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EX-32 - EXHIBIT 32 - KinerjaPay Corp. | exh32.htm |
EX-31 - EXHIBIT 31 - KinerjaPay Corp. | exh31.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM 10-Q
___________________
ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2015
Commission File Number: 333-168068
SOLARFLEX
CORP.
(Exact Name Of
Registrant As Specified In Its Charter)
Delaware | 42-1771817 |
(State of Incorporation) | (I.R.S. Employer Identification No.) |
c/o Sergei Rogov, 12 Abba Hillel Silver Street, 11th Floor, Ramat Gan, Israel | 52506 |
(Address of Principal Executive Offices) | (ZIP Code) |
Registrant's Telephone Number, Including Area Code: +(972) 3-753-9888
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 x No ¨
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer (as defined in Rule 12b-2 of the Exchange Act) or a smaller reporting company .
Large accelerated filer ¨ | Accelerated filer ¨ | Non-Accelerated filer ¨ | Smaller reporting company x |
On November 6, 2015, the Registrant had 135,249,990 shares of common stock outstanding.
Item |
Description |
Page |
|||
---|---|---|---|---|---|
PART I - FINANCIAL INFORMATION |
|||||
ITEM 1. | FINANCIAL STATEMENTS. | 3 | |||
Balance Sheets | 4 | ||||
Statements of Operations | 5 | ||||
Statements of Cash Flows | 6 | ||||
Notes to Financial Statements | 7 | ||||
ITEM 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND PLAN OF OPERATIONS. | 13 | |||
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. | 14 | |||
ITEM 4. | CONTROLS AND PROCEDURES. | 14 | |||
PART II - OTHER INFORMATION |
|||||
ITEM 1. | LEGAL PROCEEDINGS. | 15 | |||
ITEM 1A. | RISK FACTORS. | 15 | |||
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. | 15 | |||
ITEM 3. | DEFAULT UPON SENIOR SECURITIES. | 15 | |||
ITEM 4. | MINE SAFETY DISCLOSURE. | 15 | |||
ITEM 5. | OTHER INFORMATION. | 15 | |||
ITEM 6. | EXHIBITS. | 15 |
PART I - FINANCIAL INFORMATION
SOLARFLEX CORP. | ||||
Balance Sheets | ||||
As of September 30, 2015 and December 31, 2014 | ||||
Back to Table of Contents | ||||
September 30, 2015 | December 31, 2014 | |||
(Unaudited) | (Audited) | |||
ASSETS |
||||
Current assets: | ||||
Cash | $ | 1,016 | $ | 1,824 |
Total current assets | 1,016 | 1,824 | ||
Total Assets | $ | 1,016 | $ | 1,824 |
LIABILITIES AND STOCKHOLDERS' DEFICIT |
||||
Current liabilities: | ||||
Accrued expenses | $ | 12,550 | $ | 4,150 |
Accrued interest | 20,361 | 9,810 | ||
Current portion of convertible notes payable, net of discount, $94,000 and $0, respectively, in default | 122,000 | 77,275 | ||
Total current liabilities | 154,911 | 91,235 | ||
Total liabilities | 154,911 | 91,235 | ||
Stockholders' deficit: | ||||
Common stock, par value $0.0001 per share; 500,000,000 shares authorized; | ||||
135,249,990 shares issued and outstanding at September 30, 2015 and December 31, 2014 | 13,525 | 13,525 | ||
Additional paid-in capital | 706,429 | 491,791 | ||
Accumulated deficit | (873,849) | (594,727) | ||
Total stockholders' deficit | (153,895) | (89,411) | ||
Total Liabilities and Stockholders' Deficit | $ | 1,016 | $ | 1,824 |
See notes to unaudited interim financial statements. |
SOLARFLEX CORP. | ||||||||
Statements of Operations | ||||||||
For the Three and Nine Months Ended September 30, 2015 and 2014 | ||||||||
(Unaudited) | ||||||||
Back to Table of Contents | ||||||||
For the | For the | For the | For the | |||||
Three Months Ended | Three Months Ended | Nine Months Ended | Nine Months Ended | |||||
September 30, 2015 | September 30, 2014 | September 30, 2015 | September 30, 2014 | |||||
Expenses: | ||||||||
General and administrative | 7,174 | 3,939 | 32,208 | 95,007 | ||||
Total | 7,174 | 3,939 | 32,208 | 95,007 | ||||
(Loss) from operations | (7,174) | (3,939) | (32,208) | (95,007) | ||||
Other income (expense): | ||||||||
Interest expense | (3,651) | (2,571) | (10,551) | (6,209) | ||||
Amortization of debt discount | (12,162) | (20,316) | (37,058) | (50,628) | ||||
Loss on extinguishment of debt | (199,305) | - | (199,305) | - | ||||
Total costs and expenses | (222,292) | (26,826) | (279,122) | (151,844) | ||||
Net loss before income taxes | (222,292) | (26,826) | (279,122) | (151,844) | ||||
Income taxes | - | - | - | - | ||||
Net loss | $ | (222,292) | $ | (26,826) | $ | (279,122) | $ | (151,844) |
Basic and diluted per share amounts: | ||||||||
Basic and diluted net loss | $ | (0.00) | $ | (0.00) | (0.00) | (0.00) | ||
Weighted average shares outstanding | ||||||||
(basic and diluted) | 135,249,990 | 135,249,990 | 135,249,990 | 135,161,162 | ||||
See notes to unaudited interim financial statements. |
SOLARFLEX CORP. | ||||
Statements of Cash Flows | ||||
For the Nine Months Ended September 30, 2015 and 2014 | ||||
(Unaudited) | ||||
Back to Table of Contents | ||||
For the | For the | |||
Nine Months Ended | Nine Months Ended | |||
September 30, 2015 | September 30, 2014 | |||
Cash flows from operating activities: | ||||
Net loss | $ | (279,122) | $ | (151,844) |
Adjustments required to reconcile net loss to cash used in operating activities: | ||||
Amortization of debt discount | 37,058 | 50,628 | ||
Loss on extinguishment of debt | 199,305 | - | ||
Common stock issued for services | - | 32,500 | ||
Changes in net assets and liabilities: | ||||
Increase (decrease) in accounts payable and accrued liabilities | 18,951 | 3,652 | ||
Net cash used in operating activities | (23,808) | (65,064) | ||
Cash flows from financing activities: | ||||
Proceeds of convertible debt | 23,000 | 65,000 | ||
Net cash provided by financing activities | 23,000 | 65,000 | ||
Change in cash | (808) | (64) | ||
Cash - Beginning of period | 1,824 | 971 | ||
Cash - End of period | $ | 1,016 | $ | 907 |
See notes to unaudited interim financial statements. | ||||
Supplemental Cash Flow Disclosure: | ||||
BCF of debt discount | $ | 15,333 | $ | 65,000 |
SOLARFLEX CORP.
Notes to Unaudited
Interim Financial Statements
For the Periods Ended September 30, 2015 and
December 31, 2014
Back to Table of Contents
1. The Company and Significant Accounting Policies
Organizational Background: Solarflex Corp. ("Solarflex" or the
"Company") is a Delaware corporation in the development stage and has not
commenced operations. The Company was incorporated under the laws of the State
of Delaware on February 12, 2010. The business plan of the Company is to develop
a commercial application of the design in a patent of a "Solar element and
method of manufacturing the same". The Company also intends to produce a
prototype, and manufacture and market the product and/or seek third party
entities interested in licensing the rights to manufacture and market the
device. The accompanying financial statements of the Company were prepared from
the accounts of the Company under the accrual basis of accounting.
Basis of Presentation: The accompanying financial statements
have been prepared in conformity with accounting principles generally accepted
in the United States of America, which contemplate continuation of the Company
as a going concern. The Company has not established any source of revenue to
cover its operating costs, and as such, has incurred an operating loss since
inception. Further, as of September 30, 2015, the cash resources of the Company
were insufficient to meet its current business plan, and the Company had
negative working capital. These and other factors raise substantial doubt about
the Company's ability to continue as a going concern. The accompanying financial
statements do not include any adjustments to reflect the possible future effects
on the recoverability and classification of assets or the amounts and
classification of liabilities that may result from the possible inability of the
Company to continue as a going concern.
Significant Accounting
Policies
Use of Estimates: The preparation of financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statement and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from the
estimates.
Cash and Cash Equivalents: For financial
statement presentation purposes, the Company considers those short-term, highly
liquid investments with original maturities of three months or less to be cash
or cash equivalents. There were no cash equivalents as of September 30, 2015 and
December 31, 2014.
Property and Equipment: New
property and equipment are recorded at cost. Depreciation is computed using the
straight-line method over the estimated useful lives of the assets, generally 5
years. Expenditures for renewals and betterments are capitalized. Expenditures
for minor items, repairs and maintenance are charged to operations as incurred.
Gain or loss upon sale or retirement due to obsolescence is reflected in the
operating results in the period the event takes place.
Valuation of
Long-Lived Assets: We review the recoverability of our long-lived
assets including equipment, goodwill and other intangible assets, when events or
changes in circumstances occur that indicate that the carrying value of the
asset may not be recoverable. The assessment of possible impairment is based on
our ability to recover the carrying value of the asset from the expected future
pre-tax cash flows (undiscounted and without interest charges) of the related
operations. If these cash flows are less than the carrying value of such asset,
an impairment loss is recognized for the difference between estimated fair value
and carrying value. Our primary measure of fair value is based on discounted
cash flows. The measurement of impairment requires management to make estimates
of these cash flows related to long-lived assets, as well as other fair value
determinations.
Stock Based Compensation: Stock-based
awards are accounted for using the fair value method in accordance with ASC
718, Share-Based Payments. Our primary type of share-based compensation consists
of stock options. We use the Black-Scholes option pricing model in valuing
options. The inputs for the valuation analysis of the options include the market
value of the Company's common stock, the estimated volatility of the Company's
common stock, the exercise price of the warrants and the risk free interest
rate.
Accounting For Obligations And Instruments Potentially To Be
Settled In The Company's Own Stock: We account for obligations
and instruments potentially to be settled in the Company's stock in accordance
with FASB ASC 815, Accounting for Derivative Financial Instruments. This issue
addresses the initial balance sheet classification and measurement of contracts
that are indexed to, and potentially settled in, the Company's own stock.
Fair Value of Financial Instruments: FASB ASC 825,
"Financial Instruments," requires entities to disclose the fair value of
financial instruments, both assets and liabilities recognized and not recognized
on the balance sheet, for which it is practicable to estimate fair value. FASB
ASC 825 defines fair value of a financial instrument as the amount at which the
instrument could be exchanged in a current transaction between willing parties.
At September 30, 2015 and December 31, 2014, the carrying value of certain
financial instruments (cash and cash equivalents, accounts payable and accrued
expenses.) approximates fair value due to the short-term nature of the
instruments or interest rates, which are comparable with current rates.
Fair Value Measurements: The Company measures fair value
under a framework that utilizes a fair value hierarchy that prioritizes the
inputs to valuation techniques used to measure fair value. The hierarchy gives
the highest priority to unadjusted quoted prices in active markets for identical
assets or liabilities (level 1 measurements) and the lowest priority to
unobservable inputs (level 3 measurements). The three levels of inputs which
prioritize the inputs used in measuring fair value are:
Level 1:
Inputs to the valuation methodology are unadjusted quoted prices for identical
assets or liabilities in active markets that the Company has the ability to
access.
Level 2: Inputs to the valuation methodology include:
-
Quoted prices for similar assets or liabilities in active markets;
- Quoted
prices for identical or similar assets or liabilities in inactive markets;
-
Inputs other than quoted prices that are observable for the asset or liability;
- Inputs that are derived principally from or corroborated by observable market
data by correlation or other means.
If the asset or liability has a specified
(contractual) term, the level 2 input must be observable for substantially the
full term of the asset or liability.
Level 3: Inputs to the
valuation methodology are unobservable and significant to the fair value
measurement.
The assets or liability's fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. The following table presents assets that were measured and recognize at fair value on September 30, 2015 and December 31, 2014 and the year periods ended on a recurring basis:
Fair Value Measurements at September 30, 2015 |
||||||||
Quoted Prices in Active |
Significant Other |
Significant |
||||||
Markets for Identical Assets |
Observable Inputs |
Unobservable Inputs |
||||||
Total |
(Level 1) |
(Level 2) |
(Level 3) |
|||||
None | $ |
- |
$ |
- | $ |
- |
$ |
- |
Total assets at fair value | $ |
- |
$ |
- | $ |
- |
$ |
- |
Fair Value Measurements at December 31, 2014 |
||||||||
Quoted Prices in Active |
Significant Other |
Significant |
||||||
Markets for Identical Assets |
Observable Inputs |
Unobservable Inputs |
||||||
Total |
(Level 1) |
(Level 2) |
(Level 3) |
|||||
None | $ |
- |
$ |
- | $ |
- |
$ |
- |
Total assets at fair value | $ |
- |
$ |
- | $ |
- |
$ |
- |
When the Company changes its valuation inputs for measuring financial assets and liabilities at fair value, either due to changes in current market conditions or other factors, it may need to transfer those assets or liabilities to another level in the hierarchy based on the new inputs used. The Company recognizes these transfers at the end of the reporting period that the transfers occur. For the fiscal periods ended September 30, 2015 and December 31, 2014, there were no significant transfers of financial assets or financial liabilities between the hierarchy levels.
Earnings per Common Share: We compute net income (loss) per share in accordance with ASC 260, Earning per Share. ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.
Income Taxes: We have adopted ASC 740, Accounting for
Income Taxes. Pursuant to ASC 740, we are required to compute tax asset
benefits for net operating losses carried forward. The potential benefits of
net operating losses have not been recognized in these financial statements
because the Company cannot be assured it is more likely than not it will
utilize the net operating losses carried forward in future years.
We
must make certain estimates and judgments in determining income tax expense
for financial statement purposes. These estimates and judgments occur in the
calculation of certain tax assets and liabilities, which arise from
differences in the timing of recognition of revenue and expense for tax and
financial statement purposes.
Deferred tax assets and liabilities are
determined based on the differences between financial reporting and the tax
basis of assets and liabilities using the tax rates and laws in effect when
the differences are expected to reverse. ASC 740 provides for the
recognition of deferred tax assets if realization of such assets is more
likely than not to occur. Realization of our net deferred tax assets is
dependent upon our generating sufficient taxable income in future years in
appropriate tax jurisdictions to realize benefit from the reversal of
temporary differences and from net operating loss, or NOL, carryforwards. We
have determined it more likely than not that these timing differences will
not materialize and have provided a valuation allowance against
substantially all of our net deferred tax asset. Management will continue to
evaluate the realizability of the deferred tax asset and its related
valuation allowance. If our assessment of the deferred tax assets or the
corresponding valuation allowance were to change, we would record the
related adjustment to income during the period in which we make the
determination. Our tax rate may also vary based on our results and the mix
of income or loss in domestic and foreign tax jurisdictions in which we
operate.
In addition, the calculation of our tax liabilities involves
dealing with uncertainties in the application of complex tax regulations. We
recognize liabilities for anticipated tax audit issues in the U.S. and other
tax jurisdictions based on our estimate of whether, and to the extent to
which, additional taxes will be due. If we ultimately determine that payment
of these amounts is unnecessary, we will reverse the liability and recognize
a tax benefit during the period in which we determine that the liability is
no longer necessary. We will record an additional charge in our provision
for taxes in the period in which we determine that the recorded tax
liability is less than we expect the ultimate assessment to be.
ASC
740 which requires recognition of estimated income taxes payable or
refundable on income tax returns for the current year and for the estimated
future tax effect attributable to temporary differences and carry-forwards.
Measurement of deferred income tax is based on enacted tax laws including
tax rates, with the measurement of deferred income tax assets being reduced
by available tax benefits not expected to be realized.
Uncertain
Tax Positions
When tax returns are filed, it is highly certain that some positions
taken would be sustained upon examination by the taxing authorities, while
others are subject to uncertainty about the merits of the position taken or
the amount of the position that would be ultimately sustained. In accordance
with the guidance of FASB ASC 740-10, Accounting for Uncertain Income Tax
Positions, the benefit of a tax position is recognized in the financial
statements in the period during which, based on all available evidence,
management believes it is more likely than not that the position will be
sustained upon examination, including the resolution of appeals or
litigation processes, if any. Tax positions taken are not offset or
aggregated with other positions. Tax positions that meet the
more-likely-than-not recognition threshold are measured as the largest
amount of tax benefit that is more than 50 percent likely of being realized
upon settlement with the applicable taxing authority. The portion of the
benefits associated with tax positions taken that exceeds the amount
measured as described above should be reflected as a liability for
unrecognized tax benefits in the accompanying balance sheets along with any
associated interest and penalties that would be payable to the taxing
authorities upon examination.
Our federal and state income tax
returns are open for fiscal years ending on or after December 31, 2010. We
are not under examination by any jurisdiction for any tax year. At September
30, 2015 we had no material unrecognized tax benefits and no adjustments to
liabilities or operations were required under FIN 48.
Recent
Accounting Pronouncements
In April 2015, the Financial Accounting
Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2015-03,
"Interest-Imputation of Interest (Subtopic 835-30): Simplifying the
Presentation of Debt Issuance Costs." ASU 2015-03 requires that debt
issuance costs related to a recognized debt liability be presented in the
balance sheet as a direct deduction from the carrying amount of that debt
liability, consistent with debt discounts. Currently, debt issuance costs
are recognized as deferred charges and recorded as other assets. The
guidance is effective for annual and interim periods beginning after
December 15, 2015 with early adoption permitted and is to be implemented
retrospectively. Adoption of the new guidance will only affect the
presentation of the Company's consolidated balance sheets and will have no
impact to our financial statements.
Management does not anticipate
that the adoption of these standards will have a material impact on the
financial statements.
The accompanying balance sheet as of September
30, 2015, which was derived from audited financial statements, and the
unaudited interim financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America
("U.S. GAAP") for interim financial information and in accordance with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by U.S.
GAAP for complete financial statements. These financial statements should be
read in conjunction with the audited financial statements and related notes
for the fiscal year ended December 31, 2014, included in the Company's
Annual Report on Form 10-K covering that period.
The preparation of
these financial statements in conformity with accounting principles
generally accepted in the United States requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues
and expenses, and related disclosure of contingent assets and liabilities.
On an on-going basis, we evaluate our estimates, including those related
intangible assets, income taxes, insurance obligations and contingencies and
litigation. We base our estimates on historical experience and on various
other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments
about the carrying values of assets and liabilities that are not readily
apparent from other resources. Actual results may differ from these
estimates under different assumptions or conditions. The results of
operations for the periods presented are not necessarily indicative of the
results for the full fiscal year or any future period.
In the opinion
of management, the information furnished in these interim financial
statements reflects all adjustments necessary for a fair statement of the
financial position and results of operations and cash flows as of and for
the three and nine-month periods ended September 30, 2015 and 2014. All such
adjustments are of a normal recurring nature. The Financial Statements do
not include some information and notes necessary to conform to annual
reporting requirements.
2. Stockholders' Equity
During the quarter ended June 30, 2014 we issued 250,000 shares of our common stock valued at $0.13 or $32,500 as consideration for services. The shares were valued using the closing price at the date of grant.
3. Convertible Notes
Current 2015 Reporting Period:
On October 6, 2015 the conversion price on all outstanding notes was
reduced from $0.03 to $0.01 per share effective September 30, 2015. At the
time of modification there were 10 notes outstanding with principal amounts
ranging from $3,000 to $35,000. It was determined that the modification
resulted in derecognition of the old notes and recognition of the new notes.
Accordingly, the remaining unamortized discount of $4,028 was immediately
expensed and the aggregate fair value of the modified conversion terms,
$199,305, was recognized as a loss on debt extinguishment at September 30,
2015.
During 2015 the Company signed three unsecured promissory notes
with unrelated parties for an aggregate of $23,000. The notes bear interest
at12% per annum and are due approximately one year from the date of
issuance. The notes have a conversion right that allows the holder of each
note to convert the principal balance into the Company's common stock at the
lender's sole discretion at $0.01 per share.
In accordance with ASC
470, the Company has analyzed the beneficial nature of the initial
conversion terms and determined that a beneficial conversion feature (BCF)
exists because the effective conversion price was less than the quoted
market price at the time of the issuance. The Company calculated the value
of the BCF using the intrinsic method as stipulated in ASC 470. The BCF of
$15,333 has been recorded as a discount to the notes payable and to
Additional Paid-in Capital.
For the interim nine-month period ended September 30, 2015, the Company has recognized $10,551 in interest expense related to the convertible notes and has amortized $37,058 of the beneficial conversion feature and debt discount which has been recorded as amortization expense. As of September 30, 2015, the Company has recorded $20,361 in accrued interest. The carrying values at each respective balance sheet dates is as follows:
September 30, 2015 |
December 31, 2014 |
|||
Face amount of the notes* | $ | 122,000 | $ | 90,000 |
Less unamortized discount | $ | - | $ | (21,725) |
Carrying value | $ | 122,000 | $ | 77,275 |
*Nine notes totaling $94,000 with maturity dates on or before September 30, 2015 remain unpaid and are in default as of that date.
Year 2014:
During 2014 the Company signed seven unsecured promissory notes with
unrelated parties for an aggregate of $99,000. The notes bear interest at12%
per annum and are due approximately one year from the date of issuance. The
notes have a conversion right that allows the holder of each note to convert
the principal balance into the Company's common stock at the lender's sole
discretion at $0.03 per share. The conversion rate on these notes was
reduced to $0.01 effective September 30, 2015.
For the year ended
December 31, 2014 the Company had recognized $9,161 in interest expense
related to the convertible notes, accrued interest of $9,810 and had
amortized $70,864 of the beneficial conversion feature and debt discount
which had been recorded as amortization expense
4. Future Commitment
On March 10, 2010, the Company entered into a Patent Sale Agreement whereby the Company acquired all of the rights, title and interest in the patent known as the "Solar element and method of manufacturing the same". In consideration of the sale the Company agrees to pay to seller a sum equal to 10% of the royalties that the Company will receive in relation to the patent for an indefinite period.
5. Going Concern
The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The Company has not established any source of revenue to cover its operating costs, and as such, has incurred an operating loss since inception. Further, as of September 30, 2015, the cash resources of the Company were insufficient to meet its current business plan. These and other factors raise substantial doubt about the Company's ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.
6. Subsequent Events
On October 6, 2015, effective as of September 30, 2015, the Company agreed to reduce the conversion price of all 10 outstanding convertible debt instruments from $0.03 to $0.01. There were no other material subsequent events following the period ended September 30, 2015 and throughout the date of the filing of Form 10-Q.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.
As used in this Form 10-Q, references to the SOLARFLEX CORP , Company, we, our or us refer to SOLARFLEX CORP . Unless the context otherwise indicates.
Forward-Looking Statements
The following discussion should be read in conjunction with our financial statements, which are included elsewhere in this Form 10-Q (the Report). This Report contains forward-looking statements which relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as may, should, expects, plans, anticipates, believes, estimates, predicts, potential or continue or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors that may cause our or our industrys actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
For a description of such risks and uncertainties refer to our Registration Statement on Form S-1, filed with the Securities and Exchange Commission. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Plan of Operation
We are a development stage company that has acquired the rights to a patent application for the design of and manufacturing method for a solar photovoltaic conversion element which is expected to reduce cost, enhance the flexibility of the manufacturing process, improve manufacturing efficiency and absorb the solar spectrum better than current models, which should enable our product to increase solar energy conversion rates.
Our goal in the next twelve months is to complete development and production of a fully operational prototype of our solar photovoltaic conversion element, identify sub-contractors or licensees which will have the ability to design and manufacture our product in commercial quantities, and market our product to solar panel producers.
Although we have not yet engaged a manufacturer to develop a fully operational prototype of the solar photovoltaic conversion element, based on our preliminary discussions with certain manufacturers, we believe that it will take approximately twelve months, from design to manufacture, to produce a basic prototype of our product. Once the prototype has been produced, we plan for the design and development of a commercial product to be carried out by specialist subcontractors offering expertise in several relevant disciplines, including plastics and metal, electricity and electronics, device design, operation and control, automation and mechanics, computer and microcomputers, and others.
We initially intend to focus on the following activities:
- Locating third parties to perform research and development and engineering services
- Completing development of our solar photovoltaic conversion element.
- Producing a working prototype of our product.
- Locating sub-contractors or licensees to design and manufacture our product in
commercial quantities
- Marketing our product to solar panel producers.
We estimate the cost to develop and produce the prototype at $14,000, which include $10,500 in technology development and engineering costs, and $3,500 for the manufacture of the prototype.
The design and development of a working prototype of our product will be divided into three stages:
a) Technical Concept/Definition (three months) to be performed by management and
a third party contractor.
b) Engineering Specification (four months) to be performed by management and a
third party contractor.
c) Engineering & Preparation for Production & Actual Manufacture (four months)
to be performed by management and a third party contractor
If and when we have a viable prototype, depending on the availability of funds, we estimate that we would need approximately an additional four to six months to bring this product to market. Our objective is either to manufacture the product ourselves through third party sub-contractors, and market the product as an off-the-shelf device, and/or to license the manufacturing rights to the product and related technology to third party manufacturers who would then assume responsibility for marketing and sales.
Results of Operations during the three months ended September 30, 2015 as compared to the three months ended September 30, 2014
We have not generated any revenues since inception. We have operating expenses related to general and administrative expense being a public company and interest expense. During the three months ended September 30, 2015, we incurred a net loss of $222,292 due to general and administrative expense of $7,174, interest expense of $3,651, amortization of debt discount expense of $12,162 and an expense related to extinguishment of debt of $199,305 compared to a net loss of $26,826 due to general and administrative expense $3,939, interest expense of $2,571 and amortization of debt discount expense of $20,316 during the same period in the prior year.
Results of Operations during the nine months ended September 30, 2015 as compared to the nine months ended September 30, 2014
We have not generated any revenues since inception. We have operating expenses related to general and administrative expense being a public company and interest expense. During the nine months ended September 30, 2015, we incurred a net loss of $279,122 due to general and administrative expense of $32,208, interest expense of $10,551, amortization of debt discount expense of $37,058 and an expense related to extinguishment of debt of $199,305 compared to a net loss of $151,844 due to general and administrative expense of $95,007, interest expense of $6,209 and amortization of debt discount expense of $50,628 during the same period in the prior year.
Liquidity and Capital Resources
On September 30, 2015, we had $1,016 in cash as compared to $1,824 in cash at December 31, 2014. We had total current liabilities of $154,911 consisting of $12,550 in accrued expenses, $20,361 in accrued interest and $122,000 in current portion of convertible notes payable compared to total current liabilities of $91,235 as of December 31, 2014 consisting of $4,150 in accrued expenses, accrued interest of $9,810 and $77,275 in current portion of convertible notes payable. Our accumulated deficits as of September 30, 2015 and December 31, 2014 were $873,849 and $594,727, respectively.
We used $23,808 in our operating activities during the nine-month period ended September 30, 2015, which was due to a net loss of $279,122 offset by amortization of debt discount expenses of $37,058, a non-cash charge related to extinguishment of debt of $199,305 and an increase in accounts payable and accrued liabilities of $18,951. We used $65,064 in our operating activities during the nine-month period ended September 30, 2014, which was due to a net loss of $151,844 offset by amortization of debt discount expenses of $50,628, non-cash compensation of $32,500 and an increase in accounts payable and accrued liabilities by $3,652.
We financed our negative cash flow from operations during the nine-month period ended September 30, 2015 through the issuance of $23,000 in convertible debt. We financed our negative cash flow from operations during the nine-month period ended September 30, 2014 through proceeds of $65,000 from issuance of convertible debt.
Going Concern Consideration
Our auditors have issued an opinion on our annual financial statements which includes a statement describing our going concern status. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills and meet our other financial obligations. This is because we have not generated any revenues and no revenues are anticipated until we begin marketing the product.
The Company does not believe that without cash resources it will be able to fund its expenses over the next 12 months. There can be no assurance that additional capital will be available to the Company. The Company currently has no agreements, arrangements, or understandings with any person to obtain funds through bank loans, lines of credit, or any other sources. Since the Company has no such arrangements or plans currently in effect, its inability to raise funds for the above purposes will have a severe negative impact on its ability to remain a viable company.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
A smaller reporting company, as defined by Item 10 of Regulation S-K, is not required to provide the information required by this item.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of disclosure controls and procedures. As of September 30, 2015, the Company's chief executive officer and chief financial officer conducted an evaluation regarding the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act. Based upon the evaluation of these controls and procedures, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this report.
Changes in internal controls. During the quarterly period covered by this report, no changes occurred in our internal control over financial reporting that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II
OTHER INFORMATION
There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Companys property is not the subject of any pending legal proceedings.
A smaller reporting company, as defined by Item 10 of Regulation S-K, is not required to provide the information required by this item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES UND USE OF PROCEEDS.
None.
ITEM 3. DEFAULT UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURE.
None.
None.
Exhibit No. | Description |
31 | Certification of CEO and CFO pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32 | Certification of CEO and CFO pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
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.
Solarflex Corp | |||
Date: November 6, 2015 | By: | /s/ Sergei Rogov | |
Name: Sergei Rogov | |||
Title: Chief Executive Officer> | |||
By: | /s/ /s/ Sergei Rogov | ||
Name : Sergei Rogov | |||
Title : Principal Accounting and Financial Officer |
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.
Date: November 6, 2015 | By: | /s/ Sergei Rogov | |
Name: Sergei Rogov | |||
Title: Chief Executive Officer and Chairman> |