversely affected.
OUR ARTICLES OF
INCORPORATION, AS AMENDED, AND BYLAWS LIMIT THE LIABILITY OF, AND PROVIDE
INDEMNIFICATION FOR, OUR OFFICERS AND DIRECTORS.
Our
Articles of Incorporation, generally limit our officer’s and Director’s personal
liability to the Company and its stockholders for breach of fiduciary duty as an
officer or Director except for breach of the duty of loyalty or acts or
omissions not made in good faith or which involve intentional misconduct or a
knowing violation of law. Our Articles of Incorporation, as amended, and Bylaws,
as amended and restated, provide indemnification for our officers and Directors
to the fullest extent authorized by the Nevada General Corporation Law against
all expense, liability, and loss, including attorney's fees, judgments, fines
excise taxes or penalties and amounts to be paid in settlement reasonably
incurred or suffered by an officer or Director in connection with any action,
suit or proceeding, whether civil or criminal, administrative or investigative
(hereinafter a "Proceeding") to which the officer or Director is made a party or
is threatened to be made a party, or in which the officer or Director is
involved by reason of the fact that he is or was an officer or Director of the
Company, or is or was serving at the request of the Company as an officer or
director of another corporation or of a partnership, joint venture, trust or
other enterprise whether the basis of the Proceeding is an alleged action in an
official capacity as an officer or Director, or in any other capacity while
serving as an officer or Director. Thus, the Company may be prevented from
recovering damages for certain alleged errors or omissions by the officers and
Directors for liabilities incurred in connection with their good faith acts for
the Company. Such an indemnification payment might deplete the
Company's assets. Stockholders who have questions regarding the fiduciary
obligations of the officers and Directors of the Company should consult with
independent legal counsel. It is the position of the Securities and Exchange
Commission that exculpation from and indemnification for liabilities arising
under the Securities Act of 1933, as amended, and the rules and regulations
thereunder is against public policy and therefore unenforceable.
-11-
IF THE REGISTRATION
STATEMENT, OF WHICH THIS PROSPECTUS IS A PART BECOMES EFFECTIVE, WE WILL BECOME
A PUBLIC REPORTING COMPANY, AND WILL INCUR SIGNIFICANT INCREASED COSTS IN
CONNECTION WITH COMPLIANCE WITH SECTION 404 OF THE SARBANES OXLEY ACT, AND OUR
MANAGEMENT WILL BE REQUIRED TO DEVOTE SUBSTANTIAL TIME TO NEW COMPLIANCE
INITIATIVES.
If the
Registration Statement, of which this Prospectus is a part, becomes effective,
we will become subject to among other things, the periodic reporting
requirements of Section 15(d) of the Securities Exchange Act of 1934, as
amended, and will incur significant legal, accounting and other expenses in
connection with such requirements. The Sarbanes-Oxley Act of 2002
(the "Sarbanes-Oxley Act") and new rules subsequently implemented by the SEC
have imposed various new requirements on public companies, including requiring
changes in corporate governance practices. As such, our management and other
personnel will need to devote a substantial amount of time to these new
compliance initiatives. Moreover, these rules and regulations will increase our
legal and financial compliance costs and will make some activities more
time-consuming and costly. In addition, the Sarbanes-Oxley Act requires, among
other things, that we maintain effective internal controls for financial
reporting and disclosure of controls and procedures. Our compliance with Section
404 will require that we incur substantial accounting expense and expend
significant management efforts. We currently do not have an internal audit
group, and we will need to hire additional accounting and financial staff with
appropriate public company experience and technical accounting knowledge.
Moreover, if we are not able to comply with the requirements of Section 404 in a
timely manner, or if we or our independent registered public accounting firm
identify deficiencies in our internal controls over financial reporting that are
deemed to be material weaknesses, the market price of our stock could decline,
and we could be subject to sanctions or investigations by the SEC or other
regulatory authorities, which would require additional financial and management
resources.
-12-
OUR
FAILURE TO RESPOND TO RAPID CHANGE IN THE MARKET FOR SOLAR AND ALTERNATIVE
ENERGY PRODUCTS COULD
HAVE AN ADVERSE EFFECT ON OUR RESULTS OF OPERATIONS.
Our
future success will depend significantly on our ability to develop, license,
market and install new solar energy products that keep pace with technological
developments and evolving industry standards in order to benefit our future
clients. Our delay or failure to develop or acquire technological improvements,
adapt the products we intend to sell or market to technological changes or
provide technology that appeals to our customers may cause us to lose customers
or prevent us from obtaining customers and may prevent us from generating
revenue which could ultimately cause us to cease operations.
IF WE EXPERIENCE SIGNIFICANT
DELAYS, COST OVERRUNS OR TECHNICAL DIFFICULTIES INSTALLING EQUIPMENT FOR OUR
FUTURE CUSTOMERS, IF ANY, OUR BUSINESS PLANS, PROSPECTS, RESULTS OF OPERATIONS
AND FINANCIAL CONDITION WILL SUFFER.
Completing
the installation of equipment for our planned future customers will be subject
to significant risks, including risks of delays, equipment failure, cost
overruns and installation issues. Our planned installation process uses both
off-the-shelf and custom-built equipment, and requires us to partner with
sub-contractors to install the products we hope to sell moving forward. In the
future, we may experience delivery and installation delays of key pieces of
equipment, which may make it impossible for us to complete installations in a
timely fashion, if at all. Significant future installation delays or
technical difficulties due to our operations or those of our future partners may
hurt our reputation, force customers to cancel their orders and/or prevent us
from gaining customers in the future. Consequently, we may be forced
to scale back and/or abandon our business plans.
SOLAR ENERGY PRODUCTS HAVE
NEVER BEEN SOLD ON A MASS MARKET COMMERCIAL BASIS, AND WE DO NOT KNOW WHETHER
THEY WILL BE ACCEPTED BY THE MARKET.
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 the products we hope
to sell are not accepted by the market, our business plans, prospects, results
of operations and financial condition will suffer. The development of a
successful market for our proposed products and our ability to market and sell
our products and services at an attractive price to potential customers may be
affected by a number of factors, many of which are beyond our control,
including, but not limited to:
·
|
Demand
for solar power and alternative energy sources in
general;
|
|
·
|
The
efficiency, size, complexity and power output of current and future solar
power technologies;
|
|
·
|
Competition
from conventional energy sources and alternative distributed generation
technologies, such as wind energy;
|
|
·
|
Our
failure to develop and maintain successful relationships with suppliers,
distributors, systems integrators and other resellers, as well as
strategic partners; and
|
|
·
|
Customer
acceptance of our products.
|
WE WILL DEPEND ON A LIMITED
NUMBER OF THIRD-PARTY SUPPLIERS FOR OUR KEY MATERIALS, AND ANY DISRUPTIONS FROM
SUCH SUPPLIERS COULD PREVENT US FROM SELLING COST-EFFECTIVE
PRODUCTS.
We plan
to purchase the photovoltaic (“PV”) arrays that we plan to install and/or
arrange to be installed at our customer’s locations from a limited number of
third-party suppliers. We do not currently have in place any supply contracts
which any suppliers. If we fail to maintain our relationships with our
suppliers, or fail to secure additional supply sources from other PV array
suppliers that meet our quality, quantity and cost requirements in a timely
manner, we may be unable to obtain the parts that we will require and/or such
parts may be available only at a higher cost or after a long delay. We may be
unable to identify new suppliers in a timely manner and materials and components
from new suppliers also be less suited for our installations and/or have higher
failure rates. Any of these factors could prevent us from delivering our planned
products to our customers within required timeframes, resulting in potential
order cancellations and lost revenue.
-13-
TECHNOLOGICAL CHANGES IN THE
SOLAR POWER INDUSTRY COULD RENDER OUR PRODUCTS OBSOLETE, WHICH COULD PREVENT US
FROM ACHIEVING SALES.
Our
failure to offer and market new products could cause our future operations to
become uncompetitive or obsolete, which could prevent us from obtaining any
sales, or increasing our sales and becoming profitable. The solar power industry
is rapidly evolving and highly competitive. Our marketing efforts may be
rendered obsolete by the technological advances of other technology, and other
technologies may prove more advantageous for the commercialization of solar
power products. If this occurs, our future sales and profits, if any, could be
diminished.
THE REDUCTION OR ELIMINATION
OF GOVERNMENT SUBSIDIES AND ECONOMIC INCENTIVES FOR ON-GRID SOLAR ELECTRICITY
APPLICATIONS COULD REDUCE DEMAND FOR FUTURE PRODUCTS.
The
reduction, elimination or expiration of government subsidies and economic
incentives for on-grid 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 future sales. 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, have provided subsidies in
the form of tariffs, rebates, tax write-offs and other incentives to end-users,
distributors, systems integrators and manufacturers of PV products. For example,
certain markets in the United States have been strong supporters of PV products
and systems, and political changes could result in significant reductions or the
elimination of incentives. Many of these government incentives could expire,
phase-out over time, exhaust the allocated funding or require renewal by the
applicable authority. 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 future
sales, if any, and financial condition.
EXISTING REGULATIONS AND
POLICIES AND CHANGES TO THESE REGULATIONS AND POLICIES MAY PRESENT TECHNICAL,
REGULATORY AND ECONOMIC BARRIERS TO THE PURCHASE AND USE OF PHOTOVOLTAIC
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 policies promulgated by electric
utilities. These regulations and policies often relate to electricity pricing
and technical interconnection of customer-owned electricity generation. In the
United States and in a number of other countries, these regulations and policies
have been modified in the past and may be modified again in the future. These
regulations and policies could deter end-user purchases of photovoltaic products
and investment in the research and development of photovoltaic technology. For
example, without a mandated regulatory exception for photovoltaic systems,
utility customers are often charged fees for putting distributed power
generation on the electric utility grid. These fees could increase the cost to
our end-users of using photovoltaic systems and make them less desirable,
thereby harming our business, prospects, results of operations and financial
condition. In addition, electricity generated by photovoltaic systems mostly
competes with expensive peak hour electricity, rather than the less expensive
average price of electricity. Modifications to the peak hour pricing policies of
utilities, such as to a flat rate, would require photovoltaic systems to achieve
lower prices in order to compete with the price of electricity from other
sources.
-14-
We
anticipate that our solar modules and their installation will be subject to
oversight and regulation in accordance with national and local ordinances
relating to building codes, safety, environmental protection, utility
interconnection and metering and related matters. It is difficult 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 modules may result in significant additional expenses to us, our
partners and our customers and, as a result, could cause a significant reduction
in demand for our products and services.
WE WILL DEPEND HEAVILY ON
OUR ABILITY TO MARKET OUR PRODUCTS TO POTENTIAL CONSUMERS.
We will
depend on our marketing efforts, to make potential customers aware of our
products. If we fail to market make potential customers aware of our products,
and/or potential customers believe that our products and services are not
competitively priced and/or not attractive to such potential customers, it is
likely that we will not be able to compete in the market for alternative energy
services. If you invest in us and we fail to properly market our products, we
could be forced to curtail our business plan or discontinue our business
operations altogether.
WE MAY BE VULNERABLE TO THE
EFFORTS OF ELECTRIC UTILITY COMPANIES LOBBYING TO PROTECT THEIR REVENUE STREAMS
AND FROM COMPETITION FROM SUCH ELECTRIC UTILITY COMPANIES.
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 PV products and investment in the research and development of PV
technology. In addition, electricity generated by PV systems mostly competes
with expensive peak hour electricity, rather than the less expensive average
price of electricity. Modifications to the peak hour pricing policies of
utilities, such as flat rate pricing, would require PV systems to achieve lower
prices in order to compete with the price of electricity. Any changes to
government regulations or utility policies that favors electric utility
companies could reduce our competitiveness and cause a significant reduction in
demand for our future products.
OUR OPERATING RESULTS ARE
LIKELY TO FLUCTUATE SIGNIFICANTLY QUARTER TO QUARTER AND YEAR TO
YEAR.
As a
result of our limited operating history and the rapidly changing nature of the
markets in which we compete, our quarterly and annual revenues and operating
results, if any, are likely to fluctuate from period to period. These
fluctuations may be caused by a number of factors, many of which are beyond our
control. These factors include the following, as well as others discussed
elsewhere in this section:
·
|
how
and when we introduce new products and services and enhance our then
existing products and services;
|
·
|
our
ability to attract and retain new customers and satisfy our customers'
demands;
|
·
|
our
ability to establish and maintain strategic
relationships;
|
·
|
our
ability to attract, train and retain key
personnel;
|
·
|
the
emergence and success of new and existing
competition;
|
·
|
varying
operating costs and capital expenditures related to the expansion of our
business operations and infrastructure, including the hiring of new
employees; and
|
·
|
changes
in the mix of products and services that we offer to our
customers.
|
-15-
In
addition, because the market for our products and services is relatively new and
rapidly changing, it is difficult to predict future financial
results.
For these
reasons, you should not rely on period-to-period comparisons of our financial
results, if any, as indications of future results. Our future operating results,
if any, could fall below the expectations of public market analysts or investors
and significantly reduce the market price of our common stock. Fluctuations in
our operating results will likely increase the volatility of our stock
price.
THE HIGH COST OR
INACCESSIBILITY OF FINANCING FOR SOLAR ENERGY PROJECTS MAY ADVERSELY AFFECT
DEMAND FOR OUR PRODUCTS.
If
financing for solar energy projects becomes more costly or becomes inaccessible
in the future, the growth of the market for solar energy applications may be
materially and adversely affected which could adversely affect demand for our
products and materially reduce our future revenue, if any. In addition, rising
interest rates could render existing financings more expensive, as well as
present an obstacle for potential financings that would otherwise spur the
growth of the PV industry. We believe that the availability of financing could
have a significant effect on the level of sales of off-grid solar energy
applications. If financings for solar energy projects become more expensive,
demand for our products would be adversely affected and our revenues, if any,
could decline.
WE WILL FACE INTENSE
COMPETITION FOR THE PRODUCTS WE PLAN TO SELL AND THE SERVICES WE PLAN TO PROVIDE
AND WILL BE COMPETING WITH DIFFERENT SOLAR ENERGY SYSTEMS AS WELL AS OTHER
RENEWABLE ENERGY SOURCES IN THE ALTERNATIVE ENERGY MARKET.
The PV
market is intensely competitive and rapidly evolving. The number of PV product
manufacturers, suppliers and installers has rapidly increased due to the growth
of actual and forecasted demand for PV products and the relatively low barriers
to entry. The weakened demand for PV modules due to weakened macroeconomic
conditions, combined with the increased supply of PV modules due to production
capacity expansion by PV module manufacturers worldwide in recent years, has
caused the price of PV modules to decline. We expect that the prices of PV
products, including PV modules, may continue to decline over time due to
increased supply of PV products, reduced manufacturing costs from economies of
scale, and the advancement of manufacturing technologies. If we fail to attract
and retain customers in our target markets for our future planned products and
services, our results of operations, if any, will be adversely
affected.
Additionally,
we may also face competition from new entrants to the PV market, including those
that offer more advanced technological solutions or that have greater financial
resources than us. In addition, our competitors may also enter into the PV
manufacturing business, which may provide them with cost advantages.
Furthermore, the entire PV industry also faces competition from conventional
energy and non-solar renewable energy providers.
Many of
our existing and potential competitors have substantially greater financial,
technical, manufacturing and other resources than we do. The greater size of
many of our competitors provides them with cost advantages as a result of their
economies of scale and their ability to obtain volume discounts and purchase raw
materials at lower prices. As a result, such competitors may have stronger
bargaining power with their suppliers and have an advantage over us in pricing
as well as securing sufficient supply of PV during times of shortage. Many of
our competitors also have better brand name recognition, more established
distribution networks, larger customer bases or more in-depth knowledge of the
target markets. As a result, they may be able to devote greater resources to the
research and development, promotion and sale of their products and respond more
quickly to evolving industry standards and changes in market conditions as
compared to us. Our failure to adapt to changing market conditions and to
compete successfully with existing or future competitors would have a material
adverse effect on our business, prospects and results of
operations.
WE HAVE NO INSURANCE
COVERAGE AND MAY INCUR LOSSES RESULTING FROM PRODUCT LIABILITY CLAIMS, BUSINESS
INTERRUPTION OR NATURAL DISASTERS RELATING TO OUR
INSTALLATIONS.
We may be
exposed to risks associated with product liability claims if the use of our
installed PV products, or the installation of such products, results in injury.
Since our PV products are components of electricity producing devices, it is
possible that users could be injured or killed by our PV products, whether by
product malfunctions, defects, improper installation or other causes. We do not
maintain any business interruption insurance coverage. As a result, and because
we do not maintain insurance coverage for our operations, we may have to pay,
out of our own funds, for financial and other losses, damages and liabilities,
including those in connection with or resulting from third- party product
liability claims and those caused by natural disasters and other events beyond
our control, relating to our installations and/or the products which we sell,
and/or may be forced to expend significant resources defending or litigating
such claims, which could have a material adverse effect on our financial
condition and results of operations.
-16-
Risks Relating To the
Company’s Securities
WE HAVE NEVER PAID CASH
DIVIDENDS IN CONNECTION WITH OUR COMMON STOCK AND HAVE NO PLANS TO PAY DIVIDENDS
IN THE FUTURE.
We have
paid no cash dividends on our common stock to date and it is not anticipated
that any cash dividends will be paid to holders of our common stock in the
foreseeable future. While our dividend policy will be based on the
operating results and capital needs of our business, it is anticipated that any
earnings will be retained to finance our future expansion.
INVESTORS MAY FACE
SIGNIFICANT RESTRICTIONS ON THE RESALE OF OUR COMMON STOCK DUE TO FEDERAL
REGULATIONS OF PENNY STOCKS.
Our
common stock will be subject to the requirements of Rule 15(g)9, promulgated
under the Securities Exchange Act as long as the price of our common stock is
below $5.00 per share. Under such rule, broker-dealers who recommend low-priced
securities to persons other than established customers and accredited investors
must satisfy special sales practice requirements, including a requirement that
they make an individualized written suitability determination for the purchaser
and receive the purchaser's consent prior to the transaction. The Securities
Enforcement Remedies and Penny Stock Reform Act of 1990, also requires
additional disclosure in connection with any trades involving a stock defined as
a penny stock. Generally, the Commission defines a penny stock as any equity
security not traded on an exchange or quoted on NASDAQ that has a market price
of less than $5.00 per share. The required penny stock disclosures include the
delivery, prior to any transaction, of a disclosure schedule explaining the
penny stock market and the risks associated with it. Such requirements could
severely limit the market liquidity of the securities and the ability of
purchasers to sell their securities in the secondary market.
In
addition, various state securities laws impose restrictions on transferring
"penny stocks" and as a result, investors in the common stock may have their
ability to sell their shares of the common stock impaired.
SHAREHOLDERS MAY BE DILUTED
SIGNIFICANTLY THROUGH OUR EFFORTS TO OBTAIN FINANCING AND SATISFY OBLIGATIONS
THROUGH THE ISSUANCE OF ADDITIONAL SHARES OF OUR COMMON
STOCK.
We have
no committed source of financing. Wherever possible, our Board of Directors will
attempt to use non-cash consideration to satisfy obligations. In many instances,
we believe that the non-cash consideration will consist of restricted shares of
our common stock. Our Board of Directors has authority, without action or vote
of the shareholders, to issue all or part of the authorized but unissued shares
of common stock. In addition, if a trading market develops for our common stock,
we may attempt to raise capital by selling shares of our common stock, possibly
at a discount to market. These actions will result in dilution of the ownership
interests of existing shareholders, may further dilute common stock book value,
and that dilution may be material. Such issuances may also serve to enhance
existing management’s ability to maintain control of the Company because the
shares may be issued to parties or entities committed to supporting existing
management.
STATE SECURITIES LAWS MAY
LIMIT SECONDARY TRADING, WHICH MAY RESTRICT THE STATES IN WHICH AND CONDITIONS
UNDER WHICH YOU CAN SELL SHARES.
Secondary
trading in our common stock may not be possible in any state until the common
stock is qualified for sale under the applicable securities laws of the state or
there is confirmation that an exemption, such as listing in certain recognized
securities manuals, is available for secondary trading in the state. If we fail
to register or qualify, or to obtain or verify an exemption for the secondary
trading of, the common stock in any particular state, the common stock cannot be
offered or sold to, or purchased by, a resident of that state. In the event that
a significant number of states refuse to permit secondary trading in our common
stock, the liquidity for the common stock could be significantly
impacted.
-17-
BECAUSE WE ARE NOT SUBJECT
TO COMPLIANCE WITH RULES REQUIRING THE ADOPTION OF CERTAIN CORPORATE GOVERNANCE
MEASURES, OUR STOCKHOLDERS HAVE LIMITED PROTECTIONS AGAINST INTERESTED DIRECTOR
TRANSACTIONS, CONFLICTS OF INTEREST AND SIMILAR MATTERS.
The
Sarbanes-Oxley Act of 2002, as well as rule changes proposed and enacted by the
SEC, the New York and American Stock Exchanges and the Nasdaq Stock Market, as a
result of Sarbanes-Oxley, require the implementation of various measures
relating to corporate governance. These measures are designed to enhance the
integrity of corporate management and the securities markets and apply to
securities that are listed on those exchanges or the Nasdaq Stock Market.
Because we are not presently required to comply with many of the corporate
governance provisions and because we chose to avoid incurring the substantial
additional costs associated with such compliance any sooner than legally
required, we have not yet adopted these measures.
Because
our Directors are not independent directors, we do not currently have
independent audit or compensation committees. As a result, our Directors have
the ability to, among other things, determine their own level of compensation.
Until we comply with such corporate governance measures, regardless of whether
such compliance is required, the absence of such standards of corporate
governance may leave our stockholders without protections against interested
director transactions, conflicts of interest, if any, and similar matters and
any potential investors may be reluctant to provide us with funds necessary to
expand our operations.
We intend
to comply with all corporate governance measures relating to director
independence as and when required. However, we may find it very difficult or be
unable to attract and retain qualified officers, Directors and members of board
committees required to provide for our effective management as a result of the
Sarbanes-Oxley Act of 2002. The enactment of the Sarbanes-Oxley Act of 2002 has
resulted in a series of rules and regulations by the SEC that increase
responsibilities and liabilities of Directors and executive officers. The
perceived increased personal risk associated with these recent changes may make
it more costly or deter qualified individuals from accepting these
roles.
WE DO NOT CURRENTLY HAVE A
PUBLIC MARKET FOR OUR SECURITIES. IF THERE IS A MARKET FOR OUR SECURITIES IN THE
FUTURE, SUCH MARKET MAY BE VOLATILE AND ILLIQUID.
There is
currently no public market for our common stock. In the future, we hope to quote
our securities on the Over-The-Counter Bulletin Board (“OTCBB”). If there is a
market for our common stock in the future, we anticipate that such market would
be illiquid and would be subject to wide fluctuations in response to several
factors, including, but not limited to:
(1)
|
actual
or anticipated variations in our results of operations;
|
|
(2)
|
our
ability or inability to generate new revenues;
|
|
(3)
|
the
number of shares in our public float;
|
|
(4)
|
increased
competition; and
|
|
(5)
|
conditions
and trends in the market for solar power products and alternative energy
products in general.
|
Furthermore,
if our common stock becomes quoted on the OTCBB in the future, our stock price
may be impacted by factors that are unrelated or disproportionate to our
operating performance. These market fluctuations, as well as general economic,
political and market conditions, such as recessions, interest rates or
international currency fluctuations may adversely affect the market price of our
common stock. Additionally, moving forward we anticipate having a
limited number of shares in our public float, and as a result, there could be
extreme fluctuations in the price of our common stock. Further, due
to the limited volume of our shares which trade and our limited public float, we
believe that our stock prices (bid, ask and closing prices) will be entirely
arbitrary, will not relate to the actual value of the Company, and will not
reflect the actual value of our common stock. Shareholders and
potential investors in our common stock should exercise caution before making an
investment in the Company, and should not rely on the publicly quoted or traded
stock prices in determining our common stock value, but should instead determine
the value of our common stock based on the information contained in the
Company's public reports, industry information, and those business valuation
methods commonly used to value private companies.
-18-
NEVADA LAW AND OUR ARTICLES
OF INCORPORATION AUTHORIZE US TO ISSUE SHARES OF STOCK, WHICH SHARES MAY CAUSE
SUBSTANTIAL DILUTION TO OUR EXISTING SHAREHOLDERS.
We have
authorized capital stock consisting of 140,000,000 shares of common stock,
$0.001 par value per share and 10,000,000 shares of preferred stock, $0.001 par
value per share. As of the date of this Prospectus, we have 2,447,250 shares of
common stock issued and outstanding and – 0 – shares of Preferred Stock issued
and outstanding. As a result, our Board of Directors has the ability
to issue a large number of additional shares of common stock without shareholder
approval, which if issued could cause substantial dilution to our then
shareholders. Additionally, shares of Preferred Stock may be issued
by our Board of Directors without shareholder approval with voting powers, and
such preferences and relative, participating, optional or other special rights
and powers as determined by our Board of Directors, which may be greater than
the shares of common stock currently outstanding. As a result, shares
of Preferred Stock may be issued by our Board of Directors which cause the
holders to have super majority voting power over our shares, provide the holders
of the Preferred Stock the right to convert the shares of Preferred Stock they
hold into shares of our common stock, which may cause substantial dilution to
our then common stock shareholders and/or have other rights and preferences
greater than those of our common stock shareholders. Investors should keep in
mind that the Board of Directors has the authority to issue additional shares of
common stock and Preferred Stock, which could cause substantial dilution to our
existing shareholders. Additionally, the dilutive effect of any
Preferred Stock, which we may issue may be exacerbated given the fact that such
Preferred Stock may have super majority voting rights and/or other rights or
preferences which could provide the preferred shareholders with voting control
over us subsequent to this Offering and/or give those holders the power to
prevent or cause a change in control. As a result, the issuance of
shares of common stock and/or Preferred Stock may cause the value of our
securities to decrease and/or become worthless.
IF OUR COMMON STOCK IS NOT
APPROVED FOR QUOTATION ON THE OVER-THE-COUNTER BULLETIN BOARD, OUR COMMON STOCK
MAY NOT BE PUBLICLY-TRADED, WHICH COULD MAKE IT DIFFICULT TO SELL SHARES OF OUR
COMMON STOCK AND/OR CAUSE THE VALUE OF OUR COMMON STOCK TO DECLINE IN
VALUE.
In order
to have our common stock quoted on the OTCBB, which is our current plan, we will
need to first have this Registration Statement declared effective; then engage a
market maker, who will file a Form 15c2-11 with the Financial Industry
Regulatory Authority ("FINRA"); and clear FINRA comments to obtain a trading
symbol on the OTCBB. Assuming we clear SEC comments and assuming we clear FINRA
comments, we anticipate receiving a trading symbol and having our shares of
common stock quoted on the OTCBB in approximately one (1) to two (2) months
after the effectiveness of this Registration Statement. In the event we are
unable to have this Registration Statement declared effective by the SEC or our
Form 15c2-11 is not approved by the FINRA, we plan to file a 15c2-11 to quote
our shares of common stock on the Pink Sheets. If we are not cleared to have our
securities quoted on the OTCBB and/or in the event we fail to obtain
effectiveness of this Registration Statement, and are not cleared for trading on
the Pink Sheets, there will be no public market for our common stock and it
could be difficult for our then shareholders to sell shares of common stock
which they own. As a result, the value of our common stock will likely be less
than it would otherwise due to the difficulty shareholders will have in selling
their shares. If we are unable to obtain clearance to quote our securities on
the OTCBB and/or the Pink Sheets, it will be difficult for us to raise capital
and we could be forced to curtail or abandon our business operations, and as a
result, the value of our common stock could become worthless.
-19-
USE
OF PROCEEDS
We will
not receive any proceeds from the sale of the selling shareholders shares of
commons stock registered herein
DIVIDEND
POLICY
To date,
we have not declared or paid any dividends on our outstanding shares. We
currently do not anticipate paying any cash dividends in the foreseeable future
on our common stock. Although we intend to retain our earnings to finance our
operations and future growth, our Board of Directors will have discretion to
declare and pay dividends in the future. Payment of dividends in the future will
depend upon our earnings, capital requirements and other factors, which our
Board of Directors may deem relevant.
LEGAL
PROCEEDINGS
From time
to time, we may become party to litigation or other legal proceedings that we
consider to be a part of the ordinary course of our business. We are not
currently involved in legal proceedings that could reasonably be expected to
have a material adverse effect on our business, prospects, financial condition
or results of operations. We may become involved in material legal proceedings
in the future.
DIRECTORS,
EXECUTIVE OFFICERS,
PROMOTERS
AND CONTROL PERSONS
The
following table sets forth the name, age and position of our Director and
executive officer. There are no other persons who can be classified as a
promoter or controlling person of us. Our executive officer and Director
currently serving is as follows:
Name
|
Title
|
Age
|
David
W. Mooney, Jr., AIA
|
Chief
Executive Officer, President and Director
|
53
|
Carey
G. Birmingham
|
Chief
Financial Officer, Vice President, Secretary, Treasurer and
Director
|
54
|
David W.
Mooney, Jr., American Institute of Architects (“AIA”), has served as our Chief
Executive Officer, President and Director since our incorporation on May 28,
2008. Mr. Mooney attended Boston Architectural College and Pratt
Institute, and received his Bachelor of Architecture in 1982 from the Boston
Architectural Center. Mr. Mooney also received a Master of Science in Real
Estate Investment and Development from New York University in 2001. Prior to
establishing his own firm, David W. Mooney, Jr., Architects, in June 1990, which
Mr. Mooney also provides continued service to; Mr. Mooney was responsible for
the design and construction of over $350 million of commercial and residential
projects in and throughout New York, New Jersey and Connecticut. Mr.
Mooney is also a founding partner in IDOS, a computer imaging and Animation
Company located in Rye, New York and Holderness, New Hampshire. IDOS
contracts computer image renderings and graphic depictions of various
architectural interior and exterior perspectives for a wide range of commercial
and residential clients. Due to Mr. Mooney’s employment with David W.
Mooney, Jr. Architects, Mr. Mooney currently anticipates being able to spend
approximately 20 hours per week on Company matters.
Carey G.
Birmingham has served as our Chief Financial Officer, Vice President, Secretary,
Treasurer and Director since our incorporation on May 28, 2008. Mr.
Birmingham served as President, Chief Executive Officer and Director of United
Restaurant Management, Inc. (“URM”) from April 2006 to April
2008. From November 2007 to June 2009, Mr. Birmingham served on a
part-time basis as Chief Financial Officer of Michael Lambert,
Inc. Additionally, from September 1999 through April 2004, Mr.
Birmingham worked at URM, serving in various capacities as officer and
director. Mr. Birmingham served as President of Baseline Oil &
Gas Corp. [BOGA:OTCBB] ("Baseline") from January 2004 to November 2006. Between
January 2004 and February 2006, Mr. Birmingham served as a Director of
Baseline.
-20-
From
March 1982 through April 1984, Mr. Birmingham served as Asset Manager and Sr.
Asset Manager of commercial real estate for New York Life
Insurance. Mr. Birmingham served as a Vice President of Commercial
Real Estate for Unicorp American Corporation and Executive Vice President for
Unicorp Property Management, a company subsidiary, from May 1984 through
November 1989. Mr. Birmingham served as a Portfolio Director,
Commercial Real Estate, for United Services Automobile Association (USAA) from
1990 through part of 1992. In addition, Mr. Birmingham served as a
real estate consultant for Fidelity Mutual Life Insurance and Mutual Benefit
Life from 1992 through 1994. Mr. Birmingham received a BA degree from
New York University in Journalism in 1980, and a degree in Real Estate Appraisal
and Finance in 1982.
Our
Directors are elected annually and hold office until our next annual meeting of
the shareholders and until their successors are elected and qualified. Officers
will hold their positions at the pleasure of the Board of Directors, absent any
employment agreement. Our officers and Directors may receive compensation as
determined by us from time to time by vote of the Board of Directors. Such
compensation might be in the form of stock options. Directors may be reimbursed
by the Company for expenses incurred in attending meetings of the Board of
Directors. Vacancies in the Board are filled by majority vote of the remaining
Directors.
Involvement In Certain Legal
Proceedings
There
have been no events under any bankruptcy act, no criminal proceedings and no
judgments, injunctions, orders or decrees material to the evaluation of the
ability and integrity of any Director or executive officer, of the Company
during the past five years.
Independence of
Directors
We are
not required to have independent members of our Board of Directors, and do not
anticipate having independent Directors until such time as we are required to do
so.
Audit Committee and
Financial Expert
The
Company is not required to have an audit committee and as such, does not have
one.
Code of
Ethics
We have
not adopted a formal Code of Ethics. The Board of Directors, evaluated the
business of the Company and the number of employees and determined that since
the business is operated by only two persons David W. Mooney Jr.,
AIA, and Carey G. Birmingham, general rules of fiduciary duty and federal and
state criminal, business conduct and securities laws are adequate ethical
guidelines. In the event our operations, employees and/or
Directors expand in the future, we may take actions to adopt a formal Code of
Ethics.
Control
Persons:
David M.
Loev is considered a control person of the Company due to the fact that he
beneficially owns 28.6% of our common stock. As such, Mr. Loev’s
biographical information is provided below:
David M.
Loev currently manages The Loev Law Firm, PC, which he founded as David M. Loev,
Attorney at Law in January 2003, and which changed its name to The Loev Law
Firm, PC in January 2007. Prior thereto, Mr. Loev served as a partner at
Vanderkam & Sanders, a law firm specializing in corporate/securities
matters. Prior thereto, Mr. Loev served as Chief Financial Officer, Treasurer,
Secretary and General Counsel of PinkMonkey.com, Inc., an Internet publisher of
educational study aids. Mr. Loev received his law degree from
Southern Methodist University in 1997 and received a B.B.A. in accounting from
the University of Texas at Austin, Texas in 1992. Mr. Loev was
admitted to the State Bar of Texas in 1997. Mr. Loev is also a
Certified Public Accountant.
-21-
In 2005,
Mr. Loev was a party to a civil lawsuit filed by the Securities and Exchange
Commission (“Commission”) against a former client which he served as outside
securities counsel to (Securities And Exchange Commission
v. Integrated Services Group Inc., James L. Rowton and David M. Loev,
Defendants, Case No. 4:05-cv-04071 (U.S.D.C/S.D. Tex, Houston
Division)). In connection with the lawsuit, the Commission
alleged that Mr. Loev violated Sections 5(a) and 5(c) of the Securities Act of
1933, as amended (the “Securities Act”). Mr. Loev chose to settle
with the Commission in November 2005 (the “Settlement”), without admitting or
denying the Commission’s claims against him, by consenting to the entry into an
order enjoining him from violating the securities registration provisions of the
Securities Act; ordering him to pay certain amounts in disgorgement and as a
civil penalty; and prohibiting him from a) issuing Rule 504 opinions, which
opinions provide for the issuance of shares of common stock free of restrictive
legend; and b) accepting securities of any issuer whose securities are quoted on
the Pink Sheets in consideration for legal or consulting services
rendered.
As a
result of the lawsuit filed by the Commission referenced above, the Texas State
Board of Public Accountancy (the “Board”) filed a complaint against Mr. Loev
alleging discreditable acts, violations of Professional Conduct, and conduct
indicating a lack of fitness to serve the public as a professional accountant
which resulted in an Agreed Consent Order. In connection with the
Agreed Consent Order, Mr. Loev was reprimanded and paid the Board an
administrative penalty of $2,500 and $1,496 in administrative costs and agreed
to complete four (4) hours of a Board approved ethics course, which has been
completed to date.
We do not
believe that Mr. Loev’s Settlement or the Agreed Consent Order will have any
affect on the Company or on Mr. Loev’s ability to represent us as our securities
counsel.
We owe
The Loev Law Firm, PC $14,000 pursuant to the terms of an Engagement Agreement
we entered into in August 2008 which has been amended and have an outstanding
Line of Credit with Mr. Loev in the amount of $1,400 as described
below.
-22-
EXECUTIVE
COMPENSATION
Summary
Compensation Table:
Name
and principal position
(a)
|
Year
ended July 31
(b)
|
Salary
($)
(c)
|
Bonus
($)
(d)
|
Stock
Awards ($)
(e)
|
Option
Awards ($)
(f)
|
Non-Equity
Incentive Plan Compensation ($)
(g)
|
Nonqualified
Deferred Compensation Earnings ($)
(h)
|
All
Other Compensation ($)
(i)
|
Total
($)
(j)
|
||||||||||||||||||||||||
David
W. Mooney, Jr., AIA
CEO,
President, and Director
|
2009
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
$
|
-
|
|||||||||||||||||||||||
2008
|
-
|
-
|
700
|
(1)
|
-
|
-
|
-
|
-
|
$
|
700
|
|||||||||||||||||||||||
Carey G. Birmingham,
CFO, VP, Secretary, Treasurer and Director
|
2009
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
$
|
-
|
|||||||||||||||||||||||
2008
|
-
|
-
|
700
|
(1)
|
-
|
-
|
-
|
-
|
$
|
700
|
The table
above does not include perquisites and other personal benefits in amounts less
than 10% of the total annual salary and other compensation.
Neither
Mr. Mooney nor Mr. Birmingham receives or accrues a salary from
us. It is anticipated that they will not receive salaries until we
obtain a minimum of $150,000 in annual revenues, of which there can be no
assurance.
(1)
Represents 700,000 shares of common stock issued to the executive in May 2008 in
consideration for services rendered to the Company as an officer of the Company
during the fiscal year ended July 31, 2008. The shares were valued at
par value, $0.001 per share pursuant to FAS 123(R). The number of
shares issued to the officers in consideration for their services to the Company
was determined in the sole discretion of the Board of Directors of the Company
(consisting solely of Mr. Mooney and Mr. Birmingham) based on the capitalization
of the Company, the services rendered by the officers, the restricted nature of
the shares and the fact that no public market existed for the Company’s shares,
and the fact that the officers had agreed to render such services solely in
consideration for shares of the Company’s common stock.
Summary
of Compensation
SEV, Inc.
was incorporated in May 2008 and has paid no compensation to any executive or
Director to date, other than through the issuance of 700,000 shares of common
stock for services rendered to our officers and Directors as provided
above. There have been no material changes in the Company’s
compensation policies and payments/awards since July 31, 2009.
Stock
Option Grants
We have
not granted any stock options to our executive officers since our
incorporation.
Employment
Agreements
We do not
have an employment or consulting agreement with our officers or
Directors.
-23-
Compensation
Discussion and Analysis
Director
Compensation
Our Board
of Directors (consisting solely of Mr. Mooney and Mr. Birmingham) does not
currently receive any consideration for their services as members of the Board
of Directors. The Board of Directors reserves the right in the future
to award the members of the Board of Directors cash or stock based consideration
for their services to the Company, which awards, if granted shall be in the sole
determination of the Board of Directors.
Executive
Compensation Philosophy
Our Board
of Directors determines the compensation given to our executive officers in
their sole determination, and as such Mr. Mooney and Mr. Birmingham, as our sole
officers and Directors, determine their salary in their sole
discretion. As neither Mr. Mooney nor Mr. Birmingham currently draws
any compensation from us, we do not currently have any executive compensation
program in place. Our Board of Directors also reserves the right to
pay our executive or any future executives a salary, and/or issue them shares of
common stock issued in consideration for services rendered and/or to award
incentive bonuses which are linked to our performance, as well as to the
individual executive officer’s performance. This package may also
include long-term stock based compensation to certain executives which is
intended to align the performance of our executives with our long-term business
strategies. Additionally, while our Board of Directors has not
granted any performance base stock options to date, the Board of Directors
reserves the right to grant such options in the future, if the Board in its sole
determination believes such grants would be in the best interests of the
Company. We do not currently anticipate paying any cash compensation
to our officers until such time as we generate revenues sufficient to support
our operations and planned business activities, if ever.
Incentive
Bonus
The Board
of Directors may grant incentive bonuses to our executive officer and/or future
executive officers in its sole discretion, if the Board of Directors believes
such bonuses are in the Company’s best interest, after analyzing our current
business objectives and growth, if any, and the amount of revenue we are able to
generate each month, which revenue is a direct result of the actions and ability
of such executives.
Long-term,
Stock Based Compensation
In order
to attract, retain and motivate executive talent necessary to support the
Company’s long-term business strategy we may award our executive and any future
executives with long-term, stock-based compensation in the future, in the sole
discretion of our Board of Directors, which we do not currently have any
immediate plans to award.
-24-
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS
AND MANAGEMENT
The
following table presents certain information regarding the beneficial ownership
of all shares of common stock as of February 17, 2010, by (i) each person
who owns beneficially more than five percent (5%) of the outstanding shares of
common stock based on 2,447,250 shares outstanding as of February 17, 2010,
(ii) each of our Directors, (iii) each named executive officer and (iv) all
Directors and officers as a group. Except as otherwise indicated, all shares are
owned directly.
Name
and Address of Beneficial Owner
|
Shares
Beneficially Owned
|
Percentage
Beneficially Owned
|
David
W. Mooney, Jr., AIA
|
700,000
|
28.6%
|
President,
CEO and Director
|
||
5
Blind Brook Lane
|
||
Rye,
NY 10580
|
||
Carey
G. Birmingham
|
700,000
|
28.6%
|
CFO,
VP, Secretary, Treasurer,
|
||
and
Director
|
||
20022
Creek Farm
|
||
San
Antonio, Texas 78259
|
||
David
M. Loev
|
700,000
|
28.6%
|
6300
West Loop South
|
||
Suite
280
|
||
Bellaire,
Texas 77401
|
||
All
Officers and Directors as a Group
(2
individuals)
|
1,400,000
|
57.2%
|
The
number of shares of common stock owned are those "beneficially owned" as
determined in accordance with Rule 13d-3 of the Exchange Act of 1934, as
amended, including any shares of common stock as to which a person has sole or
shared voting or investment power and any shares of common stock which the
person has the right to acquire within sixty (60) days through the exercise of
any option, warrant or right.
INTEREST
OF NAMED EXPERTS AND COUNSEL
This Form
S-1 Registration Statement was prepared by our counsel, The Loev Law Firm,
PC. The financial statements attached hereto were audited by M&K
CPAS, PLLC (“M&K”). M&K, has no interest contingent or
otherwise in SEV, Inc. David M. Loev, the manager of The Loev Law
Firm, PC, our attorney, owns 700,000 shares of our common stock (the “Loev
Securities”), but does not and The Loev Law Firm, PC, does not otherwise hold
any interest contingent or otherwise in the Company.
EXPERTS
The
audited financial statements as of July 31, 2009 and 2008 and the period from
inception (May 28, 2008) through July 31, 2009, which are included in this
Prospectus have been audited by M&K CPAS, PLLC, our independent registered
public accounting firm, as stated in their report appearing herein and have been
so included in reliance upon the reports of such firm, given upon their
authority as experts in accounting and auditing.
-25-
No expert
or counsel named in this Prospectus as having prepared or certified any part of
this Prospectus or having given an opinion upon the validity of the securities
being registered or upon other legal matters in connection with the registration
or offering of the common stock was employed on a contingency basis, or had, or
is to receive, in connection with the Offering, any interest, directly or
indirectly, in our company or any of our parents or subsidiaries, other than the
Loev Securities, which are beneficially owned by David M. Loev, our
attorney. Nor was any such person connected with us or any of our
parents or subsidiaries, if any, as a promoter, managing or principal
underwriter, voting trustee, director, officer, or employee.
INDEMNIFICATION
OF DIRECTORS AND OFFICERS
The
Nevada Revised Statutes and our Articles of Incorporation, allow us to indemnify
our officers and Directors from certain liabilities and our Bylaws, as amended
and restated (“Bylaws”), state that we shall indemnify every (i) present or
former Director, advisory Director or officer of us, (ii) any person who while
serving in any of the capacities referred to in clause (i) served at our request
as a Director, officer, partner, venturer, proprietor, trustee, employee, agent
or similar functionary of another foreign or domestic corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise, and (iii) any
person nominated or designated by (or pursuant to authority granted by) the
Board of Directors or any committee thereof to serve in any of the capacities
referred to in clauses (i) or (ii) (each an “Indemnitee”).
Our
Bylaws provide that we shall indemnify an Indemnitee against all judgments,
penalties (including excise and similar taxes), fines, amounts paid in
settlement and reasonable expenses actually incurred by the Indemnitee in
connection with any proceeding in which he was, is or is threatened to be named
as a defendant or respondent, or in which he was or is a witness without being
named a defendant or respondent, by reason, in whole or in part, of his serving
or having served, or having been nominated or designated to serve, if it is
determined that the Indemnitee (a) conducted himself in good faith, (b)
reasonably believed, in the case of conduct in his Official Capacity, that his
conduct was in our best interests and, in all other cases, that his conduct was
at least not opposed to our best interests, and (c) in the case of any criminal
proceeding, had no reasonable cause to believe that his conduct was unlawful;
provided, however, that in the event that an Indemnitee is found liable to us or
is found liable on the basis that personal benefit was improperly received by
the Indemnitee, the indemnification (i) is limited to reasonable expenses
actually incurred by the Indemnitee in connection with the Proceeding and (ii)
shall not be made in respect of any Proceeding in which the Indemnitee shall
have been found liable for willful or intentional misconduct in the performance
of his duty to us.
Except as
provided above, the Bylaws provide that no indemnification shall be made in
respect to any proceeding in which such Indemnitee has been (a) found liable on
the basis that personal benefit was improperly received by him, whether or not
the benefit resulted from an action taken in the Indemnitee's official capacity,
or (b) found liable to us. The termination of any proceeding by
judgment, order, settlement or conviction, or on a plea of nolo contendere or
its equivalent, is not of itself determinative that the Indemnitee did not meet
the requirements set forth in clauses (a) or (b) above. An Indemnitee
shall be deemed to have been found liable in respect of any claim, issue or
matter only after the Indemnitee shall have been so adjudged by a court of
competent jurisdiction after exhaustion of all appeals
therefrom. Reasonable expenses shall, include, without limitation,
all court costs and all fees and disbursements of attorneys’ fees for the
Indemnitee. The indemnification provided shall be applicable whether
or not negligence or gross negligence of the Indemnitee is alleged or
proven.
Neither
our Bylaws, as amended and restated, nor our Articles of Incorporation include
any specific indemnification provisions for our officer or Directors against
liability under the Securities Act of 1933, as amended. Additionally, insofar as
indemnification for liabilities arising under the Securities Act of 1933, as
amended (the "Act") may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise, the
Company has 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.
-26-
FORWARD
LOOKING STATEMENTS
This Form
S-1 includes forward-looking statements which include words such as "anticipates", "believes", "expects", "intends", "forecasts", "plans", "future", "strategy" or words of similar
meaning. Various factors could cause actual results to differ
materially from those expressed in the forward-looking statements, including
those described in "Risk
Factors" in this Prospectus. We urge you to be cautious of
these forward-looking statements. Except as required by applicable
law, including the securities laws of the United States and/or if the existing
disclosure fundamentally or materially changes, we do not intend to update any
of the forward-looking statements to conform these statements to actual
results.
DESCRIPTION
OF BUSINESS
Overview
SEV, Inc.
(the “Company,” “we,” “us,” and “SEV”) was incorporated in Nevada on May 28,
2008.
We are a
development stage company operating under the business name of “Solar Energy
Ventures” in the states of New York and Texas. We plan to provide our
services in South Texas, Vermont, Connecticut, the New York suburban markets and
Northern New Jersey. We intend to provide full-service design consulting,
construction management and general contracting services and support for the
design and installation of large and small solar panel arrays on commercial
buildings. We also plan to focus on marketing our products and
services to public buildings including schools, churches and other facilities
which can significantly cut in-house electrical expense through the utilization
of solar panels. In addition, we will call upon our President, David
Mooney, Jr., AIA, to provide specific architectural services as required to
comply with local regulatory requirements. In the alternative, we may
from time to time sub-contract architectural services from local firms licensed
to practice in those cities and states where we offer our
services. Those services may include the following:
Ø
|
Site
Selection;
|
|
Ø
|
Financial
Pro-forma preparation and analysis;
|
Ø
|
Return
on Investment and Rate of Return Analysis;
|
|
Ø
|
Design
Development;
|
Ø
|
Construction
Management;
|
|
Ø
|
General
Contracting;
|
Ø
|
Job
Supervision; and
|
|
Ø
|
Sale/Leaseback
and other Disposition Scenario
Analyses.
|
We have
not however generated any revenues to date and are only in the development stage
of our operations. Moving forward, funding permitting, we plan to
market our services to potential customers and hope to generate revenues through
such marketing and word of mouth.
In
addition, our business plan calls for us to enter into joint ventures with
sub-contractors who may do direct installation of solar panels or purchase such
panels into inventory. Furthermore, we intend to seek by the most
efficient means, a method whereby we can package for resale any unused Federal
Tax Credits which may accrue to the users of solar panels, yet are un-usable by
them due to their tax exempt status. However, 1) such tax credits may
not be available to the end users for the foreseeable future, 2) may not be
available for resale, or 3) no market for such a resale may exist in the
future.
In
addition to, and as part of or our overall business plan, we intend to create
various limited partnerships for the purpose of purchasing leasehold interests
in roof areas of large commercial properties, unused excess land or other large,
exposed areas adjacent or connected to commercial
buildings. Once such leases are procured by these partnerships, in
which we intend to perform the role of general partner, we will design, install
and maintain varying sizes of photovoltaic (“PV”) arrays, commonly referred to
as solar panels, for the purpose of collecting and reselling the electric power
produced from such PV arrays for the benefit of the limited partnership, and as
a result, the Company.
-27-
We are
currently in the development and planning stage of our operations and have only
limited operations to date. As a result of our status as a
development stage company, our auditors have expressed substantial doubt as to
whether we will be able to continue as a going concern. This risk may
be exacerbated by the fact that we have only two employees, neither of which are
paid by the Company, David W. Mooney, Jr., AIA our president and director, and
our Vice President, Director and Chief Financial Officer, Carey G.
Birmingham. In addition to being our sole employees, Mr. Mooney and
Mr. Birmingham are majority shareholders controlling 57.2% of our common
stock.
Our
principal executive offices are located at 5 Blind Brook Lane, Rye, New York
10580, our telephone number is (914) 967-0960 and our fax number is (210)
481-5177.
Marketing
According
to remarks made in March 2007, by Department of Energy Assistant Secretary Andy
Karsner, “solar technology will play an increasingly important role in making
affordable, carbon-free, renewable energy available to people all over the
nation. Expanding clean solar power can help reduce the strain on our
electricity infrastructure and secure our nation's energy future.”
In March
2007, the United States Government launched the Solar America
Initiative. The Solar America Initiative is a U.S. Department of
Energy (“DOE”) effort to make solar electricity from photovoltaics
cost-competitive with conventional forms of electricity from the utility grid by
2015. The strategy pursues complementary activities in research and development
(“R&D”) and in market transformation. The goals are to reduce costs through
R&D and to eliminate market barriers through deployment.
To
achieve its goals, the Solar America Initiative partners with:
·
|
Industries;
|
|
·
|
Universities;
|
·
|
State
governments;
|
|
·
|
Federal
agencies; and
|
·
|
Other
non-governmental agencies.
|
The
planned benefits to the nation of the Solar America Initiative
include:
·
|
Boosting
the economy by creating a U.S.-based solar industry;
|
|
·
|
Increasing
energy security by diversifying the nation's electricity
portfolio;
|
·
|
Decreasing
the effect of power outages on cities; and
|
|
·
|
Reducing
the impact on the environment of power generation from fossil fuels,
nuclear energy, and natural gas.
|
How
a Solar Energy System Works:
1.
|
Solar
PV panels are mounted on a commercial building’s roof, where the panels
collect energy from the sun in the form of direct current
electricity.
|
2.
|
The
direct current electricity is then converted by an inverter into
alternating current electricity and sold back to the local or regional
power utility.
|
3.
|
The
alternating current electricity can be fed directly into the commercial
building itself, for use by the tenant and/or owner of the building,
similar to its use by the local electricity provider. Since the solar
energy system works in tandem with the electricity provider, the
commercial user will continue to get electricity from the
provider when the user needs more than the solar energy system can provide
(e.g. during overcast weather and at night, when the PV panel cannot
collect energy from the sun).
|
-28-
Limited
Partnership Strategy
We intend
to investigate the creation of various limited partnerships for the purpose of
leasing rooftop space of large commercial buildings and installing solar panels
and PV arrays. We believe that these units, in turn, will create a
net excess of electrical power which can then be distributed to the power grid
in local areas and resold. Such solar power arrangements come with
extensive tax incentives which we believe will improve the overall yield of the
investment.
Our
strategy will be to put the power production near the users and distribute the
power plant into small pockets in varying market areas. The
alternative strategy for solar power distribution is buying or leasing land to
put a very large, condensed solar array or “farm” on.
Why
commercial rooftops?
Not all
commercial rooftop space is usable for installation of a PV
panel. The optimal buildings are large 1-3 story buildings with flat
roofs. In a large urban setting like a city there are hundreds of
thousands of square feet of currently unused rooftop space that would be
considered optimal. As the space is plentiful and is currently
unrealized as a means of cash generation for building owners, the rental of the
space will prove economically viable for all parties.
It is
common for a commercial building with a flat roof to be reinforced to handle
heavy equipment like air conditioners. Solar panels and other
electrical equipment tend to be heavy and it would be best to use roofs that are
already built to handle extra weight. In addition, many new PV
designs can be installed without roof penetration, thereby limiting the
potential for leaks.
Commercial
buildings are serviced by the utility company and therefore have immediate
access to the power grid, and minimal grid infrastructure changes would have to
be made. This is in contrast to a distant solar farm where miles of
high voltage utility lines and towers and expensive high power transformers
would need to be constructed to realize the energy provided from the solar farm
in urban areas.
Another
consideration for the Company is that one of the biggest consumers of power in
southern states, such as Texas, is air conditioning, and air conditioning demand
synchronizes well with peak solar power output (i.e., consumers are more likely
to require increased air conditioning on hotter days with more sunlight, which
days will most likely also generate the most solar energy).
Who
will buy the power from our planned limited partnerships?
Power
companies operate under local regulations with overarching state
regulations. Many states in which we plan to form partnerships will
have local, regulated energy monopolies and it may be illegal to sell power to
end users in those markets. Nevertheless, many local utilities
purchase power from wind farms, methane generators and various other alternative
energy sources outside their immediate market area. Thus, local
utilities in some instances are already purchasing wholesale electricity from
third party suppliers.
While
large cities are a good target market for installation of PV systems which may
be owned by our partnerships, we will not overlook smaller
towns. Smaller towns may have local governments and power companies
that are less bureaucratic and easier to deal and do business with.
-29-
Solar
hardware
One of
the biggest costs involved in the Company’s planned operations will be the
installation of the equipment on rooftops. The general rule of thumb
is that it costs the same to have equipment installed as it does to purchase the
equipment from contractors. Laws and regulations usually mandate that
panels are installed by a licensed professional and connected to the grid by a
power company employee to ensure installation is done properly. To
reduce cost, we may, if revenues permit, hire our own installation crew and hire
our own licensed professional(s). In the meantime, however, we intend
to contract out these services on an as needed basis.
The basic
setup will consist of solar panels, an inverter that connects to the power grid
and synchronizes with the phase on the power grid wire, a power meter, and
whatever materials are needed to physically connect the energy to the
grid. In cases where the solar array is large enough, multiple
inverters may be needed to connect to different phase wires. There
also needs to be hardware that controls when the inverter allows power to be
pushed to grid.
Compliance
with Government Regulations
We
anticipate that our solar modules and their installation will be subject to
oversight and regulation in accordance with national and local ordinances
relating to building codes, safety, environmental protection, utility
interconnection and metering and related matters. It is difficult 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 modules may result in significant additional expenses to us, our
partners and our customers and, as a result, could cause a significant reduction
in demand for our products and services.
Employees
As of
February 17, 2010, we had two employees: David W. Mooney, Jr., AIA, our Chief
Executive Officer, President, and Director, and Carey G. Birmingham, our Chief
Financial Officer, Vice President, Secretary, Treasurer and
Director. Both Mr. Mooney and Mr. Birmingham are not paid any salary
and are not accruing any salary. Additionally, the Company currently
plans to use consultants on an as needed basis as funding permits.
Description
of property
We use
office space that is provided by David W. Mooney, Jr., AIA in his architectural
practice as David W. Mooney, Jr. Architect on a rent-free month-to-month
basis. The office space encompasses approximately 144 square
feet. The office space has an address of: 5 Blind Brook Lane, Rye,
New York 10580.
The
Company’s Chief Financial Officer, Carey Birmingham, also provides the Company
with approximately 44 square feet of officer space on a rent-free basis at the
Company’s San Antonio, Texas office, 20022 Creek Farm Road, San Antonio, Texas
78259.
Blank Check Company
Issues
Rule 419
of the Securities Act of 1933, as amended (the “Act”) governs offerings by
“blank check companies.” Rule 419 defines a “blank check company” as
a development stage company that has no specific business plan or purpose or has
indicated that its business plan is to engage in a merger or acquisition with an
unidentified company or companies, or other entity or person; and issuing “penny
stock,” as defined in Rule 3a51-1 under the Securities Exchange Act of
1934.
Our
management believes that the Company does not meet the definition of a “blank
check company,” because, while we are in the development stage, we do have a
specific business plan and purpose as described above, and our current purpose
is not to engage in a merger or acquisition, and as such, we should not
therefore be characterized as a “blank check company.”
-30-
MANAGEMENT'S
DISCUSSION AND ANALYSIS OF
FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Plan of
Operations
The
initial target market for our services will be South Texas, Vermont,
Connecticut, the New York suburban markets and Northern New
Jersey. These areas are all within close proximity to our San Antonio
and New York offices.
We will
begin our marketing plan by the creation of a website to demonstrate the breadth
of our expertise and capabilities.
Initially,
we will concentrate on offering design services and possible leases to
individual industrial properties, teaming up with local roofing companies, as
needed, and calling upon property owners, developers and
end users, demonstrating the advantages of solar power PV arrays for electricity
savings and possible resale. We will also introduce the concept of
leasing their rooftop space to various limited partnerships which we plan to
create for this purpose. The Company will attempt to raise capital
from its limited partners to offset the cost of the installation of and purchase
of the PV panels, which are prohibitively expensive, but which provide tax
advantages to individuals and partnerships (such as the Company’s proposed
partnerships), which the Company cannot take full advantage
of. Furthermore, the Company hopes to receive fees from its
partnership participation as well as management fees for the management of the
planned partnerships.
COMPARISON
OF OPERATIONS FOR THE THREE MONTHS ENDED OCTOBER 31, 2009 COMPARED TO THE THREE
MONTHS ENDED OCTOBER 31, 2008.
We had
total expenses of $1,507 for the three months ended October 31, 2009, compared
to total expenses of $14,228 for the three months ended October 31, 2008, a
decrease of $12,721 from the prior period. The main reason for the
decrease in total expenses from the prior period was due to a decrease from
$13,661 in filing fees in for the three months ended October 31, 2008, compared
to no filing fees for the three months ended October 31, 2009, which was in
connection with the Company’s decision to expense $10,000 in accrued legal fees,
along with $2,500 in accounting fees paid in connection with the Company’s S-1
Registration Statement during the three months ended October 31, 2008, which
expenses were not present during the three months ended March 31,
2009.
We had
$111 of interest expense for the three months ended October 31, 2009, compared
to $237 of interest expense for the three months ended October 31,
2008. Interest expense for both periods was in connection with the
line of credits and notes payable described below under “Liquidity and Capital
Resources”.
We had a
net loss of $1,618 for the three months ended October 31, 2009, compared to a
net loss of $14,465 for the three months ended October 31, 2008, a decrease in
net loss of $12,847 from the prior period.
COMPARISON
OF OPERATIONS FOR THE YEAR ENDED JULY 31, 2009 COMPARED TO THE PERIOD FROM MAY
28, 2008 (INCEPTION) TO JULY 31, 2008.
We had
total expenses and a net loss of $22,828 for the year ended July 31, 2009,
compared to total expenses and a net loss of $400 for the period from May 28,
2008 through July 31, 2008. The main reason for the increase in
expenses and net loss was the fact that the expenses and net loss for the year
ended July 31, 2009, represented expenses for a full year; where as the expenses
and net loss for the period from May 28, 2008 (Inception) through July 31, 2009,
only represented expenses for approximately two months.
The main
items attributing to the expenses and net loss for the year ended July 31, 2009,
was $17,050 of professional fees relating to our legal and accounting expenses
associated with our Private Placement Memorandum and the disclosures therein,
rent of $2,250 and $1,225 of filing fees relating to our incorporation costs in
the State of Nevada.
-31-
LIQUIDITY
AND CAPITAL RESOURCES
We had
assets of $88, consisting solely of current assets of cash as of October 31,
2009.
We had
total liabilities, consisting solely of current liabilities of $7,664 as of
October 31, 2009, which included $1,704 of note payable to officer and Director,
relating to funds advanced by Mr. Birmingham (described below) in connection
with our start-up and formation costs, $650 of note payable to officer and
Director, relating to funds advanced by Mr. Mooney (described below), in
connection with various printing and internet set-up fees, note payable to
related party of $5,000 in connection with unpaid legal fees owed to The Loev
Law Firm, PC pursuant to the Engagement Agreement described below, as well as
$310 of accrued interest on the Note with The Loev Law Firm, PC.
We had a
working capital deficit of $7,576 and a deficit accumulated during the
development stage of $24,846 as of October 31, 2009.
We had
cash used in operating activities of $1,057 for the three months ended October
31, 2009, which included $1,618 of net loss offset by $450 of donated rent, and
$111 of imputed interest.
We had
$1,000 of net cash provided by financing activities for the three months ended
October 31, 2009, which included $1,000 of proceeds from related party note, in
connection with funds borrowed under the Loev Note, described
below.
From
October 2008 to March 2009, we sold 172,250 shares of our common stock to 27
private investors in a private placement, pursuant to an exemption from
registration provided by Rule 506 of the Securities Act of 1933, as amended (the
“Act”), for aggregate consideration of $13,780 or $0.08 per share.
In August
2008, we entered into a Master Revolving Line of Credit with Carey G.
Birmingham, the Company’s Chief Financial Officer, which was subsequently
amended by the parties (the “Line of Credit”). The Line of Credit
allows us to borrow up to $10,000 from Mr. Birmingham. Any amounts
borrowed under the Line of Credit do not bear interest and are due and payable
on December 31, 2010. We did however have imputed interest expense of
$168 relating to such Line of Credit as of July 31, 2009. As of July
31, 2009 and November 15, 2009, a total of $1,704 had been loaned under the Line
of Credit.
In May
2008, we entered into an Engagement Agreement with The Loev Law Firm, PC (the
“Law Firm”), which was amended and restated in December 2009, whereby the Law
Firm agreed to provide the Company with legal services in connection with the
Company’s private placement and Form S-1 Registration Statement, and we agreed
to pay the Law Firm an aggregate of $37,500 based on us meeting specific
milestones as set forth in the Engagement Agreement and issue David M. Loev, the
Manager of the Law Firm, an aggregate of 700,000 shares of the Company’s common
stock, which shares have been issued to date. Two of those milestones
were reached by May 2009 and as such and pursuant to the terms of the Engagement
Agreement, we were required to pay the Law Firm a total of $10,000 for legal
services provided. Additionally, a total of $10,000 was due and
payable upon the filing of the Company’s Form S-1 Registration Statement of
which this Prospectus is a part, which occurred in December 2009. As
of October 31, 2009, we had paid the Law Firm $6,000 and the balance owed to The
Loev Law Firm, PC in the amount of $4,000 as of October 31, 2009, has been
accruing interest at 7% per annum since May 2009. As of the filing of
this amended Registration Statement, we owe the Law Firm $14,000, and upon the
filing of this amended Registration Statement, we will owe the Law Firm an
additional $7,500 payment.
The
remaining $10,000 is due to the Law Firm pursuant to the Engagement Agreement
upon the Company’s Form S-1 Registration Statement being declared “effective” by
the Securities and Exchange Commission.
In
September 2008, we entered into a Master Revolving Credit Note with David W.
Mooney, Jr., AIA, our Chief Executive Officer, which was subsequently amended by
the parties (the “Credit Note”). The Credit Note allows us to borrow
up to $10,000 from Mr. Mooney. Any amounts borrowed under the Line of
Credit do not bear interest and are due and payable on December 31,
2010. We did however have imputed interest expense of $11 relating to
such Line of Credit as of July 31, 2009. As of July 31, 2009 and
October 31, 2009, a total of $650 had been loaned under the Line of
Credit.
-32-
In
October 2009, we entered into a Master Revolving Credit Note with David M. Loev,
our Attorney, and a significant shareholder of the Company (the “Loev
Note”). Pursuant to the Loev Note, Mr. Loev agreed to loan us up to
$2,500, which funds do not bear interest, and are due and payable on February
28, 2010. The Loev Note was also guaranteed by our officers, Carey G.
Birmingham and David W. Mooney, Jr., AIA. As of the date of this
filing, an aggregate of $2,400 has been borrowed pursuant to the Loev Note, of
which $1,000 has been repaid.
We have
budgeted the need for approximately $100,000 of additional funding during the
next 12 months to continue our business operations, pay costs and expenses
associated with our filing requirements with the Securities and Exchange
Commission (assuming the Registration Statement, of which this Prospectus is a
part is declared effective) and conduct our development activities as planned,
and we can provide no assurances that such funding can be raised on favorable
terms, if at all. We believe we can continue our operations for
approximately the next 12 months if no additional financing is raised, with
funds advanced to us by our officers, Directors and significant shareholders
pursuant to their Line of Credits, as described below; provided that we will not
be able to conduct any development activities during that time if no additional
funding is raised. If we are unable to raise adequate working capital
for the remainder of fiscal 2010 and throughout 2011, we will be restricted in
the implementation of our development plan.
Assuming
that our registration statement of which this Prospectus is a part is declared
effective by the Commission, we plan to seek out additional debt and/or equity
financing; however, we do not currently have any specific plans to raise such
additional financing at this time. We believe that by becoming a
reporting company and becoming subject to the filing requirements of Section
15(d) of the Securities Exchange Act of 1934, as amended, as well as by engaging
a market maker to quote our common stock on the OTCBB (as is our current plan)
we will be able to make an investment in the Company more attractive to
potential investors, which will help facilitate our ability to raise capital, of
which there can be no assurance. The sale of additional equity securities, if
undertaken by the Company and if accomplished, may result in dilution to our
shareholders. We cannot assure you, however, that future financing will be
available in amounts or on terms acceptable to us, or at all.
The
nature of the Company’s operations is highly speculative, and there is a
consequent risk of loss of your investment. The success of our plan
of operation will depend to a great extent on the operations, financial
condition, and management of the identified business opportunity.
Use of
Estimates:
The
preparation of financial statements in conformity with generally accepted
accounting principles require management to make estimates and assumptions that
affect the reported amount of assets, liabilities, and disclosures contingent on
assets and liabilities at the date of the financial statements and the reported
amounts of revenue and expenses during the reporting periods. Actual
results could differ from these estimates.
Fair Value of Financial
Instruments:
The
estimated fair values of cash and property and equipment due to the stockholder,
none of which are held for trading purposes, approximate their carrying value
because of short term maturity of these instruments or the stated interest rates
are indicative of market interest rates.
Cash and Cash
Equivalents:
For
purposes of the statement of cash flows, the Company considers all highly liquid
investments purchased with an original maturity of three months or less to be
cash equivalents.
-33-
Income
Taxes:
The
Company follows the asset and liability method of accounting for income taxes.
Deferred tax assets and liabilities are recognized for the estimated future tax
consequences attributable to differences between the financial statements
carrying amounts of existing assets and liabilities and their respective tax
basis. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that included the enactment date. A valuation allowance is
recorded to reduce the carrying amounts of deferred tax assets unless management
believes it is more likely than not that such assets will be
realized.
Basic and Diluted
Income/(Loss) Per Share:
In
accordance with current accounting literature ,the basic income/(loss) per
common share is computed by dividing net income/(loss) available to common
stockholders by the weighted average number of common shares outstanding.
Diluted income per common share is computed similar to basic income per common
share except that the denominator is increased to include the number of
additional common shares that would have been outstanding if the potential
common shares had been issued and if the additional common shares were dilutive.
As of October 31, 2009 there were no dilutive convertible common shares
outstanding.
Revenue
Recognition:
The
Company recognizes revenue when persuasive evidence of an agreement exists,
services have been rendered, the sales price of a unit is fixed or determinable,
and collectability is reasonable assured. Since our inception on May
28, 2008 to our fiscal year ended July 31, 2009, the Company has had no
revenues.
Stock Based
Compensation:
Our
stock-based compensation cost is measured at the grant date, based on the
calculated fair value of the award, and is recognized as an expense over the
employees' requisite service period (generally the vesting period of the equity
grant).
We
estimate the fair value of stock options using the Black-Scholes valuation
model. Key input assumptions used to estimate the fair value of stock options
include the exercise price of the award, expected option term, expected
volatility of our stock over the option's expected term, risk-free interest rate
over the option's expected term, and the expected annual dividend yield. We
believe that the valuation technique and approach utilized to develop the
underlying assumptions are appropriate in our calculations. As of October 31,
2009, we did not have any stock based compensation.
Fair
Value of Financial Instruments:
Accounting
principles generally accepted in the United States of America require disclosing
the fair value of financial instruments to the extent practicable for financial
instruments, which are recognized or unrecognized in the balance sheet. The fair
value of the financial instruments disclosed herein is not necessarily
representative of the amount that could be realized or settled, nor does the
fair value amount consider the tax consequences of realization or settlement. In
assessing the fair value of these financial instruments, SEV uses a variety of
methods and assumptions, which were based on estimates of market conditions and
risks existing at that time. For certain instruments, including cash, accounts
payable, accrued liabilities and convertible notes payable, it was estimated
that the carrying amount approximated fair value for the majority of these
instruments because of their short maturity. The Company has current
accounting literature in these financial statements, the impact of these
pronouncements has not been material.
-34-
Recently Adopted and
Recently Enacted Accounting Pronouncements
In
April 2008, the FASB issued ASC 350-10, "Determination of the Useful Life of
Intangible Assets." ASC 350-10 amends the factors that should be considered in
developing renewal or extension assumptions used to determine the useful life of
a recognized intangible asset under ASC 350-10, "Goodwill and Other Intangible
Assets." ASC No. 350-10 is effective for fiscal years beginning after
December 15, 2008. The adoption of this ASC did not have a material impact
on our consolidated financial statements.
In
April 2009, the FASB issued ASC 805-10, "Accounting for Assets Acquired and
Liabilities assumed in a Business Combination That Arise from Contingencies—an
amendment of FASB Statement No. 141 (Revised December 2007), Business
Combinations". ASC 805-10 addresses application issues raised by preparers,
auditors and members of the legal profession on initial recognition and
measurement, subsequent measurement and accounting and disclosure of assets and
liabilities arising from contingencies in a business combination. ASC 805-10 is
effective for assets or liabilities arising from contingencies in business
combinations for which the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after December 15, 2008.
ASC 805-10 will have an impact on our accounting for any future
acquisitions and its consolidated financial statements.
In
May 2009, the FASB issued SFAS No. 165, "Subsequent Events", which is
included in ASC Topic 855, Subsequent Events. ASC Topic 855 established
principles and requirements for evaluating and reporting subsequent events and
distinguishes which subsequent events should be recognized in the financial
statements versus which subsequent events should be disclosed in the financial
statements. ASC Topic 855 also requires disclosure of the date through which
subsequent events are evaluated by management. ASC Topic 855 was effective for
interim periods ending after June 15, 2009 and applies prospectively.
Because ASC Topic 855 impacts the disclosure requirements, and not the
accounting treatment for subsequent events, the adoption of ASC Topic 855 did
not impact our consolidated results of operations or financial condition. See
Note 10 for disclosures regarding our subsequent events.
Effective
July 1, 2009, we adopted the Financial Accounting Standards Board ("FASB")
Accounting Standards Codification ("ASC") 105-10, Generally Accepted Accounting
Principles—Overall ("ASC 105-10"). ASC 105-10 establishes the FASB Accounting
Standards Codification (the "Codification") as the source of authoritative
accounting principles recognized by the FASB to be applied by nongovernmental
entities in the preparation of financial statements in conformity with
U.S. GAAP. Rules and interpretive releases of the SEC under authority of
federal securities laws are also sources of authoritative U.S. GAAP for SEC
registrants. All guidance contained in the Codification carries an equal level
of authority. The Codification superseded all existing non-SEC accounting and
reporting standards. All other non-grandfathered, non-SEC accounting literature
not included in the Codification is non-authoritative. The FASB will not issue
new standards in the form of Statements, FASB Staff Positions or Emerging Issues
Task Force Abstracts. Instead, it will issue Accounting Standards Updates
("ASUs"). The FASB will not consider ASUs as authoritative in their own right.
ASUs will serve only to update the Codification, provide background information
about the guidance and provide the bases for conclusions on the change(s) in the
Codification. References made to FASB guidance throughout these consolidated
financials have been updated for the Codification.
In
August 2009, the FASB issued ASU No. 2009-05, Measuring Liabilities at Fair
Value, which provides additional guidance on how companies should measure
liabilities at fair value under ASC 820. The ASU clarifies that the quoted price
for an identical liability should be used. However, if such information is not
available, an entity may use the quoted price of an identical liability when
traded as an asset, quoted prices for similar liabilities or similar liabilities
traded as assets, or another valuation technique (such as the market or income
approach). The ASU also indicates that the fair value of a liability is not
adjusted to reflect the impact of contractual restrictions that prevent its
transfer and indicates circumstances in which quoted prices for an identical
liability or quoted price for an identical liability traded as an asset may be
considered level 1 fair value measurements. This ASU is effective
October 1, 2009. We are currently evaluating the impact of this standard,
but would not expect it to have a material impact on the our consolidated
results of operations or financial condition.
-35-
CERTAIN
RELATIONSHIPS AND
RELATED
TRANSACTIONS
In May
2008, we issued 700,000 shares of our restricted common stock to our Chief
Executive Officer and President, David W. Mooney, Jr., AIA in consideration for
services rendered to the Company. We claim an exemption from
registration afforded by Section 4(2) of the Securities Act of 1933, as amended
(the “Act”) since the foregoing issuance did not involve a public offering, the
recipient took the shares for investment and not resale and we took appropriate
measures to restrict transfer. No underwriters or agents were involved in the
foregoing issuance and we paid no underwriting discounts or
commissions.
In May
2008, we issued 700,000 shares of our restricted common stock to our Chief
Financial Officer and Vice President, Carey G. Birmingham in consideration for
services rendered to the Company. We claim an exemption from
registration afforded by Section 4(2) of the Act since the foregoing issuance
did not involve a public offering, the recipient took the shares for investment
and not resale and we took appropriate measures to restrict transfer. No
underwriters or agents were involved in the foregoing issuance and we paid no
underwriting discounts or commissions.
In May
2008, we issued 700,000 shares of our restricted common stock to our corporate
counsel, David M. Loev in consideration for services rendered to the
Company. We claim an exemption from registration afforded by Section
4(2) of the Act since the foregoing issuance did not involve a public offering,
the recipient took the shares for investment and not resale and we took
appropriate measures to restrict transfer. No underwriters or agents were
involved in the foregoing issuance and we paid no underwriting discounts or
commissions.
In August
2008, we entered into a Master Revolving Line of Credit with Carey G.
Birmingham, the Company’s Chief Financial Officer, which was subsequently
amended by the parties (the “Line of Credit”). The Line of Credit
allows us to borrow up to $10,000 from Mr. Birmingham. Any amounts
borrowed under the Line of Credit do not bear interest and are due and payable
on December 31, 2010. We did however have imputed interest expense of
$168 relating to such Line of Credit as of July 31, 2009. As of July
31, 2009 and October 31, 2009, a total of $1,704 had been loaned under the Line
of Credit.
In May
2008, we entered into an Engagement Agreement with The Loev Law Firm, PC (the
“Law Firm”), which was amended and restated in December 2009, whereby
the Law Firm agreed to provide the Company with legal services in connection
with the Company’s private placement and Form S-1 Registration Statement, and we
agreed to pay the Law Firm an aggregate of $37,500 based on us meeting specific
milestones as set forth in the Engagement Agreement and issue David M. Loev, the
Manager of the Law Firm, an aggregate of 700,000 shares of the Company’s common
stock, which shares have been issued to date. Two of those milestones
were reached by May 2009 and as such and pursuant to the terms of the Engagement
Agreement, we were required to pay the Law Firm a total of $10,000 for legal
services provided. Additionally, a total of $10,000 was due and
payable upon the filing of the Company’s Form S-1 Registration Statement of
which this Prospectus is a part, which occurred in December 2009. As
of October 31, 2009, we had paid the Law Firm $6,000 and the balance owed to The
Loev Law Firm, PC in the amount of $4,000 as of October 31, 2009, has been
accruing interest at 7% per annum since May 2009. As of the filing of
this amended Registration Statement, we owe the Law Firm $14,000, and upon the
filing of this amended Registration Statement, we will owe the Law Firm an
additional $7,500 payment.
The
remaining $10,000 is due to the Law Firm pursuant to the Engagement Agreement
upon the Company’s Form S-1 Registration Statement being declared “effective” by
the Securities and Exchange Commission.
In
September 2008, we entered into a Master Revolving Credit Note with David W.
Mooney, Jr., AIA, our Chief Executive Officer (the “Credit Note”), which was
subsequently amended by the parties. The Credit Note allows us to
borrow up to $10,000 from Mr. Mooney. Any amounts borrowed under the
Credit Note do not bear interest and are due and payable on December 31,
2010. We did however have imputed interest expense of $11 relating to
such Line of Credit as of July 31, 2009. As of July 31, 2009 and October 31,
2009, a total of $650, had been loaned under the Credit Note.
-36-
In
October 2009, we entered into a Master Revolving Credit Note with David M. Loev,
our Attorney, and a significant shareholder of the Company (the “Loev
Note”). Pursuant to the Loev Note, Mr. Loev agreed to loan us up to
$2,500, which funds do not bear interest, and are due and payable on February
28, 2010. The Loev Note was also guaranteed by our officers, Carey G.
Birmingham and David W. Mooney, Jr., AIA. As of the date of this
filing, an aggregate of $2,400 has been borrowed pursuant to the Loev Note, of
which $1,000 has been repaid.
We use
office space that is provided by David W. Mooney, Jr., AIA in his architectural
practice as David W. Mooney, Jr. Architect on a rent-free month-to-month
basis. The office space encompasses approximately 144 square
feet. The office space has an address of: 5 Blind Brook Lane, Rye,
New York 10580.
The
Company’s Chief Financial Officer, Carey Birmingham, also provides the Company
with approximately 44 square feet of office space on a rent-free basis at the
Company’s San Antonio, Texas office, 20022 Creek Farm, San Antonio, Texas
78259.
Review,
Approval and Ratification of Related Party Transactions
Given our
small size and limited financial resources, we have not adopted formal policies
and procedures for the review, approval or ratification of transactions, such as
those described above, with our executive officer and Director and significant
stockholders. However, all of the transactions described above were
approved and ratified by our Board of Directors, consisting of Mr. Mooney and
Mr. Birmingham. In connection with the approval of the transactions
described above, our Directors took into account several factors, including
their fiduciary duty to the Company; the relationship of the related parties
described above to the Company; the material facts underlying each transaction;
the anticipated benefits to the Company and related costs associated with such
benefits; whether comparable products or services were available (if
applicable); and the terms the Company could receive from an unrelated third
party. The Company believes that each transaction described above
were on terms no less favorable to the Company than could have been obtained
from an unaffiliated third party.
We intend
to establish formal policies and procedures in the future, once we have
sufficient resources and have appointed additional Directors, so that such
transactions will be subject to the review, approval or ratification of our
Board of Directors, or an appropriate committee thereof. On a
moving forward basis, our Directors will continue to approve any related party
transaction based on the criteria set forth above.
CORPORATE
GOVERNANCE
The
Company promotes accountability for adherence to honest and ethical conduct;
endeavors to provide full, fair, accurate, timely and understandable disclosure
in reports and documents that the Company files with the Securities and Exchange
Commission (the “SEC”) and in other public communications made by the Company;
and strives to be compliant with applicable governmental laws, rules and
regulations. The Company has not formally adopted a written code of business
conduct and ethics that governs the Company’s employees, officers and Directors
as the Company is not required to do so.
In lieu
of an Audit Committee, the Company’s Board of Directors, consisting of Mr.
Mooney and Mr. Birmingham, are responsible for reviewing and making
recommendations concerning the selection of outside auditors, reviewing the
scope, results and effectiveness of the annual audit of the Company's financial
statements and other services provided by the Company’s independent public
accountants. The Board of Directors, consisting of our Chief Executive Officer,
Mr. Mooney and Chief Financial Officer, Mr. Birmingham reviews the Company's
internal accounting controls, practices and policies.
-37-
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
DESCRIPTION
OF CAPITAL STOCK
We have
authorized capital stock consisting of 140,000,000 shares of common stock,
$0.001 par value per share (“Common Stock”) and 10,000,000 shares of preferred
stock, $0.001 par value per share (“Preferred Stock”). As of February
__, 2010, we had 2,447,250 shares of Common Stock and no shares of Preferred
Stock issued and outstanding.
Common
Stock
The
holders of outstanding shares of Common Stock are entitled to receive dividends
out of assets or funds legally available for the payment of dividends of such
times and in such amounts as the board from time to time may
determine. Holders of Common Stock are entitled to one vote for each
share held on all matters submitted to a vote of shareholders. There
is no cumulative voting of the election of directors then standing for
election. The Common Stock is not entitled to pre-emptive rights and
is not subject to conversion or redemption. Upon liquidation,
dissolution or winding up of our company, the assets legally available for
distribution to stockholders are distributable ratably among the holders of the
Common Stock after payment of liquidation preferences, if any, on any
outstanding payment of other claims of creditors. Each outstanding
share of Common Stock is, and all shares of Common Stock to be outstanding upon
completion of this Offering will upon payment therefore be, duly and validly
issued, fully paid and non-assessable.
Preferred
Stock
Shares of
Preferred Stock may be issued from time to time in one or more series, each of
which shall have such distinctive designation or title as shall be determined by
our Board of Directors (“Board of Directors”) prior to the issuance of any
shares thereof. Preferred Stock shall have such voting powers, full
or limited, or no voting powers, and such preferences and relative,
participating, optional or other special rights and such qualifications,
limitations or restrictions thereof, as shall be stated in such resolution or
resolutions providing for the issue of such class or series of Preferred Stock
as may be adopted from time to time by the Board of Directors prior to the
issuance of any shares thereof. The number of authorized shares of
Preferred Stock may be increased or decreased (but not below the number of
shares thereof then outstanding) by the affirmative vote of the holders of a
majority of the voting power of all the then outstanding shares of our capital
stock entitled to vote generally in the election of the directors, voting
together as a single class, without a separate vote of the holders of the
Preferred Stock, or any series thereof, unless a vote of any such holders is
required pursuant to any Preferred Stock Designation.
Options,
Warrants and Convertible Securities
We do not
currently have any warrants, options or convertible securities
outstanding.
-38-
SHARES
AVAILABLE FOR FUTURE SALE
Future
sales of substantial amounts of our common stock could adversely affect market
prices prevailing from time to time, and could impair our ability to raise
capital through the sale of equity securities.
Upon the
date of this Prospectus, there are 2,447,250 shares of common stock issued and
outstanding. Upon the effectiveness of this Registration Statement, 347,250
shares of common stock to be resold pursuant to this Prospectus will be eligible
for immediate resale in the public market if and when any market for the common
stock develops. The remaining 2,100,000 shares of our currently
issued and outstanding common stock, which shares are solely owned by our Chief
Executive Officer, David M. Mooney, Jr., AIA, our Chief Financial Officer, Carey
G. Birmingham, and our Attorney, David M. Loev, which are not being registered
pursuant to this Registration Statement will constitute “restricted securities”
as that term is defined by Rule 144 of the Act and bear appropriate legends,
restricting transferability. The Company may also raise capital in
the future by issued issuing additional restricted shares to
investors.
Restricted
securities may not be sold except pursuant to an effective registration
statement filed by us or an applicable exemption from registration, including an
exemption under Rule 144 promulgated under the Act.
Pursuant
to Rule 144 of the Securities Act of 1933, as amended (“Rule 144”), a “shell
company” is defined as a company that has no or nominal operations; and, either
no or nominal assets; assets consisting solely of cash and cash equivalents; or
assets consisting of any amount of cash and cash equivalents and nominal other
assets. As such, we are a “shell company” pursuant to Rule 144, and
as such, sales of our securities pursuant to Rule 144 are not able to be made
until 1) we have ceased to be a “shell company; 2) we are subject to Section 13
or 15(d) of the Securities Exchange Act of 1934, as amended, and have filed all
of our required periodic reports for the previous one year period prior to any
sale; and a period of at least twelve months has elapsed from the date “Form 10
information” has been filed with the Commission reflecting the Company’s status
as a non-“shell company.” Because none of our securities can be sold
pursuant to Rule 144, until at least a year after we cease to be a “shell
company”, any non-registered securities we issue will have no liquidity and will
in fact be ineligible to be resold until and unless such securities are
registered with the Commission and/or until a year after we cease to be a “shell
company” and have complied with the other requirements of Rule 144, as described
above. “Form 10 information” refers to similar disclosures, including
a description of business operations, risk factors, audited financial statements
and other information as is required in a Form 10 Registration Statement filing
with the Securities and Exchange Commission.
Assuming
we cease to be a “shell company” and at least a year has passed since we filed
“Form 10 information” with the Commission and we otherwise meet the requirements
of Rule 144, and assuming we remain a non-reporting company, under Rule 144 a
person (or persons whose shares are aggregated) who is not deemed to have been
our affiliate at any time during the 90 days preceding a sale, and who owns
shares within the definition of “restricted securities” under Rule 144 under the
Securities Act that were purchased from us (or any affiliate) at least one year
previously, would be entitled to sell such shares under Rule 144 without
restrictions. A person who may be deemed our affiliate, who owns
shares that were purchased from us (or any affiliate) at least one year
previously, is entitled to sell within any three-month period a number of shares
that does not exceed 1% of the then outstanding common stock. Sales
by affiliates are also subject to certain manner of sale provisions, notice
requirements and the availability of current public information about
us.
If the
Company should cease to be a “shell company” and should become a “reporting
company,” the conditions applicable to the resale of securities under Rule 144
are different. If we become a reporting company, a person (or persons
whose shares are aggregated) who owns shares that were purchased from us (or any
affiliate) at least six months previously, would be entitled to sell
such shares without restrictions other than the availability of current public
information about us. A person who may be deemed our affiliate, who
owns shares that were purchased from us (or any affiliate) at least six months
previously would be entitled to sell his shares if he complies with the volume
limitations, manner of sale provisions, public information requirements and
notice requirements discussed above. A person who is not deemed to
have been our affiliate at any time during the 90 days preceding a sale, and who
owns restricted securities that were purchased from us (or any affiliate) at
least one year previously, would be entitled to sell such shares under Rule 144
without restrictions.
-39-
PLAN
OF DISTRIBUTION AND SELLING STOCKHOLDERS
This
Prospectus relates to the resale of 347,250 shares of common stock by the
selling stockholders, which term includes the stockholders listed below and
their transferees, pledgees, donees or their successors. The table below sets
forth information with respect to the resale of shares of common stock by the
selling stockholders. We will not receive any proceeds from the resale of common
stock by the selling stockholders for shares currently
outstanding. None of the selling stockholders are broker/dealers
and/or affiliated with broker/dealers. None of the selling
stockholders have held any material relationship, position or office with the
Company, or any of its predecessors or affiliates.
Selling
Stockholders:
Shareholder
Name
|
Date
Shares Acquired
|
Common
Stock Beneficially Owned Before Resale
|
Amount
Offered
|
Shares
Beneficially Owned After Resale (3)
|
||
Angela
Butler
|
January
2009
|
6,250
|
(1)
|
6,250
|
-
|
|
B.
Raphael Sonsino
|
January
2009
|
4,375
|
(1)
|
4,375
|
-
|
|
Brian
Harris
|
July
2008
|
25,000
|
(2)
|
25,000
|
-
|
|
Chris
Matthews
|
December
2008
|
4,375
|
(1)
|
4,375
|
-
|
|
Christopher
Crumpler
|
November
2008
|
5,000
|
(1)
|
5,000
|
-
|
|
Dan
Gostylo
|
July
2008
|
25,000
|
(2)
|
25,000
|
-
|
|
Dan
Gostylo
|
February
2009
|
10,000
|
(1)
|
10,000
|
-
|
|
Daniel
Babajanov
|
December
2008
|
4,375
|
(1)
|
4,375
|
-
|
|
Debra
Liberton
|
December
2008
|
5,000
|
(1)
|
5,000
|
-
|
|
Derek
& Sue Tudor, JT
|
December
2008
|
6,250
|
(1)
|
6,250
|
-
|
|
Donal
Cranny
|
December
2008
|
4,375
|
(1)
|
4,375
|
-
|
|
Gilbert
Steedley
|
December
2008
|
18,750
|
(1)
|
18,750
|
-
|
|
Gregorio
Inestroza
|
December
2008
|
12,500
|
(1)
|
12,500
|
-
|
|
Hans
Hodell
|
December
2008
|
12,500
|
(1)
|
12,500
|
-
|
|
Harold
A. Yount, Jr.
|
July
2008
|
25,000
|
(2)
|
25,000
|
-
|
|
Henri
N. Gourd
|
November
2008
|
4,375
|
(1)
|
4,375
|
-
|
|
Jake
Gostylo
|
July
2008
|
50,000
|
(2)
|
50,000
|
-
|
|
James
Dickson
|
December
2008
|
2,500
|
(1)
|
2,500
|
-
|
|
Jed
Lavitt
|
December
2008
|
4,375
|
(1)
|
4,375
|
-
|
|
Joseph
F. Melagrano
|
January
2009
|
2,500
|
(1)
|
2,500
|
-
|
|
Jospeh
Nemelka
|
December
2008
|
4,375
|
(1)
|
4,375
|
-
|
|
Kenneth
Kremer
|
December
2008
|
4,375
|
(1)
|
4,375
|
-
|
|
Kevin
McAdams
|
January
2009
|
4,375
|
(1)
|
4,375
|
-
|
|
Kimet
Hand
|
January
2009
|
2,500
|
(1)
|
2,500
|
-
|
|
Lelia
M. Wood-Smith
|
October
2008
|
4,375
|
(1)
|
4,375
|
-
|
|
Phil
Phillips
|
July
2008
|
25,000
|
(2)
|
25,000
|
-
|
|
Poya
Hedayati
|
March
2009
|
8,000
|
(1)
|
8,000
|
-
|
|
Rich
Guthrie
|
December
2008
|
5,000
|
(1)
|
5,000
|
-
|
|
Rita
Stewart
|
December
2008
|
8,750
|
(1)
|
8,750
|
-
|
|
Robert
Kremer
|
July
2008
|
25,000
|
(2)
|
25,000
|
-
|
|
Robert
McMahon
|
November
2008
|
8,750
|
(1)
|
8,750
|
-
|
|
Steven
Weiss
|
January
2009
|
8,000
|
(1)
|
8,000
|
-
|
|
Wulf
Losee
|
November
2008
|
6,250
|
(1)
|
6,250
|
-
|
|
Total
|
347,250
|
347,250
|
-40-
(1) All
shares were purchased from the Company as part of a private placement from
October 2008 to March 2009, pursuant to which we sold 172,250 shares of our
common stock to 27 private investors, pursuant to an exemption from registration
provided by Rule 506 of the Securities Act of 1933, as amended (the “Act”), for
aggregate consideration of $13,780 or $0.08 per share.
(2)
Shares issued in consideration for services rendered to the
Company.
(3)
Assuming the sale of all shares registered herein.
Upon the
effectiveness of this Registration Statement, the 2,100,000 outstanding shares
of common stock not registered herein will be subject to the resale provisions
of Rule 144, if available. The 347,250 remaining shares offered by the selling
stockholders pursuant to this Prospectus may be sold by one or more of the
following methods, without limitation:
o
|
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits the purchaser;
|
o
|
block
trades in which the broker-dealer will attempt to sell the shares as agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
|
o
|
purchases
by a broker-dealer as principal and resale by the broker-dealer for its
account;
|
o
|
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
o
|
privately-negotiated
transactions;
|
o
|
broker-dealers
may agree with the Selling Security Holders to sell a specified number of
such shares at a stipulated price per share;
|
o
|
a
combination of any such methods of sale; and
|
o
|
any
other method permitted pursuant to applicable
law.
|
The
Selling Security Holders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this Prospectus.
We
currently lack a public market for our common stock. Selling shareholders will
sell at a price of $0.10 per share until our shares are quoted on the OTC
Bulletin Board and thereafter at prevailing market prices or privately
negotiated prices.
The
Offering price of the shares has been arbitrarily determined by us based on
estimates of the price that purchasers of speculative securities, such as the
shares offered herein, will be willing to pay considering the nature and capital
structure of our Company, the experience of the officers and Directors, and the
market conditions for the sale of equity securities in similar companies. The
Offering price of the shares bears no relationship to the assets, earnings or
book value of our Company, or any other objective standard of value. We believe
that only a small number of shares, if any, will be sold by the selling
shareholders, prior to the time our common stock is quoted on the
OTC Bulletin Board, at which time the selling shareholders will sell their
shares based on the market price of such shares. The Company is not selling any
shares pursuant to this Registration Statement and is only registering the
re-sale of securities previously purchased from us.
The
Selling Security Holders may pledge their shares to their brokers under the
margin provisions of customer agreements. If a Selling Security Holder defaults
on a margin loan, the broker may, from time to time, offer and sell the pledged
shares.
-41-
We have
advised the Selling Security Holders that the anti-manipulation provisions of
Regulation M under the Securities Exchange Act of 1934 will apply to purchases
and sales of shares of common stock by the Selling Security Holders.
Additionally, there are restrictions on market-making activities by persons
engaged in the distribution of the shares. The Selling Security Holders have
agreed that neither them nor their agents will bid for, purchase, or attempt to
induce any person to bid for or purchase, shares of our common stock while they
are distributing shares covered by this Prospectus.
Accordingly,
the Selling Security Holders are not permitted to cover short sales by
purchasing shares while the distribution is taking place. We will advise the
Selling Security Holders that if a particular offer of common stock is to be
made on terms materially different from the information set forth in this Plan
of Distribution, then a post-effective amendment to the accompanying
Registration Statement must be filed with the Securities and Exchange
Commission.
Broker-dealers
engaged by the Selling Security Holders may arrange for other broker-dealers to
participate in sales. Broker-dealers may receive commissions or discounts from
the Selling Security Holders (or, if any broker-dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to be negotiated. It is not
expected that these commissions and discounts will exceed what is customary in
the types of transactions involved.
The
Selling Security Holders may be deemed to be an "underwriter" within the meaning
of the Securities Act in connection with such sales. Therefore, any commissions
received by such broker-dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act.
MARKET
FOR COMMON EQUITY
AND
RELATED STOCKHOLDER MATTERS
No
established public trading market exists for our common stock and the Company’s
common stock has never been quoted on any market or exchange. Except
for this Offering, there is no common stock that is being, or has been proposed
to be, publicly offered. As of February 17, 2010, there were 2,447,250 shares of
common stock outstanding, held by approximately 35 shareholders of
record.
ADDITIONAL
INFORMATION
Our
fiscal year ends on July 31. We plan to furnish our shareholders annual reports
containing audited financial statements and other appropriate reports, where
applicable. In addition, the effectiveness of the Registration Statement of
which this Prospectus is a part will trigger the Company’s obligation to file
current and periodic reports with the Commission under Section 15(d) of the
Securities Act of 1934, as amended. You may read and copy any reports,
statements, or other information we file at the SEC's public reference room at
100 F. Street, N.E., Washington D.C. 20549. You can request copies of these
documents, upon payment of a duplicating fee by writing to the SEC. Please call
the SEC at 1-800-SEC-0330 for further information on the operation of the public
reference rooms. Our SEC filings are also available to the public on the SEC's
Internet site at http\\www.sec.gov.
-42-
LEGAL
MATTERS
Certain
legal matters with respect to the issuance of shares of common stock offered
hereby will be passed upon by The Loev Law Firm, PC, Bellaire,
Texas.
FINANCIAL
STATEMENTS
The
Financial Statements included below are stated in U.S. dollars and are prepared
in accordance with U.S. Generally Accepted Accounting Principles. The following
financial statements pertaining to SEV, Inc. are filed as part of this
Prospectus. The audited financial statements included below as of
July 31, 2009 and 2008 and the period from inception (May 28, 2008) through July
31, 2009, have been audited by the Company’s independent accounting firm,
M&K CPAS, PLLC, as described below.
-43-
Table
of Contents to Financial Statements
Report
of Independent Registered Public Accounting Firm
|
F-2 | |
Balance
Sheets as of October 31, 2009 (Unaudited) and July 31, 2009 and
2008
|
F-3 | |
Statements
of Operations for the three months ended October 31, 2009 and 2008
(Unaudited) the year ending July 31, 2009 and the period from May 28, 2008
(inception) to July 31, 2008 and October 31, 2009
(unaudited).
|
F-4 | |
Statement
of Shareholders’ Equity from May 28, 2008 (Inception) through October 31,
2009 (Unaudited)
|
F-5 | |
Statements
of Cash Flows for the three months ended October 31, 2009 and 2008
(Unaudited) the year ending July 31, 2009 and the period from May 28, 2008
(inception) to July 31, 2008 and October 31, 2009
(unaudited).
|
F-6 | |
Notes
to the Financial Statements
|
F-7 | |
F-1
REPORT
OF INDEPENDENT REGISTERED ACCOUNTING FIRM
To the
Board of Directors and Stockholders
SEV,
Inc.
(A
Development Stage Company)
We have
audited the accompanying Balance Sheets of SEV, Inc., (a Development Stage
Company), as of July 31, 2009 and 2008, and the related Statements of
Operations, Stockholders Equity (Deficit), and Cash Flows for the years then
ended and for the period from inception (May 28, 2008) to July 31,
2009. These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on these
financial statements based upon our audit.
We
conducted our audit in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. The
Company is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audit included
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no
such opinion. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our
opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of SEV, Inc. as of July 31, 2009 and
2008, and the results of its operations and its cash flows for the years then
ended and the period from inception (May 28, 2008) to July 31, 2009 in
conformity with accounting principles generally accepted in the United States of
America.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. The Company has no current source
of income and has limited cash. These matters raise substantial doubt about the
Company’s ability to continue as a going concern. These financial
statements do not include any adjustments relating to the recoverability and
classification of asset carrying amounts or the amount and classification of
liabilities that may result should the Company be unable to continue as a going
concern. See note 4 to the financial statements for further information
regarding this uncertainty.
/s/ M&K CPA’s,
PLLC
M&K
CPA’s, PLLC
www.mkacpas.com
Houston,
TX
December
9, 2009
F-2
SEV,
Inc.
|
||||||||||||
(A
Development Stage Company)
|
||||||||||||
Balance
Sheets
|
||||||||||||
As
of October 31, 2009 and July 31, 2009 and 2008
|
||||||||||||
October
31, 2009 (Unaudited)
|
July
31, 2009
(Audited)
|
July
31, 2008
|
||||||||||
(Audited)
|
||||||||||||
ASSETS
|
||||||||||||
Current
Assets
|
||||||||||||
Cash
|
$ | 88 | $ | 145 | $ | 100 | ||||||
Total
Current Assets
|
88 | 145 | 100 | |||||||||
TOTAL
ASSETS
|
$ | 88 | $ | 145 | $ | 100 | ||||||
LIABILITIES
AND SHAREHOLDERS' EQUITY (Deficit)
|
||||||||||||
Current
Liabilities
|
||||||||||||
Note
Payable to Officers & Directors
|
$ | 2,354 | $ | 2,354 | $ | - | ||||||
Notes
Payable to Related Party
|
5,000 | 4,000 | - | |||||||||
Accrued
Interest to Related Party Notes
|
310 | 310 | - | |||||||||
Total
Current Liabilities
|
7,664 | 6,664 | - | |||||||||
Shareholders'
Equity
|
||||||||||||
Common
Stock, $.001 par, 140,000,000 authorized
|
||||||||||||
2,447,250
issued and outstanding at October 31, 2009
|
2,447 | 2,447 | 2,275 | |||||||||
&
July 31, 2009
|
||||||||||||
Preferred
stock, $.001 par, 10,000,000 authorized
|
||||||||||||
None
issued and outstanding
|
- | - | ||||||||||
Additional
Paid in Capital
|
14,823 | 14,262 | (1,775 | ) | ||||||||
Deficit
accumulated during the development stage
|
(24,846 | ) | (23,228 | ) | (400 | ) | ||||||
Total
Shareholders' Equity (Deficit)
|
(7,576 | ) | (6,519 | ) | 100 | |||||||
TOTAL
LIABILITIES & SHAREHOLDERS' EQUITY (Deficit)
|
$ | 88 | $ | 145 | $ | 100 |
The accompanying notes are an integral part of the financial statements
F-3
SEV, INC. | ||||||||||||||||||||
(A Development Stage Company) | ||||||||||||||||||||
Statement of Operations | ||||||||||||||||||||
For the three months ended October 31, 2009 and 2008 (unaudited), | ||||||||||||||||||||
Twelve months ended July 31, 2009 and 2008 and the period from | ||||||||||||||||||||
Inception (May 28, 2009) to October 31, 2009 | ||||||||||||||||||||
Three
months ended October 31, 2009
|
Three
months ended October 31, 2008
|
Twelve
Months
|
Inception
(May 28, 2008)
|
From
inception (May 28, 2008)
|
||||||||||||||||
ended
July 31,
|
through
|
to
|
||||||||||||||||||
2009 |
July
31, 2008
|
October
31, 2009
|
||||||||||||||||||
Revenues
|
$ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
Advertising
Marketing
|
- | - | 120 | 120 | ||||||||||||||||
Bank
Charges
|
57 | - | 281 | 338 | ||||||||||||||||
Dues
& Subscriptions
|
- | - | 258 | - | 258 | |||||||||||||||
Interest
Expense
|
- | - | 490 | - | 601 | |||||||||||||||
Filing
Fees
|
- | 13,661 | 1,225 | - | 1,225 | |||||||||||||||
Postage
& Delivery
|
- | - | 153 | - | 153 | |||||||||||||||
Printing
& Reproduction
|
- | - | 751 | - | 751 | |||||||||||||||
Professional
Fees
|
1,000 | - | 17,050 | - | 18,050 | |||||||||||||||
Rent
|
450 | 567 | 2,250 | 400 | 3,100 | |||||||||||||||
Office
Supplies
|
- | - | 211 | - | 211 | |||||||||||||||
Professional
Development
|
- | - | 39 | 39 | ||||||||||||||||
- | ||||||||||||||||||||
Total
Operating expenses
|
1,507 | 14,228 | 22,828 | 400 | 24,846 | |||||||||||||||
Net
Operating gain/(loss)
|
(1,507 | ) | (14,228 | ) | (22,828 | ) | (400 | ) | (24,846 | ) | ||||||||||
Other
Income (Expense)
|
- | - | - | - | - | |||||||||||||||
Interest
Income (Expense)
|
(111 | ) | (237 | ) | - | - | - | |||||||||||||
Net
gain/(loss)
|
$ | (1,618 | ) | $ | (14,465 | ) | $ | (22,828 | ) | $ | (400 | ) | $ | (24,846 | ) | |||||
Basic
& Diluted Net
|
||||||||||||||||||||
gain/(loss)
per share
|
$ | (0.00 | ) | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.00 | ) | $ | (0.01 | ) | |||||
Weighted
Average Common
|
||||||||||||||||||||
Shares
Outstanding
|
2,447,250 | 2,275,000 | 2,376,310 | 2,275,000 | 2,447,250 |
The
accompanying notes are an integral part of the financial statements
F-4
SEV,
Inc.
|
||||||||||||||||||||
A
Development Stage Company
|
||||||||||||||||||||
Statement
of Shareholders' Equity
|
||||||||||||||||||||
May
28, 2008 (Inception) to October 31, 2009
|
||||||||||||||||||||
(Unaudited)
|
||||||||||||||||||||
Common
Stock
|
Additional
Paid in Capital
|
Deficit
Accumulated during development stage
|
Total
Shareholders' Equity
|
|||||||||||||||||
Shares
|
Amount
|
|||||||||||||||||||
May
28, 2008 (Inception)
|
- | $ | - | $ | - | - | $ | - | ||||||||||||
Founders
Shares
|
||||||||||||||||||||
issued
for cash
|
2,275,000 | 2,275 | (2,175 | ) | - | 100 | ||||||||||||||
Donated
Rent
|
400 | 400 | ||||||||||||||||||
July
31, 2008 Net Loss
|
- | (400 | ) | (400 | ) | |||||||||||||||
Common
stock sold in
|
||||||||||||||||||||
private
placement offering
|
||||||||||||||||||||
for
cash ($0.08/share)
|
172,250 | 172 | 13,608 | 13,780 | ||||||||||||||||
Donated
rent
|
2,250 | 2,250 | ||||||||||||||||||
Imputed
interest expense
|
179 | 179 | ||||||||||||||||||
Net
loss for year ended
|
||||||||||||||||||||
July
31, 2009
|
- | (22,828 | ) | (22,828 | ) | |||||||||||||||
Balance,
July 31, 2009
|
2,447,250 | $ | 2,447 | $ | 14,262 | $ | (23,228 | ) | $ | (6,519 | ) | |||||||||
Donated
Rent
|
450 | 450 | ||||||||||||||||||
Imputed
Interest
|
111 | 111 | ||||||||||||||||||
October
31, 2009 Net Loss
|
- | (1,618 | ) | (1,618 | ) | |||||||||||||||
Balance,
October 31, 2009
|
2,447,250 | $ | 2,447 | $ | 14,823 | $ | (24,846 | ) | $ | (7,576 | ) | |||||||||
The
accompanying notes are an integral part of the financial statements
F-5
SEV,
Inc.
|
(A
Development Stage Company)
|
STATEMENT
OF CASH FLOWS
FOR
THE YEAR ENDED JULY 31, 2009 AND 2008
AND
THE PERIOD FROM MAY 28, 2008 (INCEPTION) TO JULY 31, 2009 AND
2008
|
Three
months ended October 31, 2009
(Unaudited)
|
Three
months ended October 31, 2008
(Unaudited)
|
From
Inception May 28, 2008
|
||||||||||||||
Year
ended
|
Year
Ended
|
|||||||||||||||
July 31, 2009 |
July
31, 2008
|
|||||||||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
$ | (1618 | ) | $ | (14,465 | $ | (22,828 | ) | $ | (400 | ) | |||||
Net Income/(Loss) | ||||||||||||||||
Adjustments
to reconcile net income to net
|
||||||||||||||||
cash provided
(used) in operating activities:
|
||||||||||||||||
Imputed Interest | 111 | 61 | 179 | - | ||||||||||||
Donated Rent | 450 | 567 | 2,250 | 400 | ||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||
Accrued Expenses | - | 176 | 310 | - | ||||||||||||
Net cash used in operating activities | $ | (1,057 | ) | $ | (13,661 | ) | (20,089 | ) | - | |||||||
|
||||||||||||||||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
||||||||||||||||
Proceeds from related party note
|
1,000 | 13,585 | 17,881 | - | ||||||||||||
Payments on related party debt
|
- | (11,527 | ) | - | ||||||||||||
Proceeds from issuance of common stock
|
- | 13,780 | - | |||||||||||||
Proceeds from issuance of founders shares
|
- | - | 100 | |||||||||||||
Net cash provided by financiang activities | 1,000 | 13,585 | 20,134 | 100 | ||||||||||||
Increase (decrease) in cash and equivalents | (76 | ) | 45 | - | ||||||||||||
Cash and equivalents, beginning of period | 145 | 100 | 100 | - | ||||||||||||
Cash and cash equivalents, end of period | 88 | 24 | $ | 145 | $ | 100 | ||||||||||
Non Cash Activities | ||||||||||||||||
Founders' Shares | - | - | - | 2,175 |
F-6
SEV,
Inc.
(A
Development Stage Company)
Notes
to the Financial Statements
NOTE 1 –
DESCRIPTION OF BUSINESS
SEV, Inc.
(“SEV” or the “Company”) was incorporated in Nevada on May 28,
2008. SEV, Inc., operating under the business name of Solar Energy
Ventures, plans to provide full-service design consulting, construction
management and general contracting services and support for the design and
installation of large and small solar panel arrays on commercial buildings. Many
of these panels are intended to be installed on public
buildings. This includes schools, churches, and other facilities
which can significantly reduce electricity expense through the use of these
panels.
NOTE 2 –
PREPARATION OF INTERIM FINANCIAL STATEMENTS
The
accompanying balance sheet as of October 31, 2009, statements of operations
for the three months ended October 31, 2009 and 2008, statement of owners'
equity for the three months ended October 31, 2009 and 2008 and statements of
cash flows for the three months ended October 31, 2009 and 2008 are unaudited.
These unaudited interim financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
("GAAP"). In the opinion of the Company's management, the unaudited interim
financial statements have been prepared on the same basis as the audited
financial statements and include all adjustments necessary for the fair
presentation of the Company's statement of financial position at October 31,
2009 and its results of operations and its cash flows for the three months ended
October 31, 2009 and 2008. The results for the three months ended October 31,
2009 are not necessarily indicative of the results to be expected for the fiscal
year ending July 31, 2010.
NOTE 3 – SUMMARY OF
SIGNIFICANT ACCOUNT POLICIES
Development Stage
Policy
The
nature of our operations is highly speculative, and there is a consequent risk
of loss of your investment. The success of our plan of operation will
depend to a great extent on the operations, financial condition, and management
of the identified business opportunity.
Use of
Estimates
The
preparation of financial statements in conformity with generally accepted
accounting principles require management to make estimates and assumptions that
affect the reported amount of assets, liabilities, and disclosures contingent on
assets and liabilities at the date of the financial statements and the reported
amounts of revenue and expenses during the reporting periods. Actual
results could differ from these estimates.
Fair Value of Financial
Instruments
The
estimated fair values of cash and property and equipment due to the stockholder,
none of which are held for trading purposes, approximate their carrying value
because of short term maturity of these instruments or the stated interest rates
are indicative of market interest rates.
Cash and Cash
Equivalents
For
purposes of the statement of cash flows, SEV considers all highly liquid
investments purchased with an original maturity of three months or less to be
cash equivalents. There were no cash equivalents as of October 31, 2009 or as of
July 31, 2009 and 2008.
F-7
Income
Taxes
The
Company follows the asset and liability method of accounting for income taxes.
Deferred tax assets and liabilities are recognized for the estimated future tax
consequences attributable to differences between the financial statements
carrying amounts of existing assets and liabilities and their respective tax
basis. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that included the enactment date. A valuation allowance is
recorded to reduce the carrying amounts of deferred tax assets unless management
believes it is more likely than not that such assets will be
realized.
Basic and Diluted
Income/(Loss) Per Share:
In
accordance with current accounting literature ,the basic income/(loss) per
common share is computed by dividing net income/(loss) available to common
stockholders by the weighted average number of common shares outstanding.
Diluted income per common share is computed similar to basic income per common
share except that the denominator is increased to include the number of
additional common shares that would have been outstanding if the potential
common shares had been issued and if the additional common shares were dilutive.
As of October 31, 2009, July 31, 2009 and 2008, there were no
dilutive convertible common shares outstanding.
Revenue
Recognition:
SEV
recognizes revenue when persuasive evidence of an agreement exists, services
have been rendered, the sales price of a unit is fixed or determinable, and
collectability is reasonable assured. Since our inception on May 28,
2008 to our fiscal year ended July 31, 2009 and thru October 31, 2009 SEV has
had no revenues.
Stock Based
Compensation:
Our
stock-based compensation cost is measured at the grant date, based on the
calculated fair value of the award, and is recognized as an expense over the
employees' requisite service period (generally the vesting period of the equity
grant).
We
estimate the fair value of stock options using the Black-Scholes valuation
model. Key input assumptions used to estimate the fair value of stock options
include the exercise price of the award, expected option term, expected
volatility of our stock over the option's expected term, risk-free interest rate
over the option's expected term, and the expected annual dividend yield. We
believe that the valuation technique and approach utilized to develop the
underlying assumptions are appropriate in our calculations. As of October 31,
2009, we did not have any stock based compensation.
Fair
Value of Financial Instruments:
Accounting
principles generally accepted in the United States of America require disclosing
the fair value of financial instruments to the extent practicable for financial
instruments, which are recognized or unrecognized in the balance sheet. The fair
value of the financial instruments disclosed herein is not necessarily
representative of the amount that could be realized or settled, nor does the
fair value amount consider the tax consequences of realization or settlement. In
assessing the fair value of these financial instruments, SEV uses a variety of
methods and assumptions, which were based on estimates of market conditions and
risks existing at that time. For certain instruments, including cash, accounts
payable, accrued liabilities and convertible notes payable, it was estimated
that the carrying amount approximated fair value for the majority of these
instruments because of their short maturity. The Company has current
accounting literature in these financial statements, the impact of these
pronouncements has not been material.
F-8
Recently
Adopted and Recently Enacted Accounting Pronouncements
In
April 2008, the FASB issued ASC 350-10, "Determination of the Useful Life of
Intangible Assets." ASC 350-10 amends the factors that should be considered in
developing renewal or extension assumptions used to determine the useful life of
a recognized intangible asset under ASC 350-10, "Goodwill and Other Intangible
Assets." ASC No. 350-10 is effective for fiscal years beginning after
December 15, 2008. The adoption of this ASC did not have a material impact
on our consolidated financial statements.
In April 2009, the FASB issued ASC 805-10, "Accounting for Assets
Acquired and Liabilities assumed in a Business Combination That Arise from
Contingencies—an amendment of previous FASB authoritative literature. ASC
805-10 addresses application issues raised by preparers, auditors and members of
the legal profession on initial recognition and measurement, subsequent
measurement and accounting and disclosure of assets and liabilities arising from
contingencies in a business combination. ASC 805-10 is effective for assets or
liabilities arising from contingencies in business combinations for which the
acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2008. ASC 805-10 will have
an impact on our accounting for any future acquisitions and its consolidated
financial statements.
In May 2009, the FASB issued ASC Topic 855, Subsequent Events.
ASC Topic 855 established principles and requirements for evaluating and
reporting subsequent events and distinguishes which subsequent events should be
recognized in the financial statements versus which subsequent events should be
disclosed in the financial statements. ASC Topic 855 also requires
disclosure of the date through which subsequent events are evaluated by
management. ASC Topic 855 was effective for interim periods ending after
June 15, 2009 and applies prospectively. Because ASC Topic 855 impacts the
disclosure requirements, and not the accounting treatment for subsequent events,
the adoption of ASC Topic 855 did not impact our consolidated results of
operations or financial condition. See Note 10 for disclosures regarding
our subsequent events.
Effective
July 1, 2009, we adopted the Financial Accounting Standards Board ("FASB")
Accounting Standards Codification ("ASC") 105-10, Generally Accepted Accounting
Principles—Overall ("ASC 105-10"). ASC 105-10 establishes the FASB Accounting
Standards Codification (the "Codification") as the source of authoritative
accounting principles recognized by the FASB to be applied by nongovernmental
entities in the preparation of financial statements in conformity with
U.S. GAAP. Rules and interpretive releases of the SEC under authority of
federal securities laws are also sources of authoritative U.S. GAAP for SEC
registrants. All guidance contained in the Codification carries an equal level
of authority. The Codification superseded all existing non-SEC accounting and
reporting standards. All other non-grandfathered, non-SEC accounting literature
not included in the Codification is non-authoritative. The FASB will not issue
new standards in the form of Statements, FASB Staff Positions or Emerging Issues
Task Force Abstracts. Instead, it will issue Accounting Standards Updates
("ASUs"). The FASB will not consider ASUs as authoritative in their own right.
ASUs will serve only to update the Codification, provide background information
about the guidance and provide the bases for conclusions on the change(s) in the
Codification. References made to FASB guidance throughout these consolidated
financials have been updated for the Codification.
In
August 2009, the FASB issued ASU No. 2009-05, Measuring Liabilities at Fair
Value, which provides additional guidance on how companies should measure
liabilities at fair value under ASC 820. The ASU clarifies that the quoted price
for an identical liability should be used. However, if such information is not
available, an entity may use the quoted price of an identical liability when
traded as an asset, quoted prices for similar liabilities or similar liabilities
traded as assets, or another valuation technique (such as the market or income
approach). The ASU also indicates that the fair value of a liability is not
adjusted to reflect the impact of contractual restrictions that prevent its
transfer and indicates circumstances in which quoted prices for an identical
liability or quoted price for an identical liability traded as an asset may be
considered level 1 fair value measurements. This ASU is effective
October 1, 2009. We are currently evaluating the impact of this standard,
but would not expect it to have a material impact on the our consolidated
results of operations or financial condition.
F-9
SEV does
not expect the adoption of recently issued accounting pronouncements to have a
significant impact on our results of operations, financial position, or cash
flow.
NOTE
4 – GOING CONCERN
As shown
in the accompanying financial statements, SEV does not have current
operations. We have yet to begin operations. These
conditions, along with a reliance on raising cash through debt and equity raise
substantial doubt as to the company’s ability to continue as a going
concern. Management is attempting to raise additional capital through
sales of stock. The financial statements do not include any
adjustments that might be necessary if SEV is unable to continue as a going
concern.
NOTE
5 – ISSUANCE OF STOCK
Common
Stock
SEV is
authorized to issue up to 140 million shares of common stock. At July
31, 2009 and October 31, 2009, SEV had issued 2,447,250 shares, of which
2,100,000 shares have been treated for accounting purposes as founders’ shares.
The share composition is as follows: 2,275,000 shares issued as founders’
shares, The Company has valued these shares and another 175,000 shares accounted
for as founders shares at $100 which was the aggregate cash received. Founders’
shares were issued to the controlling shareholders of the Company for their
contributions to the Company. Additionally, another 172,250 shares were issued
to a total of 27 individual investors for cash. These shares were sold for $.08
per share for total funds of $13,780. There were not any options or warrants
issued for the period.
Rent
donated by an officer of the company was accounted for as an expense and
additional paid in capital of $450 and $2,250 as of October, 31, 2009 and July
31, 2009, respectively.
Preferred
Stock
SEV is
authorized to issue up to 10 million shares of preferred stock. As of
October 31, 2009, 2008 and July 31, 2009 and 2008, none of these shares has been
issued and none is outstanding.
NOTE 6 -
COMMITMENTS
SEV has
no lease expense for the period ended October 31, 2009 or for the years ended
July 31, 2009 and 2008. SEV is using office space provided by one of
its officers on a rent-free, month to month basis. SEV has expensed
the rent as if incurred by the company accounted for the amount as contributed
capital.
NOTE 7 – NOTES
PAYABLE TO OFFICERS & DIRECTORS AND RELATED PARTIES
During the past fiscal year,
SEV entered into various Notes and Lines of Credit with the Company’s President
and CEO and the Company’s Vice President and CFO, as well as with the company’s
corporate counsel.
The Line
of Credit with the Company’s President and CEO is in the amount of $10,000,
matures in December 2010 and accrues no interest. As of October 31,
2009 and July 31, 2009, SEV has borrowed $650. SEV has imputed
interest expense of $111 and $168 relating to such Line of Credit as of October
31, 2009 and July 31, 2009, respectively.
The Line
of Credit with SEV’s Vice President and CFO is in the amount of $10,000, matures
in December 2010 and accrues no interest. As of October 31, 2009 and
July 31, 2009, the Company has borrowed $1,704. SEV has imputed
interest expense of $11 relating to such Line of Credit as of July 31,
2009.
In May
2008, SEV entered into an Engagement Agreement with The Loev Law Firm, PC (the
“Law Firm”), which was amended and restated in December 2009, whereby the Law
Firm agreed to provide SEV with legal services in connection with SEV’s private
placement and Form S-1 Registration Statement, and SEV agreed to pay the Law
Firm an aggregate of $37,500 based on SEV meeting specific milestones as set
forth in the Engagement Agreement and issue David M. Loev, the Manager of the
Law Firm, an aggregate of 700,000 shares of the Company’s common stock, which
shares have been issued to date (as described above). Two of those
milestones were reached by May 2009 and as such and pursuant to the terms of the
Engagement Agreement, SEV was required to pay the Law Firm a total of $10,000
for legal services provided. As of October 31, 2009 and July 31,
2009, SEV had paid the Law Firm $6,000. The balance owed to The Loev Law Firm,
PC in the amount of $5,000 and $4,000 as of October 31, 2009 and 2008 and July
31, 2009, respectively, has been accruing interest at 7% per annum since May
2009.
F-10
The
remaining $27,500 due to the Law Firm pursuant to the Engagement Agreement is
due as follows: $10,000 is due and payable upon the filing of SEV’s Form S-1
Registration Statement; $7,500 is due and payable upon the filing of the first
amendment to SEV’s Form S-1 Registration Statement (or in the event that no
Amendments are required, at the time the Form S-1 is declared “effective”); and
$10,000 is due and payable upon SEV’s Form S-1 Registration Statement being
declared “effective” by the Securities and Exchange Commission.
NOTE 8 –
COMMITMENTS AND CONTINGENCIES
SEV has
no outstanding commitments for office rental or other obligations which would
require additional disclosures than have already been described in these
financial statements.
NOTE 9 – INCOME
TAXES
SEV
believes that, given our operational status, it is remote that the Company will
pay federal income taxes in the future. SEV also does not have any material
uncertain income tax positions.
Three
Months
|
Three
Months
|
Twelve
Months
|
Twelve
Months
|
|||||||||||||
Ended
|
Ended
|
Ended
|
Ended
|
|||||||||||||
31-Oct-09
|
31-Oct-08
|
31-Jul-09
|
31-Jul-08
|
|||||||||||||
Current
Deferred Tax Asset
|
$ | - | $ | - | $ | - | $ | - | ||||||||
Current
Year Net Income/(Loss)
|
1,507 | 14,228 | 22,828 | 400 | ||||||||||||
Tax
Rate
|
0 | 0 | 0 | 0 | ||||||||||||
Expected
Income Tax expense (benefit)
|
527 | 4,980 | 7,990 | 140 | ||||||||||||
Valuation
Allowances
|
(527 | ) | (4,980 | ) | (7,990 | ) | (140 | ) | ||||||||
Total
|
$ | - | $ | - | $ | - | $ | - |
At July
31, 2009 and 2008, the Company had net operating loss carry forwards in the
amount of $22,828 and $400 respectively, available to offset future taxable
income through 2028. The Company established valuation allowances
equal to the full amount of the deferred tax assets due to the uncertainty of
the utilization of the operating losses in future periods.
NOTE 10 –
SUBSEQUENT EVENTS
During
November 2009, SEV entered into a Line of Credit with David M. Loev, the
Company’s Corporate Counsel and principal of the Loev Law Firm,
PC. The amount of this Line of Credit is $2,500, it accrues interest
at 0.00% and matures in February 2010. As of October 31, 2009, the Company had
not borrowed any amounts on this Note and expects to pay off any balance on or
before its current maturity date.
SEV, Inc.
has evaluated for subsequent events through March 5, 2010.
F-11
DEALER
PROSPECTUS DELIVERY OBLIGATION
Until
ninety (90) days after the later of (1) the effective date of the registration
statement or (2) the first date on which the securities are offered publicly,
all dealers that effect transactions in these securities, whether or not
participating in this Offering, may be required to deliver a
Prospectus. This is in addition to the dealers’ obligation to deliver
a Prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
-44-
PART
II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM
13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The
following table sets forth the expenses in connection with this Registration
Statement. All of such expenses are estimates, other than the filing fees
payable to the Securities and Exchange Commission.
Description
|
Amount
to be Paid
|
|||
Filing
Fee - Securities and Exchange Commission
|
$
|
2.48
|
||
Attorney's
fees and expenses
|
30,000.00
|
*
|
||
Accountant's
fees and expenses
|
10,000.00
|
*
|
||
Transfer
agent's and registrar fees and expenses
|
1,000.00
|
*
|
||
Printing
and engraving expenses
|
1,000.00
|
*
|
||
Miscellaneous
expenses
|
500.00
|
*
|
||
Total
|
$
|
42,502.48
|
*
|
*
Estimated
ITEM
14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
See
Indemnification of Directors and Officers above.
ITEM
15. RECENT SALES OF UNREGISTERED SECURITIES
In May
2008, we issued 700,000 shares of our restricted common stock to our Chief
Executive Officer and President, David W. Mooney, Jr., AIA in consideration for
services rendered to the Company. The shares were valued at $700 or
$0.001 per share. We claim an exemption from registration afforded by
Section 4(2) of the Securities Act of 1933, as amended (the “Act”) since the
foregoing issuance did not involve a public offering, the recipient took the
shares for investment and not resale and we took appropriate measures to
restrict transfer. No underwriters or agents were involved in the foregoing
issuance and we paid no underwriting discounts or commissions.
In May
2008, we issued 700,000 shares of our restricted common stock to our Chief
Financial Officer and Vice President, Carey G. Birmingham in consideration for
services rendered to the Company. The shares were valued at $700 or
$0.001 per share. We claim an exemption from registration afforded by
Section 4(2) of the Act since the foregoing issuance did not involve a public
offering, the recipient took the shares for investment and not resale and we
took appropriate measures to restrict transfer. No underwriters or agents were
involved in the foregoing issuance and we paid no underwriting discounts or
commissions.
In May
2008, we issued 700,000 shares of our restricted common stock to our corporate
counsel, David M. Loev in consideration for services rendered to the
Company. The shares were valued at $700 or $0.001 per
share. We claim an exemption from registration afforded by Section
4(2) of the Act since the foregoing issuance did not involve a public offering,
the recipient took the shares for investment and not resale and we took
appropriate measures to restrict transfer. No underwriters or agents were
involved in the foregoing issuance and we paid no underwriting discounts or
commissions.
In May
2008, we issued 50,000 shares of our restricted common stock to Jacob C.
Gostylo, our consultant in consideration for consulting services rendered to the
Company. The shares were valued at $50 or $0.001 per
share. We claim an exemption from registration afforded by
Section 4(2) of the Act since the foregoing issuance did not involve a public
offering, the recipient took the shares for investment and not resale and we
took appropriate measures to restrict transfer. No underwriters or agents were
involved in the foregoing issuance and we paid no underwriting discounts or
commissions.
-45-
In May
2008, we issued 25,000 shares of our restricted common stock to Daniel Gostylo,
our consultant in consideration for services rendered to the
Company. The shares were valued at $25 or $0.001 per share. We
claim an exemption from registration afforded by Section 4(2) of the Act since
the foregoing issuance did not involve a public offering, the recipient took the
shares for investment and not resale and we took appropriate measures to
restrict transfer. No underwriters or agents were involved in the foregoing
issuance and we paid no underwriting discounts or commissions.
In May
2008, we issued 25,000 shares of our restricted common stock to Brian Harris,
our consultant in consideration for services rendered to the
Company. The shares were valued at $25 or $0.001 per
share. We claim an exemption from registration afforded by Section 4(2) of
the Act since the foregoing issuance did not involve a public offering, the
recipient took the shares for investment and not resale and we took appropriate
measures to restrict transfer. No underwriters or agents were involved in the
foregoing issuance and we paid no underwriting discounts or
commissions.
In May
2008, we issued 25,000 shares of our restricted common stock to Harold A. Yount,
Jr., our consultant in consideration for services rendered to the
Company. The shares were valued at $25 or $0.001 per share. We
claim an exemption from registration afforded by Section 4(2) of the Act since
the foregoing issuance did not involve a public offering, the recipient took the
shares for investment and not resale and we took appropriate measures to
restrict transfer. No underwriters or agents were involved in the foregoing
issuance and we paid no underwriting discounts or commissions.
In May
2008, we issued 25,000 shares of our restricted common stock to Robert Kremer,
our marketing consultant in consideration for services rendered to the
Company. The shares were valued at $25 or $0.001 per share. We claim an
exemption from registration afforded by Section 4(2) of the Act since the
foregoing issuance did not involve a public offering, the recipient took the
shares for investment and not resale and we took appropriate measures to
restrict transfer. No underwriters or agents were involved in the foregoing
issuance and we paid no underwriting discounts or commissions.
In May
2008, we issued 25,000 shares of our restricted common stock to Philip J.
Phillips, our construction and installation consultant in consideration for
services rendered to the Company. The shares were valued at $25_or
$0.001 per share. We claim an exemption from registration afforded by Section
4(2) of the Act since the foregoing issuance did not involve a public offering,
the recipient took the shares for investment and not resale and we took
appropriate measures to restrict transfer. No underwriters or agents were
involved in the foregoing issuance and we paid no underwriting discounts or
commissions.
From
October 2008 to March 2009, we sold 172,250 shares of our common stock to 27
private investors in a private placement, pursuant to an exemption from
registration provided by Rule 506 of the Act, for aggregate consideration of
$13,780 or $0.08 per share.
-46-
ITEM
16. EXHIBITS
Exhibit Number
|
Description of Exhibit
|
Exhibit
3.1(1)
|
Articles
of Incorporation
|
Exhibit
3.2(1)
|
Amended
and Restated Bylaws
|
Exhibit
5.1*
|
Opinion
and consent of The Loev Law Firm, PC re: the legality of the shares being
registered
|
Exhibit
10.1(1)
|
Master
Revolving Credit Note with David M. Mooney, Jr.
|
Exhibit
10.2(1)
|
Master
Revolving Credit Note with Carey G. Birmingham
|
Exhibit
10.3(1)
|
Master
Revolving Credit Note with David M. Loev
|
Exhibit
10.4*
|
Amended
Master Revolving Credit Note with David M. Mooney, Jr.
|
Exhibit
10.5*
|
Amended
Master Revolving Credit Note with Carey G. Birmingham
|
Exhibit
23.1*
|
Consent
of M&K CPAs, PLLC
|
Exhibit
23.2*
|
Consent
of The Loev Law Firm, PC (included in Exhibit
5.1)
|
(1) Filed
as exhibits to the Company’s Registration Statement on Form S-1, filed with the
Commission on December 10, 2009, and incorporated by reference
herein.
* Attached
hereto.
-47-
ITEM
17. UNDERTAKINGS
The
undersigned registrant hereby undertakes:
1.
|
To
file, during any period in which offers or sales are being made, a post
effective amendment to this Registration
Statement:
|
(a)
|
To
include any Prospectus required by Section 10(a)(3) of the Securities
Act;
|
|
(b)
|
To
reflect in the Prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of Prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in the volume
and rise represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement; and
|
|
(c)
|
To
include any material information with respect to the plan of distribution
not previously disclosed in this Registration Statement or any material
changes to such information in the Registration
Statement.
|
2.
|
For
determining liability under the Securities Act, treat each post-effective
amendment as a new registration statement of the securities offered, and
the offering of the securities at that time to be the initial bona fide
offering.
|
3.
|
To
file a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the
offering.
|
4.
|
Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer of
controlling person of the Registrant 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, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question 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.
|
5.
|
That,
for the purpose of determining liability under the Securities
Act:
|
Each
Prospectus filed pursuant to Rule 424(b) as part of a registration
statement relating to an offering, other than registration statements
relying on Rule 430B or other than Prospectuses filed in reliance on Rule
430A, shall be deemed to be part of and included in the registration
statement as of the date it is first used after effectiveness. Provided,
however, that no statement made in a registration statement or Prospectus
that is part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the registration
statement or Prospectus that is part of the registration statement will,
as to a purchaser with a time of contract of sale prior to such first use,
supersede or modify any statement that was made in the registration
statement or Prospectus that was part of the registration statement or
made in any such document immediately prior to such date of first
use.
|
-48-
SIGNATURES
In
accordance with the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements of filing on Form S-1 and authorized this Registration Statement to
be signed on its behalf by the undersigned in the City of Rye, New York, on
March 5, 2010.
SEV,
INC.
By: /s/
David W. Mooney, Jr.
David
W. Mooney, Jr.
Chief
Executive Officer
(Principal
Executive Officer),
President
and Director
By: /s/
Carey G. Birmingham
Carey
G. Birmingham
Chief
Financial Officer
(Principal
Financial Officer
and
Principal Accounting Officer),
Vice
President, Secretary,
Treasurer
and Director
-49-
EXHIBIT
INDEX
Exhibit Number
|
Description of Exhibit
|
Exhibit
3.1(1)
|
Articles
of Incorporation
|
Exhibit
3.2(1)
|
Amended
and Restated Bylaws
|
Exhibit
5.1*
|
Opinion
and consent of The Loev Law Firm, PC re: the legality of the shares being
registered
|
Exhibit
10.1(1)
|
Master
Revolving Credit Note with David M. Mooney, Jr.
|
Exhibit
10.2(1)
|
Master
Revolving Credit Note with Carey G. Birmingham
|
Exhibit
10.3(1)
|
Master
Revolving Credit Note with David M. Loev
|
Exhibit
10.4*
|
Amended
Master Revolving Credit Note with David M. Mooney, Jr.
|
Exhibit
10.5*
|
Amended
Master Revolving Credit Note with Carey G. Birmingham
|
Exhibit
23.1*
|
Consent
of M&K CPAs, PLLC
|
Exhibit
23.2*
|
Consent
of The Loev Law Firm, PC (included in Exhibit
5.1)
|
(1) Filed
as exhibits to the Company’s Registration Statement on Form S-1, filed with the
Commission on December 10, 2009, and incorporated by reference
herein.
* Attached
hereto.
-50-