Sunworks, Inc. - FORM 10-Q/A - September 21, 2012

Attached files

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EXCEL - IDEA: XBRL DOCUMENT - Sunworks, Inc.	Financial_Report.xls
EX-31.2 - Sunworks, Inc.	ex31-2.htm
EX-32.1 - Sunworks, Inc.	ex32-1.htm
EX-31.1 - Sunworks, Inc.	ex31-1.htm
EX-32.2 - Sunworks, Inc.	ex32-2.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q/A

Amendment No. 1

(Mark One)

x QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2012.

o TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to ______________

Commission File Number 000-49805

SOLAR3D, INC.

(Name of registrant in its charter)

Delaware

(State or other jurisdiction of incorporation or organization)

01-05922991

(I.R.S. Employer Identification No.)

6500 Hollister Avenue, Suite 130 , Goleta, California 93117

(Address of principal executive offices) (Zip Code)

Issuer’s telephone Number: (805) 690-9000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes

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

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 definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	o		Accelerated filer	o
Non-accelerated filer (Do not check if a smaller reporting company)	o		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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.

The number of shares of registrant’s common stock outstanding as of May 14, 2012 was 121,972,296.

EXPLANATORY NOTE

This Amendment No. 1 on Form 10-Q/A to our Quarterly Report on Form 10-Q for the three months ended March 31, 2012, originally filed with the Securities and Exchange Commission on May 15, 2012, amends Items 1 (Financial Statements) and 2 (Management’s Discussion and Analysis of Financial Condition and Results of Operations), of our Quarterly Report on Form 10-Q/A. This Form 10-Q/A is filed to correct the financial statements for the three months ended March 31, 2012 for unrecorded liabilities and debt discount recognized as interest on promissory notes. Certifications from our Chief Executive Officer and Chief Financial Officer required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are attached to this Form 10-Q/A as Exhibits 31.1, 31.2, 32.1 and 32.2.

This Amendment No. 1 amends and restates in its entirety Items 1 and 2 and the Exhibit Index of the original filing. This Amendment No. 1 does not modify or update other disclosures in the original filing, and, accordingly, this Amendment No. 1 should be read in conjunction with the original filing.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS (Unaudited)	1
	Balance Sheets at March 31, 2012 (Unaudited) and December 31, 2011	1
	Statements of Operations for the Three Months Ended March 31, 2012 and March 31, 2011 (Unaudited)	2
	Statement of Shareholders' Deficit at March 31, 2012 (Unaudited)	3
	Statements of Cash Flows for the Three Months Ended March 31, 2012 and March 31, 2011 (Unaudited)	4
	Notes to the Consolidated Financial Statements (Unaudited)	5
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	9

PART II - OTHER INFORMATION
ITEM 6.	EXHIBITS	13

SIGNATURES		14

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

SOLAR3D, INC.

(A Development Stage Company)

BALANCE SHEETS

	March 31, 2012			December 31, 2011
	(Restated)
ASSETS

CURRENT ASSETS
Cash	$	-		$	-
Prepaid expense		18,750			25,000

TOTAL CURRENT ASSETS		18,750			25,000

PROPERTY & EQUIPMENT, at cost
Machinery & equipment		13,080			13,080
Computer equipment		57,795			57,795
Furniture & fixture		4,670			4,670
		75,545			75,545
Less accumulated depreciation		(69,916	)		(69,514	)

NET PROPERTY AND EQUIPMENT		5,629			6,031

OTHER ASSETS
Security deposit		2,975			2,975

TOTAL OTHER ASSET		2,975			2,975

TOTAL ASSETS	$	27,354		$	34,006

LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT)

CURRENT LIABILITIES
Bank Overdraft	$	6,632		$	12,916
Accounts payable		79,699			17,349
Accrued expenses		15,848			-
Accrued interest, related parties		241			-
Notes payable		78,500			-

TOTAL CURRENT LIABILITIES		180,920			30,265



SHAREHOLDERS' EQUITY/(DEFICIT)
Common stock, $.001 par value; 550,000,000 authorized shares; 120,972,296 and 118,283,724 shares issued and outstanding, respectively		120,972			118,283
Additional paid in capital		10,265,722			9,974,861
Deficit accumulated during the development stage		(10,540,260	)		(10,089,403	)

TOTAL SHAREHOLDERS' EQUITY/(DEFICIT)		(153,566	)		3,741

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT)	$	27,354		$	34,006

The accompanying notes are an integral part of these consolidated financial statements.

SOLAR3D, INC.

(A Development Stage Company)

STATEMENTS OF OPERATIONS

(Unaudited)

							From Inception
							January 30,2002
	Three Months Ended						through
	March 31, 2012			March 31, 2011			March 31, 2012
	(Restated)

REVENUE	$	-		$	-		$	1,127,406

COST OF SERVICES		-			-			496,177

GROSS PROFIT		-			-			631,229

OPERATING EXPENSES
Selling, General and administrative expenses		318,476			313,232			6,605,624
Research and development		53,237			21,299			1,668,340
Impairment loss		-			-			1,753,502
Depreciation and amortization expense		402			571			116,240

TOTAL OPERATING EXPENSES		372,115			335,102			10,143,706

LOSS FROM OPERATIONS		(372,115	)		(335,102	)		(9,512,477	)

OTHER INCOME/(EXPENSES)
Interest income		-			-			10,321
Interest expense		(78,742	)		(2,093	)		(350,548	)
Penalties		-			-			(184	)
Gain/(loss) on investment		-			-			(73,121	)
Loss on settlement of debt		-			-			(613,288	)
Gain/(loss) on sale of asset		-			-			(963	)

TOTAL OTHER INCOME/(EXPENSES)		(78,742	)		(2,093	)		(1,027,783	)

NET LOSS	$	(450,857	)	$	(337,195	)	$	(10,540,260	)


BASIC AND DILUTED LOSS PER SHARE	$	(0.00	)	$	(0.00	)

WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING BASIC AND DILUTED		119,534,136			102,497,253

The accompanying notes are an integral part of these consolidated financial statements.

SOLAR3D, INC.

(A Development Stage Company)

STATEMENT OF SHAREHOLDERS' EQUITY/(DEFICIT)

							Accumulated
							Deficit During
					Additional		the
	Common stock				Paid-in		Development
	Shares		Amount		Capital		Stage			Total
Balance at December 31, 2011		118,283,724	$	118,283	$	9,974,861	$	(10,089,403	)	$	3,741

Issuance of common stock for cash and subscription payable (price per share between $0.03 and $0.05) (unaudited)		2,688,572		2,689		87,561		-			90,250

Debt discount (unaudited)		-		-		78,500		-			78,500

Stock compensation cost (unaudited)		-		-		124,800		-			124,800

Net loss for the three months ended March 31, 2012 (unaudited) (restated)		-		-		-		(450,857	)		(450,857	)

Balance at March 31, 2012 (unaudited) (restated)		120,972,296	$	120,972	$	10,265,722	$	(10,540,260	)	$	(153,566	)

The accompanying notes are an integral part of these consolidated financial statements.

SOLAR3D, INC.

(A Development Stage Company)

STATEMENTS OF CASH FLOWS

(Unaudited)

							From Inception
							January 30, 2002
	Three Months Ended						through
	March 31, 2012			March 31, 2011			March 31, 2012
	(Restated)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(450,857	)	$	(337,195	)	$	(10,540,260	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization		402			571			122,240
Issuance of common shares and warrants for services		-			-			832,361
Issuance of common shares in conversion of debt		-			-			400,000
(Gain)/loss on investment		-			-			73,121
Stock Compensation Cost		124,800			124,803			901,783
Gain on sale of asset		-			-			963
Impairment loss		-			-			1,753,502
Amortization of debt discount recognized as interest		78,500			-			78,500
Loss on settlement of debt		-			-			613,288
Changes in Assets and Liabilities
(Increase) Decrease in:
Prepaid expenses		6,250			6,000			(18,750	)
Deposits and other assets		-			-			2,025
Increase (Decrease) in:
Accounts payable		62,350			4,129			159,199
Accrued expenses		16,089			10,083			603,370

NET CASH USED IN OPERATING ACTIVITIES		(162,466	)		(191,609	)		(5,018,658	)

NET CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchase of property and equipment		-			-			(81,198	)
Sale of asset		-			-			3,963
Investment in companies		-			-			(6,121	)

NET CASH USED IN INVESTING ACTIVITIES		-			-			(83,356	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from bank overdraft		(6,284	)					6,632
Proceeds from notes payable related parties		78,500			47,000			1,252,842
Proceeds from convertible promissory note		-			-			129,000
Repayment of notes payable related party		-			(47,000	)		(184,000	)
Contributed capital by shareholder		-			-			19,197
Proceeds from subsidiary		-			-			300,000
Proceeds from subscription payable		-			-			6,750
Proceeds from issuance of common stock and subscription payable		90,250			309,000			3,563,943

NET CASH PROVIDED BY FINANCING ACTIVITIES		162,466			309,000			5,094,364

NET INCREASE/DECREASE IN CASH		-			117,391			(7,650	)


CASH, BEGINNING OF PERIOD		-			3,311			7,650

CASH, END OF PERIOD	$	-		$	120,702		$	-

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid	$	-		$	134		$	137,657
Income taxes	$	-		$	-		$	-

The accompanying notes are an integral part of these consolidated financial statements.

SOLAR3D, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS-UNAUDITED

MARCH 31, 2012

1.	BASIS OF PRESENTATION

The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012. For further information refer to the consolidated financial statements and footnotes thereto included in the Company's Form 10-K for the year ended December 31, 2011.

Going Concern

The accompanying financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities and commitments in the normal course of business. The accompanying financial statements do not reflect any adjustments that might result if the Company is unable to continue as a going concern. The Company does not generate significant revenue, and has negative cash flows from operations, which raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern and appropriateness of using the going concern basis is dependent upon, among other things, an additional cash infusion. The Company has obtained funds from its shareholders since its inception through March 31, 2012. It is Management's plan to generate additional working capital from investors, and then continue to pursue its business plan and purposes.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of significant accounting policies of Solar3D, Inc. is presented to assist in understanding the Company’s financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.

Development Stage Activities and Operations

The Company has been in its initial stages of formation and for the three months ended March 31, 2012, had no revenues. A development stage activity is one in which all efforts are devoted substantially to establishing a new business and even if planned principal operations have commenced, revenues are insignificant.

Cash and Cash Equivalent

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Stock-Based Compensation

Share based payments applies to transactions in which an entity exchanges its equity instruments for goods or services, and also applies to liabilities an entity may incur for goods or services that are to follow a fair value of those equity instruments. We will be required to follow a fair value approach using an option-pricing model, such as the Black-Scholes option valuation model, at the date of a stock option grant. The deferred compensation calculated under the fair value method would then be amortized over the respective vesting period of the stock option. The adoption of share based compensation has no material impact on our results of operations.

Loss per Share Calculations

Loss per Share dictates the calculation of basic earnings per share and diluted earnings per share. Basic earnings per share are computed by dividing income available to common shareholders by the weighted-average number of common shares available. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. No shares for employee options or warrants were used in the calculation of the loss per share as they were all anti-dilutive. The Company’s diluted loss per share is the same as the basic loss per share for the three months ended March 31, 2012 and 2011 as the inclusion of any potential shares would have had an anti-dilutive effect due to the Company generating a loss.

SOLAR3D, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS-UNAUDITED

MARCH 31, 2012

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Revenue Recognition

We recognize revenue upon delivery, provided that evidence of an arrangement exists, title, and risk of loss have passed to the customer, fees are fixed or determinable, and collection of the related receivable is reasonably assured. We record revenue net of estimated product returns, which is based upon our return policy, sales agreements, management estimates of potential future product returns related to current period revenue, current economic trends, changes in customer composition and historical experience. We accrue for warranty costs, sales returns, and other allowances based on our experience, which tells us we have less than $25,000 per year in warranty returns and allowances. Generally, we extend credit to our customers and do not require collateral. We perform ongoing credit evaluations of our customers and historic credit losses have been within our expectations. We do not ship a product until we have either a purchase agreement or rental agreement signed by the customer with a payment arrangement. This is a critical policy, because we want our accounting to show only sales which are “final” with a payment arrangement. We do not make consignment sales, nor inventory sales subject to a “buy back” or return arrangement from customers. Accordingly, original equipment manufacturers do not presently have a right to return unsold products to us.

We also grant exclusive licenses for the use of the technology required to operate our products. Software license revenue is recognized over the contract period, for those contracts that either do not contain a service component or that have services which are not essential to the functionality of any other element of the contract.

Recently adopted pronouncements

Management reviewed accounting pronouncements issued during the three months ended March 31, 2012, and no pronouncements were adopted during the period.

3. CAPITAL STOCK AND WARRANTS

During the three months ended March 31, 2012, the Company issued 1,300,000 shares of common stock at a price of $0.03 per share for cash of $34,000; issued 428,572 shares of common stock at a price of $0.04 per share for cash of $15,000; issued 825,000 shares of common stock at a price of $0.05 per share for cash of $41,250; issued 135,000 shares of common stock at a price of $0.05 for a subscription payable of $6,750.

During the three months ended March 31, 2011, the Company issued 4,620,004 shares of common stock at prices of between $0.05 and $0.075 per share for cash of $309,000.

4. STOCK OPTIONS AND WARRANTS

During the year ended December 31, 2010, in consideration for services as a director of the Company, the Board of Directors issued to Mr. Nelson a nonqualified stock option to purchase up to 15,000,000 shares of the Company’s common stock. The stock options were granted on July 22, 2010 and vest 1/36th per month commencing on a monthly basis as of August 1, 2010, for as long as he is an employee or consultant of the Company. The stock options are exercisable for a period of seven years from the date of grant at an exercise price of $0.05 per share, as adjusted for the five for one reverse split of the Company’s common stock. The Company determined the fair market value of these options by using the Black Scholes option valuation model with the following significant assumptions:

Risk free interest rate		2.38%
Stock volatility factor		229%
Weighted average expected option life		7 years
Expected dividend yield		None

SOLAR3D, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS-UNAUDITED

MARCH 31, 2012

4. STOCK OPTIONS AND WARRANTS (Continued)

A summary of the Company’s stock option activity and related information follows:

	3/31/2012
			Weighted
	Number		average
	of		exercise
	Options		price
Outstanding, beginning of period		15,000,000	$	0.05
Granted		-		-
Exercised		-		-
Expired		-		-
Outstanding, end of period		15,000,000	$	0.05
Exercisable at the end of period		8,333,333	$	0.05
Weighted average fair value of options granted during the period			$	-

The stock-based compensation expense recognized in the statement of operations during the three month period ended March 31, 2012 and 2011, were $124,800 and $124,803, respectively.

WARRANTS

During the three months ended March 31, 2012, the Company granted 7,971,430 stock purchase warrants associated with promissory notes and private placements to purchase 7,971,430 shares of common stock at prices between $0.025 and $0.05. At March 31, 2012, the Company had a total of 22,204,770 common stock purchase warrants outstanding.

5. RELATED PARTY TRANSACTIONS

During the period ended March 31, 2012, the Company signed promissory notes for funds received in the amount of $78,500 for operating expenses from an investor. The notes bear interest at 5% per annum, and are due within one year. Also, as collateral the investor was assigned stock purchase warrants to purchase 2,757,143 shares of common stock.

6. SUBSEQUENT EVENTS

Management has evaluated subsequent events according to the requirements of ASC TOPIC 855 and has reported the following events:

During the subsequent quarter, the Company received funds of $21,000 for signed promissory notes, and as collateral issued 2,320,000 stock purchase warrants to purchase 2,320,000 shares of common stock. Also, the Company issued 1,000,000 shares of common stock for services at fair value of $50,000.

Management concluded there were no other subsequent events or transactions that require recognition or disclosure in the financial statements.

7. RESTATEMENT OF FINANCIAL STATEMENTS

During the period ended March 31, 2012, the Company received vendor invoices for services, which were not recorded in the accounts payable. Also, promissory notes were issued with stock purchase warrants, but the debt discount was not recognized.

As the errors were material to the current period, the Company has restated the Balance Sheet and Statement of Operations as of March 31, 2012 to correct the misstatements as follows:

·	Accounts payable increased by $45,000

·	Web hosting expenses increased by $15,000

·	Investor relations increased by $30,000

·	Increase in amortization of debt discount recognized as interest expense resulting in a $78,500 increase in APIC

SOLAR3D, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS-UNAUDITED

MARCH 31, 2012

7. RESTATEMENT OF FINANCIAL STATEMENTS (Continued)

Financial Report Line Item/Balance Affected March 31, 2012

	As Reported			Restatement			Restated
Statement of Operations
Operating expenses	$	326,713		$	45,000		$	371,713

Total Operating Expenses		327,115			45,000			372,115

Other Expenses
Interest expense		(242	)		(78,500	)		(78,742	)
Total Other Expenses		(242	)		(78,500	)		(78,742	)

Net Loss	$	327,357		$	123,500		$	450,857


Balance Sheet
Current Liabilities
Accounts Payable	$	34,699		$	45,000		$	79,699

Shareholder's Deficit
Additional Paid in Capital	$	10,187,223		$	78,500		$	10,265,723
Accumulated Deficit	$	10,416,760		$	123,500		$	10,540,260

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Cautionary Statements

This Form 10-Q/A contains financial projections and other “forward-looking statements,” as that term is used in federal securities laws, about Solar3D, Inc.’s (“Solar3D,” “we,” “us,” or the “Company”) financial condition, results of operations and business. These statements include, among others: statements concerning the potential for revenues and expenses and other matters that are not historical facts. These statements may be made expressly in this Form 10-Q/A. You can find many of these statements by looking for words such as “believes,” “expects,” “anticipates,” “estimates,” or similar expressions used in this Form 10-Q/A. These forward-looking statements are subject to numerous assumptions, risks and uncertainties that may cause the Company’s actual results to be materially different from any future results expressed or implied by the Company in those statements. The most important facts that could prevent the Company from achieving its stated goals include, but are not limited to, the following:

(a)

inability to complete research and development of the new Solar3D technology with little or no current revenue;

(b)

volatility or decline of the Company’s stock price;

(c)

potential fluctuation in quarterly results;

(d)

failure of the Company to earn revenues or profits;

(e)

inadequate capital to continue business;

(f)

barriers to raising the additional capital or to obtaining the financing needed to implement its business plans;

(g)

lack of demand for the Company’s products and services;

(h)

rapid and significant changes in markets;

(i)

litigation with or legal claims and allegations by outside parties;

(j)

insufficient revenues to cover operating costs;

(k)

inability to start or acquire new businesses, or lack of success of new businesses started or acquired by the Company, if any;

(l)

inability to effectively develop or commercialize our new Solar3D technology or to earn revenue from it; and

(m)

inability to obtain patent or other protection for the Company’s proprietary intellectual property.

Because the statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by the forward-looking statements. The Company cautions you not to place undue reliance on the statements, which speak only as of the date of this Form 10-Q/A. The cautionary statements contained or referred to in this section should be considered in connection with any subsequent written or oral forward-looking statements that the Company or persons acting on its behalf may issue.

The Company does not undertake any obligation to review or confirm analysts’ expectations or estimates or to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q/A or to reflect the occurrence of unanticipated events.

The following discussion should be read in conjunction with our condensed financial statements and notes to those statements. In addition to historical information, the following discussion and other parts of this quarterly report contain forward-looking information that involves risks and uncertainties.

Overview

On August 5, 2010, the holders of a majority of the outstanding voting stock of the Company voted by written consent to (1) effect a one-for-five reverse stock split, and (2) change the name of the Company to Solar 3D, Inc. Our new business focus is centered on the acquisition, development, and commercialization of new proprietary technology to significantly increase the efficiency and energy production of solar photovoltaic cells that are currently offered in the market and that may be developed in the future. In furtherance of our new business focus, we recently applied for patents covering a novel six-dimensional solar cell technology that is designed to maximize the conversion of sunlight into electricity. We believe our new technology will dramatically increase the efficiency of solar cells.

Almost all conventional solar cells have a two-dimensional design where up to 30 percent of incident is sunlight reflected off of each solar cell’s surface and more light energy absorbed and lost inside the solar cell materials than is converted into energy. By contrast, our Solar3D design uses a matrix of light-collecting elements that guide sunlight into a corresponding array of six-dimensional, micro-photovoltaic structures. The sunlight, in the form of photons, is trapped among these micro-structures, where it bounces around until virtually all of the energy is converted into electricity. Solar3D aims to create a better solar cell using this innovative technique by eliminating surface reflection and maximizing the conversion of photons into electrons to achieve greater efficiency and a lower cost per watt.

We currently have one full time employee, our chief executive officer . We also retain the services of several research consultants who are responsible for product development.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to impairment of property, plant and equipment, intangible assets, deferred tax assets and fair value computation using the Black Scholes option pricing model. We base our estimates on historical experience and on various other assumptions, such as the trading value of our common stock and estimated future undiscounted cash flows, that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions; however, we believe that our estimates, including those for the above-described items, are reasonable.

Use of Estimates

In accordance with accounting principles generally accepted in the United States, management utilizes estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. These estimates and assumptions relate to recording net revenue, collectability of accounts receivable, useful lives and impairment of tangible and intangible assets, accruals, income taxes, inventory realization, stock-based compensation expense and other factors. Management believes it has exercised reasonable judgment in deriving these estimates. Consequently, a change in conditions could affect these estimates.

Fair Value of Financial Instruments

Our cash, cash equivalents, investments, accounts receivable and accounts payable are stated at cost which approximates fair value due to the short-term nature of these instruments.

Revenue Recognition

We will continue to recognize revenue in accordance with the Securities and Exchange Commission Staff Accounting Bulletin No. 104, “Revenue Recognition in Financial Statements” (“SAB 104”). We will continue to recognize revenue upon delivery, provided that evidence of an arrangement exists, title, and risk of loss have passed to the customer, fees are fixed or determinable, and collection of the related receivable is reasonably assured. We will continue to record revenue net of estimated product returns, which is based upon our return policy, sales agreements, management estimates of potential future product returns related to current period revenue, current economic trends, changes in customer composition and historical experience. We will continue to accrue for warranty costs, sales returns, and other allowances based on our prior experience in servicing customers and products. We may extend credit to our customers based upon credit evaluations and do not require collateral. We do not and will not ship a product until we have either a purchase agreement or rental agreement signed by the customer with a payment arrangement. This is a critical policy, because we want our accounting to show only sales which are “final” with a payment arrangement. We do not and will not make consignment sales or inventory sales subject to a “buy back” or return arrangement from customers.

Provision For Sales Returns, Allowances and Bad Debts

We will continue to maintain a provision for sales allowances, returns and bad debts. Sales returns and allowances result from equipment damaged in delivery or customer dissatisfaction, as provided by agreement. The provision will continue to be provided for by reducing gross revenue by a portion of the amount invoiced during the relevant period. The amount of the reduction will continue to be estimated based on historical experience.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2012 COMPARED TO THE THREE MONTHS ENDED MARCH 31, 2011

REVENUE AND COST OF SALES

For the three months ended March 31, 2012 and 2011, the Company had no revenue or cost of sales and is in its development stage.

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES

Selling, general, and administrative (“SG&A”) expenses increased by $5,244 to $318,476 for the three months ended March 31, 2012 compared to $313,232 for the three months ended March 31, 2011. SG&A expenses increased due to an increase in marketing expenses and a decrease in overall operating expenses.

RESEARCH AND DEVELOPMENT

Research and development (“R&D”) costs increased by $31,938 to $53,237 for the three months ended March 31, 2012 compared to $21,299 for the three months ended March 31, 2011. This increase in R&D costs was the result of an increase in consulting fees related to review of the technology.

NET LOSS

Net loss increased by $(113,662) to $(450,857) for the three months ended March 31, 2012, compared to $(337,195) for the three months ended March 31, 2011. The increase in net loss was the result of a net increase in overall operating expenses. Currently, operating costs exceed revenue because sales have not yet commenced. We cannot assure when the Company will earn revenue or if revenue will exceed operating costs.

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2012, we had a working deficit of $(162,170) as compared to a working deficit of $(5,265) at December 31, 2011. This increase in working capital deficit was due primarily to an overall increase in accounts payable, accrued expenses, and notes payable.

Cash flow used in operating activities was $(162,466) for the three months ended March 31, 2012, as compared to cash used of $(191,609) for the three months ended March 31, 2011. This decrease of cash used in operating activities of $(29,143) was primarily attributable to the increase in net loss plus the payment of prepaid expenses, and the increase in accounts payable, and accrued expenses.

Cash used in investing activities was $0 for the three months ended March 31, 2012 and 2011, respectively. There were no purchases of tangible or intangible assets during the periods.

Cash provided from financing activities during the three months ended March 31, 2012 was $162,466 as compared to cash provided of $309,000 for the three months ended March 31, 2011. The decrease of $(146,534) was primarily due to a decrease in equity financing, and an increase in proceeds from notes payable.

Off-Balance Sheet Arrangements

We do not have any off balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, results of operations, liquidity, or capital expenditures.

PART II – OTHER INFORMATION

ITEM 6. EXHIBITS.

Exhibit		Description

31.1		Section 302 Certification of Principal Executive Officer
31.2		Section 302 Certification of Principal Accounting Officer
32.1		Section 906 Certification of Principal Executive Officer
32.2		Section 906 Certification of Principal Accounting Officer
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	SOLAR3D, INC.

Dated: September 21, 2012	By:	/s/James B. Nelson
		James B. Nelson
		Director and Chief Executive Officer (Principal Executive Officer) and Interim Chief Financial Officer (Principal Accounting Officer)

Sunworks, Inc. - FORM 10-Q/A - September 21, 2012

Attached files

Sunworks, Inc. Reports