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EX-21 - 3Power Energy Group Inc. | v197867_ex21.htm |
EX-32.1 - 3Power Energy Group Inc. | v197867_ex32-1.htm |
EX-31.1 - 3Power Energy Group Inc. | v197867_ex31-1.htm |
SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON,
DC 20549
FORM
10-K/A
Amendment
No. 2
x
|
ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
fiscal year ended: December 31,
2009
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF
1934
|
For the
transition period from _________ to _________
Commission
File Number: 333-103647
Prime Sun Power
Inc.
(Exact
Name of Registrant as Specified in its Charter)
Nevada
|
98-0393197
|
|
(State
of other jurisdiction of
|
(IRS
Employer Identification
|
|
incorporation
or organization)
|
Number)
|
100
Wall Street, 21st
Floor
New York, NY
10005
(Address
of principal executive offices)
866-523-5551
(Registrant’s
telephone number)
Securities
registered pursuant to Section 12(b) of the Exchange Act: None
Securities
registered pursuant to Section 12(g) of the Exchange Act: None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.
Yes ¨ No x
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Exchange Act.
Yes x No ¨
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes x No
¨
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).
Yes ¨ No ¨
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K: ¨
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. (Check one):
Large
Accelerated Filer
|
¨
|
Accelerated
Filer
|
¨
|
Non-Accelerated
Filer
|
¨
|
Smaller
Reporting Company
|
x
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
Yes x No ¨
State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and asked price of such common equity, as of the
last business day of the registrant’s most recently completed second fiscal
quarter: $3,099,673 at June 30, 2009.
Indicate
the number of shares outstanding of each of the registrant’s classes of common
stock, as of the latest practicable date: The Issuer had 40,114,900 shares
of Common Stock, par value $.0001, outstanding as of April 8, 2010.
Explanatory Note: This
amendment to the Company’s Annual Report on Form 10-K for the period ended
December 31, 2009 has been filed in response to comments received by the Company
from the U.S. Securities and Exchange Commission. All disclosures herein refer
to the fiscal year ended December 31, 2009 except as otherwise
indicated.
2
TABLE
OF CONTENTS
ITEM
1: BUSINESS
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5
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ITEM
1A: RISK FACTORS
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10
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ITEM
1B: UNRESOLVED STAFF COMMENTS
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15
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ITEM
2: PROPERTIES
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15
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ITEM
3: LEGAL PROCEEDINGS
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15
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ITEM
4: RESERVED
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15
|
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ITEM
5: MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
|
16
|
|
ITEM
6: SELECTED FINANCIAL DATA
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17
|
|
ITEM
7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
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18
|
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ITEM
7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
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22
|
|
ITEM
8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
F-1
|
|
ITEM
9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
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23
|
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ITEM
9A: CONTROLS AND PROCEDURES
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23
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ITEM
9B: OTHER INFORMATION
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24
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ITEM
10: DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
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25
|
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ITEM
11: EXECUTIVE COMPENSATION
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28
|
|
ITEM
12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
|
31
|
|
ITEM
13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE
|
33
|
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ITEM
14: PRINCIPAL ACCOUNTING FEES AND SERVICES
|
35
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ITEM
15: EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
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36
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SIGNATURES
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39
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3
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
The
following cautionary statements identify important factors that could cause our
actual results to differ materially from those projected in forward-looking
statements made in this Annual Report on Form 10-K (this “Report”) and in other
reports and documents published by us from time to time. Any statements about
our beliefs, plans, objectives, expectations, assumptions, future events or
performance are not historical facts and may be forward-looking. These
statements are often, but not always, made through the use of words or phrases
such as “believes,” “will likely result,” “are expected to,” “will continue,”
“is anticipated,” “estimated,” “intend,” “plan,” “projection,” “outlook” and the
like, constitute “forward-looking statements” within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”). However, as we issue
“penny stock,” as such term is defined in Rule 3a51-1 promulgated under the
Exchange Act, we are ineligible to rely on these safe harbor provisions. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements of
our Company to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Given
these uncertainties, readers are cautioned to carefully read all “Risk Factors”
set forth under Item 1A and not to place undue reliance on any forward-looking
statements. We disclaim any obligation to update any such factors or to announce
publicly the results of any revisions of the forward-looking statements
contained or incorporated by reference herein to reflect future events or
developments, except as required by the Exchange Act. New factors emerge from
time to time, and it is not possible for us to predict which will arise or to
assess with any precision the impact of each factor on our business or the
extent to which any factor, or combination of factors, may cause actual results
to differ materially from those contained in any forward-looking
statements.
Unless
otherwise provided in this Report, references to the “Company,” the
“Registrant,” the “Issuer,” “we,” “us,” and “our” refer to Prime Sun Power Inc.
(formerly known as ATM Financial Corp.).
4
PART
I
ITEM 1: BUSINESS
Corporate
Information
We were
incorporated in the State of Nevada on December 18, 2002, as ATM Financial Corp.
On November 10, 2006, our President and Chief Executive officer resigned to
pursue other interests. We suspended all prior business plans as of that date.
During the first quarter of the year ended December 31, 2008, we began
considering a new business model involving solar power and other renewable
energies. On April 1, 2008, we changed our name from “ATM Financial Corp.” to
“Prime Sun Power Inc.” On April 15, 2008, the Company changed its stock symbol
from “AFIC” to “PSPW.” The Company’s common stock is traded on the National
Association of Securities Dealers Inc.’s over-the-counter bulletin
board.
The
Company’s address is 100 Wall Street, 21st Floor,
New York, NY 10005. The Company’s telephone number is 866-523-5551.
Customers
The
Company is a development stage business planning to provide solar power and
other renewable energies. We anticipate that we will do business mainly in
Europe, and that our Company will operate solar photovoltaic power plants for
which power is produced for sale to local or regional electrical grids. We
intend to enter into strategic alliances with others engaged in the manufacture
and/or assembly of solar modules. During the period covered by this Report the
Company did not have any customers. As of the end of the period covered by this
Report, the Company had not commenced the construction of any solar plants. We
plan to outsource most of the Company’s operations to vendors who will work
exclusively for the Company, and while the Company anticipates maintaining the
overall project management, control, administration and finance within Company
staff.
Management
Structure
The
Company’s planned management structure is as follows:
The
Company intends to retain these employees during 2010.
Sales
and Marketing
The
Company plans to sell up to 150Mwt of PV Solar plants and use the revenues,
together with funds raised from strategic investors, to build and operate its
own power plants. The Company has established excellent relations and strong
networks with financial institutions and industry leaders who represent the
Company’s potential customers for Power plant purchase or investment. The
Company plans to appoint an IR and PR agency to support market awareness and the
Company’s plans to apply for listing on the NASDAQ Stock Market.
5
Intellectual
Property
The
Company has no intellectual property at the present time.
Government
Regulation
At the
present time, the Company is planning on commencing operations in Italy. The
operation of solar power plants, both in that country and elsewhere, will be
subject to extensive national and local regulation at each location in which we
will operate, both prior to and after commencing operations. In particular, the
Company’s execution of the Acquisition Agreement (as defined below) will require
the Company to comply with Italian regulations relating to the continuing
operation of a solar power park. The Company represented in the Acquisition
Agreement that PSP Italia S.r.l. will hold all licenses, consents, permits,
approvals and authorizations required for the operation of the solar power plant
and its connection to the electrical grid, and that PSP Italia S.r.l. will hold
such authorizations for a period of at least twenty years.
The
Company currently intends to sell the electrical power it generates through the
Italian power company Ente Nazionale per l'Energia eLettrica
(Enel).
The
Company will require approval from certain government authorities in order to
connect to Italy’s National Electricity Transmission Grid. The generation of
electricity in Italy is regulated by the Autorità per l'energia elettrica e il
gas (the Italian Regulatory Authority for Electricity and Gas).
Once an
operational solar power plant has been constructed in Italy, the Company will
require the approval of the Gestore dei Servizi Elettrici (GSE) in order to
receive production incentives for solar power. The GSE is a publicly-owned
company which promotes and supports renewable energy in Italy. Over the past
five years, Italy has had some of the world’s most generous incentives for the
construction of solar power plants, and continues to have relatively high
incentives.
SUBSEQUENT
EVENTS
Project
Acquisition by GPR Global Power Resources Ltd.
On
March 2, 2010, the Company entered into a project acquisition agreement (the
“Acquisition Agreement”) with GPR Global Power Resources Ltd., a Company formed
in Switzerland (“GPR,” and together with the Company, the “Parties”). Pursuant
to the Acquisition Agreement, the Company has agreed to sell to GPR all of the
shares of a wholly-owned Italian subsidiary of the Company called PSP Italia
S.r.l. This subsidiary expects to develop a turnkey alternative energy power
plant, utilizing solar power. The purchase price for the shares of PSP Italia
S.r.l. shall be a minimum of 4.05 million Euros per mega watt of power produced
by the solar power plant. The Acquisition Agreement shall cover up to a total of
twenty five mega watts of power, for a total potential sales price of 101.25
million Euros.
The
purchase price for this transaction shall be released by GPR to the Company
incrementally on each date on which the Company shall connect five mega watts of
the solar power plant to the Italian National Grid as enumerated in the
Acquisition Agreement. Thus, payment shall be due to the Company in five equal
tranches; for each five mega watts connected, a payment of 20.25 million Euros
shall be due and payable to the Company. GPR shall make each tranche of payments
within ninety days of the date on which the Company shall connect five mega
watts of power to the electrical grid. GPR shall have the right to withhold 10%
of the purchase price due to the Company for up to six months as a security for
the fulfillment of the Company’s obligations. The purchase price that GPR shall
be required to pay may be reduced by the amount of certain cost savings that GPR
may assist the Company in making or as a result of certain taxes GPR may be
required to pay, in each case as set forth in the Acquisition Agreement.
Furthermore, the Parties have agreed that certain specifications concerning this
project to be included in the annexes to the Acquisition Agreement have not yet
been set, and will be mutually agreed upon by the Parties in the immediate
future. The Company and GPR will not finalize these annexes until such time as
GPR delivers the Bank Standby Letter described below.
6
The
Acquisition Agreement requires the Company to facilitate and arrange for
long-term debt financing of at least 80% of the purchase price to be paid by
GPR. The terms of the Acquisition Agreement are subject to review and approval
by the relevant third party financing institution. The Acquisition Agreement
requires GPR to finance the remainder of the purchase price, and to deliver a
Bank Standby Letter of Credit in an amount equal to 20% of the first payment
tranche that will be due (4.05 million Euros).
The
Company shall be responsible for all construction costs for the solar power
plant, including costs for sub contractors. At the present time, the Company is
in discussions with the EPC contractors and module suppliers to obtain the final
binding offers. The Company intends to commence construction of the solar power
plant in the fourth quarter of 2010 upon completion of the required fund
raising.
Once
construction commences, the Company estimates that it will take approximately
three to four months to complete the 25 mega watt solar power plant. The Company
currently estimates that the costs of production per mega watt will be 3.6
million Euros.
Throughout
the construction process, the Company shall be required to provide GPR with
regular progress reports and rights to inspect the facility. The Company shall
inform GPR without delay about all present and expected legal, political and
economic facts relating to PSP Italia S.r.l. and/or the solar power plant which
may negatively affect the acquisition of PSP Italia S.r.l., the future operation
of the solar power plant, the expected core data or key values of the solar
power plant and/or the business expectations of GPR. In addition, the Company
shall be required to maintain liability insurance in the amount of 5 million
Euros per liability event, and, at the request of GPR, the Company shall be
obliged to ensure that all losses and damages caused by sub-contractors are
sufficiently covered by the corresponding insurance of the
sub-contractors.
The
Company will represent that its subsidiary PSP Italia S.r.l. has good and
marketable title to all of its properties and assets, including the solar power
plant, free and clear of any liens. The Company will also represent that PSP
Italia S.r.l. will hold all licenses, consents, permits, approvals and
authorizations required for the operation of the solar power plant and its
connection to the electrical grid, and that PSP Italia S.r.l. will hold such
authorizations for a period of at least 20 years. The Company will also
represent that PSP Italia S.r.l. will hold all necessary guarantees and has no
obligations (other than related to the right to operate the solar power
plant).
The solar
power plant shall be required to meet certain standards for electrical
production capacity enumerated in the Acquisition Agreement. The Company shall
be obliged to construct the solar power plant in accordance with the
specifications agreed to in the Acquisition Agreement and in conformity with any
applicable regulation of whatever nature. The Company has acknowledged and
agreed that GPR shall be entitled to give binding instructions and directives
with regard to the construction of the solar power plant to the extent that: (i)
such instruction and directive does not lead to an increase of the construction
costs, unless the Parties have otherwise agreed; and (ii) it does not negatively
affect the achievement of connection to the electrical grid. The Company must
advise GPR of any substantial deviations from agreed
specifications.
The
Company shall represent and warrant that the construction of the solar power
plant has been performed in accordance with all applicable laws and regulations
and in accordance with the generally accepted rules of building and
construction. The Company shall furthermore represent and warrant that the solar
power plant has been completed in accordance with all licenses and guarantees,
and that the solar power plant, and all applicable licenses and guarantees shall
be validly transferred upon the connection of the solar power plant to the
electrical grid. The Company shall avoid performance in any manner that could
lead to the revocation of any licenses, consents, permits, approvals,
authorizations or other reasons attributable to the Company. At the time of
connection to the electrical grid, the solar power plant shall have all
necessary approvals and acceptance.
7
The
Company shall also represent and warrant that the structure of the solar power
plant shall remain in viable, suitable and useable condition for a time period
of at least 20 years from the date of connection to the electrical grid, and
that the solar power plant will produce electric power at the agreed capacity
for a time period of at least 20 years. The Company shall be liable for any
defect and damage to the solar power plant or drop in power production. The
Company is also representing and warranting that spare parts for the solar power
plant will be available for a period of 20 years, and that all relevant licenses
relating to the solar power plant will be valid for a period of 20 years. The
Company intends to satisfy these liabilities, representations and warranties by
obtaining back-to-back representations and warranties regarding the same matters
from established and reputable subcontractors who will engineer and construct
the power plant.
The
Company shall indemnify and hold harmless GPR and its affiliates, as well as
their directors, officers and employees, from and against any and all losses
arising out of any breach by the Company of any representation, warranty,
agreement or covenant in the Acquisition Agreement, of which GPR gives notice to
the Company within 20 years after the closing of this transaction, except for
indemnifications related to taxes, which shall survive for 10 years after
closing. GPR shall indemnify and hold harmless the Company and its directors,
officers and employees from and against any and all losses arising out of any
breach by GPR, which the Company gives GPR notice of within two years of the
closing.
The
Acquisition Agreement also contains standard representations regarding the
capital structure and ownership of PSP Italia S.r.l., its articles of
association, corporate organization, books and records, compliance with law,
qualification to do business, consents and approvals and lack of pending legal
proceedings. Both Parties to the Acquisition Agreement have agreed not to
disclose confidential information.
Neither
Party may assign the Acquisition Agreement. The Acquisition Agreement is
governed by Swiss Law, and the jurisdiction of any dispute shall be Zurich.
Disputes shall be settled by arbitration in accordance with the Swiss Rules of
International Arbitration of the Swiss Chambers of Commerce.
The
Acquisition Agreement was initiated and executed pursuant to the terms of a
frame Agreement for PV-Plant Acquisitions (the “Frame Agreement”) entered into
by the Parties on November 18, 2009. Pursuant to the Frame Agreement, the
Parties established a general outline and framework under which the Company
would develop a series of solar power plants (“PV Plants”) in Italy. The Parties
agreed in the Frame Agreement that the Company would have a goal of developing
100 mega watts of power in 2010. The Parties agreed that as each project was
finalized by the Company, the Company would offer such solar power plant to GPR
for purchase. The purchase price, as set forth in the Frame Agreement, would not
exceed: (i) 4.1 million Euros per mega watt for PV Plants grid connected in 2010
in the event that the Company delivers long-term debt funding of 85% or more; or
(ii) 4.05 million Euros per mega watt for PV Plants grid connected in 2010 in
the event that the Company delivers long-term debt funding of 80% or more. Under
the terms of the Frame Agreement, the parties determined that upon definitive
agreement regarding the terms and conditions for acquisition of the solar PV
Plants, the Parties would enter into a separate binding acquisition agreement
for each such PV Plant. Under the Frame Agreement, the Parties agreed that if
they could not reach definitive agreement on all parameters relating to the
acquisition, the Company would be free to offer that particular PV Plant to any
third party investor. The Parties agreed that GPR would undertake to deliver at
signing of the first specific acquisition agreement a rollover Bank Standby
Letter of Credit in the amount of 100% of the equity portion of the purchase
price for the first 5 mega watts, which shall be carried forward for the next
tranches of 5 mega watts each. This letter of credit would be subject to the
condition of the prior occurrence of the (i) grid connection of the solar power
plant as defined in such acquisition agreement and the closing of such
acquisition agreement; and (ii) the provision of long-term debt funding at a
debt-equity ratio of 80:20 or at a higher debt rate and overall terms acceptable
to GPR. The form of the Standby Letter of Credit will be subject to the approval
and acceptance of the bank providing the long term debt. The Parties agreed the
acquisition agreements will be subject to the delivery of long-term debt funding
by the Company of at least 80% under terms and conditions acceptable for GPR.
The Parties further agreed that the Company would deliver specified due
diligence documentation. The Frame Agreement is to remain in effect until
December 31, 2010. Neither Party may assign the Frame Agreement. The Frame
Agreement is governed by Swiss Law, and the jurisdiction of any dispute is
Zurich, Switzerland. On March 2, 2010, the Parties entered into the first of the
acquisition agreement as contemplated under the Frame Agreement for the sale to
GPR of a 25 megawatt power plant, as described above.
8
Subsequent
to the period covered by this Report, the Parties to the Frame Agreement reached
an understanding that they would extend the Frame Agreement through December 31,
2011.
Financing
Agreement with CRG Finance AG
On March
2, 2010, the Company entered into a Financing Agreement (the “Financing
Agreement”) with CRG Finance AG (“CRG Finance”). Pursuant to the Financing
Agreement, CRG Finance loaned the Company a total of 470,000 Euros. In further
consideration for the making of this loan, the Company shall transfer 20% of the
Company’s rights to its net profits to be made in the sale of PSP Italian S.r.l.
to GPR (the “Net Profit Rights”).
CRG
Finance has agreed that upon receipt of its Net Profit Rights, CRG Finance will
reinvest at least 50% of such Net Profit Rights into either new projects of the
Company or shares of the Company, at a purchase price to be mutually agreed
upon. The Company has issued a senior promissory note to CRG Finance in the
amount of 470,000 Euros. The principal of the note, along with interest at an
annual rate of seven and one half percent, is due within thirty days of
demand.
The
Company has utilized these 470,000 Euros in the identification of potential
locations for the development of solar facilities. The Company has identified
locations which the Company believes are commercially viable for the operation
of solar power projects.
Where
You Can Find More Information
The
Company is a “voluntary reporting company.” We expect to continue to file
annual, quarterly and other requisite filings with the U.S. Securities and
Exchange Commission (the “SEC”). Members of the public may read and copy any
materials which we file with the SEC at the SEC’s Public Reference Room at 100 F
Street, N.E., Room 1580, Washington, D.C. 20549. Members of the public may
obtain additional information on the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330. The SEC also maintains an internet site that
contains reports, proxy and information statements, as well as other information
regarding issuers that file electronically with the SEC. This site is located at
http://www.sec.gov.
We
maintain an Internet website at www.primesunpower.com . In addition to news and
other information about our company, we make available on our website our annual
report on Form 10-K, our quarterly reports on Form 10-Q, our current reports on
Form 8-K and all amendments to those reports as soon as reasonably practicable
after we electronically file this material with, or furnish it to, the
Securities and Exchange Commission and copies of our Prime Sun Power Code of
Ethics. The information available on our website is provided for convenience
only and is not incorporated into this Report.
You may
also request a copy of our filings at no cost, by writing or telephoning us
at:
PRIME SUN
POWER INC.
100 Wall
Street, 21st
Floor
New York,
NY 10005
Telephone:
866-523-5551
Attention:
Olivier de Vergnies
Title:
Acting Chief Executive Officer
9
An
investment in our Company involves a risk of loss. You should carefully consider
the risks described below, before you make any investment decision regarding our
Company. Additional risks and uncertainties, including those generally affecting
the market in which we operate or those we currently deem immaterial, may also
impair our business. If any such risks actually materialize, our business,
financial condition and operating results could be adversely affected. In such
case, the trading price of our common stock could decline.
The
following risk factors are not exhaustive and the risks discussed herein do not
purport to be inclusive of all possible risks but are intended only as examples
of possible investment risks.
Risks
Related to Our Business
We
are commencing business as an early stage company under development. We have not
yet commenced revenue generating operations under our new business model and we
have no past performance which can serve as an indicator of our future
potential.
We have
initiated a new business model. We have been developing our business plan and
growing our team, but as of the date of this Report we have not yet completed
our plans. Our most recent financial statements will therefore not provide
sufficient information to assess our future prospects. Our likelihood of success
must be considered in light of all of the risks, expenses and delays inherent in
establishing a new business, including, but not limited to unforeseen expenses,
complications and delays, established competitors and other
factors.
Our
Auditors have issued an opinion expressing uncertainty regarding our ability to
continue as a going concern. If we are not able to continue operations,
investors could lose their entire investment in our company.
We have a
history of operating losses, and may continue to incur operating losses for the
foreseeable future. This raises substantial doubts about our ability to continue
as a going concern. Our auditors issued an opinion in their audit report dated
April 14, 2010 expressing uncertainty about our ability to continue as a going
concern. This means that there is substantial doubt whether we can continue as
an ongoing business without additional financing and/or generating profits from
our operations. If we are unable to continue as a going concern and our Company
fails, investors in our Company could lose their entire investment.
We
need to raise additional capital which may not be available to us or might not
be available on favorable terms.
We will
need additional funds to implement our business plan as our business model
requires significant capital expenditures. We will need substantially more
capital to execute our business plan. Our future capital requirements will
depend on a number of factors, including our ability to grow our revenues and
manage our business. Our growth will depend upon our ability to raise additional
capital, possibly through the issuance of long-term or short-term indebtedness
or the issuance of our equity securities in private or public transactions. If
we are successful in raising equity capital, because of the number and
variability of factors that will determine our use of the capital, our ultimate
use of the proceeds may vary substantially from our current plans. We expect
that our management will have considerable discretion over the use of equity
proceeds.
Indebtedness
may burden us with high interest payments and highly restrictive terms which
could adversely affect our business.
As a
matter of Company policy, our financial plans will limit our debt exposure to a
reasonable level. However, a significant amount of indebtedness could increase
the possibility that we may be unable to generate sufficient revenues to service
the payments on indebtedness, when due, including principal, interest and other
amounts.
The
current global financial market conditions will be relevant to the Company’s
ability to raise funds and make sales in the particular markets in which we will
be active. While the Company believes that the opportunity exists to proceed in
spite of these factors, major market disruptions, recent adverse changes in
global market conditions, and the regulatory climate may affect our business.
10
Currency
conversion and exchange rate volatility could adversely affect our financial
condition.
To the
extent that we need to convert United States dollars into foreign currencies for
our operations, appreciation of the foreign currency against the United States
dollar could have a material adverse effect on our business, financial condition
and results of operations.
Our
sole officer and director, Olivier de Vergnies, has other professional
responsibilities which may divert his time from the operations of the
Company.
Our sole
officer and director, Olivier de Vergnies, has additional professional
responsibilities which could divert management time. Mr. de Vergnies serves in
outside capacities and on other boards from time to time. In particular, Mr. de
Vergnies is presently on the Board of Directors of Rudana Investment Group AG,
4C Controls Inc. and Laureate Resources & Steel Industries Inc. In addition,
Mr. de Vergnies is currently the Chief Operating Officer of Rudana Investment
Group AG. At the present time, Mr. de Vergnies is spending approximately 75% of
his professional time on Company activities. It is the Company’s current plan to
raise adequate financing to commence operations, and then have Mr. de Vergnies
continue to spend approximately 75% of his time on Company activities, although
the Company intends that these activities will change as additional officers and
directors are added. The Company intends to retain a full-time Chief Operating
Officer and project management team to run the daily operations of the
Company.
Mr.
de Vergnies’ affiliation with Rudana Investment Group AG, the Company’s majority
shareholder, may create potential conflicts of interest.
Mr. de
Vergnies is presently a member of the Board of Directors and the Chief Operating
Officer of Rudana Investment Group AG. The Company acknowledges that these
positions may cause conflicts of interest between Mr. de Vergnies’
responsibilities to the Company’s majority shareholder, Rudana Investment Group
AG, and his responsibilities to the Company’s other shareholders. The Company
intends to appoint independent directors in the near future.
Our
strategy for growth may include joint ventures, strategic alliances and mergers
and acquisitions, which could be difficult to manage.
The
successful execution of the our growth strategy may depend on many factors,
including identifying suitable companies, negotiating acceptable terms,
successfully consummating the corporate relationships and obtaining the required
financing on acceptable terms. We may be exposed to risks that we may
incorrectly assess new businesses and technologies. We could face difficulties
and unexpected costs during and after the establishment of corporate
relationships.
Acquisitions
may be foreign acquisitions which would add additional risks including
political, regulatory and economic risks related to specific countries as well
as currency risks.
We
may be exposed to tax audits.
Our U.S.
federal and state tax returns may be audited by the U.S. Internal Revenue
Service (the “IRS”). An audit may result in the challenge and disallowance of
deductions claimed by us. Further, an audit could lead to an audit of one or
more of our investors and ultimately result in attempts to adjust investors’ tax
returns with respect to items unrelated to us. We are unable to guarantee the
deductibility of any item that we acquire. We will claim all deductions for
federal and state income tax purposes which we reasonably believe that we are
entitled to claim. In particular, we will elect to treat as an expense for tax
purposes all interest, management fees, taxes and insurance. The IRS may
disallow any of the various elements used in calculating our expenses, thereby
reducing federal income tax benefits of an investment. To the extent that any
challenge or disallowance is raised in connection with a tax return filed by an
individual shareholder, the cost of any audit and/or litigation resulting there
from would be born solely by the affected shareholder. In the event the IRS
should disallow any of our deductions, the directors, in their sole discretion,
will decide whether to contest such disallowance. No assurance can be given that
in the event of such a contest the deductions would be sustained by the courts.
If the disallowance of any deductions results in an underpayment of tax,
investors could also be responsible for interest on the
underpayments.
11
Because
of the nature of our business and the areas in which we operate, our customers
and distributors may need approval from foreign governments.
Our
customers or distributors will be responsible for obtaining local regulatory
approval from the governments in the countries in which they operate. If these
regional distributors are not successful in obtaining the necessary approvals,
we will not be able to distribute in those regions. Local and in some cases
central governmental approval for the installation and the connection of PV
power plants is a fundamental pre-condition for us to commence generating
revenues. Any delay or failure of such approval may (i) result in a substantial
delay for generating revenues or (ii) block us entirely from generating
revenues.
Should
GPR suffer financial or other setbacks, the Company could experience significant
losses in connection with the Acquisition Agreement.
Subsequent
to the period covered by this Report (on March 2, 2010), the Company entered
into the Acquisition Agreement with GPR. Pursuant to the Acquisition Agreement,
the Company has agreed to sell to GPR all of the shares of a wholly-owned
Italian subsidiary of the Company called PSP Italia S.r.l. The purchase price
for this transaction shall be released by GPR to the Company incrementally on
the achievement of certain milestones, with respect to connection of the solar
power plant to the Italian National Grid as enumerated in the Acquisition
Agreement. However, should GPR suffer financial or other set-backs, and is no
longer able to pay its agreed purchase price, the Company will need to make
other sales arrangements. The Company may not be able to identify another buyer
on the same, or similar, terms as those agreed with GPR. The Company could lose
all of its investment in this transaction.
Should
the Company fail to get GPR financing, the transaction contemplated by the
Acquisition Agreement may not proceed.
The
Acquisition Agreement requires the Company to facilitate and arrange for
long-term debt financing of at least 80% of the purchase price to be paid by
GPR. Without such financing, the transaction might not proceed as presently
contemplated.
The
financing loan of 470,000 Euros which the Company has received from CRG Finance
AG will not be adequate for the Company to proceed with the planned construction
of solar power plants; should the Company fail to find additional financing, the
Company will not be able to proceed with its planned projects.
The
Company will need to raise additional funds to proceed with the transactions
contemplated by the Acquisition Agreement. The Company has utilized all of the
loan of 470,000 Euros in the identification of potential locations for the
development of solar facilities. The Company has identified locations which the
Company believes are commercially viable for the operation of solar power
projects.
The
Company will require no less than $2,000,000 in additional funding in order to
conduct proposed operations for the next year. Should the Company fail to raise
such funds, the Company will not be able to commence construction of the solar
power plants. In order to commence construction on all of the Company’s
currently contemplated projects, the Company would be required to raise
15,000,000 Euros ($19,218,450) to acquire definitive licenses to own and operate
solar parks, and then organize construction bridge loans to pay for the
construction of the solar parks.
12
The
Company has entered into an agreement to acquire adequate liability insurance,
which may be difficult for the Company to accomplish.
Pursuant
to the Acquisition Agreement, the Company will be required to maintain liability
insurance in the amount of at least $5,000,000. Such insurance may be difficult
to acquire at an affordable rate, and the Company has not yet received any
assurances that such insurance will be available. Should the Company fail to get
adequate liability insurance, the Company will be in breach of the Acquisition
Agreement.
The
Company has agreed to construct a solar power plant that will continue to remain
operational for twenty years, and complying with this provision of the
Acquisition Agreement may be challenging.
Pursuant
to the Acquisition Agreement, the Company has represented and warranted that the
structure of the solar power plant shall remain in viable, suitable and useable
condition for a time period of at least twenty years from the date of connection
to the electrical grid, and that the solar power plant will produce electric
power at the agreed capacity for a time period of at least twenty years. The
Company has agreed that it shall be liable for any defect and damage to the
solar power plant or drop in power production. The Company is also representing
and warranting that spare parts for the solar power plant will be available for
a period of twenty years, and that all relevant licenses relating to the solar
power plant will be valid for a period of twenty years. While the Company
intends to satisfy these liabilities, representations and warranties by
obtaining back-to-back representations and warranties regarding the same matters
from established and reputable subcontractors who will engineer and construct
the power plant, it is possible that circumstances beyond the Company’s control
could cause a breach of such agreements.
Existing
regulations, and changes to such regulations, may present technical,
regulatory and economic barriers to the purchase and use of solar power
products.
Installation
of solar power systems are subject to oversight and regulation in accordance
with national and local ordinances, building codes, zoning, environmental
protection regulation, utility interconnection requirements for metering and
other rules and regulations. We must insure that systems comply with varying
standards.
At the
present time, the Company is planning on commencing operations in Italy. The
Company will require approval from certain government authorities in order to
connect to Italy’s National Electricity Transmission Grid. The generation of
electricity in Italy is regulated by the Autorità per l'energia elettrica e il
gas (the Italian Regulatory Authority for Electricity and Gas). Changes in
government regulations could reduce or eliminate our ability to profitably
operate.
The
price and availability of land on which to construct solar parks will impact our
ability to commence operations.
In order
to commence operations of a solar park, the Company will need to acquire or
lease suitable land. The Company may have to pay significant premiums in order
to persuade land owners or landlords to permit the Company to utilize suitable
land for purposes of solar energy production. There is inherent uncertainty
whether sufficient suitable land will be available to the Company at reasonable
prices to acquire or lease. If the Company cannot acquire or lease land which is
suitable for solar energy production, the Company’s business model could be
significantly impaired.
Reductions
in Italian incentives for the solar industry may adversely impact our
business.
Once an
operational solar power plant has been constructed in Italy, the Company will
require the approval of the Gestore dei Servizi Elettrici (GSE) in order to
receive production incentives for solar power. The GSE is a publicly-owned
company which promotes and supports renewable energy in Italy. Over the past
five years, Italy has had some of the world’s most generous incentives for the
construction of solar power plants, and continues to have relatively high
incentives. Cuts in these incentives could impact the profitability of the
Company.
13
Risks
Related To Investing In Our Common Shares
We
do not anticipate paying cash dividends.
We do not
anticipate paying cash dividends in the foreseeable future. We intend to retain
any cash flow we generate for investment in our business. Accordingly, our
common stock may not be suitable for investors who are seeking current income
from dividends. Any determination to pay dividends on our common stock in the
future will be at the discretion of our board of directors.
Our
common shares trade on the Over-the-Counter-Bulletin-Board quotation system.
Trading in our shares has historically been subject to very low volumes and wide
disparity in pricing. Investors may not be able to sell or trade their common
shares because of thin volume and volatile pricing with the consequence that
they may have to hold your shares for an indefinite period of time.
There
are legal restrictions on the resale of the common shares offered, including
penny stock regulations under the U.S. Federal Securities Laws.
We
anticipate that our common stock will continue to be subject to the penny stock
rules under the Securities Exchange Act of 1934, as amended. These rules
regulate broker/dealer practices for transactions in "penny stocks." Penny
stocks are generally equity securities with a price of less than $5.00. The
penny stock rules require broker/dealers to deliver a standardized risk
disclosure document that provides information about penny stocks and the nature
and level of risks in the penny stock market. The broker/dealer must also
provide the customer with current bid and offer quotations for the penny stock,
the compensation of the broker/dealer and its salesperson and monthly account
statements showing the market value of each penny stock held in the customer's
account. The bid and offer quotations and the broker/dealer and salesperson
compensation information must be given to the customer orally or in writing
prior to completing the transaction and must be given to the customer in writing
before or with the customer's confirmation. In addition, the penny stock rules
require that prior to a transaction, the broker and/or dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written agreement to the transaction.
The transaction costs associated with penny stocks are high, reducing the number
of broker-dealers who may be willing to engage in the trading of our shares.
These additional penny stock disclosure requirements are burdensome and may
reduce all of the trading activity in the market for our common stock. As long
as the common stock is subject to the penny stock rules, our shareholders may
find it more difficult to sell their shares.
If
we raise additional funds through the issuance of equity or convertible debt
securities, your ownership will be diluted.
If we
raise additional funds through the issuance of equity or convertible debt
securities, the percentage ownership held by existing shareholders will be
reduced, new securities may contain certain rights, preferences or privileges
that are senior to those of our common shares. Furthermore, any additional
equity financing may be dilutive to shareholders, and debt financing, if
available, may involve restrictive covenants, which may limit our operating
flexibility with respect to certain business matters.
Grants
of stock options and other rights to our employees may dilute your stock
ownership.
We plan
to attract and retain employees in part by offering stock options and other
purchase rights for a significant number of common shares. We have granted stock
options to certain officers and directors. The issuance of common shares
pursuant to these options, and options issued in the future, will have the
effect of reducing the percentage of ownership in us of our then existing
shareholders.
14
Our
stock price may be volatile and market movements may adversely affect your
investment.
The
market price of our stock may fluctuate substantially due to a variety of
factors, many of which are beyond our control. The stock markets in general have
experienced substantial volatility that has often been unrelated to the
operating performance of particular companies. These broad market fluctuations
may adversely affect the market price of our stock. Future sales of our common
shares by our shareholders could depress the price of our stock.
The
Company is not required to file Current and Periodic Reports with the U.S.
Securities and Exchange Commission and the Company’s status as a voluntary filer
may have consequences for investors’ ability to access relevant and timely
information about the Company.
The
Company is a “voluntary filer” with the U.S. Securities and Exchange Commission.
This means that the Company is not required to file Current and Periodic Reports
with the U.S. Securities and Exchange Commission. The Company is not a fully
reporting company that is subject to review under Section 408 of the
Sarbanes-Oxley Act of 2002. Furthermore, the Company is not subject to the going
private rules and certain tender offer regulations, and the beneficial holders
of the Company’s securities do not need to report on acquisitions or depositions
of the Company’s securities or their plans regarding their influence and control
over the Company. Therefore the Company’s status a voluntary filer reduces
investors’ rights to access significant information regarding the Company and
its controlling shareholders.
The
Company’s status as a voluntary filer could lead to its removal from the over
the counter bulletin board.
The
Company’s voluntary filer status may lead to its removal from the over the
counter bulletin board, as Rule 6530 of the Financial Industry Regulatory
Authority provides that issuers must be required to file reports pursuant to
Section 13 or 15(d) of the Securities and Exchange Act of 1934 in order to
remain listed.
ITEM 1B: UNRESOLVED STAFF COMMENTS
ITEM 2: PROPERTIES
The
Company does not own any real estate or other property. The Company does not
plan on investing directly or indirectly in real estate in the near future. As
of the date of this Report, the Company is currently utilizing office space at
100 Wall Street, New York, NY 10005. There is no rent charged for this space,
which is being temporarily provided to the Company by its counsel. We intend to
move to new offices for our corporate headquarters in the foreseeable
future.
ITEM 3: LEGAL PROCEEDINGS
The
Company is not, and has not been during the period covered by this Report, a
party to any legal proceedings.
Subsequent
to the period covered by this Report, on February 25, 2010, the Company received
notification from Sunpower Corporation, a Delaware corporation (“SunCorp”),
demanding that Prime Sun Power Inc. cease and desist from using the words “Sun
Power” in its name. SunCorp identified several U.S. and International trademark
registrations of its “Sunpower” mark. The Company subsequently received a cease
and desist letter from SunCorp legal counsel on April 1, 2010 asserting rights
to the name “Sun Power.” The Company is assessing its response.
ITEM 4: RESERVED
Not
Applicable.
15
PART
II
ITEM 5: MARKET FOR REGISTRANT’S COMMON
EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES
(a)
Market Information.
Our
shares are traded on the over-the-counter bulletin board operated by the
National Association of Securities Dealers, Inc. under the symbol “PSPW”. Prior
to April 15, 2008 our common stock traded on the over-the-counter bulletin board
under the symbol “AFIC”. The following table sets forth for the periods
indicated the high and low bid information for the Company’s common stock in
U.S. Dollars. These quotations reflect only inter dealer prices, without retail
mark up, mark down or commissions and may not represent actual transactions. The
following prices reflect the effects of the Company’s 6 for 1 stock dividend
declared on January 22, 2008 and paid to the shareholders of record of the
Company as of February 4, 2008.
Common Stock
|
||||||||
High
|
Low
|
|||||||
Quarter
Ended December 31, 2009
|
.25
|
.08
|
||||||
Quarter
Ended September 30, 2009
|
.35
|
.07
|
||||||
Quarter
Ended June 30, 2009
|
1.75
|
.13
|
||||||
Quarter
Ended March 31, 2009
|
.55
|
.15
|
||||||
Quarter
Ended December 31, 2008
|
2.55
|
.30
|
||||||
Quarter
Ended September 30, 2008
|
5.00
|
1.1
|
||||||
Quarter
Ended June 30, 2008
|
3.03
|
1.26
|
||||||
Quarter
Ended March 31, 2008
|
9.00
|
.52
|
(b)
Holders.
At April
8, 2010, there were ten stockholders of record of the Company’s common
stock.
(c)
Dividends.
On
January 22, 2008, the Board of Directors declared the payment of a stock
dividend, approving the payment of such dividend to all of the shareholders of
record of the Company as of the record date of February 4, 2008. Each
shareholder received six additional shares of the Company’s common stock for
each one share of the Company’s common stock which they held on the record date.
Following payment of the stock dividend, the issued and outstanding share
ownership of the Company increased from 5,730,700 shares of Company common stock
to 40,114,900 shares of common stock.
During
the period covered by this Report, we have not declared or paid cash dividends.
The Company does not intend to pay cash dividends on its common stock in the
foreseeable future. We anticipate retaining any earning for use in our continued
development. We are not subject to any restrictions respecting the payment of
dividends, except that they may not be paid to render us insolvent.
(d)
Securities authorized for issuance under equity compensation plans
We do not
have any equity compensation plans and accordingly we have no securities
authorized for issuance thereunder.
16
Recent
Sales of Unregistered Securities; Use of Proceeds from Registered
Securities
Warrant issued to Synergy
Investments & Finance Holding Limited
On May
10, 2008, the Company issued a warrant to Synergy Investments & Finance
Holding Limited (referred to herein as “Synergy”) in consideration for
international corporate development services rendered on behalf of the Company.
On May 22, 2008, the Company amended the First Warrant and issued a second
warrant to Synergy (the “Second Warrant” and together with the First Warrant,
the “Warrants”). The Company intends to amalgamate and amend the Warrants. The
Warrants will have an exercise term of 3 years and will become exercisable only
for the purchase of a number of shares equal to (i) 5% of the amount of capital
raised by the Company from introductions made by Synergy, divided by (ii) the
original exercise price of $1.62 per share. All other terms and conditions of
the Warrants shall remain the same. As a result of the contingent nature of the
vesting of the Synergy warrant, no expense has been recognized. We cannot
guarantee that Synergy will be successful in assisting us to raise capital for
our operations. As of the date of this Report, Synergy has not raised any
capital for the Company and as such no rights to purchase any shares under the
terms of the Synergy Warrant have yet been granted. Synergy has not made any
firm commitment to provide financing to the Company. The Company’s agreement
with Synergy is nominally for a period of three years, however, the agreement
may be terminated prior to that period so long as the Company compensates
Synergy for any introductions of capital which Synergy has made.
We will
need to raise additional capital to implement our new business plan and continue
operations. We are seeking alternative sources of financing, through private
placement of securities and loans from our shareholders in order for us to
maintain our operations. We cannot guarantee that we will be successful in
raising additional cash resources for our operations or that we will stay in
business after our new business plan has commenced.
The
transaction described above was made in reliance upon the exemption from
Securities Act registration provided by Section 4(2) of the U.S. Securities Act,
and the rules and regulations promulgated thereunder, including Rule 903 of
Regulation S. Synergy is not a U.S. person (as such term is defined in Rule
902(k) of Regulation S) and this transaction was entered into outside of the
United States.
ITEM 6: SELECTED FINANCIAL DATA
Pursuant
to permissive authority under Regulation S-K, Rule 301, we have omitted Selected
Financial Data.
17
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The
following discussion of the financial condition and results of operations of
Prime Sun Power Inc. should be read in conjunction with the financial statements
and the related notes thereto included elsewhere in this Report. This Report
contains certain forward-looking statements and the Company's future operating
results could differ materially from those discussed herein. Certain statements
contained in this Report, including, without limitation, statements containing
the words “believes”, “anticipates,” “expects” and the like, constitute
“forward-looking statements” within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”). However, as the Company intends to issue “penny
stock,” as such term is defined in Rule 3a51-1 promulgated under the Exchange
Act, the Company is ineligible to rely on these safe harbor provisions. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements of
the Company to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Given
these uncertainties, readers are cautioned not to place undue reliance on such
forward-looking statements. The Company disclaims any obligation to update any
such factors or to announce publicly the results of any revisions of the
forward-looking statements contained or incorporated by reference herein to
reflect future events or developments, except as required by the Exchange Act.
Plan
of Operation
The
Company is a development stage business planning to develop and sell solar
photovoltaic power and other renewable energies. Although our Company has a new
business purpose, we have not commenced any revenue generating operations under
the new business model. We anticipate that we will do business mainly in Europe,
and that our Company will operate photovoltaic energy production parks in which
solar electrical power is produced for sale to the local electrical grid. We
intend to enter into strategic alliances with other companies and organizations
engaged in the manufacture and/or assembly of solar modules.
The
Company presently faces a number of challenges, including raising capital,
indentifying commercially viable photovoltaic power plant locations, obtaining
rights and licenses for development, interacting with local governments,
indentifying and entering into agreements with appropriate subcontractors for
the development and operation of solar parks, and hiring and retaining qualified
staff.
Revenues
During
the fiscal year ended December 31, 2009, the Company had no revenues from
operations.
Expenses
The Net
Cash Used in Operating Activities, which totaled approximately $270,892 for the
year ended December 31, 2009, as opposed to approximately $362,945 for the year
ended December 31, 2008 is also indicative of the commencement of the Company’s
business operations. Since inception of the Company, we have incurred aggregate
total expenses of $2,840,903, including total expenses of $1,992,470 during the
twelve months ended December 31, 2009 and $697,924 during the twelve months
ended December 31, 2008. The Company’s liabilities are expected to grow
considerably during the foreseeable future as the Company continues the
development of its new business model compared to prior periods in which the
Company had no operations.
18
Our total
expenses for the year ended December 31, 2009 of $1,992,470 consisted primarily
of general and administrative expenses of $57,362, professional fees of
$386,379, consulting fees & director fees of $112,308 and personnel costs of
$390,338. The professional fees included $32,240 for accounting, $282,805 for
legal fees consisting primarily of fees to negotiate land grants, assure legal
and regulatory compliance and obtain international corporate legal advice. The
consulting fees included $57,242 for an engineering study and director fees. The
personnel costs include $58,009 for the COO and $212,052 for the Chief
Technology Officer. Interest accrued on related party transactions is
$46,328.
Liquidity
and capital resources
As of the
date of this Report, we have not yet generated any revenues from our business
operations. Since inception, the Company has incurred total expenses of
$2,840,903, including total expenses of $1,992,470 during the twelve months
ended December 31, 2009.
Our
consolidated cash balance at December 31, 2009 was $14,051. As of December 31,
2009, our total assets consisted of $14,051, which was an increase from the
Company’s total assets of $6,629 at December 31, 2008. As of December 31, 2009,
the Company’s total liabilities were $2,474,417, which increased from $628,633
as of December 31, 2008.
During
the twelve months ended December 31, 2009 and through the date of this Report,
our primary source of capital has been loans from Rudana Investment Group AG,
the majority shareholder of our Company. Our pre-operational activities to date
have consumed substantial amounts of cash. Our negative cash flow from
operations is expected to continue and to accelerate in the foreseeable future
as the Company invests in capital expenditures to commence
operations.
For
purposes of operations during 2009, the Company relied upon shareholder loans
from Rudana Investment Group AG, the Company’s majority shareholder. The total
amount of shareholder loans during 2009 was $700,668. To date, the Company has
received loans in aggregate of $999,001 from Rudana (the “Shareholder Loans”).
The Company has used the proceeds from the Shareholder Loans for general
corporate purposes. The Shareholder Loans have an interest rate of seven and a
half percent (7.5%) per annum, which together with the principal amount shall be
repayable thirty (30) days after demand by Rudana. In connection with the
Shareholder Loans, the Company intends to execute notes setting forth the terms
thereof.
On May
10, 2008, the Company issued a warrant to Synergy Investments & Finance
Holding Limited (referred to herein as “Synergy”) in consideration for
international corporate development services rendered on behalf of the Company.
On May 22, 2008, the Company amended the First Warrant and issued a second
warrant to Synergy (the “Second Warrant” and together with the First Warrant,
the “Warrants”). The Company intends to amalgamate and amend the Warrants. The
Warrants will have an exercise term of 3 years and will become exercisable only
for the purchase of a number of shares equal to (i) 5% of the amount of capital
raised by the Company from introductions made by Synergy, divided by (ii) the
original exercise price of $1.62 per share. All other terms and conditions of
the Warrants shall remain the same.
We will
need to raise additional capital to implement our new business plan and continue
operations for any length of time. We are seeking alternative sources of
financing, through private placement of securities and loans from our
shareholders in order for us to maintain our operations. We cannot guarantee
that we will be successful in raising additional cash resources for our
operations. Rudana Investment Group AG, the majority shareholder of our Company,
has loaned the Company funds for operations in the past, and has indicated that
it will continue to loan funds as their financial circumstances may permit.
Rudana, however, is under no obligation to make additional loans in the
future.
The
Company will require no less than $2,000,000 in additional funding in order to
conduct proposed operations for the next year. Should the Company fail to raise
such funds, the Company will be unable to commence construction of the solar
power plants. In order to commence construction on all of the Company’s
currently contemplated projects, the Company would be required to raise
15,000,000 Euros ($19,218,450) to acquire definitive licenses to own and operate
solar parks, and then organize construction bridge loans to pay for the
construction of the solar parks.
19
Project
Acquisition by GPR Global Power Resources Ltd.
On
March 2, 2010, the Company entered into a project acquisition agreement (the
“Acquisition Agreement”) with GPR Global Power Resources Ltd., a Company formed
in Switzerland (“GPR,” and together with the Company, the
“Parties”). Pursuant to the Acquisition Agreement, the Company has
agreed to sell to GPR all of the shares of a wholly-owned Italian subsidiary of
the Company called PSP Italia S.r.l. This subsidiary expects to
develop a turnkey alternative energy power plant, utilizing solar
power. The purchase price for the shares of PSP Italia S.r.l. shall
be a minimum of 4.05 million Euros per mega watt of power produced by the solar
power plant. The Acquisition Agreement shall cover up to a total of
twenty five mega watts of power, for a total potential sales price of 101.25
million Euros.
The
purchase price for this transaction shall be released by GPR to the Company
incrementally on each date on which the Company shall connect five mega watts of
the solar power plant to the Italian National Grid as enumerated in the
Acquisition Agreement. Thus, payment shall be due to the Company in
five equal tranches; for each five mega watts connected, a payment of 20.25
million Euros shall be due and payable to the Company. GPR shall make
each tranche of payments within ninety days of the date on which the Company
shall connect five mega watts of power to the electrical grid. GPR
shall have the right to withhold 10% of the purchase price due to the Company
for up to six months as a security for the fulfillment of the Company’s
obligations. The purchase price that GPR shall be required to pay may
be reduced by the amount of certain cost savings that GPR may assist the Company
in making or as a result of certain taxes GPR may be required to pay, in each
case as set forth in the Acquisition Agreement. Furthermore, the Parties have
agreed that certain specifications concerning this project to be included in the
annexes to the Acquisition Agreement have not yet been set, and will be mutually
agreed upon by the Parties in the immediate future. The Company and
GPR will not finalize these annexes until such time as GPR delivers the Bank
Standby Letter described below.
The
Acquisition Agreement requires the Company to facilitate and arrange for
long-term debt financing of at least 80% of the purchase price to be paid by
GPR. The terms of the Acquisition Agreement are subject to review and
approval by the relevant third party financing institution. The
Acquisition Agreement requires GPR to finance the remainder of the purchase
price, and to deliver a Bank Standby Letter of Credit in an amount equal to 20%
of the first payment tranche that will be due (4.05 million
Euros).
The
Company shall be responsible for all construction costs for the solar power
plant, including costs for sub contractors. At the present time, the
Company is in discussions with the EPC contractors and module suppliers to
obtain the final binding offers. The Company intends to commence
construction of the solar power plant in the fourth quarter of 2010 upon
completion of the required fund raising.
Once
construction commences, the Company estimates that it will take approximately
three to four months to complete the 25 mega watt solar power
plant. The Company currently estimates that the costs of production
per mega watt will be 3.6 million Euros.
Subsequent
to the period covered by this Report, the Parties to the Frame Agreement reached
an understanding that they would extend the Frame Agreement through December 31,
2011.
Project
San Paolo and Project Puglia
On April
15, 2009, the Company entered into four agreements to obtain licenses and land
lease call option rights for the development of certain photovoltaic power plant
projects in Italy. These agreements included two Transfer Agreements:
one for a project located in San Paolo, Italy (referred to herein as “Project
San Paolo”) and one for a project located in Foggia/Apricena, Italy (referred to
herein as “Project Puglia” and together with Project San Paolo, the
“Projects”). Both of the Projects were located in the Puglia region
of Italy.
Pursuant
to the Transfer Agreements for the Projects, the Company planned to acquire
option contracts from another party (referred to herein as the “Transferor”), as
acquired from various landlords. The Company intended to acquire or lease
certain land at specified prices for the purpose of constructing and installing
photovoltaic plants. The Transferor was expected to assist the
Company to apply for certain key licenses. The Company agreed to pay
the Transferor certain transaction fees upon the performance of certain
conditions by the Transferor. The Projects were expected to collectively cover a
total installed capacity of up to 83 MW (megawatts).
20
In
addition, the Company entered into two Advisory Agreements, one for each of
Project San Paolo and Project Puglia. Pursuant to these agreements,
it was planned that a local advisor would assist the Company in the development
of each of the Projects. The Company was to pay the advisor certain
success fees related to the aggregate building and installing costs of the PV
Plants upon the achievement of certain milestones.
Project
San Paolo and Project Puglia have terminated as the Company was unable
to obtain the necessary licenses to proceed with the Projects. All of the
applicable agreements pertaining to the Projects have terminated in accordance
with their terms. Prior to the
cancellation of the Projects, that Company’s largest shareholder, Rudana
Investment Group AG, advanced 150,000 Euros towards each of the two payments
required under the Transfer Agreements related to Project San Paolo and Project
Puglia, for a total of 300,000 Euros ($428,980). The advance of
these payments on behalf of the Company by Rudana Investment Group AG has been
recorded as loan. The aggregate amounts of 300,000 Euros ($428,980)
paid in respect of the Transfer Agreement have been written
off.
We have
not yet commenced active operations. As of December 31, 2008 and
December 31, 2009, our Company had no operations, no revenues and substantially
no assets. As such, comparative information for such periods would
not assist the reader to understand our business model and we have therefore
omitted such information from this discussion.
Plant
and Equipment
The
Company has not yet determined its anticipated spending on plant and equipment
for the year ending December 31, 2010.
Employees
As of
December 31, 2009, the Company had only one employee: Olivier de Vergnies, the
Company’s Acting Chief Executive Officer and Acting Chief Financial
Officer. The Company has not yet determined its anticipated employee
and staff needs for the year ending December 31, 2010.
Effective
as of November 9, 2009, Dr. Cesare Boffa resigned as a member of the Company’s
Board of Directors. Dr. Boffa has also resigned as the Company’s
Chief Technology Officer. He will continue to serve the Company as a
consultant on an as-need basis.
The
Company’s planned management structure is as follows:
21
Research
and Development
We have
not yet determined our anticipated spending on research and development
activities for the year ending December 31, 2009. Research and development
efforts are expected to be overseen by our Chief Technology Officer, Cesare
Boffa.
Off
Balance Sheet Arrangements
As of
December 31, 2009, we did not have any off balance sheet arrangements that have
or are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital
resources.
ITEM 7A: QUANITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
We did
not have any operations which implicated market risk as of the end of the latest
fiscal year. We expect that our planned operations will engender
market risk, particularly with respect to interest rate risk, foreign currency
exchange rate risk, commodity price risk (in regard to our prospective customer
base), and other relevant market risks, such as equity price risk. We
intend to implement an analysis and assessment program which will on a regular
basis determine exposures of our Company to such risks. We expect to
report the results of all such quantitative and qualitative risk assessments
prior to entering into any material agreements, and on a regular monthly and
annual basis to our Audit Committee so that responsive risk management measures
can be discussed and actions taken to the extent reasonably feasible.
22
ITEM
8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Financial
Statements
Report
of Independent Registered Public Accounting Firm (2009)
|
F-2
|
||
Report
of Independent Registered Public Accounting Firm (2006)
|
F-3
|
||
Balance
Sheets
|
F-4
|
||
Statements
of Operations
|
F-5
|
||
Statements
of Stockholders' Equity (Deficiency)
|
F-6
|
||
Statements
of Cash Flows
|
F-7
|
||
Notes
to Financial Statements
|
F-8
|
F-1
Paritz
& Company, P.A.
|
15
Warren Street, Suite 25
Hackensack,
New Jersey 07601
(201)342-7753
Fax:
(201) 342-7598
E-Mail:
paritz @paritz.com
|
Certified
Public Accountants
|
REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
Board of
Directors
Prime Sun
Power Inc.
(A
Development Stage Company)
New York,
New York
We have
audited the accompanying balance sheets of Prime Sun Power Inc. (A Development
Stage Company) as of December 31, 2009 and 2008 and the related statements of
operations, changes in stockholders’ deficiency and cash flows for the years
then ended and the period from inception (December 18, 2002) to December 31,
2009. We did not audit the statements of operations and changes in
stockholders’ deficiency of the Company from inception (December 18, 2002) to
December 31, 2006. Those statements were audited by other auditors
whose report has been furnished to us, and our opinion insofar as it relates to
amounts included for that period is based solely on the report of the other
auditors. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. The
Company is not 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 includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. An audit also includes 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 Prime Sun Power Inc., (A
Development Stage Company) as of December 31, 2009 and 2008, and the results of
its operations and its cash flows for the years then ended and, based on the
report of the other auditors, for the period from inception (December 18, 2002)
to December 31, 2008, in conformity with accounting principles generally
accepted in the United States of America.
As
discussed in Note 1, the accompanying financial statements have been prepared
assuming the Company will continue as a going concern. The ability of
the Company to continue as a going concern and to emerge from the development
stage is dependent upon, among other things, its successful execution of its
plan of operations and ability to raise additional financing. There
is no guarantee that the Company will be able to raise additional capital or
sell any of its products or services at a profit. In addition, as of
December 31, 2009 the Company has a stockholders’ deficiency and negative
working capital of $2,460,366. These factors, among others, raise
substantial doubt regarding the Company’s ability to continue as a going
concern. The accompanying financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/
Paritz & Company, P.A.
Paritz
& Company, P.A.
Hackensack,
New Jersey
April 14,
2010
F-2
Chang
Lee LLP
|
Chartered
Accountants
|
505
- 815 Hornby Street
Vancouver,
B.C, V6Z 2E6
Tel:
604-687-3776
Fax:
604-688-3373
E-mail:
info@changleellp.com
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors and Stockholders of
PRIME
SUN POWER INC.
(formerly
ATM FINANCIAL CORP.)
(A
development stage company)
We have
audited the balance sheets of Prime Sun Power Inc. (formerly ATM Financial
Corp.) (the
“Company”) (a development stage company) as at December 31,
2006 and 2005 and the related statements of operations, stockholders’ equity,
and cash flows for the years ended December 31, 2006 and 2005 and for the period
from December 18, 2002 (inception) to December 31, 2006. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform an audit to obtain reasonable assurance whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes 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, these financial statements present fairly, in all material respects,
the financial position of the Company as at December 31, 2006 and 2005 and the
results of its operations and its cash flows for the years then ended, and for
the period from December 18, 2002 (inception) to December 31, 2006 in conformity
with generally accepted accounting principles in the United States of
America.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 1 to the financial
statements, the Company is a development stage company since inception on
December 18, 2002 and has incurred significant recurring net losses since then
resulting in a substantial accumulated deficit, which raise substantial doubt
about its ability to continue as a going concern. The Company is devoting
substantially all of its present efforts in establishing its business.
Management’s plans regarding the matters that raise substantial doubt about the
Company’s ability to continue as a going concern are also disclosed in Note 1 to
the financial statements. The ability to meet its future financing requirements
and the success of future operations cannot be determined at this time. These
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
Vancouver,
Canada
|
|
March
19, 2007
|
Chartered
Accountants
|
F-3
Prime Sun
Power Inc.
(A
development stage company)
Balance
Sheets
December 31,
|
December 31,
|
|||||||
2009
|
2008
|
|||||||
ASSETS
|
||||||||
Current
Assets
|
||||||||
Cash
|
$
|
14,051
|
$
|
6,629
|
||||
Total
Current Assets and Total Assets
|
$
|
14,051
|
$
|
6,629
|
||||
LIABILITIES
AND STOCKHOLDERS' DEFICIENCY
|
||||||||
Current
Liabilities
|
||||||||
Accounts
payable and accrued liabilities
|
$
|
994,573
|
$
|
330,300
|
||||
Note
payable - finance company
|
414,626
|
|||||||
Accrued
management services - related party
|
416,667
|
|||||||
Accrued
Interest - related party
|
57,550
|
|||||||
Loan
from shareholder
|
591,001
|
298,333
|
||||||
Total
Current Liabilities and Total Liabilities
|
2,474,417
|
628,633
|
||||||
Stockholders'
Deficiency:
|
||||||||
Common
Stock, par value $.0001 per share 100,000,000 shares authorized,
40,114,900 shares issues and outstanding at December 31, 2009 and December
31, 2008
|
4,011
|
4,011
|
||||||
Additional
paid in capital
|
376,526
|
222,418
|
||||||
Deficit
accumulated during development stage
|
(2,840,903
|
)
|
(848,433
|
)
|
||||
Total
Stockholders' Deficiency
|
(2,460,366
|
)
|
(622,004
|
)
|
||||
Total
Liabilities and Stockholders' Deficiency
|
$
|
14,051
|
$
|
6,629
|
See Notes
to Financial Statements
F-4
Prime Sun
Power Inc.
(A
development stage company)
Statement
of Operations
Accumulated from
|
||||||||||||
December 18, 2002
|
||||||||||||
Year Ended
|
(Date of Inception)
|
|||||||||||
December, 31
|
to December 31,
|
|||||||||||
2009
|
2008
|
2009
|
||||||||||
Revenue
|
-
|
-
|
-
|
|||||||||
Consulting
and director fees
|
112,308
|
106,664
|
245,799
|
|||||||||
Professional
fees
|
386,379
|
272,349
|
717,820
|
|||||||||
Management
services - related party
|
416,667
|
-
|
416,667
|
|||||||||
Personnel
costs
|
390,338
|
196,872
|
587,210
|
|||||||||
General
& administrative
|
57,362
|
57,858
|
192,960
|
|||||||||
Land
licensing and development fees
|
428,980
|
428,980
|
||||||||||
Interest
expense
|
46,328
|
11,222
|
58,576
|
|||||||||
Gain
on debt settlement
|
(14,176
|
)
|
||||||||||
Non-cash
compensation
|
154,108
|
52,959
|
207,067
|
|||||||||
Total
Expenses (Income)
|
1,992,470
|
697,924
|
2,840,903
|
|||||||||
Net
Loss
|
$
|
(1,992,470
|
)
|
$
|
(697,924
|
)
|
$
|
(2,840,903
|
)
|
|||
Basic
and Diluted Loss Per Share
|
$
|
(0.05
|
)
|
$
|
(0.02
|
)
|
||||||
Weighted
Average Shares Outstanding
|
40,114,900
|
40,114,900
|
Share
data has been adjusted to reflect the stock dividend effective February 4,
2008
See Notes
to Financial Statements
F-5
(A
development stage company)
Statement
of Stockholders' Deficiency
For the
Period from December 18, 2002 (Date of Inception) to December 31,
2009
Deficit
|
||||||||||||||||||||
Accumulated
|
||||||||||||||||||||
|
|
During the
|
||||||||||||||||||
Common Stock
|
Additional
|
Development
|
|
|||||||||||||||||
Shares
|
Par Value
|
Paid-in Capital
|
Stage
|
Total
|
||||||||||||||||
#
|
($)
|
($)
|
($)
|
($)
|
||||||||||||||||
Balance
- December 18, 2002
|
||||||||||||||||||||
(Date
of Inception)
|
||||||||||||||||||||
Common
stock issued for cash at
|
||||||||||||||||||||
$0.0001
per share
|
28,000,000
|
2,800
|
(2,400
|
)
|
400
|
|||||||||||||||
Net
loss for the period
|
(21,990
|
)
|
(21,990
|
)
|
||||||||||||||||
Balance
- December 31, 2002
|
28,000,000
|
2,800
|
(2,400
|
)
|
(21,990
|
)
|
(21,590
|
)
|
||||||||||||
Net
loss for the Year
|
(24,216
|
)
|
(24,216
|
)
|
||||||||||||||||
Balance
- December 31, 2003
|
28,000,000
|
2,800
|
(2,400
|
)
|
(46,206
|
)
|
(45,806
|
)
|
||||||||||||
Net
loss for the Year
|
(13,398
|
)
|
(13,398
|
)
|
||||||||||||||||
Balance
- December 31, 2004
|
28,000,000
|
2,800
|
(2,400
|
)
|
(59,604
|
)
|
(59,204
|
)
|
||||||||||||
February
14, 2005 - shares
|
||||||||||||||||||||
issued
for cash at $0.10 per share
|
12,114,900
|
1,211
|
171,859
|
173,070
|
||||||||||||||||
Net
loss for the Year
|
(18,609
|
)
|
(18,609
|
)
|
||||||||||||||||
Balance
- December 31, 2005
|
40,114,900
|
4,011
|
169,459
|
(78,213
|
)
|
95,257
|
||||||||||||||
Net
loss for the Year
|
(16,167
|
)
|
(16,167
|
)
|
||||||||||||||||
Balance
- December 31, 2006
|
40,114,900
|
4,011
|
169,459
|
(94,380
|
)
|
79,090
|
||||||||||||||
Net
loss for the Year
|
(56,129
|
)
|
(56,129
|
)
|
||||||||||||||||
Balance
- December 31, 2007
|
40,114,900
|
4,011
|
169,459
|
(150,509
|
)
|
22,961
|
||||||||||||||
Non-cash
compensation
|
52,959
|
52,959
|
||||||||||||||||||
Net
loss for the Year
|
(697,924
|
)
|
(697,924
|
)
|
||||||||||||||||
Balance
- December 31, 2008
|
40,114,900
|
4,011
|
222,418
|
(848,433
|
)
|
(622,004
|
)
|
|||||||||||||
Non-cash
compensation
|
154,108
|
154,108
|
||||||||||||||||||
Net
loss for the period
|
(1,992,470
|
)
|
(1,992,470
|
)
|
||||||||||||||||
Balance
- December 31, 2009
|
40,114,900
|
$
|
4,011
|
$
|
376,526
|
$
|
(2,840,903
|
)
|
$
|
(2,460,366
|
)
|
See Notes
to Financial Statements
F-6
Prime Sun
Power Inc.
(A
development stage company)
Statement
of Cash Flow
Accumulated from
|
||||||||||||
For the Year Ended
|
December 18, 2002
|
|||||||||||
December 31,
|
(Date of Inception)
|
|||||||||||
2009
|
2008
|
to December 31, 2009
|
||||||||||
Operating
Activities
|
||||||||||||
Net
loss
|
$
|
(1,992,470
|
)
|
$
|
(697,924
|
)
|
$
|
(2,840,903
|
)
|
|||
Adjustments
to reconcile net loss to net cash
|
||||||||||||
used
in operations:
|
||||||||||||
Non-cash
compensation
|
154,108
|
52,959
|
207,067
|
|||||||||
Interest
accrued to related party
|
46,328
|
11,222
|
57,550
|
|||||||||
Gain
in debt settlement
|
-
|
-
|
14,176
|
|||||||||
Accrued
management services - related party
|
416,667
|
416,667
|
||||||||||
Land
licensing and development fees
|
428,980
|
|||||||||||
Change
in operating assets and liabilities
|
-
|
|||||||||||
Prepaid
expense
|
600
|
|||||||||||
Accounts
payable and accrued liabilities
|
675,495
|
270,198
|
994,573
|
|||||||||
Net
cash used in operating activities
|
(270,892
|
)
|
(362,945
|
)
|
(1,150,870
|
)
|
||||||
Investing
Activities
|
||||||||||||
Land
licensing & development fees
|
(428,980
|
)
|
||||||||||
Net
cash used in investing activities
|
(428,980
|
)
|
-
|
-
|
||||||||
Financing
Activities
|
||||||||||||
Proceeds
of loans from Shareholder
|
292,668
|
298,333
|
591,001
|
|||||||||
Proceeds
of bank loan
|
414,626
|
414,626
|
||||||||||
Gain
in debt settlement
|
-
|
-
|
(14,176
|
)
|
||||||||
Common
stock issued
|
-
|
-
|
173,470
|
|||||||||
Net
cash provided by (used in) financing activities
|
707,294
|
298,333
|
1,164,921
|
|||||||||
Increase
(decrease) in Cash
|
7,422
|
(64,612
|
)
|
14,051
|
||||||||
Cash
- beginning of period
|
6,629
|
71,241
|
-
|
|||||||||
Cash
- end of period
|
$
|
14,051
|
$
|
6,629
|
$
|
14,051
|
See Notes
to Financial Statements
F-7
PRIME
SUN POWER INC.
(A
Development Stage Company)
NOTES TO
FINANCIAL STATEMENTS
DECEMBER
31, 2009
1.
BUSINESS DESCRIPTION
Organization
and Business Description
Prime Sun
Power Inc. (the “Company”) was incorporated in the State of Nevada on December
18, 2002 and is a development stage company as defined by current account
guidance. On January 10, 2008, a change of control of the Company occurred and
Rudana Investment Group AG, (“Rudana”) a corporation formed under the laws of
Switzerland, became the new majority shareholder of the Company (“Rudana”),
controlling approximately 70% of the issued and outstanding shares of the
Company’s common stock. On April 1, 2008, we changed our name from ATM Financial
Corp. to Prime Sun Power Inc. The Company plans to pursue a business model
producing solar generated electrical power and other alternative renewable
energies.
Going
Concern
The
Company has been in the development stage since its inception and has not yet
realized any revenues from its planned operations. As shown in the accompanying
financial statements, the Company has incurred a net loss of $2,840,903 for the
period from inception (December 18, 2002) to December 31, 2009, has a working
capital deficiency of $2,460,366. The ability of the Company to continue as a
going concern and to emerge from the development stage is dependent upon, among
other things, its successful execution of its plan of operations and ability to
raise additional financing or capital. There is no guarantee that the Company
will be able to raise additional financing capital or sell any of services or
products at a profit. These factors, among others, raise substantial doubt
regarding the Company’s ability to continue as a going concern. The accompanying
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
2. SIGNIFICANT
ACCOUNTING POLICIES
Basis
of accounting
These
financial statements are prepared in conformity with accounting principles
generally accepted in the United States and are presented in U.S.
Dollars.
Income
taxes
The
Company accounts for income taxes in accordance with current authoritative
accounting standards which require that deferred tax assets and liabilities be
recognized for future tax consequences attributable to differences between
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. In addition, these standards require that
a valuation allowance be provided when it is more likely than not that some
portion of the deferred tax asset will not be realized.
Impairment
of long-lived assets
The
Company reviews its long-lived assets for impairment whenever events or changes
in circumstances indicate that the carrying amount of the assets may not be
fully recoverable. To determine if impairment exists, the Company compares the
estimated future undiscounted cash flows from the related long-lived assets to
the net carrying amount of such assets. Once it has been determined that
impairment exists, the carrying value of the assets is adjusted to the fair
value. Factors considered in the determination of the fair value. Factors
considered in the determination of the fair value include current operating
results, trends and the present value of estimated expected future cash flows.
F-8
Stock
based compensation
Under
authoritative guidance issued by FASB, stock-based compensation expense is
measured at the grant date based on the value of the option or restricted stock
and is recognized as expense, less expected forfeitures, over the requisite
service period.
Use
of estimates
The
preparation of financial statements in conformity with U.S. generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period. The
actual results experienced by the Company may differ materially from the
Company’s estimates. To the extent there are material differences between the
estimates and the actual results, future results of operations will be affected
and the effect could be material.
Financial
instruments
The
Company’s financial instruments consist of cash and cash equivalents, accounts
and notes payable and accrued liabilities.
The fair
value of these financial instruments approximates their carrying
values.
Cash
and Cash equivalents
The
Company considers all highly liquid instruments with a maturity of three months
or less at the time of issuance to be cash equivalents.
The
Company maintains cash balances at various financial institutions. Accounts at
each institution are insured by the Federal Deposit Insurance Corporation up to
$250,000. The Company’s accounts at these institutions may, at times, exceed the
Federally insured limits. The Company has not experienced any losses in such
accounts.
Property
and equipment and depreciation policy
Depreciation
is based on the estimated useful lives of the related assets and is computed
using the straight-line method. Equipment is recorded at cost and depreciation
is provided over the useful lives of five years.
Comprehensive
loss
Current
accounting guidance establishes standards for the reporting and display of
comprehensive income or loss and its components and accumulated balances.
Comprehensive loss comprises equity, except those resulting from investments by
owners and distributions to owners.
Loss
per share
Loss per
share is computed using the weighted average number of shares outstanding during
the period. Diluted loss per share is equivalent to basic loss per
share.
F-9
Recently
Issued Accounting Standards
In
January 2010, the FASB issued Accounting Standards Update (“ASU”) 2010-06,
“improving Disclosures about Fair Value Measurements,” which clarifies certain
existing requirements in ASC 820 “Fair Value Measurements and Disclosures,” and
required disclosures related to significant transfers between each level and
additional information about Level 3 activity. FASB ASU 2010-06 begins phasing
in the first fiscal period beginning after December 15, 2009. The Company is
currently assessing the impact on its consolidated results of operations and
financial conditions.
In June
2009, the FASB issued additional guidance under ASC 860 “Accounting for Transfer
of financial Assets and Extinguishment of Liabilities” which improves the
relevance, representational faithfulness, and comparability of the information
that a reporting entity provides in its financial statements about a transfer of
financial asset; the effects of a transfer on its financial position, financial
performance, and cash flows; and a transferor’s continuing involvement, if any,
in transferred financial assets. This additional guidance requires
that a transferor recognize and initially measure at fair value all assets
obtained (including a transferor’s beneficial interest) and liabilities incurred
as a result of a transfer of financial assets accounted for as a
sale. Enhanced disclosures are required to provide financial
statement users with greater transparency about transfer of financial assets and
a transferor’s continuing involvement with transferred financial
assets. This additional guidance must be applied as of the beginning
of each reporting entity’s first annual reporting period and for interim and
annual reporting periods thereafter. Earlier application is
prohibited. This additional guidance must be applied to transfers
occurring on or after the effective date. The adoption of this ASC
860 is not expected to have a material impact on the Company’s financial
statements and disclosures.
In
February 2010, the FASB issued FASB ASU 2010-09, “Subsequent Events, Amendments
to Certain Recognition and Disclosure Requirements”, which clarifies certain
existing evaluation and disclosure requirements in ASC 855 “Subsequent Events”
related to subsequent events. FASB ASU 2010-09 requires SEC filers to
evaluate subsequent events through the date in which the financial statements
are issued and is effective immediately. The new guidance does not
have an effect on the Company’s consolidated results of operations and financial
condition.
In June
2009, the FASB issued a pronouncement amending previous topic guidance, and
changes how a company determines when an entity that is insufficiently
capitalized or is not controlled through voting (or similar rights) should be
consolidated. The determination whether a company is required to
consolidate an entity is based on, among other things, an entity’s purpose and
design and a company’s ability to direct the activities of the entity that most
significantly impact the entity’s economic performance. This
pronouncement is effective for financial statements issued for fiscal years
beginning after December 15, 2009 and interim periods within those fiscal
years. The Company is evaluating the impact that this pronouncement
will have on the Company’s consolidated financial statements.
Management
does not believe that any other recently issued, but not yet effective,
accounting standards if currently adopted would have a material effect on the
accompanying financial statements.
3.
INCOME TAXES
The
Company has available approximately $2,745,000 of net operating loss carry
forwards to offset future taxable income, if any. The carry forwards
expire as follows:
2022
|
$
|
22,000
|
||
2023
|
$
|
24,000
|
||
2024
|
$
|
13,000
|
||
2025
|
$
|
19,000
|
||
2026
|
$
|
16,000
|
||
2027
|
$
|
56,000
|
||
2028
|
$
|
695,000
|
||
2029
|
$
|
1,900,000
|
The
Company has a deferred tax asset of approximately $950,000 relating to available
net operating loss carry forwards for which 100% valuation allowance has been
provided.
F-10
In
December 2009, the Company borrowed Euro 290,000 (approximately $415,000) from a
finance company. In March 2010 the Company borrowed an additional
Euro 180,000 (approximately $140,000) from the finance company and executed a
senior promissory note which bears interest at 7.5% per annum and is due on
demand. In addition, the Company conveyed 20% of the Net Profit
Rights, as defined, of the sale of the Italian subsidiary referred to in Note
8.
5.
LAND LICENSING AND
DEVELOPMENT FEES
Project
San Paolo and Project Puglia
On April
15, 2009, the Company entered into four agreements to obtain licenses and land
lease call option rights for the development of certain photovoltaic power plant
projects in Italy. These agreements included two Transfer Agreements:
one for a project located in San Paolo, Italy (referred to herein as Project San
Paolo) and one for a project located in Foggia/Apricena, Italy (referred to
herein as Project Puglia and together with Project San Paolo, the
Projects). Both of the Projects were located in the Puglia region of
Italy.
Pursuant
to the Transfer Agreements for the Projects, the Company planned to acquire
option contracts from another party (referred to herein as the Transferor), as
acquired from various landlords. The Company intended to acquire or lease
certain land at specified prices for the purpose of constructing and installing
photovoltaic plants. The Transferor was expected to assist the
Company to apply for certain key licenses. The Company agreed to pay
the Transferor certain transaction fees upon the performance of certain
conditions by the Transferor.
Project
San Paolo and Project Puglia have terminated as the Company was unable
to obtain the necessary licenses to proceed with the Projects. All of the
applicable agreements pertaining to the Projects have terminated in accordance
with their terms. Prior to the cancellation of the Projects, that
Company’s largest shareholder, Rudana Investment Group AG, advanced 150,000
Euros towards each of the two payments required under the Transfer Agreements
related to Project San Paolo and Project Puglia, for a total of 300,000 Euros
($428,980). The advance of these payments on behalf of the
Company by Rudana Investment Group AG has been recorded as loan. The
aggregate amounts of 300,000 Euros ($428,980) paid in respect of the Transfer
Agreement have been charged to expense during the year ended December 31,
2009.
6.
STOCKHOLDERS’ DEFICIENCY
On
January 22, 2008, the Board of Directors declared the payment of a stock
dividend to the stockholders of record of the Company as of February 4,
2008. The stock dividend was paid on February 4,
2008. Each stockholder received six additional shares of the
Company’s common stock for each one share of the Company’s common stock which
they held on the record date. Following the payment of the stock
dividend, the issued and outstanding share ownership of the Company increased
from 5,730,700 shares of Company common stock to 40,114,900 shares of common
stock. The Statement of Stockholders’ Deficiency and per share
amounts has been retroactively adjusted to reflect the historical impact of the
stock dividend.
On
September 22, 2008 the Company granted an option to purchase 500,000 shares of
the Company’s common stock to the Chief Technology Officer. These
options were granted at an exercise price of $1.90 per share which was equal to
the closing price of the Company’s common stock as quoted on the Nasdaq
Over-the-Counter Bulletin Board on the day immediately preceding the date of
grant.
The
Company accounted for this grant under the fair value method of accounting using
a Black Scholes valuation model to measure stock option expense at the date of
grant. The fair value of the stock option is amortized to expense
over the vesting period of one year. Using the Black Scholes options
pricing model, the options were valued at $0.39 per share for a total of
$193,300, of which $140,341 and $52,959 was expensed in the years ended December
31, 2009 and 2008.
F-11
The fair
value was estimated based on the following assumptions:
Risk-free
rate
|
1.5
|
%
|
||
Expected
volatility
|
50
|
%
|
||
Expected
life
|
1
year
|
|||
Dividend
yield
|
-
|
7.
LEGAL PROCEEDINGS
On
February 25, 2010, the Company received notification from Sunpower Corporation,
a Delaware corporation (“SunCorp”), demanding that Prime Sun Power, Inc. cease
and desist from using the words “Sun Power” in its name. SunCorp identified
several U.S. and International trademark registrations of its “Sunpower” mark.
The Company subsequently received a cease and desist letter from SunCorp legal
counsel on April 1, 2010 threatening litigation against the Company for
continued use of the words “Sun Power” in its name. The Company is assessing its
response.
8. SUBSEQUENT
EVENTS
Project
Acquisition by GPR Global Power Resources Ltd.
On
March 2, 2010, the Company entered into a project acquisition agreement (the
“Acquisition Agreement”) with GPR Global Power Resources Ltd., a Company formed
in Switzerland (“GPR,” and together with the Company, the
“Parties”). Pursuant to the Acquisition Agreement, the Company has
agreed to sell to GPR all of the shares of a wholly-owned Italian subsidiary of
the Company called PSP Italia S.r.l. This subsidiary expects to
develop a turnkey alternative energy power plant, utilizing solar
power. The purchase price for the shares of PSP Italia S.r.l. shall
be a minimum of 4.05 million Euros per mega watt of power produced by the solar
power plant. The Acquisition Agreement shall cover up to a total of
twenty five mega watts of power, for a total potential sales price of 101.25
million Euros.
The
purchase price for this transaction shall be released by GPR to the Company
incrementally on each date on which the Company shall connect five mega watts of
the solar power plant to the Italian National Grid as enumerated in the
Acquisition Agreement. Thus, payment shall be due to the Company in
five equal tranches; for each five mega watts connected, a payment of 20.25
million Euros shall be due and payable to the Company. GPR shall make
each tranche of payments within ninety days of the date on which the Company
shall connect five mega watts of power to the electrical grid. GPR
shall have the right to withhold 10% of the purchase price due to the Company
for up to six months as a security for the fulfillment of the Company’s
obligations. The purchase price that GPR shall be required to pay may
be reduced by the amount of certain cost savings that GPR may assist the Company
in making or as a result of certain taxes GPR may be required to pay, in each
case as set forth in the Acquisition Agreement. Furthermore, the Parties have
agreed that certain specifications concerning this project to be included in the
annexes to the Acquisition Agreement have not yet been set, and will be mutually
agreed upon by the Parties in the immediate future. The Company and
GPR will not finalize these annexes until such time as GPR delivers the Bank
Standby Letter described below.
The
Acquisition Agreement requires the Company to facilitate and arrange for
long-term debt financing of at least 80% of the purchase price to be paid by
GPR. The terms of the Acquisition Agreement are subject to review and
approval by the relevant third party financing institution. The
Acquisition Agreement requires GPR to finance the remainder of the purchase
price, and to deliver a Bank Standby Letter of Credit in an amount equal to 20%
of the first payment tranche that will be due (4.05 million
Euros).
The
Company shall be responsible for all construction costs for the solar power
plant, including costs for sub contractors. At the present time, the
Company is in discussions with the EPC contractors and module suppliers to
obtain the final binding offers. The Company intends to commence
construction of the solar power plant in the fourth quarter of 2010 upon
completion of the required fund raising.
F-12
Once
construction commences, the Company estimates that it will take approximately
three to four months to complete the 25 mega watt solar power plant. The Company
currently estimates that the costs of production per mega watt will be 3.6
million Euros.
Subsequent
to the period covered by this Report, the Parties to the Frame Agreement reached
an understanding that they would extend the Frame Agreement through December 31,
2011.
The
Company has evaluated events after the date of these financial statements
through April 14, 2010 the date that these financial statements were
issued. There were no additional material subsequent events as of
that date, which would require adjustment to or disclose in the accompanying
financial statements.
F-13
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
On March
24, 2008, the Company dismissed its independent auditor, Chang Lee LLP (formerly
Vellmer & Chang). Effective as of March 24, 2008, the Company has retained
Paritz & Company, P.A., as its independent auditor. The decision
to change auditors was approved by the Audit Committee of the Company's Board of
Directors. The Company financial statements with respect to fiscal
years 2008 and 2009 were audited by Paritz & Company, P.A.
During
the Company's two most recent fiscal years the opinion of Paritz & Company,
P.A. on the Company's financial statements did not contain an adverse opinion or
disclaimer of opinion and was not qualified or modified as to uncertainty, audit
scope or accounting principles, except as follows. The independent auditor's
reports of Paritz & Company, P.A. dated April 13, 2009 (for the year ended
December 31, 2008) and dated April 2, 1008 (for the year ended 2007) each
contained a “going concern” qualification. The qualification in each
of the reports indicated that the Company has accumulated losses since
inception, raising substantial doubts regarding the Company's ability to
continue as a going concern. This qualification also stressed the absence of any
resulting adjustments in the financial statements. During the Company's two most
recent fiscal years, there have been no disagreements with Paritz & Company,
P.A., whether or not resolved, on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of Paritz & Company,
P.A., would have caused it to make reference to the subject matter of the
disagreement(s) in connection with its report.
ITEM 9A: CONTROLS AND
PROCEDURES
As of the
end of the period covered by this Report, an evaluation was carried out under
the supervision and with the participation of our management, including our
Chief Executive Officer and Chief Financial Officer, of the effectiveness of our
disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated
under the Securities and Exchange Act of 1934 (the “Exchange Act”). In carrying
out that evaluation, management identified a material weakness (as defined in
Public Company Accounting Oversight Board Standard No. 2) in our disclosure
controls and procedures regarding a lack of adequate personnel and adequate
segregation of duties. Based on their evaluation of our disclosure
controls and procedures as of December 31, 2009, the Company’s Chief Executive
Officer and Chief Financial Officer have concluded that, as of that date, the
Company’s disclosure controls and procedures were not effective for the purposes
described above.
Management’s
Annual Report on Internal Control Over Financial Reporting
Management
is responsible for establishing and maintaining adequate internal control over
financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange
Act) of the Company. Internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with accounting principles generally accepted in the United States of
America.
The
Company has evaluated the effectiveness of our internal control over financial
reporting based on the framework set forth in Internal Control - Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission. The Company’s internal control over financial reporting
includes those policies and procedures that (i) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (ii) provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America, and that receipts and
expenditures of the Company are being made only in accordance with
authorizations of management and directors of the Company; and
(iii) provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use or disposition of the Company’s assets that
could have a material effect on the financial statements.
Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
23
As of the
end of the period covered by this report, the Company carried out, under the
supervision and with the participation of Company Management, which consists
solely of the Company’s Chief Executive Officer, who also serves in the capacity
of acting Chief Financial Officer, an evaluation of the effectiveness of the
design and operation of the Company’s internal control over financial reporting
(as defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of
1934) in ensuring that information required to be disclosed by the Company in
its reports is recorded, processed, summarized and reported within the required
time periods. In carrying out that evaluation, management identified a material
weakness (as defined in Public Company Accounting Oversight Board Standard No.
2) in our internal control over financial reporting.
The
material weakness identified by Management consisted of inadequate staffing and
supervision within the bookkeeping and accounting operations of the Company. The
relatively small number of employees who have bookkeeping and accounting
functions prevents us from segregating duties within the Company’s internal
control system. The inadequate segregation of duties is a weakness because it
could lead to the untimely identification and resolution of accounting and
disclosure matters or could lead to a failure to perform timely and effective
reviews. Accordingly, based on their evaluation of the Company’s internal
control over financial reporting as of December 31, 2009, the Company’s
Management, including its Chief Executive Officer who also serves as its Chief
Financial Officer, have concluded that, as of that date, the Company’s internal
controls over financial reporting were not effective. The Company intends to
take steps to remediate such controls as soon as reasonably
possible.
This
Report does not include an attestation report of the Company’s registered public
accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by our registered public
accounting firm pursuant to temporary rules of the SEC that permit us to provide
only management’s report in this Report on Form 10-K.
Changes
in Internal Control Over Financial Reporting
There was
no change in the Company’s internal control over financial reporting (as defined
in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934)
during the quarter ended December 31, 2009 that has materially affected or is
reasonably likely to materially affect the Company’s internal control over
financial reporting.
ITEM 9B: OTHER INFORMATION
24
PART
III
ITEM 10: DIRECTORS, EXECUTIVE OFFICERS,
PROMOTERS AND CORPORATE GOVERNANCE
The
following table presents information with respect to our officers, directors and
significant employees as of March, 2010:
Name
|
Age
|
Position
|
||
Olivier
de Vergnies
|
44
|
Acting
Chief Executive Officer, Acting Chief Financial Officer and
Director
|
Each
director serves until the next annual meeting of shareholders and until his/her
successor shall have been elected and qualified.
Set forth
below is biographical information regarding the current officers, directors and
significant employees of the Company as of March, 2010.
Mr. Olivier de
Vergnies. Mr. de Vergnies has served as a Director of the
Company since January 16, 2009 and has served as the Company’s Acting Chief
Executive Officer and Acting Chief Financial Officer since June 19,
2009. Mr. de Vergnies has served since July 1, 2008 as the Chief
Operating Officer of Rudana Investment Group AG, the Company’s majority
shareholder. Mr. de Vergnies also served as Chief Executive Officer
of 4C Controls Inc. (“4C Controls”) from July 1, 2008 until February 1,
2009. Mr. de Vergnies has previously served as Vice President, Head
of the Middle East Division of Dexia Private Bank (Switzerland), Geneva from
2004 -2008 where he was responsible for Middle Eastern high net worth
individuals, business acquisition and retention process, as well as the
development of new financial structured products ideas and innovative private
asset allocation. From 2000-2004 Mr. de Vergnies served Dexia Bank,
Luxembourg as Vice President, Head of Strategy & Alliances where he was
responsible for the marketing strategy and product development for Middle East
clients segments across Luxembourg, Switzerland, France, Jersey and the United
Kingdom. Mr. de Vergnies served as Global Strategic Coordinator for
the Dexia Private Banking Group Executive Committee and managed the joint
ventures optimization process with Banco Popular in Spain, multi-channel
distribution, market watch process, international and internal
communication. Mr. de Vergnies currently serves as a director of U.S.
public companies 4C Controls Inc. and Laureate Resources & Steel Industries
Inc. While neither the Company’s charter or Nevada law provides any
specific qualification that a director must possess, the Company has determined
that Mr. de Vergnies’ extensive experience in financial services has provided
him with the skills and contacts necessary to assist the Company in negotiating
the loans and investments that the Company has needed in the past, and
anticipates requiring in the future.
Conflicts
Of Interest
The
officers and directors of our Company are subject to restrictions regarding
opportunities which may compete with the Company's business plan. New
opportunities which are brought to the attention of the officers and directors
of the Company must be presented to the Board of Directors and made available to
the Company for consideration and review under principals of state law corporate
opportunity doctrines. A breach of this requirement could be
construed as a breach of the fiduciary duties of the officer or
director. Our Ethics Policy requires each employee to avoid any
activity, investment or association that conflicts or interferes with the
independent exercise of his or her judgment or actions adverse to the Company's
best interests. Under the Ethics Policy, no employee, or any member
of employee's immediate family, is permitted to accept money, gifts of other
than nominal value, unusual entertainment, loans, or any other preferential
treatment from any customer or supplier of the Company where any obligation may
be incurred or implied on the giver or the receiver or where the intent is to
prejudice the recipient in favor of the provider. Likewise, no employee is
permitted to give money, gifts of other than nominal value, unusual
entertainment or preferential treatment to any customer or supplier of the
Company, or any employee or family members thereof, where any obligation might
be incurred or implied, or where the intent is to prejudice the recipient in
favor of the Company. No directors, officers or employees are
permitted to solicit or accept kickbacks, whether in the form of money, goods,
services or otherwise, as a means of influencing or rewarding any decision or
action taken by a foreign or domestic vendor, customer, business partner,
government employee or other person whose position may affect the Company's
business. No employee is permitted to use Company property, services,
equipment or business for personal gain or benefit. Employees may not
act on behalf of, or own a substantial interest in, any company or firm that
does business, or competes, with the Company, or conduct business on behalf of
the Company with any company or firm in which the employee or a family member
has a substantial interest or affiliation. Exceptions require advance
written approval from the Chief Financial Officer. Employees must not
personally benefit from outside endeavor as a result of their employment by the
Company. Other than the provisions of our Ethics Policy
governing conflicts of interest, we have not adopted a specific conflicts of
interest policy.
25
Involvement
in Certain Legal Proceedings
To our
knowledge, during the past five years, no director, person nominated to become a
director, executive officer, promoter or control person of the company: (1) had
any bankruptcy petition filed by or against any business of which such person
was a general partner or executive officer either at the time of the bankruptcy
or within two years prior to that time; (2) was convicted in a criminal
proceeding or subject to a pending criminal proceeding (excluding traffic
violations and other minor offenses); (3) was the subject of any order, judgment
or decree, not subsequently reversed, suspended or vacated, of any court of
competent jurisdiction, permanently or temporarily enjoining, barring,
suspending or otherwise limiting his involvement in any type or business,
securities or banking activities; or (4) was found by a court of competent
jurisdiction in a civil action or by the U.S. Securities and Exchange Commission
or the Commodity Futures Trading Commission to have violated a federal or state
securities or commodities law, and the judgment has not been reversed, suspended
or vacated.
Section
16 (a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Exchange Act requires that the executive officers and directors,
and persons who beneficially own more than 10% of the equity securities of
reporting companies, file reports of ownership and changes in ownership with the
Securities and Exchange Commission. Officers, directors and greater than 10%
shareholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file. The Company, however, is a “voluntary
reporting company,” and is therefore not subject to this obligation. Based
solely on our review of the copies of such forms we received, we believe that
during the year ended December 31, 2009, all such filing requirements applicable
to our Company were complied with, except that reports were filed late by the
following persons:
Number of
Late Reports
|
Transactions
Not Timely Reported
|
Known Failures to
File a Required
Form
|
|||||||
Rudana Investment
Group AG
|
2
|
2
|
0
|
||||||
Frank
Juergens
|
1
|
1
|
0
|
||||||
Mathias
Kaiser
|
1
|
1
|
0
|
||||||
Cesare
Boffa
|
1
|
1
|
0
|
||||||
Bruno
Colle
|
1
|
1
|
0
|
||||||
Augustine
Fou
|
1
|
1
|
0
|
||||||
Roberto
Gerbo
|
1
|
1
|
0
|
Code
of Ethics
We have
adopted a corporate code of ethics. We believe our code of ethics is reasonably
designed to deter wrongdoing and promote honest and ethical conduct; provide
full, fair, accurate, timely and understandable disclosure in public reports;
comply with applicable laws; ensure prompt internal reporting of code
violations; and provide accountability for adherence to the code. To
the knowledge of the Company, there have been no reported violations of the Code
of Ethics. In the event of any future amendments to, or waivers from,
the provisions of the Code of Ethics, we intend to describe on our Internet
website, within four business days following the date of a waiver or a
substantive amendment, the date of the waiver or amendment, the nature of the
amendment or waiver, and the name of the person to whom the waiver was
granted.
26
Board
Committees
Audit
Committee
Audit
committee functions are performed by our entire board of
directors. Our audit committee is responsible for: (1) selection and
oversight of our independent accountant; (2) establishing procedures for the
receipt, retention and treatment of complaints regarding accounting, internal
controls and auditing matters; (3) establishing procedures for the confidential,
anonymous submission by our employees of concerns regarding accounting and
auditing matters; (4) engaging outside advisors; and (5) funding for the outside
auditory and any outside advisors engagement by the audit
committee.
Audit
Committee Financial Expert
None of
our directors or officers have the qualifications or experience to be considered
a financial expert. We believe the cost related to retaining a financial expert
at this time is prohibitive. Further, because of our limited operations, we
believe the services of a financial expert are not yet warranted. We intend to
appoint an audit committee financial expert during the foreseeable
future.
Disclosure
Committee
Disclosure
committee functions are performed by our entire board of directors.
Director
Nominations
There
have been no changes in the year ended December 31, 2009 to the procedures by
which security holders may recommend nominees to our board of directors.
27
Summary
Compensation Table (1)
Name
and Principal Position
|
Year
|
Salary
|
Option
Awards
|
Total
|
||||||||||
Olivier
de Vergnies, Director
|
||||||||||||||
Acting
Chief Executive Officer and Acting
|
2009
(2)
|
$
|
0
|
$
|
0
|
$
|
0
|
|||||||
Chief
Financial Officer (2)
|
2008
(2)
|
$
|
0
|
$
|
0
|
$
|
0
|
|||||||
Frank
Juergens,
|
||||||||||||||
Chief
Operating Officer and Interim Chief
|
2009
(3)
|
$
|
58,009
|
$
|
13,767
|
$
|
71,776
|
|||||||
Executive
Officer (3)
|
2008
(3)
|
$
|
0
|
$
|
0
|
$
|
0
|
|||||||
Mathias
Kaiser,
|
2009
(4)
|
$
|
75,000
|
$
|
0
|
$
|
75,000
|
|||||||
Chief
Financial Officer (4)
|
2008
(4)
|
$
|
0
|
$
|
0
|
$
|
0
|
|||||||
Gerald
Sullivan,
|
||||||||||||||
Chief
Financial Officer and Interim Chief
|
2009
(5)
|
$
|
40,903
|
$
|
0
|
$
|
40,903
|
|||||||
Executive
Officer (5)
|
2008
(5)
|
$
|
78,500
|
$
|
0
|
$
|
78,500
|
|||||||
Viktoria
Vynnyk, Director,
Chief
Executive Officer, President and Chief Financial Officer (6)
|
2008
(6)
|
$
|
0
|
$
|
0
|
$
|
0
|
|||||||
Cesare
Boffa, Director and Chief Technology
|
2009
(7)
|
$
|
212,052
|
$
|
140,341
|
$
|
352,393
|
|||||||
Officer
(7)
|
2008
(7)
|
$
|
64,804
|
$
|
52,959
|
$
|
117,763
|
(1) The
table reflects each of the Company’s last two completed fiscal
years. Pursuant to permissive authority under S-K Rule 402(a)(5) we
have omitted tables and columns where there has been no compensation awarded to,
earned by, or paid to any of the named executive officers or directors required
to be reported in that table or column in any fiscal year covered by that
table.
No
persons have been entitled to compensation in excess of $100,000 per year prior
to 2008.
(2) Mr.
de Vergnies has served as a Director of the Company since January 16, 2009 and
has served as the Company’s Acting Chief Executive Officer and Acting Chief
Financial Officer since June 19, 2009.
(3) Mr.
Juergens served as the Company’s Chief Operating Officer and Interim Chief
Executive Officer from January 7, 2009 until June 19,
2009.
(4) Mr.
Kaiser served as the Chief Financial Officer of the Company from January 7, 2009
until June 19, 2009. Mr. Kaiser was compensated for his services by
Rudana Investment Group AG, our majority shareholder, and he was not separately
compensated by the Company. As 75% of Mr. Kaiser’s time was spent on
matters related to the Company, such approximate proportion of his salary paid
by Rudana Investment Group AG has been attributed to his services rendered on
behalf of the Company.
(5) Mr.
Sullivan served as our Chief Financial Officer and Interim Chief Executive
Officer from May 10, 2008 until January 7, 2009.
(6) Ms.
Vynnyk served as our Chief Executive Officer, President and Chief Financial
Officer from November 10, 2006 until May 10, 2008.
(7) On
September 22, 2008, Cesare Boffa was appointed as a director of the Company and
as the Company's Chief Technology Officer. Dr. Boffa was granted stock options
for the purchase of 500,000 shares of the Company's common stock at an exercise
price of $1.90 per share. The aggregate grant date fair value of the
option award was computed in accordance with FASB Accounting Standards
Codification Topic 718.
28
Outstanding
Equity Awards at Fiscal Year-End
Name
and Principal Position
|
Number of
Securities Underlying Unexercised Options Exercisable |
Number of
Securities Underlying Unexercised Options Unexercisable
|
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options |
Option
Exercise Price |
Option
Expiration Date |
||||||||||||
Olivier de
Vergnies, Director
Acting
Chief Executive Officer and Acting Chief Financial Officer
(1)
|
0
|
0
|
0
|
N/A
|
N/A
|
||||||||||||
Frank
Juergens,
Chief
Operating Officer and Interim Chief Executive Officer (2)
|
0
|
0
|
0
|
N/A
|
N/A
|
||||||||||||
Mathias
Kaiser,
Chief
Financial Officer (3)
|
0
|
0
|
0
|
N/A
|
N/A
|
||||||||||||
Gerald
Sullivan
Chief
Financial Officer and Interim President and Chief Executive Officer
(4)
|
0
|
0
|
0
|
N/A
|
N/A
|
||||||||||||
Victoria
Vynnyk
Chief
Executive Officer, President and Chief Financial Officer
(5)
|
0
|
0
|
0
|
N/A
|
N/A
|
||||||||||||
Cesare
Boffa,
Director
and Chief Technology Officer (6)
|
0
|
500,000
|
0
|
$
|
1.90
|
September
22,
2013
|
(1) Mr.
de Vergnies has served as a Director of the Company since January 16, 2009 and
has served as the Company’s Acting Chief Executive Officer and Acting Chief
Financial Officer since June 19, 2009.
(2)
Mr. Juergens served as the Company’s Chief Operating Officer and Interim Chief
Executive Officer from January 7, 2009 until June 19, 2009. Mr.
Juergens was granted options to purchase 50,000 shares of the Company’s common
stock, however, such options were cancelled upon his resignation from the
Company prior to the end of the fiscal year.
(3) Mr.
Kaiser served as the Chief Financial Officer of the Company from January 7, 2009
until June 19, 2009.
(4) Mr.
Sullivan served as our Chief Financial Officer and Interim Chief Executive
Officer from May 10, 2008 until January 7, 2009.
29
(5) Ms.
Vynnyk served as our Chief Executive Officer, President and Chief Financial
Officer from November 10, 2006 until May 10, 2008.
(6) On
September 22, 2008, Cesare Boffa was appointed as a director of the Company and
as the Company's Chief Technology Officer. Dr. Boffa was granted stock options
for the purchase of 500,000 shares of the Company's common stock at an exercise
price of $1.90 per share.
Director
Compensation
Name
|
Fees earned or paid
in cash ($) |
Total ($)
|
||||||
Augustine
Fou(1)
|
$
|
14,000
|
$
|
14,000
|
(1)
Augustine Fou was the only director who received compensation in 2009 and who is
not included in the “Summary Compensation Table” above. Cesare Boffa
was compensated for his services as Company’s Chief Technology
Officer. Dr. Fou resigned as a director on August 4,
2009.
Contracts
with Officers and Directors
Pursuant
to the Company director agreement with Mr. Olivier de Vergnies, he has not
received compensation from the Company during 2009 and does not yet have rights
to compensation. The Company expects to enter into an amended
compensation agreement with Mr de Vergnies after the Company starts generating
revenues.
Gerald
Sullivan Employment Agreement
Mr.
Sullivan served as our Chief Financial Officer and Interim Chief Executive
Officer from May 10, 2008 until January 7, 2009. During that time the
Company paid him at a rate of $100,000 per annum.
Frank
Juergens Employment Agreement
Effective
as of January 7, 2009, entered into an employment agreement with Frank Juergens
regarding his service as Chief Operating Officer of the
Company. Under the employment agreement, Mr. Juergens agreed to serve
as Chief Operating Officer for a two year period. In consideration for
services rendered to the Company, Mr. Juergens was to be paid a base salary of
130,000 Swiss Francs per year. In addition, Mr. Juergens was to be granted
options to purchase 50,000 shares of common stock of the
Company. This agreement terminated when Mr. Juergens left the Company
on June 19, 2009, pursuant to a separation agreement.
Cesare
Boffa Employment and Director’s Agreement
On
September 22, 2008, the Company entered into an employment agreement with Cesare
Boffa regarding his service as the Company’s Chief Technology
Officer. Dr. Boffa’s compensation as the Company’s Chief Technology
Officer was 180,000 Euros per annum. Dr. Boffa has been granted stock
options for the purchase of 500,000 shares of the Company’s common stock equal
to the fair market value per share as of the date of the employment agreement
(the aggregate grant date fair value of the option award was computed in
accordance with FASB Accounting Standards Codification Topic
718). Dr. Boffa will devote less than 50% of his professional working
time to the Company. The employment agreement has a three year
term. On October 6, 2008, the Company entered into a director’s
agreement with Dr. Boffa regarding his service as a director of the
Company. Dr. Boffa agreed that he would not receive any compensation
other than pursuant to the employment agreement.
Dr. Boffa
is no longer the Company’s Chief Technology Officer. Dr. Boffa is now
a consultant to the Company.
30
Compensation
Arrangement with Mathias Kaiser
Mr.
Kaiser served as the Chief Financial Officer of the Company from January 7, 2009
until June 19, 2009. Mr. Kaiser was compensated for his services by
Rudana Investment Group AG, our majority shareholder, and he was not separately
compensated by the Company. As 75% of Mr. Kaiser’s time was spent on
matters related to the Company, such approximate proportion of his salary paid
by Rudana Investment Group AG has been attributed to his services rendered on
behalf of the Company.
Equity
Incentive Plan
The
Company does not currently have an equity compensation plan. The
Company expects to adopt an equity incentive plan for its officers, directors
and key employees during 2009 and make grants under such plan in accordance with
comparable industry standards.
Security
Ownership of Certain Beneficial Owners and Management
The
following table sets forth certain information regarding the beneficial
ownership of Common Stock as of April 8, 2010 by (i) each director of the
Company; (ii) each of the Company's officers named in the Summary Compensation
Table and other key employees of our Company; (iii) each person who is known by
the Company to be the beneficial owner of more than five percent of the
Company's outstanding Common Stock; and (iv) all directors and named executive
officers as a group. Except as otherwise indicated below, each person
named has sole voting and investment power with respect to the shares
indicated. The percentage of ownership set forth below reflects each
holder's ownership interest in 40,114,900 issued and outstanding shares of the
Company's common stock.
The
Company intends to adopt an equity incentive plan for its officers, directors
and key employees during the fiscal year ended December 31, 2010.
Amount and Nature of Beneficial
Ownership
Name
and Address of Beneficial Owner
|
Shares
|
Options/
Warrants |
Total
|
Percentage of
Shares Outstanding |
||||||||||||
Five Percent Shareholders
|
||||||||||||||||
Rudana
Investment Group AG (1)
|
27,716,208 | 0 | 27,716,208 | 69.1 | % | |||||||||||
Executive
Officers and Directors
|
||||||||||||||||
Olivier
de Vergnies
|
0 | 0 | 0 | 0 | ||||||||||||
All
Officers and Directors as a Group
|
0 | 0 | 0 | 0 |
* Less
than 1%.
The
mailing address for each of the listed individual is c/o Prime Sun Power Inc.,
100 Wall Street, 21st Floor,
New York, NY 10005.
(1) Mr.
Hany Salem is the individual who exercises voting and dispositive powers for
shares beneficially owned by Rudana Investment Group AG.
The
Company is not aware of any pledges of any shares, options or warrants by any of
the individuals or entities listed above.
31
Changes
in Control
As of the
date of filing of this Report, the Company is unaware of any arrangement which
may result in a change in control.
32
Transactions
Involving Prime Asset Finance Ltd.
The
Company has entered into an agreement with Prime Asset Finance Ltd. (“PAF”), a
UK company which is a wholly owned subsidiary of Rudana Investment Group AG, our
majority controlling shareholder. Under the terms of the agreement,
PAF will assist and advise us on developing strategic plans for inception of
operations, preparing acquisition growth plans, identifying potential
acquisition candidates, initiating discussion with potential acquisition
candidates and strategic alliance partners, analyzing the financial implications
of potential acquisitions and strategic alliances; negotiating terms and
conditions of transactions and strategic alliances; outlining and managing the
due diligence process; developing strategies to maximize revenue and corporate
value including growth through sales, utilizing alternative distribution
channels and enhancing marketing programs and providing support for investor
relations programs. On April 1, 2009, we entered into the written
form of management services agreement with PAF and have agreed to pay an initial
services fee of $350,000 to PAF and retroactive to January 1, 2009 we agreed to
pay management services fees of $25,000 per month in respect of the management
services. All of the management fees have accrued to date and have
not yet been paid. In addition, PAF will be compensated in the amount of 8% of
the total transaction value of any company acquired by us by merger or
acquisition. We believe that the services of PAF have been valuable
to us with respect to inception of our operations and activities, particularly
in regard to establishing our initial strategic alliances and recruiting our
highly qualified senior management team and introducing us to prospective
customers. The terms and conditions of our agreement with PAF were
independently reviewed and assessed by an independent member of our Board of
Directors as of the date of agreement, who determined that the PAF agreement is
fair and reasonable to our Company and its shareholders.
Loans
from Rudana Investment Group AG
2009
During
the year ended December 31, 2009, Rudana Investment Group AG, the Company’s
majority shareholder, paid invoices on behalf of the Company totaling
$700,668. These invoices included amounts due for the Company’s
general corporate activities. It is anticipated that the Company will
issue a note to Rudana Investment Group AG for these amounts advanced, and that
such loans will bear interest at 7.5% per annum and will be due thirty (30) days
after demand.
33
2008
During
the year ended December 31, 2008, Rudana Investment Group AG, the Company’s
majority shareholder, loaned the Company a total of $298,333. The funds were
used by the company for general corporate use. These loans bear
interest at 7.5% per annum and are due thirty (30) days after
demand.
The 2008
loans to the Company from shareholder Rudana Investment Group AG may be
summarized as follows:
Date
|
Amount
|
|||
04/11/2008
|
52,500.00
|
|||
05/12/2008
|
71,689.00
|
|||
06/04/2008
|
50,000.00
|
|||
08/11/2008
|
40,000.00
|
|||
08/13/2008
|
40,000.00
|
|||
11/03/2008
|
50,000.00
|
|||
12/15/2008
|
2,575.00
|
|||
Total:
|
306,764.00
|
This
amount is offset by $8,431, which Rudana Investment Group AG owed to the
Company, and therefore equals $298,333. Rudana had a $14,731
liability to the Company for certain legal fees advanced by the
Company. Thereafter, Rudana paid invoices in the amount of $6,300 on
behalf of the Company. The net difference is $8,431.
The terms
and conditions of these loans were approved by our Board of
Directors.
Director
Independence
As of the
date of this Report we have one director, Olivier de Vergnies. Our
Board of Directors has determined that Mr. de Vergnies is not independent since
he has an employment affiliation with our majority shareholder, Rudana
Investment Group AG. The Company has adopted the standards for
Director independence contained in the Nasdaq Marketplaces
Rule5605(a)(2).
The
Company’s Board of Directors currently has an Audit Committee and a Disclosure
Committee. Both of these committees currently consist of the entire
Board of Directors and operate in accordance with Nasdaq Marketplaces Rule
5605(a)(2). We intend to appoint an audit committee financial expert during the
foreseeable future. Until their resignation, we compensated Mr.
Colle, Mr. Gerbo and Dr. Fou for their services as members of the Board of
Directors at a rate of $24,000 per annum.
Until his
resignation as a director, Dr. Fou also served on the Board of Directors of two
other public companies in which Rudana is a majority shareholder at the same
rate of compensation as our Company. Dr. Fou had no relationships
pertaining to his services which would compromise his independence as defined
under Nasdaq Marketplaces Rules, Rule 5605(a)(2) and as determined by the Board
of Directors.
34
ITEM 14: PRINCIPAL ACCOUNTANT FEES AND
SERVICES
Audit
Fees
The
aggregate fees billed by Paritz & Company, P.A., for professional services
rendered for the audit of the Company's annual financial statements for the
fiscal year ended December 31, 2009 totaled $19,000. The aggregate
fees billed by Paritz & Company for professional services rendered for the
audit of our annual financial statements included in the Company’s Annual Report
for the fiscal year ended December 31, 2008 were $19,000.
Audit-Related
Fees
The
aggregate fees billed by Paritz & Company, P.A. for audit related services
for the fiscal year ended December 31, 2009, and which are not disclosed in
“Audit Fees” above, were $0. The aggregate fees billed by Paritz &
Company, P.A. for audit related services for the fiscal year ended December 31,
2008, and which are not disclosed in “Audit Fees” above, were
$8,660.
Tax
Fees
The
aggregate fees billed by Paritz & Company, P.A. for tax compliance for the
fiscal year ended December 31, 2009 was $0. The aggregate fees billed by
Paritz & Company, P.A. for tax compliance for the fiscal year ended December
31, 2008 was $0.
All
Other Fees
The
aggregate fees billed by Paritz & Company, P.A. for services other than
those described above, for the year ended December 31, 2009, were $3,575.
The aggregate fees billed by Paritz & Company, P.A. for services other than
those described above, for the year ended December 31, 2008, were
$0.
Audit
Committee Pre-Approval Policies
Our Board
of Directors reviewed the audit and non-audit services rendered by Paritz &
Company, P.A. during the periods set forth above and concluded that such
services were compatible with maintaining the auditors’ independence. All audit
and non-audit services performed by our independent accountants are pre-approved
by our Board of Directors to assure that such services do not impair the
auditors’ independence from us.
35
PART
IV
ITEM
15: EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Description
of Exhibits
|
||
Exhibit
3.1
|
Certificate
of Incorporation, as amended, incorporated by reference to Exhibit 3.1 to
the Company’s Annual Report on Form 10-KSB, filed with the Securities and
Exchange Commission on April 14, 2008.
|
|
Exhibit
3.2
|
Bylaws,
as amended, incorporated by reference to Exhibit 3.2 to the Company’s
Annual Report on Form 10-KSB, filed with the Securities and Exchange
Commission on April 14, 2008.
|
|
Exhibit
10.1
|
Securities
Purchase and Sale Agreement, dated January 9, 2008, between Rudana
Investment Group AG and Viktoria Vynnyk, incorporated by reference to
Exhibit 99.1 to Rudana Investment Group AG’s Schedule 13D, filed with the
Securities and Exchange Commission on January 22, 2008.
|
|
Exhibit
10.2
|
Promissory
Note issued by the Company to Rudana Investment Group AG, dated as of
April 15, 2008, incorporated by reference to Exhibit 10.2 to the Company’s
Quarterly Report on Form 10-Q, filed with the Securities and Exchange
Commission on May 15, 2008.
|
|
Exhibit
10.3
|
Director’s
Agreement by and between the Company and Dr. Augustine Fou, dated as of
May 10, 2008, incorporated by reference to Exhibit 10.3 to the Company’s
Quarterly Report on Form 10-Q, filed with the Securities and Exchange
Commission on May 15, 2008.
|
|
Exhibit
10.4
|
Common
Stock Purchase Warrant issued to Arimathea Limited, dated May 10, 2008,
incorporated by reference to Exhibit 10.4 to the Company’s Quarterly
Report on Form 10-Q, filed with the Securities and Exchange Commission on
May 15, 2008.
|
|
Exhibit
10.5
|
Form
of Promissory Note issued by the Company to Rudana Investment Group AG,
incorporated by reference to Exhibit 10.5 to the Company’s Quarterly
Report on Form 10-Q, filed with the Securities and Exchange Commission on
August 19, 2008.
|
|
Exhibit
10.6
|
Chief
Technology Officer Services Agreement by and between the Company and
Cesare Boffa, dated as of September 22, 2008, incorporated by reference to
Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q, filed with
the Securities and Exchange Commission on November 19,
2008.
|
|
Exhibit
10.7
|
Director’s
Agreement by and between the Company and Cesare Boffa, dated as of October
6, 2008, incorporated by reference to Exhibit 10.7 to the Company’s
Quarterly Report on Form 10-Q, filed with the Securities and Exchange
Commission on November 19, 2008.
|
|
Exhibit
10.8
|
Employment
Agreement, by and between the Company and Frank Juergens, dated as of
January 13, 2009, incorporated by reference to Exhibit 10.8 to the
Company’s Quarterly Report on Form 10-Q, filed with the Securities and
Exchange Commission on May 20, 2009.
|
|
Exhibit
10.9
|
Director’s
Agreement, by and between the Company and Olivier de Vergnies, dated as of
January 16, 2009, incorporated by reference to Exhibit 10.9 to the
Company’s Quarterly Report on Form 10-Q, filed with the Securities and
Exchange Commission on May 20, 2009.
|
|
Exhibit
10.10
|
Director’s
Agreement, by and between the Company and Bruno Colle, dated as of March
18, 2009, incorporated by reference to Exhibit 10.10 to the Company’s
Quarterly Report on Form 10-Q, filed with the Securities and
Exchange Commission on May 20,
2009.
|
36
Director’s
Agreement, by and between the Company and Roberto Gerbo, dated as of March
24, 2009, incorporated by reference to Exhibit 10.11 to the Company’s
Quarterly Report on Form 10-Q, filed with the Securities and Exchange
Commission on May 20, 2009.
|
||
Exhibit
10.12
|
Separation
and Mutual Release Agreement, by and between the Company and Frank
Juergens, dated as of June 19, 2009, incorporated by reference to Exhibit
10.12 to the Company’s Quarterly Report on Form 10-Q, filed with the
Securities and Exchange Commission on August 21, 2009.
|
|
Exhibit
10.13
|
Management
Services Agreement, dated as of April 1, 2009 by and between the Company
and Prime Asset Finance, incorporated by reference to Exhibit 10.13 to
Amendment No. 1 to the Company’s Annual Report on Form 10-K, filed with
the Securities and Exchange Commission on April 8,
2010.
|
|
Exhibit
10.14
|
Common
Stock Purchase Warrant issued to Arimathea Limited, dated May 22, 2008,
incorporated by reference to Exhibit 10.14 to Amendment No. 1 to the
Company’s Annual Report on Form 10-K, filed with the Securities and
Exchange Commission on April 8, 2010.
|
|
Exhibit
10.15
|
Amendment
No. 1 to Common Stock Purchase Warrant issued to Arimathea Limited, dated
May 22, 2008, incorporated by reference to Exhibit 10.15 to Amendment No.
1 to the Company’s Annual Report on Form 10-K, filed with the Securities
and Exchange Commission on April 8, 2010.
|
|
Exhibit
10.16
|
Project
San Paolo Transfer Agreement, by and between the Company and Alternative
Solutions World S.r.l, dated as of April 7, 2009, incorporated by
reference to Exhibit 10.16 to Amendment No. 1 to the Company’s Quarterly
Report on Form 10-Q, filed with the Securities and Exchange Commission on
April 8, 2010.*
|
|
Exhibit
10.17
|
Project
San Paolo Advisory Agreement, by and between the Company and Marcus
Hewland LLC, dated as of April 7, 2009, incorporated by reference to
Exhibit 10.17 to Amendment No. 1 to the Company’s Quarterly Report on Form
10-Q, filed with the Securities and Exchange Commission on April 8,
2010.*
|
|
Exhibit
10.18
|
Project
Puglia Transfer Agreement, by and between the Company and Alternative
Solutions World S.r.l, dated as of April 7, 2009, incorporated by
reference to Exhibit 10.18 to Amendment No. 1 to the Company’s Quarterly
Report on Form 10-Q, filed with the Securities and Exchange Commission on
April 8, 2010.*
|
|
Exhibit
10.19
|
Project
Puglia Advisory Agreement, by and between the Company and Marcus Hewland
LLC, dated as of April 7, 2009, incorporated by reference to Exhibit 10.19
to Amendment No. 1 to the Company’s Quarterly Report on Form 10-Q, filed
with the Securities and Exchange Commission on April 8,
2010.*
|
|
Exhibit
10.20
|
Frame
Agreement for PV- Plant Acquisitions, by and between GPR Global Power
Resources Ltd. and Prime Sun Power Inc., dated as of November 18, 2009,
incorporated by reference to Exhibit 10.20 to the Company’s Annual Report
on Form 10-K, filed with the Securities and Exchange Commission on April
15, 2010.
|
|
Exhibit
10.21
|
Acquisition
Agreement, dated as of March 2, 2010, by and between the Company and GPR
Global Power Resources Ltd., incorporated by reference to Exhibit 10.21 to
the Company’s Annual Report on Form 10-K, filed with the Securities and
Exchange Commission on April 15, 2010.
|
|
Exhibit
10.22
|
Financing
Agreement, dated as of March 2, 2010, by and between the Company and CRG
Finance AG, incorporated by reference to Exhibit 10.22 to the Company’s
Annual Report on Form 10-K, filed with the Securities and Exchange
Commission on April 15,
2010.
|
37
Exhibit
10.23
|
Senior
Promissory Note, dated as of March 2, 2010, incorporated by reference to
Exhibit 10.23 to the Company’s Annual Report on Form 10-K, filed with the
Securities and Exchange Commission on April 15,
2010.
|
Code
of Ethics for Senior Financial Officers, incorporated by reference from
the Annual Report on Form 10-KSB filed with the Securities and Exchange
Commission on April 1, 2005.
|
||
Exhibit
21
|
List
of Subsidiaries.
|
Exhibit
31.1
|
Certification
of Principal Executive Officer and Principal Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
Exhibit
32.1
|
Certification
of the Principal Executive Officer and Principal Financial Officer
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
|
|
Exhibit
99.1
|
List
of Promissory Notes entered into by and between the Company and Rudana
Investment Group AG, incorporated by reference to Exhibit 99.1 to
Amendment No. 1 to the Company’s Annual Report on Form 10-K, filed with
the Securities and Exchange Commission on April 8,
2010.
|
*
|
Portions
of those exhibits marked with an asterisk have been omitted and filed
separately with the Commission pursuant to a request for confidential
treatment.
|
38
SIGNATURES
In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
PRIME
SUN POWER INC.
|
||
By:
|
/s/
Olivier de Vergnies
|
|
Name:
Olivier de Vergnies
|
||
Title:
Acting Principal Executive Officer
|
||
Acting Principal Financial Officer and
|
||
Acting Principal Accounting
Officer
|
Dated:
September 30,
2010
In
accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
/s/ Olivier de Vergnies
|
|
Name:
|
|
Title:
|
Director
|
Dated:
|
September
30,
2010
|
39
Exhibit
Index
Exhibit
No.
|
Description
of Exhibits
|
|
Exhibit
3.1
|
Certificate
of Incorporation, as amended, incorporated by reference to Exhibit 3.1 to
the Company’s Annual Report on Form 10-KSB, filed with the Securities and
Exchange Commission on April 14, 2008.
|
|
Exhibit
3.2
|
Bylaws,
as amended, incorporated by reference to Exhibit 3.2 to the Company’s
Annual Report on Form 10-KSB, filed with the Securities and Exchange
Commission on April 14, 2008.
|
|
Exhibit
10.1
|
Securities
Purchase and Sale Agreement, dated January 9, 2008, between Rudana
Investment Group AG and Viktoria Vynnyk, incorporated by reference to
Exhibit 99.1 to Rudana Investment Group AG’s Schedule 13D, filed with the
Securities and Exchange Commission on January 22, 2008.
|
|
Exhibit
10.2
|
Promissory
Note issued by the Company to Rudana Investment Group AG, dated as of
April 15, 2008, incorporated by reference to Exhibit 10.2 to the Company’s
Quarterly Report on Form 10-Q, filed with the Securities and Exchange
Commission on May 15, 2008.
|
|
Exhibit
10.3
|
Director’s
Agreement by and between the Company and Dr. Augustine Fou, dated as of
May 10, 2008, incorporated by reference to Exhibit 10.3 to the Company’s
Quarterly Report on Form 10-Q, filed with the Securities and Exchange
Commission on May 15, 2008.
|
|
Exhibit
10.4
|
Common
Stock Purchase Warrant issued to Arimathea Limited, dated May 10, 2008,
incorporated by reference to Exhibit 10.4 to the Company’s Quarterly
Report on Form 10-Q, filed with the Securities and Exchange Commission on
May 15, 2008.
|
|
Exhibit
10.5
|
Form
of Promissory Note issued by the Company to Rudana Investment Group AG,
incorporated by reference to Exhibit 10.5 to the Company’s Quarterly
Report on Form 10-Q, filed with the Securities and Exchange Commission on
August 19, 2008.
|
|
Exhibit
10.6
|
Chief
Technology Officer Services Agreement by and between the Company and
Cesare Boffa, dated as of September 22, 2008, incorporated by reference to
Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q, filed with
the Securities and Exchange Commission on November 19,
2008.
|
|
Exhibit
10.7
|
Director’s
Agreement by and between the Company and Cesare Boffa, dated as of October
6, 2008, incorporated by reference to Exhibit 10.7 to the Company’s
Quarterly Report on Form 10-Q, filed with the Securities and Exchange
Commission on November 19, 2008.
|
|
Exhibit
10.8
|
Employment
Agreement, by and between the Company and Frank Juergens, dated as of
January 13, 2009, incorporated by reference to Exhibit 10.8 to the
Company’s Quarterly Report on Form 10-Q, filed with the Securities and
Exchange Commission on May 20, 2009.
|
|
Exhibit
10.9
|
Director’s
Agreement, by and between the Company and Olivier de Vergnies, dated as of
January 16, 2009, incorporated by reference to Exhibit 10.9 to the
Company’s Quarterly Report on Form 10-Q, filed with the Securities and
Exchange Commission on May 20, 2009.
|
|
Exhibit
10.10
|
Director’s
Agreement, by and between the Company and Bruno Colle, dated as of March
18, 2009, incorporated by reference to Exhibit 10.10 to the Company’s
Quarterly Report on Form 10-Q, filed with the Securities and
Exchange Commission on May 20,
2009.
|
40
Director’s
Agreement, by and between the Company and Roberto Gerbo, dated as of March
24, 2009, incorporated by reference to Exhibit 10.11 to the Company’s
Quarterly Report on Form 10-Q, filed with the Securities and Exchange
Commission on May 20, 2009.
|
||
Exhibit
10.12
|
Separation
and Mutual Release Agreement, by and between the Company and Frank
Juergens, dated as of June 19, 2009, incorporated by reference to Exhibit
10.12 to the Company’s Quarterly Report on Form 10-Q, filed with the
Securities and Exchange Commission on August 21, 2009.
|
|
Exhibit
10.13
|
Management
Services Agreement, dated as of April 1, 2009 by and between the Company
and Prime Asset Finance, incorporated by reference to Exhibit 10.13 to
Amendment No. 1 to the Company’s Annual Report on Form 10-K, filed with
the Securities and Exchange Commission on April 8,
2010.
|
|
Exhibit
10.14
|
Common
Stock Purchase Warrant issued to Arimathea Limited, dated May 22, 2008,
incorporated by reference to Exhibit 10.14 to Amendment No. 1 to the
Company’s Annual Report on Form 10-K, filed with the Securities and
Exchange Commission on April 8, 2010.
|
|
Exhibit
10.15
|
Amendment
No. 1 to Common Stock Purchase Warrant issued to Arimathea Limited, dated
May 22, 2008, incorporated by reference to Exhibit 10.15 to Amendment No.
1 to the Company’s Annual Report on Form 10-K, filed with the Securities
and Exchange Commission on April 8, 2010.
|
|
Exhibit
10.16
|
Project
San Paolo Transfer Agreement, by and between the Company and Alternative
Solutions World S.r.l, dated as of April 7, 2009, incorporated by
reference to Exhibit 10.16 to Amendment No. 1 to the Company’s Quarterly
Report on Form 10-Q, filed with the Securities and Exchange Commission on
April 8, 2010.*
|
|
Exhibit
10.17
|
Project
San Paolo Advisory Agreement, by and between the Company and Marcus
Hewland LLC, dated as of April 7, 2009, incorporated by reference to
Exhibit 10.17 to Amendment No. 1 to the Company’s Quarterly Report on Form
10-Q, filed with the Securities and Exchange Commission on April 8,
2010.*
|
|
Exhibit
10.18
|
Project
Puglia Transfer Agreement, by and between the Company and Alternative
Solutions World S.r.l, dated as of April 7, 2009, incorporated by
reference to Exhibit 10.18 to Amendment No. 1 to the Company’s Quarterly
Report on Form 10-Q, filed with the Securities and Exchange Commission on
April 8, 2010.*
|
|
Exhibit
10.19
|
Project
Puglia Advisory Agreement, by and between the Company and Marcus Hewland
LLC, dated as of April 7, 2009, incorporated by reference to Exhibit 10.19
to Amendment No. 1 to the Company’s Quarterly Report on Form 10-Q, filed
with the Securities and Exchange Commission on April 8,
2010.*
|
|
Exhibit
10.20
|
Frame
Agreement for PV- Plant Acquisitions, by and between GPR Global Power
Resources Ltd. and Prime Sun Power Inc., dated as of November 18, 2009,
incorporated by reference to Exhibit 10.20 to the Company’s Annual Report
on Form 10-K, filed with the Securities and Exchange Commission on April
15, 2010.
|
|
Exhibit
10.21
|
Acquisition
Agreement, dated as of March 2, 2010, by and between the Company and GPR
Global Power Resources Ltd., incorporated by reference to Exhibit 10.21 to
the Company’s Annual Report on Form 10-K, filed with the Securities and
Exchange Commission on April 15, 2010.
|
|
Exhibit
10.22
|
Financing
Agreement, dated as of March 2, 2010, by and between the Company and CRG
Finance AG, incorporated by reference to Exhibit 10.22 to the Company’s
Annual Report on Form 10-K, filed with the Securities and Exchange
Commission on April 15,
2010.
|
41
Senior
Promissory Note, dated as of March 2, 2010, incorporated by reference to
Exhibit 10.23 to the Company’s Annual Report on Form 10-K, filed with the
Securities and Exchange Commission on April 15, 2010.
|
||
Exhibit
14.1
|
Code
of Ethics for Senior Financial Officers, incorporated by reference from
the Annual Report on Form 10-KSB filed with the Securities and Exchange
Commission on April 1, 2005.
|
|
Exhibit
21
|
List
of Subsidiaries.
|
Exhibit
31.1
|
Certification
of Principal Executive Officer and Principal Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
Exhibit
32.1
|
Certification
of the Principal Executive Officer and Principal Financial Officer
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
|
|
Exhibit
99.1
|
List
of Promissory Notes entered into by and between the Company and Rudana
Investment Group AG, incorporated by reference to Exhibit 99.1 to
Amendment No. 1 to the Company’s Annual Report on Form 10-K, filed with
the Securities and Exchange Commission on April 8,
2010.
|
*
|
Portions
of those exhibits marked with an asterisk have been omitted and filed
separately with the Commission pursuant to a request for confidential
treatment.
|
42