-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VjWWs1l1MqwdCARQqvrPAzrfdsDL57EkQRb+/5Q1F33YZdccIXBE/J62jJfTXVS3 LvgEjIY1ds3KjSIJnluJvA== 0001065949-10-000219.txt : 20101119 0001065949-10-000219.hdr.sgml : 20101119 20101119162139 ACCESSION NUMBER: 0001065949-10-000219 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20100930 FILED AS OF DATE: 20101119 DATE AS OF CHANGE: 20101119 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOLAR3D, INC. CENTRAL INDEX KEY: 0001172631 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE & TELEGRAPH APPARATUS [3661] IRS NUMBER: 010592299 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-49805 FILM NUMBER: 101205791 BUSINESS ADDRESS: STREET 1: 6500 HOLLISTER AVENUE STREET 2: SUITE 130 CITY: GOLETA STATE: CA ZIP: 93117 BUSINESS PHONE: 805-690-9000 MAIL ADDRESS: STREET 1: 6500 HOLLISTER AVENUE STREET 2: SUITE 130 CITY: GOLETA STATE: CA ZIP: 93117 FORMER COMPANY: FORMER CONFORMED NAME: MACHINETALKER INC DATE OF NAME CHANGE: 20050801 FORMER COMPANY: FORMER CONFORMED NAME: MACHINE TALKER INC DATE OF NAME CHANGE: 20020506 10-Q 1 solar3d10qsept2010vfinal.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2010 or [ ] 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 01-05922991 ------------------------------- ------------------------------------ (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 6500 HOLLISTER AVENUE, SUITE 130, GOLETA, CALIFORNIA 93117 ----------------------------------------------------------- (Address of principal executive offices) (Zip Code) Issuer's telephone Number: (805) 690-9000 MACHINETALKER, INC., 513 DE LA VINA STREET, SANTA BARBARA, CALIFORNIA 93101 ------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) 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[__] No[_X_] 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 (ss.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[_X_] 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 [___] Accelerated filer [___] Non-accelerated filer (Do not check [___] Smaller reporting company [_X_] if a smaller reporting company) 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 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 November 19, 2010 was 97,889,803. TABLE OF CONTENTS PART I - FINANCIAL INFORMATION ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)...................... 2 Consolidated Balance Sheets..................................... 3 Consolidated Statements of Operations........................... 4 Consolidated Statements of Shareholders' Deficit................ 5 Consolidated Statements of Cash Flows........................... 6 Notes to the Consolidated Financial Statements.................. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.........................................10 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.........15 ITEM 4. CONTROLS AND PROCEDURES............................................15 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS..................................................15 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS........15 ITEM 3. DEFAULTS UPON SENIOR SECURITIES....................................15 ITEM 4. (REMOVED AND RESERVED).............................................15 ITEM 5. OTHER INFORMATION..................................................16 ITEM 6. EXHIBITS...........................................................16 SIGNATURES....................................................................16 -1- PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. - ----------------------------- -2-
SOLAR3D, INC. (formerly MACHINETALKER, INC.) (A DEVELOPMENT STAGE COMPANY) CONSOLIDATED BALANCE SHEETS September 30, 2010 December 31, 2009 ------------------------ ---------------------- (unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents $ 91,180 $ 10,002 ------------------------ ---------------------- TOTAL CURRENT ASSETS 91,180 10,002 ------------------------ ---------------------- PROPERTY & EQUIPMENT, at cost Machinery & equipment 13,080 13,080 Computer equipment 50,351 50,351 Furniture & fixture 4,670 4,670 ------------------------ ---------------------- 68,101 68,101 Less accumulated depreciation (67,774) (67,423) ------------------------ ---------------------- NET PROPERTY AND EQUIPMENT 327 678 ------------------------ ---------------------- OTHER ASSETS Security deposit 2,975 2,975 ------------------------ ---------------------- TOTAL OTHER ASSETS 2,975 2,975 ------------------------ ---------------------- TOTAL ASSETS $ 94,482 $ 13,655 ======================== ====================== LIABILITIES AND SHAREHOLDERS' DEFICIT CURRENT LIABILITIES Accounts payable $ 10,110 $ 45,582 Accrued expenses 453,232 401,029 Accrued interest, other 23,075 17,225 Accrued interest, related parties 107,074 110,041 Convertible promissory note 65,000 65,000 Notes payable, related parties - 44,000 ------------------------ ---------------------- TOTAL CURRENT LIABILITIES 658,491 682,877 ------------------------ ---------------------- SHAREHOLDERS' DEFICIT Common stock, $.001 par value; 550,000,000 authorized shares; 97,889,803 and 36,395,359 shares issued and outstanding, respectively 97,889 36,395 Additional paid in capital 7,567,105 7,220,377 Deficit accumulated during the development stage (8,229,003) (7,925,994) ------------------------ ---------------------- TOTAL SHAREHOLDERS' DEFICIT (564,009) (669,222) ------------------------ ---------------------- TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT $ 94,482 $ 13,655 ======================== ======================
The accompanying notes are an integral part of these consolidated financial statements -3-
SOLAR3D, INC. (formerly MACHINETALKER, INC.) (A DEVELOPMENT STAGE COMPANY) CONSOLIDATED STATEMMENTS OF OPERATIONS (Unaudited) From Inception Three Months Ended Nine Months Ended January 30, 2002 ----------------------------- ----------------------------- through September 30, September 30, September 30, September 30, September 30, 2010 2009 2010 2009 2010 ------------- ------------- ------------- -------------- -------------- REVENUE $ - $ 10,000 $ - $ 34,510 $ 1,127,406 COST OF SERVICES - - - - 496,177 ------------- ------------- ------------ ------------- ------------- GROSS PROFIT - 10,000 - 34,510 631,229 ------------- ------------- ------------ ------------- ------------- OPERATING EXPENSES Selling and marketing expenses - 49 - 25,077 1,264,814 General and administrative expenses 165,419 69,069 280,963 389,553 3,362,159 Research and development 12,098 - 14,478 1,830 1,454,343 Impairment loss - - - - 1,753,502 Depreciation and amortization expense 117 2,212 351 6,636 120,098 ------------- ------------- ------------ ------------- ------------- TOTAL OPERATING EXPENSES 177,634 71,330 295,792 423,096 7,954,916 ------------- ------------- ------------ ------------- ------------- LOSS FROM OPERATIONS (177,634) (61,330) (295,792) (388,586) (7,323,687) ------------- ------------- ------------ ------------- ------------- OTHER INCOME/(EXPENSES) BEFORE PROVISION FOR INCOME TAXES Interest income - 1 1 3 10,256 Interest expense (1,950) (2,031) (6,418) (13,598) (267,633) Penalties - - - - (155) Gain/(loss) on investment - - - 1,347 (73,121) Loss on settlement of debt - - - (567,300) (567,300) Gain/(loss) on sale of asset - - - - (963) ------------- ------------- ------------ ------------- ------------- TOTAL OTHER INCOME/(EXPENSES) (1,950) (2,030) (6,417) (579,548) (898,916) ------------- ------------- ------------ ------------- ------------- LOSS BEFORE PROVISION FOR INCOME TAXES (179,584) (63,360) (302,209) (968,134) (8,222,603) PROVISION FOR INCOME TAXES (800) - (800) - (6,400) ------------- ------------- ------------ ------------- ------------- NET LOSS $ (180,384) $ (63,360) $ (303,009) $ (968,134) $ (8,229,003) ============= ============= ============ ============= ============= BASIC AND DILUTED LOSS PER SHARE $ (0.00) $ (0.00) $ (0.00) $ (0.04) ============= ============= ============ ============= WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING BASIC AND DILUTED 86,610,969 36,395,359 61,464,356 23,799,929 ============= ============= ============ =============
The accompanying notes are an integral part of these consolidated financial statements -4-
SOLAR3D, INC. (formerly MACHINETALKER, INC.) (A DEVELOPMENT STAGE COMPANY) CONSOLIDATED STATEMENT OF SHAREHOLDERS' DEFICIT FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 Accumulated Deficit During Common stock Additional the ------------------------- Paid-in Development Shares Amount Capital Stage Total ------------- ---------- ----------- ------------ --------- Balance at December 31, 2009 36,395,359 $ 36,395 $ 7,220,377 $(7,925,994) $(669,222) Issuance of common stock in February 2010 for cash (16,000,000 shares of common stock issued at $0.0125 per share) (unaudited) 16,000,000 16,000 184,000 - 200,000 Issuance of common stock in July 2010 for cash (44,444,444 shares of common stock issued at $0.00225 per share) (unaudited) 44,444,444 44,444 55,556 - 100,000 Issuance of common stock in August 2010 for cash (1,050,000 shares of common stock issued at $0.010476 per share) (unaudited) 1,050,000 1,050 9,950 - 11,000 Stock compensation cost (unaudited) - - 97,222 - 97,222 Net loss for the nine months ended September 30, 2010 (unaudited) - - - (303,009) (303,009) ------------- --------- ----------- ------------ --------- Balance at September 30, 2010 (unaudited) 97,889,803 $ 97,889 $ 7,567,105 $(8,229,003) $(564,009) ============= ========= =========== ============ =========
The accompanying notes are an integral part of these consolidated financial statements -5-
SOLAR3D, INC. (formerly MACHINETALKER, INC.) (A Development Stage Company) CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended From Inception --------------------------------- January 30, 2002 through September 30, September 30, September 30, 2010 2009 2010 -------------- --------------- -------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (303,009) $ (968,134) $ (8,229,003) Adjustments to reconcile net loss to net cash used in operating activities Depreciation and amortization 351 6,636 120,098 Issuance of common shares and warrants for services - 166,625 727,713 Issuance of common shares in conversion of debt - - 400,000 (Gain)/loss on investment - (1,347) 73,121 Stock Compensation Cost 97,222 - 167,000 Gain on sale of asset - - 963 Impairment loss - - 1,753,502 Loss on settlement of debt - 567,300 567,300 Changes in Assets and Liabilities (Increase) Decrease in: Prepaid expenses - 904 - Patents - 656 - Deposits and other assets - 5,000 2,025 Increase (Decrease) in: Accounts payable (35,472) 30,165 89,610 Accrued expenses 55,086 103,597 583,381 Unearned revenue - (30,000) - -------------- --------------- -------------- NET CASH USED IN OPERATING ACTIVITIES (185,822) (118,598) (3,744,290) -------------- --------------- -------------- NET CASH FLOWS USED IN INVESTING ACTIVITIES: Purchase of property and equipment - - (73,754) Sale of asset - - 3,963 Investment in companies - 1,347 (6,121) -------------- --------------- -------------- NET CASH PROVIDED (USED) IN INVESTING ACTIVITIES - 1,347 (75,912) -------------- --------------- -------------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from notes payable related parties - 19,000 1,127,342 Proceeds from convertible promissory note - - 129,000 Repayment of notes payable related party (44,000) - (137,000) Contributed capital by shareholder - 6,485 19,197 Proceeds from subsidiary - - 300,000 Proceeds from issuance of common stock 311,000 100,000 2,465,193 -------------- --------------- -------------- NET CASH PROVIDED BY FINANCING ACTIVITIES 267,000 125,485 3,903,732 -------------- --------------- -------------- NET INCREASE IN CASH 81,178 8,234 83,530 CASH, BEGINNING OF PERIOD 10,002 2,949 7,650 -------------- --------------- -------------- CASH, END OF PERIOD $ 91,180 $ 11,183 $ 91,180 ============== =============== ============== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Interest paid $ - $ - $ 133,948 ============== =============== ============== Income taxes $ 800 $ - $ 6,400 ============== =============== ============== SUPPLEMENTAL SCHEDULE OF NON-CASH TRANSACTIONS During the nine months ended September 30, 2009, the Company issued 1,590,000 shares of common stock for services and accounts payable at a fair value of $246,125; 7,320,000 shares of common stock with a fair value of $933,300 were issued in conversion of $366,000 in debt resulting in a $567,300 loss on settlement of debt.
The accompanying notes are an integral part of these consolidated financial statements -6- SOLAR3D, INC. (formerly MACHINETALKER, INC. AND SUBSIDIARY) (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED SEPTEMBER 30, 2010 1. BASIS OF PRESENTATION The accompanying unaudited consolidated 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 nine months ended September 30, 2010 are not necessarily indicative of the results that may be expected for the year ending December 31, 2010. 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, 2009. GOING CONCERN The accompanying consolidated 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 consolidated 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 September 30, 2010. 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. (formerly MachineTalker, Inc.) is presented to assist in understanding the Company's consolidated financial statements. The consolidated 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 consolidated financial statements. DEVELOPMENT STAGE ACTIVITIES AND OPERATIONS The Company has been in its initial stages of formation and for the nine months ended September 30, 2010, had insignificant 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. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the Company and its subsidiaries Wideband Detection Technologies, Inc. and Micro Wireless Technologies, Inc. All significant inter-company balances and transactions have been eliminated. CASH AND CASH EQUIVALENT The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. -7- SOLAR3D, INC. (formerly MACHINETALKER, INC. AND SUBSIDIARY) (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED SEPTEMBER 30, 2010 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. 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 nine months ended September 30, 2010 and 2009 as the inclusion of any potential shares would have had an anti-dilutive effect due to the Company generating a loss. 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. RECLASSIFICATION OF EXPENSES Certain expenses for the period ended September 30, 2009 were reclassified to conform to the expenses for the period ended September 30, 2010. 3. CAPITAL STOCK AND WARRANTS On August 5, 2010, the holders of a majority of the issued and outstanding shares of the Company's common stock approved a one-for-five reverse common stock split, and these interim financial statements have been adjusted for the effects of this reverse split. -8- SOLAR3D, INC. (formerly MACHINETALKER, INC. AND SUBSIDIARY) (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED SEPTEMBER 30, 2010 3. CAPITAL STOCK AND WARRANTS (Continued) During the nine months ended September 30, 2010, the Company issued 16,000,000 shares of common stock at a price of $0.0125 per share for $200,000 in cash; 44,444,444 shares of common stock at a price of $0.00225 per share for $100,000 cash; and 1,050,000 shares of common stock at a price of $0.010476 per share for $11,000 cash. During the nine months ended September 30, 2009, the Company issued 18,648,019 shares of common stock at a price of $0.0053625 per share; 1,590,000 shares of common stock for services and accounts payable at a fair value of $246,125; and 732,000 shares of common stock with a fair value of $933,300 for conversion of $366,000 in debt resulting in the recognition of a $567,300 loss on settlement of debt. 4. STOCK OPTIONS AND WARRANTS During the period ended September 30, 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 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. 2010 -------------------- Risk free interest rate 2.38% Stock volatility factor 229% Weighted average expected option life 7 years Expected dividend yield None A summary of the Company's stock option activity and related information follows: 9/30/2010 ---------------------------------- Weighted Number average of exercise Options price ---------------------------------- Outstanding, beginning of period - $ - Granted 15,000,000 0.05 Exercised - - Expired - - ---------------------------------- Outstanding, end of period 15,000,000 $ 0.05 ================================== Exercisable at the end of period 972,222 $ 0.05 ================================== Weighted average fair value of options granted during the period $ 0.05 ============= The stock-based compensation expense recognized in the statement of operations during the period ended September 30, 2010 is $97,222. WARRANTS During the nine months ended September 30, 2010, the Company issued no warrants. At September 30, 2010, the Company had a total of 866,400 warrants to purchase 866,400 shares of common stock outstanding. -9- SOLAR3D, INC. (formerly MACHINETALKER, INC. AND SUBSIDIARY) (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED SEPTEMBER 30, 2010 5. RETURN ON INVESTMENT During the nine months ended September 30, 2009, the Company received $1,347 on its initial investment in Listen4U, LLC. 6. RELATED PARTY TRANSACTION During the year ended December 31, 2009, an investor loaned the Company $37,000 for operating expenses. The note was due and payable upon demand, and bore interest at 6% per annum. The note, including interest of $1,601 was paid off during the nine months ended September 30, 2010. During the year ended December 31, 2009, the Company's President loaned $7,000 to the Company for operating expenses. The note bore interest at 6% per annum, and was paid off during the nine months ended September 30, 2010. During the nine months ended September 30, 2009, the Company's President forgave a note payable of $52,342 and contributed cash of $6,485, both of which were recorded as contributed capital. 7. SUBSEQUENT EVENTS Management evaluated subsequent events as of the date of the financial statements pursuant to ASC TOPIC 855. On October 4, 2010, Roland F. Bryan resigned as the Chief Executive Officer of the Company and James B. Nelson was appointed as the Chief Executive Officer and a director of the Company. Mr. Bryan remains the Chairman, President, Chief Financial Officer, and Corporate Secretary of the Company. -10- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. - -------------------------------------------------------------------------------- CAUTIONARY STATEMENTS This Form 10-Q 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. 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. 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; 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. 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 Form 10-Q 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 will be centered on the acquisition, development, and commercialization of new proprietary technology to significantly increase the -11- 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 three-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 three-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 still own all of the MachineTalker technology. In May 2008, we successfully interconnected our Talker(R) product line to our new "GuardDog" product which uses Ultra-Wide Band ("UWB') technology to detect any movement or motion in its vicinity. The combination of Talkers(R) and GuardDog employs UWB radar-like signals to detect movement within an area, either in the open space or inside of a closed chamber like that of a shipping container. In addition, this new product can detect changes other than movement, such as a break or hole being made in the side of a container. This product is aimed at a unique method of protection for goods in transit or in storage, and has been proposed as part of a package to several potential customers. Another recently released product, the CBM6, has been proposed for use in monitoring the vibration in high speed rotating spindles and slower speed rotating fans and motors in oil refineries for wireless data acquisition in support of Condition-Based Maintenance ("CBM"). This product has been packaged within explosion-proof housings for use in oil refineries and in less costly polycarbonate enclosures for other harsh environments. The CBM6 has been designed to gather data from high speed sources and sensors, and to process that data at a remote site prior to sending it by wireless means to a central computer facility. Our Board of Directors is currently considering whether we will retain the MachineTalker technology in light of our new business, or sell, enter into joint ventures, or otherwise convey the MachineTalker assets. We currently have two full time employees and one part-time research scientist who is experienced in the area of semiconductor design and development. In addition, we have a contract with a second scientist with expertise in the application of photonics to the concentration of light energy. We expect that he will contribute both design and guidance for the development of our future three-dimensional products. APPLICATION OF 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 -12- 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 ("SEC") 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. RESERVE FOR OBSOLETE/EXCESS INVENTORY We own certain inventory from products which we no longer sell. These inventories are stated at the lower of cost or market. We regularly review our inventories and, when required, will record a provision for excess and obsolete inventory based on factors that may impact the realizable value of our inventory including, but not limited to, technological changes, market demand, regulatory requirements and significant changes in our cost structure. If ultimate usage varies significantly from expected usage, or other factors arise that are significantly different than those anticipated by management, inventory write-downs or increases in reserves may be required. RESULTS OF OPERATIONS - THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2010 COMPARED TO THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2009 REVENUE Total revenue for the three months ended September 30, 2010 decreased by $(10,000) to $0 compared to $10,000 for the three months ended September 30, 2009. Total revenue for the nine months ended September 30, 2010 decreased by $(34,510) to $0 compared to $34,510 for the nine months ended September 30, 2009. The decrease in revenue was the result of deferred income being fully recognized in the prior periods, and the Company is in its development stage. COST OF SALES There was no cost of sales for the three and nine months ended September 30, 2010 and 2009, respectively. This was a result of recognition of previously deferred income with no related purchases of materials. -13- SELLING AND MARKETING EXPENSES Selling and marketing ("S&M") expenses decreased by $(49) to $0 for the three months ended September 30, 2010 compared to $49 for the three months ended September 30, 2009. S&M expenses decreased by $(25,077) to $0 for the nine months ended September 30, 2010 compared to $25,077 for the nine months ended September 30, 2009. This decrease in S&M expenses was the result of a decrease in outside service expenses and a reduction in investor relations services. GENERAL AND ADMINISTRATIVE EXPENSES General and administrative ("G&A") expenses increased by $96,350 to $165,419 for the three months ended September 30, 2010 compared to $69,069 for the three months ended September 30, 2009. G&A expenses decreased by $(108,590) to $280,963 compared to $389,553 for the nine months ended September 30, 2009. The overall decrease in G&A expenses was the result of a decrease in professional fees. RESEARCH AND DEVELOPMENT Research and Development ("R&D") costs increased by $12,098 to $12,098 for the three months ended September 30, 2010 compared to $0 for the three months ended September 30, 2009. R&D costs increased by $12,648 to $14,478 for the nine months ended September 30, 2010 compared to $1,830 for the nine months ended September 30, 2009. This increase in R&D costs was the result of an increase in consulting fees due to a change in focus of our technology. NET LOSS Net Loss increased by $(117,024) to $(180,384) for the three months ended September 30, 2010 compared to $(63,360) for the three months ended September 30, 2009. Net Loss decreased by $(665,125) to $(303,009) for the nine months ended September 30, 2010 compared to $(968,134) for the nine months ended September 30, 2009. The overall decrease in Net Loss was the result of decrease in professional fees and other expenses. The decrease in other expenses resulted from the Company recognizing no losses on settlement of debt during the current period compared to a loss of $567,300 recognized during the prior year. Currently operating costs exceed revenue because sales are not yet significant. We cannot assure when or if revenue will exceed operating costs. LIQUIDITY AND CAPITAL RESOURCES As of September 30, 2010, we had a working capital deficit of $(567,311) as compared to $(672,875) at December 31, 2009. This decrease in working capital deficit of $(105,564) was due primarily to an increase in cash from investors. Cash flow used in operating activities was $(185,822) for the nine months ended September 30, 2010, as compared to cash used of $(118,598) for the nine months ended September 30, 2009. This increase of cash used in operating activities of $(67,224) was primarily attributable to the payment of accounts payable, and accrued expenses. Cash provided by investing activities was $0 for the nine months ended September 30, 2010 as compared to cash provided of $1,347 for the nine months ended September 30, 2009. The decrease of cash provided by investing activities was due to no investment returns being experienced during the current period. Cash provided from financing activities during the nine months ended September 30, 2010 was $267,000 as compared to cash provided of $125,485 for the nine months ended September 30, 2009. The increase of $141,515 was primarily due to an increase in equity financing. 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. -14- ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. - ------------------------------------------------------------------- Not Applicable. ITEM 4. CONTROLS AND PROCEDURES. - -------------------------------- EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by the Company is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Our management, under the direction of our Chief Executive Officer and Principal Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as such terms are defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2010. As part of such evaluation, management considered the matters discussed below relating to internal control over financial reporting. Based on this evaluation our management, including the Company's Chief Executive Officer and Principal Financial Officer, has concluded that the Company's disclosure controls and procedures were effective as of September 30, 2010. INTERNAL CONTROL OVER FINANCIAL REPORTING The Company's Chief Executive Officer and Principal Financial Officer, are responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our 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 of accounting principles generally accepted in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING There were no changes in the Company's internal control over financial reporting identified in connection with the evaluation of it that occurred during the quarter ended September 30, 2010 that materially affected or are reasonably likely to materially affect the Company's internal control over financial reporting. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. - -------------------------- None. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. - -------------------------------------------------------------------- In addition to the sales of equity reported by us on Form 8K during the third quarter, we issued 1,050,000 shares of our common stock to one investor for $11,000 pursuant to the private placement exemption available under Rule 506 of Regulation D of the Securities Act of 1933, as amended. The proceeds from the sale of these shares are being used for general working capital. ITEM 3. DEFAULTS UPON SENIOR SECURITIES. - --------------------------------------- None. ITEM 4. (REMOVED AND RESERVED). - ------------------------------- -15- ITEM 5. OTHER INFORMATION. - -------------------------- As reported in the Form 8K filed by us with the Securities and Exchange Commission on October 6, 2010, we appointed Mr. James Nelson as an officer and director of the Company, effective October 4, 2010. Mr. Nelson was appointed as a director and Chief Executive Officer of the Company. Mr. Roland Bryan remains the Chairman of our Board of Directors and the President of the Company. ITEM 6. EXHIBITS. - ----------------- EXHIBIT DESCRIPTION ------- ------------------------------------------------------------- 10.1 Form of Stock Purchase Agreement, dated July 22, 2010* 10.2 Nonstatutory Stock Option Agreement, dated July 22, 2010* 31.1 Section 302 Certification of Principal Executive Officer 31.2 Section 302 Certification of Chief Financial Officer 32.1 Section 906 Certification of Principal Executive Officer 32.2 Section 906 Certification of Chief Financial Officer - ---------------- *Incorporated by reference from the Report on Form 8-K filed by the Company with the Securities and Exchange Commission, dated August 3, 2010. 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: November 19, 2010 By:/s/Roland F. Bryan -------------------------------------------- Roland F. Bryan, Chairman of the Board and President (Principal Executive Officer) Dated: November 19, 2010 By:/s/Roland F. Bryan -------------------------------------------- Roland F. Bryan, Chief Financial Officer (Principal Financial Officer) -16- EX-31.1 2 ex311.txt EXHIBIT 31.1 SECTION 302 CERTIFICATION EXHIBIT 31.1 CERTIFICATION I, Roland F. Bryan, certify that: 1. I have reviewed this report on Form 10-Q of Solar3D, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (of persons performing the equivalent functions): a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting. Date: November 19, 2010 /s/ Roland F. Bryan ------------------------------------------------------ Roland F. Bryan, Chairman of the Board and President (Principal Executive Officer) EX-31.2 3 ex312.txt EXHIBIT 31.2 SECTION 302 CERTIFICATION EXHIBIT 31.2 CERTIFICATION I, Roland F. Bryan, certify that: 1. I have reviewed this report on Form 10-Q of Solar3D, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (of persons performing the equivalent functions): a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting. Date: November 19, 2010 /s/ Roland F. Bryan ----------------------------------------------------- Roland F. Bryan, Chief Financial Officer (Principal Financial Officer) EX-32.1 4 ex321.txt EXHIBIT 32.1 SECTION 906 CERTIFICATION Exhibit 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Solar3D, Inc. (the "Company") on Form 10-Q for the period ending September 30, 2010 (the "Report") I, Roland F. Bryan, Chairman of the Board and President of the Company, certify, pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge and belief: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: November 19, 2010 /s/ Roland F. Bryan - ---------------------------------------------------- Roland F. Bryan, Chairman of the Board and President This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. EX-32.2 5 ex322.txt EXHIBIT 32.2 SECTION 906 CERTIFICATION Exhibit 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Solar3D, Inc. (the "Company") on Form 10-Q for the period ending September 30, 2010 (the "Report") I, Roland F. Bryan, Chief Financial Officer of the Company, certify, pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge and belief: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: November 19, 2010 /s/ Roland F. Bryan - ---------------------------------------- Roland F. Bryan, Chief Financial Officer This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. -----END PRIVACY-ENHANCED MESSAGE-----