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, 2015.
Or
o TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to ______________

Commission File Number 000-49805

SOLAR3D, INC.
(Name of registrant in its charter)

Delaware
(State or other jurisdiction of incorporation or organization)
01-0592299
(I.R.S. Employer Identification No.)

1010 Winding Creek Road, Suite 100, Roseville, CA  95678
(Address of principal executive offices) (Zip Code)

Issuer’s telephone Number: (805) 690-9000
 
26 West Mission Avenue #8, Santa Barbara, CA 93101
(Former Address 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
x
No
o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes
x
No
o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
o
No
x

The number of shares of registrant’s common stock outstanding as of November 3, 2015 was 17,788,483.
 
 
TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION
 
ITEM 1.
  1
 
  1
 
  2
 
  3
 
  4
 
  5
     
ITEM 2.
14
ITEM 3.
19
ITEM 4.
19
     
PART II - OTHER INFORMATION
 
ITEM 1.
20
ITEM 2.
20
ITEM 3.
20
ITEM 4.
20
ITEM 5.
20
ITEM 6.
20
     
21
 
 
PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

 SOLAR3D, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)

   
September 30, 2015
   
December 31, 2014
 
   
(Unaudited)
       
Assets
           
Current Assets
           
   Cash and cash equivalents
 
$
9,259
   
$
414
 
   Restricted cash
   
37
     
-
 
   Accounts receivable
   
6,688
     
2,023
 
   Inventory
   
402
     
23
 
   Costs in excess of billing
   
1,972
     
1,277
 
   Other current assets
   
286
     
281
 
                 
                   Total Current Assets
   
18,644
     
4,018
 
                 
Property and Equipment, net
   
194
     
84
 
                 
Other Assets
               
   Other deposits
   
38
     
20
 
   Goodwill
   
5,893
     
2,599
 
                 
                   Total Other Assets
   
5,931
     
2,619
 
                 
                         Total Assets
 
$
24,769
   
$
6,721
 
                 
Liabilities and Shareholders' Equity
               
Current Liabilities:
               
   Accounts payable and accrued liabilities
 
$
4,047
   
$
1,971
 
   Billings in excess of costs
   
1,366
     
892
 
   Customer deposits
   
149
     
52
 
   Loan payable, current portion
   
17
     
-
 
   Derivative liability
   
-
     
68
 
   Acquisition convertible promissory notes, net of beneficial conversion feature of $2,085 and $234, respectively
   
1,415
     
891
 
   Convertible promissory notes, net of debt discount of $0 and $1, respectively
   
850
     
887
 
                 
                   Total Current Liabilities
   
7,844
     
4,761
 
                 
Long Term Liabilities
               
   Loan payable
   
48
     
-
 
   Warranty liability
   
25
     
-
 
                   Total Long Term Liabilities
   
73
     
-
 
                 
                   Total Liabilities
   
7,917
     
4,761
 
                 
Shareholders' Equity
               
Preferred stock, $.001 par value;
5,000,000 authorized shares;
   
-
     
-
 
Common stock, $.001 par value;
1,000,000,000 authorized shares;
17,788,483 and 14,016,252 shares issued and outstanding, respectively
   
18
     
14
 
Additional paid in capital
   
57,776
     
42,765
 
Accumulated  Deficit
   
(40,942
)
   
(40,819
)
                 
Total Shareholders' Equity
   
16,852
     
1,960
 
                 
  Total Liabilities and Shareholders' Equity
 
$
24,769
   
$
6,721
 

The accompanying notes are an integral part of these condensed consolidated financial statements.
 
 
SOLAR3D, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)

   
Three Months Ended
   
Nine Months Ended
 
   
September 30, 2015
   
September 30, 2014
   
September 30, 2015
   
September 30, 2014
 
                         
Sales
 
$
19,730
   
$
6,438
   
$
36,394
   
$
14,956
 
                                 
Cost of Goods Sold
   
14,400
     
4,699
     
25,670
     
10,909
 
                                 
Gross Profit
   
5,330
     
1,739
     
10,724
     
4,047
 
                                 
Operating Expenses
                               
Selling and marketing expenses
   
1,564
     
413
     
3,918
     
1,031
 
General and administrative expenses
   
2,047
     
1,269
     
5,902
     
3,029
 
Research and development cost
   
6
     
25
     
53
     
86
 
Depreciation and amortization
   
10
     
2
     
26
     
6
 
                                 
Total Operating Expenses
   
3,627
     
1,709
     
9,899
     
4,152
 
                                 
Income (Loss) before Other Income/(Expenses)
   
1,703
     
30
     
825
     
(105
)
                                 
Other Income/(Expenses)
                               
Interest and other income
   
-
     
-
     
10
     
-
 
Penalties
   
-
     
(1
)
   
-
     
(7
)
Commitment fee
   
-
     
-
     
(3
)
   
-
 
Gain on settlement of debt
   
-
     
(65
)
   
-
     
(14
)
(Loss) Gain on change in fair value of derivative liability
   
-
     
(12,941
)
   
68
     
(14,533
)
Interest expense
   
(301
)
   
(786
)
   
(1,023
)
   
(2,919
)
                                 
Total Other Income/(Expenses)
   
(301
)
   
(13,793
)
   
(948
)
   
(17,473
)
                                 
Income (Loss) before Income Taxes
   
1,402
     
(13,763
)
   
(123
)
   
(17,578
)
                                 
Income Tax Expense
   
-
     
-
     
-
     
-
 
                                 
Net Income (Loss)
 
$
1,402
   
$
(13,763
)
 
$
(123
)
 
$
(17,578
)
                                 
EARNINGS (LOSS) PER SHARE:
                               
Basic
 
$
0.08
   
$
(1.14
)
 
$
(0.01
)
 
$
(1.61
)
Diluted
 
$
0.06
   
$
(1.14
)
 
$
(0.01
)
 
$
(1.61
)
                                 
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING
                         
Basic
   
17,756,967
     
12,093,857
     
16,670,146
     
10,939,492
 
Diluted
   
22,477,526
     
12,093,857
     
16,670,146
     
10,939,492
 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
 
SOLAR3D, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(In thousands, except share and per share data)

                           
Additional
             
   
Preferred stock
   
Common stock
   
Paid-in
   
Accumulated
       
   
Shares
   
Amount
   
Shares
   
Amount
   
Capital
   
Deficit
   
Total
 
Balance at December 31, 2014
   
-
   
$
-
     
14,016,252
   
$
14
   
$
42,765
   
$
(40,819
)
   
1,960
 
                                                         
Issuance of common stock for cash
   
-
     
-
     
3,000,000
     
3
     
11,576
     
-
     
11,579
 
                                                         
Issuance of common stock for conversion of promissory notes, plus accrued interest
   
-
     
-
     
643,465
     
1
     
316
     
-
     
317
 
                                                         
Issuance of common stock for services at fair value
   
-
     
-
     
57,529
     
-
     
239
     
-
     
239
 
                                                         
Issuance of common stock for commitment fee
   
-
     
-
     
11,583
     
-
     
3
     
-
     
3
 
                                                         
Issuance of common stock for exercise of warrants
   
-
     
-
     
3,000
     
-
     
12
     
-
     
12
 
                                                         
Issuance of common stock for cashless exercise of options
                   
53,649
      -
 
   
-
     
-
     
-
 
                                                         
Stock based compensation
   
-
     
-
             
-
     
107
     
-
     
107
 
                                                         
Contributed capital
   
-
     
-
     
-
     
-
     
39
             
39
 
                                                         
Beneficial conversion feature on convertible promissory note
   
-
     
-
     
-
     
-
     
2,719
     
-
     
2,719
 
                                                         
Rounding shares due to reverse split
   
-
     
-
     
3,004
     
-
             
-
     
-
 
                                                         
Net loss for the nine months ended September 30, 2015
   
-
     
-
     
-
     
-
     
-
     
(123
)
   
(123
)
                                                         
Balance at September 30, 2015 (Unaudited)
   
-
   
$
-
     
17,788,483
   
$
18
   
$
57,776
   
$
(40,942
)
 
$
16,852
 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
 
SOLAR3D, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, except share and per share data)
(Unaudited)

   
Nine Months Ended
 
   
September 30, 2015
   
September 30, 2014
 
CASH FLOWS FROM OPERATING ACTIVITIES:
           
Net loss
 
$
(123
)
 
$
(17,578
)
Adjustments to reconcile net loss to net cash provided by
      (used in) operating activities
               
Depreciation and amortization
   
26
     
6
 
Stock compensation cost
   
107
     
978
 
Common stock issued for services
   
242
     
47
 
(Gain) Loss on change in derivative liability
   
(68
)
   
14,533
 
Amortization of debt discount and beneficial conversion feature recognized as interest
   
868
     
2,776
 
Loss on settlement of debt
   
-
     
14
 
Changes in Assets and Liabilities
               
(Increase) Decrease in:
               
Accounts receivable
   
(3,752
)
   
(516
)
Inventory
   
(379
)    
(90
)
Other current assets
   
18
     
(285
)
Cost in excess of billings
   
(640
)
   
(1,412
)
Restricted cash
   
(37
)
   
(64
)
Other deposits
   
(11
)
      -  
Accounts payable
   
1,373
     
1,240
 
Billings in excess of cost
   
459
     
714
 
Customer deposits
   
98
     
      -
 
Other liabilities
   
25
     
55
 
                 
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES
   
(1,794
)
   
418
 
                 
NET CASH FLOWS USED IN INVESTING ACTIVITIES:
               
    Net cash paid for acquisition
   
(921
)
   
(1,062
)
    Purchase of property and equipment
   
(61
)
   
(33
)
                 
NET CASH USED IN INVESTING ACTIVITIES
   
(982
)
   
(1,095
)
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
               
    Proceeds (payments) for notes payable
   
(9
)
   
490
 
Proceeds from convertible promissory notes
   
-
     
1,465
 
Proceeds from exercise of warrants
   
12
     
-
 
Capital contribution
   
39
     
-
 
Proceeds from issuance of common stock, net of cost
   
11,579
     
-
 
                 
NET CASH PROVIDED BY FINANCING ACTIVITIES
   
11,621
     
1,955
 
                 
NET INCREASE IN CASH AND CASH EQUIVALENTS
   
8,845
     
1,278
 
                 
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
   
414
     
10
 
                 
CASH AND CASH EQUIVALENTS, END OF PERIOD
 
$
9,259
   
$
1,288
 
                 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
         
   Interest paid
 
$
87
   
$
31
 
   Income taxes
 
$
88
   
$
-
 
                 
SUPPLEMENTAL DISCLOSURES OF NON-CASH TRANSACTIONS
         
   Convertible promissory notes issued for acquisition
 
$
2,650
   
$
1,750
 
   Issuance of common stock upon conversion of debt at fair value
 
$
317
   
$
7,504
 
   Issuance of common stock upon a cashless conversion of warrants
 
$
-
   
$
2
 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
 
SOLAR3D, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
SEPTEMBER 30, 2015
(IN THOUSANDS EXCEPT FOR SHARE DATA)
 
1.     BASIS OF PRESENTATION
 
The accompanying unaudited financial statements of Solar3D, Inc. (the “Company”) 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, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015. 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, 2014.
 
All dollar figures are in thousands (000’s) unless otherwise specified.
 
2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

Principles of Consolidation
The accompanying condensed consolidated financial statements include the accounts of Solar3D, Inc., and its wholly owned operating subsidiaries, Solar United Network, Inc. (d/b/a SUNworks) and MD Energy, Inc. All material intercompany transactions have been eliminated upon consolidation of these entities.

Use of Estimates
The preparation of the financial statements in conformity with accounting principles generally accepted in the U.S requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the financial statement date, and reported amounts of revenue and expenses during the reporting period.  Significant estimates include estimates used to review the Company’s goodwill, impairments and estimations of long-lived assets, revenue recognition on percentage of completion type contracts, allowances for uncollectible accounts, inventory valuation, debt beneficial conversion features, valuations of non-cash capital stock issuances and the valuation allowance on deferred tax assets.  The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable in 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 sources.  Actual results may differ from these estimates under different assumptions or conditions.

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

Stock-Based Compensation
The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the Financial Accounting Standards Board whereas the value of the award is measured on the date of grant and recognized over the vesting period. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the Financial Accounting Standards Board whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date.
 
 
Basic and Diluted Net Income (Loss) per Share Calculations
Income (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. The shares for employee options, warrants and convertible notes were used in the calculation of the income per share.

For the nine months ended September 30, 2015, the Company has excluded 899,574 options, 2,997,000 warrants outstanding, and notes convertible into 5,168,639 shares of common stock, because their impact on the loss per share is anti-dilutive.
 
Dilutive per share amounts are computed using the weighted-average number of common shares outstanding and potentially dilutive securities, using the treasury stock method if their effect would be dilutive.
 
The following schedule reconciles the denominators of the Company’s calculation for basic and diluted net income per share:
 
   
Three months ended
 
   
September 30, 2015
 
Shares used in basic per share computation
    17,756,967  
Effect of dilutive common stock options outstanding
    571,151  
Effect of dilutive conversion options
    4,149,408  
Shares used in diluted per share computation
    22,477,526  
 
Revenue Recognition
Revenues and related costs on construction contracts are recognized using the “percentage of completion method” of accounting in accordance with ASC 605-35, Accounting for Performance of Construction-Type and Certain Production Type Contracts (“ASC 605-35”). Under this method, contract revenues and related expenses are recognized over the performance period of the contract in direct proportion to the costs incurred as a percentage of total estimated costs for the entirety of the contract. Costs include direct material, direct labor, subcontract labor and any allocable indirect costs. All un-allocable indirect costs and corporate general and administrative costs are charged to the periods as incurred. However, in the event a loss on a contract is foreseen, the Company will recognize the loss as it is determined.

Revisions in cost and profit estimates during the course of the contract are reflected in the accounting period in which the facts, which require the revision, become known.  Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined.  Changes in job performance, job conditions, and estimated profitability, including those arising from contract penalty provisions, and final contract settlements may result in revisions to costs and income and are recognized in the period in which the revisions are determined.
 
The Asset, “Costs in excess of billings”, represents revenues recognized in excess of amounts billed on contracts in progress. The Liability, “Billings in excess of costs”, represents billings in excess of revenues recognized on contracts in progress. At September 30, 2015 and December 31, 2014, the costs in excess of billings balance were $1,972 and $1,277, and the billings in excess of costs balance were $1,366 and $892, respectively.

Contract receivables are recorded on contracts for amounts currently due based upon progress billings, as well as retention, which are collectible upon completion of the contracts.  Accounts payable to material suppliers and subcontractors are recorded for amounts currently due based upon work completed or materials received, as are retention due subcontractors, which are payable upon completion of the contract.  General and administrative expenses are charged to operations as incurred and are not allocated to contract costs. Retention receivable is the amount withheld by a customer until a contract is completed. Retention receivables of $31 and $0 were included in the balance of trade accounts receivable as of September 30, 2015 and December 31, 2014, respectively.

Contracts Receivable
The Company performs ongoing credit evaluation of its customers. Management closely monitors outstanding receivables based on factors surrounding the credit risk of specific customers, historical trends, and other information, and records bad debts using the direct write-off method. Generally accepted accounting principles require the allowance method be used to reflect bad debts, however, the effect of the use of the direct write-off method is not materially different from the results that would have been obtained had the allowance method been followed.
 
 
Warranty Liability
The Company establishes warranty liability reserves to provide for estimated future expenses as a result of installation and product defects, product recalls and litigation incidental to the Company’s business.  Liability estimates are determined based on management’s judgment, considering such factors as historical experience, the likely current cost of corrective action, manufacturers’ and subcontractors’ participation in sharing the cost of corrective action, consultations with third party experts such as engineers, and discussions with the Company’s general counsel and outside counsel retained to handle specific product liability cases.  Solar panel manufacturers currently provide substantial warranties between twenty to twenty-five years with full reimbursement to replace and install replacement panels while inverter manufacturers currently provide warranties covering ten to fifteen year replacement and installation.
 
Property and Equipment
Property and equipment are stated at cost, and are depreciated using the straight line method over its estimated useful lives:

 Machinery & equipment
 5 Years
 Furniture & fixtures
 5-7 Years
 Computer equipment
 3-5 Years

Depreciation expenses as of September 30, 2015 and 2014 was $26 and $6, respectively.

Long-Lived Assets
The Company reviews its property and equipment and any identifiable intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The test for impairment is required to be performed by management at least annually. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted operating cash flow expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell.

Concentration Risk
Cash includes amounts deposited in financial institutions in excess of insurable Federal Deposit Insurance Corporation (FDIC) limits. At times throughout the year, the Company may maintain cash balances in certain bank accounts in excess of FDIC limits. As of September 30, 2015, the cash balance in excess of the FDIC limits was $9,076. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk in these accounts.
 
Fair Value of Financial Instruments
Disclosures about fair value of financial instruments, requires disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value. As of September 30, 2015, the amounts reported for cash, accrued interest and other expenses, and notes payable approximate the fair value because of their short maturities.
 
We adopted ASC Topic 820 as of January 1, 2008 for financial instruments measured as fair value on a recurring basis. ASC Topic 820 defines fair value, established a framework for measuring fair value in accordance with accounting principles generally accepted in the United States and expands disclosures about fair value measurements.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 established a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include:
 
·  
Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;
·  
Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and
·  
Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

We measure certain financial instruments at fair value on a recurring basis. As of September 30, 2015, all level 3 liabilities were measured and recorded at fair value.
 
 
The following is a reconciliation of the derivative liability for which Level 3 inputs were used in determining the approximate fair value:
 
Beginning balance as of January 1, 2015
 
$
68
 
Fair value of derivative liabilities issued
   
-
 
Conversion of notes payable
   
(76
)
Loss on change in derivative liability
   
8
 
Ending balance as of September 30, 2015
 
$
-
 
 
Segment Reporting
Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker, or decision making group, in deciding the method to allocate resources and assess performance. The Company currently has one reportable segment for financial reporting purposes, which represents the Company's core business.

Recently adopted pronouncements
In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers” (Topic 606). This ASU provides guidance for revenue recognition and affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets and supersedes the revenue recognition requirements in Topic 605, “Revenue Recognition,” and most industry specific guidance. The standard’s core principle is the recognition of revenue when a company transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under the current guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. In August 2015, the FASB issued ASU 2015-14, "Revenue from Contracts with Customers" (Topic 606): Deferral of the Effective Date, which deferred the effective date of ASU 2014-09 to fiscal years beginning after December 15, 2017, including interim reporting periods within that reporting period. Early adoption is permitted for fiscal years beginning after December 15, 2016. The Company is currently evaluating the method and impact the adoption of ASU 2014-09 will have on the Company’s consolidated financial statements and disclosures.
 
 
In April 2015, the FASB issued ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs” this Update as part of its initiative to reduce complexity in accounting standards (the Simplification Initiative). The Board received feedback that having different balance sheet presentation requirements for debt issuance costs and debt discount and premium creates unnecessary complexity. Recognizing debt issuance costs as a deferred charge (that is, an asset) also is different from the guidance in International Financial Reporting Standards (IFRS), which requires that transaction costs be deducted from the carrying value of the financial liability and not recorded as separate assets. Additionally, the requirement to recognize debt issuance costs as deferred charges conflicts with the guidance in FASB Concepts Statement No. 6, Elements of Financial Statements, which states that debt issuance costs are similar to debt discounts and in effect reduce the proceeds of borrowing, thereby increasing the effective interest rate. Concepts Statement 6 further states that debt issuance costs cannot be an asset because they provide no future economic benefit. To simplify presentation of debt issuance costs, the amendments in this Update require 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. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this Update. For public business entities, the amendments in this Update are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. For all other entities, the amendments in this Update are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within fiscal years beginning after December 15, 2016. The Company is currently evaluating the effects of adopting this ASU, if it is deemed to be applicable.

Management reviewed currently issued pronouncements during the nine months ended September 30, 2015, and does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying condensed financial statements.

3.     BUSINESS ACQUISITIONS

Solar United Network, Inc. (SUNworks)
 
On January 31, 2014, the Company acquired 100% of the issued and outstanding stock of Solar United Network, Inc. (SUNworks) for cash in the amount of $1,062 and by issuance of convertible promissory notes in the principal amount of $1,750. The acquisition was accounted for under ASC 805.  SUNworks provides solar photovoltaic installation and consulting services to residential, commercial and agricultural properties. The acquisition is designed to enhance our services for solar technology. SUNworks is now a wholly-owned subsidiary of SLTD.
 
 
Under the purchase method of accounting, the transactions were valued for accounting purposes at $2,812, which was the fair value of SUNworks at time of acquisition. The assets and liabilities of SUNworks were recorded at their respective fair values as of the date of acquisition. Since the Company determined there were no other separately identifiable intangible assets, any difference between the cost of the acquired entity and the fair value of the assets acquired and liabilities assumed is recorded as goodwill. The acquisition date estimated fair value of the consideration transferred consisted of the following:
 
Closing cash payment
 
$
1,062
 
Convertible promissory notes
 
$
1,750
 
Total purchase price
 
$
2,812
 
         
Tangible assets acquired
 
$
1,253
 
Liabilities assumed
   
(1,040
)
Net tangible assets
   
213
 
Goodwill
   
2,599
 
Total purchase price
 
$
2,812
 
 
Key factors that make up the goodwill created by the transaction include knowledge and experience of the acquired workforce and infrastructure.

MD Energy, LLC (MDE)
 
On March 2, 2015, the Company acquired 100% of the tangible and intangible assets of MD Energy, LLC (MDE), for cash in the amount of $850, a convertible promissory note in the principal amount of $2,650, and payment of working capital surplus in the amount of $437. The acquisition was accounted for under ASC 805.  MDE designs, arranges financing, monitors and maintains solar systems, but outsources the physical construction of the systems. The acquisition is designed to enhance our services for solar technology. MDE is now a wholly-owned subsidiary of the Company.
 
 
Under the purchase method of accounting, the transactions were valued for accounting purposes at $3,937, which was the fair value of the Company at time of acquisition. Since the Company determined there were no other separately identifiable intangible assets, any difference between the cost of the acquired entity and the fair value of the assets acquired and liabilities assumed is recorded as goodwill. The acquisition date estimated fair value of the consideration transferred consisted of the following:

Closing cash payment
 
$
850
 
Working capital surplus
 
$
437
 
Convertible promissory notes
 
$
2,650
 
Total purchase price
 
$
3,937
 
         
Tangible assets acquired
 
$
1,442
 
Liabilities assumed
   
(799
)
Net tangible assets
   
643
 
Goodwill
   
3,294
 
Total purchase price
 
$
3,937
 

The above estimated fair value of the intangible assets is based on a preliminary purchase price allocation prepared by management. As a result, during the preliminary purchase price allocation period, which may be up to one year from the business combination date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill.  After the preliminary purchase price allocation period, we record adjustments to assets acquired or liabilities assumed subsequent to the purchase price allocation period in our operating results in the period in which the adjustments were determined.

Pro forma results
The following tables set forth the unaudited pro forma results of the Company as if the acquisition of SUNworks and MDE had taken place on the first day of the periods presented. These combined results are not necessarily indicative of the results that may have been achieved had the companies been combined as of the first day of the periods presented.
 
   
Nine months ended,
September 30, 2015
   
Nine months ended,
September 30, 2014
 
Total revenues
 
$
37,910
   
$
17,595
 
Net loss
   
(151
)
   
(17,713
)
Basic and diluted net loss per common share
 
$
(0.01
)
 
$
(1.62
)
 
 
Elite Solar (Elite)

On August 6, 2015, the company entered into an Agreement and Plan of Merger (the “Merger”) with Plan B Enterprises, Inc., a California corporation and d/b/a Elite Solar, Universal Racking Solutions (collectively, “Plan B”), Kirk R. Short (the “Plan B Shareholder”) and Elite Solar Acquisition Sub., Inc., a wholly owned subsidiary of the Company (“Acquisition Sub”) whereby Plan B will be merged with and into Acquisition Sub, with Acquisition Sub surviving as the Surviving Corporation. The closing date of the Merger was contemplated to be on or around November 1, 2015 and has been extended by one month with anticipated closing on or before December 1, 2015.

Plan B is engaged in the business of designing and installing photovoltaic systems for residential, commercial, agricultural and municipal customers.
 
4.     CONVERTIBLE PROMISSORY NOTES

On March 1, 2013, the Company entered into a securities purchase agreement providing for the sale of a 5% convertible promissory note in the aggregate principal amount of $8, for consideration of $8. The note is convertible into shares of common stock of the Company at a price equal to a variable conversion price equal to the lesser of $0.52 per share or the lowest closing price after the effective date. The note matured on March 31, 2015. As of September 30, 2015, the Company had issued 16,987 shares of common stock for principal in the amount of $8, plus accrued interest of $1.

On January 29, 2014, the Company entered into a securities purchase agreement providing for the sale of a 10% convertible promissory note in the principal amount of up to $100. Upon execution of the note, the Company received an initial advance of $90. On December 4, 2014, the Company issued 192,543 shares of common stock upon conversion of $60 in principal, plus interest of $5. As of December 31, 2014, the remaining balance is $30. The note was convertible into shares of common stock of the Company at a price equal to a variable conversion price equal to the lesser of $0.338 per share, or fifty percent (50%) of the lowest trading price after the effective date. The Company issued 97,633 shares of common stock upon conversion of principal in the amount of $30, plus accrued interest of $3 during the nine months ended September 30, 2015

On January 31, 2014, the Company entered into a securities purchase agreement providing for the sale of a 10% convertible promissory note in the principal amount of up to $750, for consideration of $750. The proceeds were restricted and were used for the purchase of Solar United Network, Inc. The note was convertible into shares of common stock of the Company at a price equal to a variable conversion price equal to the lesser of $1.30 per share, or fifty percent (50%) of the lowest trading price after the effective date. As of September 30, 2014, the note was exchanged for a new note with a fix price of $0.338, and convertible into shares of common stock.  Per ASC 815, the derivative liability on the note was extinguished and the new note was re-valued per ASC 470 as a beneficial conversion feature, which was expensed in the statement of operations during the prior year. The note matured on October 28, 2014, with an extension of three months. The note matured on January 31, 2015, and was extended to June 30, 2016. The Company recorded interest expense in the amount of $60 and $50, during the nine months ended September 30, 2015 and 2014, respectively.
 
On February 11, 2014, the Company entered into a securities purchase agreement providing for the sale of a 10% convertible promissory note in the principal amount of up to $100. Upon execution of the note, the Company received an initial advance of $20. In February and March, the Company received additional advances in an aggregate amount of $80 for an aggregate total of $100. The note was convertible into shares of common stock of the Company at a price equal to a variable conversion price equal to the lesser of $1.30 per share, or fifty percent (50%) of the lowest trading price after the effective date. As of September 30, 2014, the note was exchanged for a new note with a fixed price of $0.338, and convertible into shares of common stock. Per ASC 815, the derivative liability on the note was extinguished and the new note was re-valued per ASC 470 as a beneficial conversion feature. The note matured on various dates from the effective date of each advance with respect to each advance. At the sole discretion of the lender, the lender was able to modify the maturity date to be twelve (12) months from the effective date of each advance. The note matured on various dates in 2014, and was extended to June 30, 2016. The Company recorded interest expense in the amount of $8 and $6, during the nine months ended September 30, 2015 and 2014, respectively.
 
At the time of issuance, the Company evaluated the financing transactions in accordance with ASC Topic 815, Derivatives and Hedging, and determined that the conversion feature of the convertible promissory note was not afforded the exemption for conventional convertible instruments due to its variable conversion rate. The notes had no explicit limit on the number of shares issuable so they did not meet the conditions set forth in current accounting standards for equity classification.  The Company elected to recognize the note under paragraph 815-15-25-4, whereby, there would be a separation into a host contract and derivative instrument. The Company elected to initially and subsequently measure the note in its entirety at fair value, with changes in fair value recognized in earnings. The derivative liability was adjusted periodically according to the stock price fluctuations.
 
 
5.     ACQUISITION CONVERTIBLE PROMISSORY NOTES
 
On January 31, 2014, the Company entered into a securities purchase agreement providing for the sale of four 4% convertible promissory notes in the aggregate principal amount of $1,750 as part of the consideration paid to acquire 100% of the issued and outstanding stock of SUNworks. The notes are convertible at any time after issuance into shares of fully paid and non-assessable shares of common stock. The conversion price is $0.52 per share until March 30, 2015, which has been amended to extend to March 31, 2016, and thereafter the conversion price will be the greater of $0.52 or 50% of the average closing price of the common stock during the ten (10) consecutive trading days following the submission of the conversion notice. The Notes are five (5) year notes and bear interest at the rate of 4% per annum.  As amended on June 30, 2015, the Company will make quarterly payments of principal and interest payable over a three year period commencing March 31, 2016. In February and March 2014, $625 of the notes was converted into 1,201,923 shares of common stock, leaving a remaining balance of $1,125 as of December 31, 2014. During the nine months ended September 30, 2015, the Company issued 528,846 shares of common stock upon conversion of principal in the amount of $275. The principal balance remaining as of September 30, 2015 is $850. The Company recorded amortization of the beneficial conversion feature as interest expense in the amount of $234 during the nine months ended September 30, 2015.

On February 28, 2015, the Company entered into a securities purchase agreement providing for the sale of a 4% convertible promissory note in the aggregate principal amount of $2,650 as part of the consideration to paid acquire 100% of the total outstanding stock of MD Energy. The note is convertible into shares of common stock on or after each of the following dates: November 30, 2015, November 30, 2016 and November 30, 2017. The conversion price shall be $2.60 per share. A beneficial conversion feature of $2,650 was calculated and capped at the value of the note based on effective conversion price of $3.20.  Commencing on March 31, 2015, and on the last day of each quarter thereafter during the first two (2) years of the note, the Company will make quarterly interest only payments to the shareholder for interest accrued on the Note during the quarter. Commencing with the quarter ending on June 30, 2017, the Company will make quarterly payments of interest accrued on the Note during the prior quarter plus $221, with the final payment of all outstanding principal and accrued but unpaid interest on the Note due and payable on February 28, 2020 (the maturity date). The Company recorded amortization of the beneficial conversion feature as interest expense in the amount of $565 during the nine months ended September 30, 2015.

We evaluated the foregoing financing transactions in accordance with ASC Topic 470, Debt with Conversion and Other Options, and determined that the conversion feature of the convertible promissory note was afforded the exemption for conventional convertible instruments due to its fixed conversion rate. The convertible promissory notes have explicit limits on the number of shares issuable so they did meet the conditions set forth in current accounting standards for equity classification.  The convertible promissory notes were issued with non-detachable conversion options that are beneficial to the investors at inception, because the conversion option has an effective strike price that is less than the market price of the underlying stock at the commitment date. The accounting for the beneficial conversion feature requires that the beneficial conversion feature be recognized by allocating the intrinsic value of the conversion option to additional paid-in-capital, resulting in a discount on the convertible notes, which will be amortized and recognized as interest expense.
 
6.     CAPITAL STOCK

On February 25, 2015, the Company effected a twenty six-for-one (26:1) reverse stock split of its issued and outstanding shares of common stock. All share amounts have been retrospectively revised to reflect the reverse stock split.

During the nine months ended September 30, 2015, the Company issued 3,004 rounding shares due to the reverse stock split. 

In the first quarter of 2015, the Company entered into an underwriting agreement with Cowen & Company, LLC, relating to the sale and issuance by the Company of 3,000,000 Units to the Underwriter in a firm commitment underwritten public offering. Each Unit consisted of one share of the Company’s common stock and a warrant to purchase one share of the Company’s common stock. The shares of common stock and warrants were immediately separable and were issued separately but sold together as parts of the units sold in the Offering. The warrants are exercisable during the period commencing from the date of issuance and ending on March 9, 2020 at an exercise price of $4.15 per share of common stock (subject to adjustment under certain circumstances).  Total proceeds of the offering were $12,450 and the Company received net cash of $11,215 after deducting fees and legal expenses.

During the nine months ended September 30, 2015, the Company issued 643,465 shares of common stock at varying prices per share ranging from $0.338 to $0.52 for conversion of principal for convertible promissory notes in the amount of $313, plus accrued interest payable of $4.
 
 
During the nine months ended September 30, 2015, the Company issued 57,529 shares of common stock for services at fair value of $239.

During the nine months ended September 30, 2015, the Company issued 11,583 shares of common stock with a fair value of $3 for a price adjustment for the shares issued for cash.

During the nine months ended September 30, 2015, the Company issued 3,000 shares of common stock for the exercise of warrants for $12.

During the nine months ended September 30, 2015, the Company received contributed capital of $39 which was the disgorged profits related to Company stock transactions by an officer within a 180 day period.

During the nine months ended September 30, 2015, the Company issued 53,649 share of common stock for the cashless exercise of options.

7.     OPTIONS AND WARRANTS

Options
As of September 30, 2015, the Company has 899,574 non-qualified stock options outstanding to purchase 899,574 shares of common stock, per the terms set forth in the option agreements. The stock options vest at various times, and are exercisable for a period of seven years from the date of grant at exercise prices ranging from $0.26 to $4.42 per share, the market value of the Company’s common stock on the date of each grant. The Company determined the fair market value of these options by using the Black Scholes option valuation model.

A summary of the Company’s stock option activity and related information follows:
 
   
9/30/2015
 
         
Weighted
 
   
Number
   
average
 
   
of
   
exercise
 
   
Options
   
price
 
Outstanding, beginning January 1, 2015
   
957,266
   
$
2.204
 
Granted
   
-
     
-
 
Exercised
   
(53,649
   
0.260
 
Expired
   
(4,043)
     
0.260
 
Outstanding, end of September 30, 2015
   
899,574
   
$
2.295
 
Exercisable at the end of September 30, 2015
   
816,239
   
$
1.089
 
Weighted average fair value of
  options granted during the period
         
$
-
 
 
Restricted Stock CEO
During the year ended December 31, 2013, the Company entered into a restricted stock grant agreement (“or RSGA”) with its Chief Executive Officer, James B. Nelson, intended to provide and incentivize Mr. Nelson to improve the economic performance of the Company and to increase its value and stock price. All shares issuable under the RSGA are performance based shares. The RSGA provides for the issuance of up to 769,230 shares of the Company’s common stock to Mr. Nelson provided certain milestones are met in certain stages. As of September 30, 2014, two of the stages were met, when the Company’s market capitalization exceeded $10,000, and the consolidated gross revenue, calculated in accordance with GAAP, equaled or exceeded $10,000 for the trailing twelve month period. The Company issued 384,615 shares of common stock to Mr. Nelson, which was exercised through a cashless exercise at fair value of $786 during the year ended December 31, 2014. If the Company’s consolidated net profit, calculated in accordance to GAAP, equals or exceeds $2,000 for a trailing twelve month period, the Company will issue an additional 384,615 shares of the Company’s common stock to Mr. Nelson. We have not recognized any cost associated with the second milestone due to not being able to estimate the probability of it being achieved. As the performance goals are achieved, the shares shall become eligible for vesting and issuance. 
 
 
Restricted Shares to Shareholders
During the year ended December 31, 2014, the Company entered into a RSGA with the Shareholders of SUNworks (SUNworks Shareholders), intended to provide incentive to the recipients to ensure economic performance of the Company. All shares issuable under the RSGA are performance based shares and none have yet vested nor have been issued. The RSGA’s provide for the issuance of up to 276,923 shares of the Company’s common stock to the SUNworks Shareholders provided certain milestones are met in certain stages as follows: a) If the Company’s aggregate net income from operations, for any trailing four (4) quarters equals or exceeds $2,000, the Company will issue 92,308 shares of common stock; b) If the Company’s aggregate net income from operations, for any trailing four (4) quarters exceeds $3,000, the Company will issued 92,308 shares of common stock; c) If the Company’s aggregate net income from operations, for any trailing four (4) quarters exceeds $4,000, the Company will issue 92,307. Based on the probability that the first milestone will be achieved during the year 2015 the Company recognized $100 in stock compensation expense. We have not recognized any cost associated with the last two milestones as we are not yet able to estimate the probability of such milestones being achieved. As the performance goals are achieved, the shares shall become eligible for vesting and issuance.

Restricted Shares to Employees
During the year ended December 31, 2014, the Company entered into a RSGA with the employees of SUNworks, intended to provide incentive to the recipients to ensure certain economic performance of the Company. All shares issuable under the RSGA are performance based shares and none have yet vested nor have been issued. The RSGA provides for the issuance of up to 38,462 shares of the Company’s common stock provided certain milestones are met in certain stages as follows: a) If the Company’s aggregate net income from operations, for any trailing four (4) quarters equals or exceeds $2,000, the Company will issue 12,821 shares of common stock; b) If the Company’s aggregate net income from operations, for any trailing four (4) quarters exceeds $3,000, the Company will issued 12,821 shares of common stock; c) If the Company’s aggregate net income from operations, for any trailing four (4) quarters exceeds $4,000, the Company will issue 12,820. Based on the probability that the Company will reach the $2,000 in aggregate income for the four (4) trailing quarters, the Company recognized $33 in stock compensation expense. We have not recognized any cost associated with the last two milestones as we are not yet able to estimate the probability of such milestones being achieved. As the performance goals are achieved, the shares shall become eligible for vesting and issuance.

Restricted Shares to CFO
On February 1, 2015, the Company entered into a RSGA with the Chief Financial Officer (“CFO) of Solar3D, intended to provide incentive to the CFO to ensure certain economic performance of the Company. All shares issuable under the RSGA are performance based shares and none have yet vested nor have been issued. The RSGA provides for the issuance of up to 115,385 shares of the Company’s common stock provided certain milestones are met in certain stages as follows: a) If the Company’s aggregate net income from operations, for any trailing four (4) quarters equals or exceeds $2,000, the Company will issue 38,462 shares of common stock; b) If the Company’s aggregate net income from operations, for any trailing four (4) quarters exceeds $3,000, the Company will issued 38,462 shares of common stock; c) If the Company’s aggregate net income from operations, for any trailing four (4) quarters exceeds $4,000, the Company will issue 38,461. We have not recognized any cost associated as we are not yet able to estimate the probability of such milestones being achieved. As the performance goals are achieved, the shares shall become eligible for vesting and issuance.

The total stock-based compensation expense recognized in the statement of operations during the nine months ended September 30, 2015 was $107.

Warrants

During the nine months ended September 30, 2015, we issued 3,000,000 common stock purchase warrants.  The warrants were issued as part of the units sold by the Company in a public offering in March 2015.  The warrants are exercisable at a price of $4.15 per share. As of September 30, 2015, the Company had 2,997,000 common stock purchase warrants outstanding.


ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
 
Forward-looking Statements
 
Statements in this quarterly report on Form 10-Q that are not historical facts constitute forward-looking statements.  Examples of forward-looking statements include statements relating to industry prospects, our future economic performance including anticipated revenues and expenditures, results of operations or financial position, and other financial items, our business plans and objectives, and may include certain assumptions that underlie forward-looking statements. Risks and uncertainties that may affect our future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements include, among other things, those listed under “Risk Factors” in our annual report on Form 10-K filed with the U.S. Securities and Exchange Commission on March 31, 2015 and elsewhere in this quarterly report.
 
These risks and uncertainties include but are not limited to:
 
·  
our limited operating history;
·  
our ability to raise additional capital to meet our objectives;
·  
our ability to compete in the solar electricity industry;
·  
our ability to sell solar electricity systems;
·  
our ability to arrange financing for our customers;
·  
government incentive programs related to solar energy;
·  
our ability to increase the size of our company and manage growth;
·  
our ability to acquire and integrate other businesses;
·  
relationships with employees, consultants and suppliers; and
·  
the concentration of our business in one industry in one geographic area.

In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “intends,”  “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other comparable terminology.
 
These statements are subject to business and economic risk and reflect management’s current expectations, and involve subjects that are inherently uncertain and difficult to predict. Actual events or results may differ materially. Moreover, neither we nor any other person assumes responsibility for the accuracy or completeness of these statements. We are under no duty to update any of the forward-looking statements after the date of this quarterly report to conform these statements to actual results.
 
 Presentation

All dollar figures are in thousands (000’s) unless otherwise specified.
 
Business Introduction / Overview

Solar3D provides photo voltaic (“PV”) based power systems for the residential, commercial and agricultural markets in California and Nevada.  Through our two operating subsidiaries, SUNworks and MD Energy we design, arrange financing, integrate, install and manage systems ranging in size from 2kW (kilowatt) for residential loads to multi MW (megawatt) systems for larger commercial projects.  Commercial installations have included office buildings, manufacturing plants, warehouses, and agricultural facilities such as farms, wineries and dairies.  The Company provides a full range of installation services to our solar energy customers including design, system engineering, procurement, permitting, construction, grid connection, warranty, system monitoring and maintenance.

In addition to our core solar integrator business, our technology division has developed a patent-pending 3-dimensional solar cell technology that we believe has the potential to increase PV conversion efficiency thereby reducing the cost of the electricity generated.
 
As of January 31, 2014, we acquired 100% of the issued and outstanding capital stock of SUNworks.  SUNworks is engaged in the business of the design, installation, and management of solar systems for commercial, agricultural, and residential customers in northern California.  SUNworks designs, finances, and installs systems ranging in size from 2KW (kilowatt) for residential loads to multi MW (megawatt) systems for larger commercial projects.  SUNworks currently employs approximately 125 personnel involved in the operations and administration of the business.  It also utilizes outside subcontractors to assist with providing solar systems to our customers.
 
 
As of March 2, 2015, we acquired 100% of tangible and intangible assets of MD Energy, LLC (MDE) for cash in the amount of $850, and by issuing a three-year convertible promissory note for $2,650, and payment of working capital surplus in the amount of $437. The acquisition transaction was accounted for under ASC 805. MDE provides solar photovoltaic installation and consulting services to residential and commercial properties and focuses its operations on southern California.  Similar to SUNworks, MD Energy designs, arranges financing, monitors and maintains solar systems, but outsources the physical construction of the systems.  MDE currently employs approximately 6 personnel involved in the operations and administration of the business.  The acquisition is designed to enhance our services for solar technology. MDE is now a wholly-owned subsidiary of SLTD.

On February 25, 2015, the Company effected a 26:1 reverse stock split on its issued and outstanding shares of common stock (with related adjustments to its outstanding convertible securities, including, options and warrants).

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

Use of Estimates
 
In accordance with accounting principles generally accepted in the United States, management utilizes estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.   Significant estimates include estimates used to review the Company’s goodwill, impairments and estimations of long-lived assets, revenue recognition on percentage of completion type contracts, allowances for uncollectible accounts, inventory valuation, debt beneficial conversion features, valuations of non-cash capital stock issuances and the valuation allowance on deferred tax assets.  The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable in 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 sources.  Actual results may differ from these estimates under different assumptions or conditions.
 
Long-Lived Assets

The Company reviews its property and equipment and any identifiable intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The test for impairment is required to be performed by management at least annually. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted operating cash flow expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell.

Fair Value of Financial Instruments
 
Our cash, accounts receivable and accounts payable are stated at cost which approximates fair value due to the short-term nature of these instruments.
 
Revenue Recognition
 
Revenues and related costs on construction contracts are recognized using the “percentage of completion method” of accounting in accordance with ASC 605-35, Accounting for Performance of Construction-Type and Certain Production Type Contracts (“ASC 605-35”). Under this method, contract revenues and related expenses are recognized over the performance period of the contract in direct proportion to the costs incurred as a percentage of total estimated costs for the entirety of the contract. Costs include direct material, direct labor, subcontract labor and any allocable indirect costs. All un-allocable indirect costs and corporate general and administrative costs are charged to the periods as incurred. However, in the event a loss on a contract is foreseen, the Company will recognize the loss as it is determined.
 

The Asset, “Costs in excess of billings”, represents revenues recognized in excess of amounts billed on contracts in progress. The Liability, “Billings in excess of costs”, represents billings in excess of revenues recognized on contracts in progress. At September 30, 2015 and December 31, 2014, the costs in excess of billings balance was $1,972 and $1,277, and the billings in excess of costs balance was $1,366 and $892, respectively.
 
RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2015 COMPARED TO THE THREE MONTHS ENDED SEPTEMBER 30, 2014

Three months of both SUNworks and MDE operations were consolidated into the Company’s financial statements for the period ended September 30, 2015.  Three months of SUNworks operations and none of the MDE operations were consolidated into the Company’s financial statements for the period ended September 30, 2014.
 
REVENUE AND COST OF SALES
 
For the three months ended September 30, 2015, our revenue for the Company more than tripled to $19,730 compared to $6,438 for the three months ended September 30, 2014.  Cost of sales for the three months ended September 30, 2015, also more than tripled to $14,400 compared to $4,699 for the three months ended September 30, 2014.  Revenue and cost of sales increased primarily due to significant year over year sales growth at SUNworks plus the inclusion of three months of MDE’s operations.

Gross profit also more than tripled to $5,330 for the three months ended September 30, 2015 compared to $1,739 for the three months ended September 30, 2014.   The gross profit percentage was the same at 27% in both third quarter periods of 2015 and 2014. Sales to the commercial and agricultural markets were especially strong during the third quarter 2015 resulting in approximately 65% of revenue with approximately 35% of revenue from sales to the residential market. The higher percentage of commercial sales relative to residential sales resulted in slightly lower gross margins compared to earlier periods.  

 SELLING AND MARKETING EXPENSES

For the three months ended September 30, 2015, selling and marketing expenses were $1,564 or 7.9% of revenue, compared to $413 or 6.4% for the three months ended September 30, 2014.  Selling and marketing expenses increased primarily due to SUNworks increased activity to promote growth including the commencing of operations in Reno.  Selling and marketing expenses also include expenditures for our specially-designed marketing efforts and tracking systems in place that enable us to attract new customers at a low cost and higher conversion rate than what we believe to be the industry average.  We use several marketing tools and business strategies to differentiate ourselves from our competitors and attract new customers.
 
GENERAL AND ADMINISTRATIVE EXPENSES
 
General and administrative expenses increased to $2,047, for the three months ended September 30, 2015, compared to $1,269 for the three months ended September 30, 2014.  General and administrative expenses increased primarily due to inclusion of MDE’s expenses plus higher professional services expenses, plus additional expenses at SUNworks related to higher volume. While general and administrative costs increased by $778 year over year as a percentage of revenue, general and administrative expenses were 10.4% of revenue in the third quarter of 2015 compared to 19.7% of revenue for the third quarter of 2014.  The lower percentage of revenue year over year is primarily the result of more efficient operations, keeping control of headcount and spreading costs across a larger base of operations and increased revenue base.

RESEARCH AND DEVELOPMENT

Research and development costs for the three months ended September 30, 2015 and 2014 were $6 and $25, respectively.  Our research costs have been for research and patent work for our proprietary 3-dimensional solar cell.  The novel 3D cell is still in the development stage.  Research and development costs have decreased as the Company focuses more on its core business of selling and installing photovoltaic systems for residential, commercial, agricultural and municipal customers.
 
OTHER INCOME/(EXPENSES)
 
Other expenses decreased to $301 for the three months ended September 30, 2015, compared to other expenses of $13,793 for the three months ended September 30, 2014.  During the third quarter of 2015 the only item in other expense was interest expense of $301 primarily related to beneficial conversion feature costs compared to $786 for the same period of 2014.  During the third quarter of 2014 we incurred a loss on the settlement of debt of $65 along with a substantial loss resulting from a change in the fair value of our derivative liability instruments of $12,941.  The derivative liability was adjusted periodically according to the stock price fluctuations.  All but one small promissory note in the principal amount of $68 were amended in the fourth quarter of 2014 to eliminate our exposure to derivative liabilities.
 
 
NET INCOME / LOSS

The net income of $1,402 for the three months ended September 30, 2015 compares to net loss of $13,763 for the three months ended September 30, 2014.  The third quarter 2015 net income resulted from a 206% increase in gross profits of $3,591 to $5,330 compared to $1,739 in the third quarter of 2014. Third quarter 2015 operating expenses of $3,627 increased by 112%, or $1,918 compared to the operating expenses of $1,709 in the third quarter of 2014.

Selling and market expenses increased $1,151 year over year and represented 7.9% of revenue for the period ended September 30, 2015 compared to 6.4% for the same period in 2014. The higher percentage is due to increased activity associated with growing our residential sales.

General and administrative expenses in the 2015 third quarter increased by $778 to $2,047 compared to $1,269 in the third quarter of 2014.  The general and administrative expenses as a percentage of sales however decreased to 10.4% in 2015 compared to 19.7% in 2014.  The lower percentage is the result of efficiencies gained and controlling headcount.  Basic and diluted earnings per share were $0.08 and $0.06, respectively, for the three months ended September 30, 2015 compared to ($1.14) for both basic and diluted earnings per share the three months ended September 30, 2014.

NINE MONTHS ENDED SEPTEMBER 30, 2015 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER 30, 2014
 
Nine months of SUNworks operations and seven months of MDE operations were consolidated into the Company’s financial statements for the period ended September 30, 2015.  Eight months of SUNworks operations and none of MDE operations were consolidated into our financial statements for the period ended September 30, 2014.
 
REVENUE AND COST OF SALES
 
For the nine months ended September 30, 2015, revenue increased 143% to $36,394 compared to $14,956 for the nine months ended September 30, 2014.  Cost of sales for the nine months ended September 30, 2015, was $25,670, an increase of 135% compared to $10,909 for the nine months ended September 30, 2014.  Revenue and cost of sales increased primarily due to SUNworks year over year sales growth plus an additional seven months of MDE operations and one month of SUNworks operations.

Gross profit for the Company increased by $6,677 to $10,724 compared to $4,047 for the nine months ended September 30, 2015 and 2014, respectively.   The gross profit percentage increased to 29.5% in the first nine months of 2015 compared to 27.1% for the first nine months of 2014 primarily due to higher volumes and improved purchasing efficiencies.  Approximately 60% of the revenue for the first nine months 2015 was from sales to the commercial and agricultural markets, and approximately 40% of revenue was from sales to the residential market.
 
SELLING AND MARKETING EXPENSES
 
For the nine months ended September 30, 2015, we had selling and marketing expenses of $3,918 or 10.8 % of revenue compared to $1,031 or 6.9% of revenue for the nine months ended September 30, 2014.  Selling and marketing expenses increased in dollar and percentage terms of revenue primarily due to SUNworks increased activity to promote growth including hiring of additional sales staff and the startup of operations in Reno.  Selling and marketing expenses include expenditures for our specially-designed marketing efforts and tracking systems in place that enable us to attract new customers at a low cost and higher conversion rate than what we believe to be the industry average.  We use several marketing tools and business strategies to differentiate ourselves from our competitors and attract new customers.

GENERAL AND ADMINISTRATIVE EXPENSES
 
General and administrative expenses increased by $2,873 to $5,902 or 16.2% as a percentage of revenue for the nine months ended September 30, 2015, compared to $3,029 or 20.1% of revenue for the nine months ended September 30, 2014.   The lower percentage of revenue year over year is primarily the result of more efficient operations, keeping control of headcount and spreading costs across a larger base of operations and increased revenue base.  The Company also incurred one-time expenses in connection with our first quarter stock offering and simultaneous uplisting to the Nasdaq stock exchange with expenses of approximately $1.3 million plus the additional month of SUNworks operations and seven additional months of MDE operations.  
 
RESEARCH AND DEVELOPMENT
 
Research and development costs for the nine months ended September 30, 2015 and 2014 were $53 and $86, respectively.  Our research costs have been for research and patent work for our proprietary 3-dimensional solar cell.  The novel 3D cell is still in the development stage.  Research and development costs have decreased as the Company focuses more on its core business of selling and installing photovoltaic systems for residential, commercial, agricultural and municipal customers.
 
 
OTHER INCOME/(EXPENSES)
 
Other expenses decreased to $948 for the nine months ended September 30, 2015, compared to other expenses of $17,473 for the nine months ended September 30, 2014.  Interest expense, primarily related to beneficial conversion feature costs, decreased during the first nine months of 2015 by $1,895 to $1,023 which compares to $2,919 for the first nine months of 2014.  The company had a gain of $68 on the settlement of debt for the nine months ended September 30, 2015 versus a substantial loss of $14,533 due to the change in fair value of the derivative liability instruments for the nine months ended September 30, 2014.  The derivative liability was adjusted periodically according to the stock price fluctuations.  All but one small promissory note in the principal amount of $68 were amended in the fourth quarter of 2014 to eliminate our exposure to derivative liabilities.
 
NET LOSS

The net loss of $123 for the nine months ended September 30, 2015 compares to net loss of $17,578 for the nine months ended September 30, 2014.  The 2015 net loss resulted from gross profit increasing by $6,677 over the same period in 2014, while 2015 operating expenses increased by $5,747 compared to the first nine months of 2014.  This resulted in $930 higher operating income of $825 for the first nine months of 2015 compared to an operating loss of $105 for the first nine months of 2014.

Selling and market expenses during the first nine months of 2015 were $3,918, an increase of $2,887 compared to $1,031 in the same period of 2014 and the 2015 nine month expenses were 10.8% of revenue compared to 6.9% for the same period in 2014.  The higher percentage is due to increased activity associated with accelerating the growth of our residential sales, including the commencement of SUNworks operations in Reno.

General and administrative expenses in the first three quarters of 2015 increased by $2,873 compared to the first nine months of 2014, with the percentage of sales decreasing to 16.2% in 2015 compared to 20.1% in 2014.  The lower percentage year over year is the result of efficiencies gained over a larger base of business partially offset by higher costs associated with our stock offering and uplisting to Nasdaq earlier in 2015.  The basic loss per share was ($0.01) for the nine months ended September 30, 2015 compared to ($1.61) for the nine months ended September 30, 2014.

LIQUIDITY AND CAPITAL RESOURCES
 
As of September 30, 2015, we had a working capital surplus of $10,800 as compared to a working capital deficit of $743 at December 31, 2014.  This increase in working capital surplus was due primarily to the proceeds received from the public offering consummated in March with cash increasing by $8,845 in the first nine months of 2015.
 
Cash flow used in operating activities was $1,794 for the nine months ended September 30, 2015, as compared to cash generated of $418 for the nine months ended September 30, 2014.  This $2,212 increase of cash used in operating activities was primarily attributable to a lower net loss of $17,455 and the difference in the change in derivative liabilities of $14,601 and lower amortization of debt discount and beneficial conversion feature recognized as interest of $1,908 and lower stock compensation costs of $871.  An increase in accounts receivable by $3,236 partially offset by a $133 increase in accounts payable also contributed to the increase in cash used in operating activities.  Cash used for operating activities for the three months ended September 30, 2015 was limited to $45 as a result of net income offset by net changes in current assets and liabilities.
 
Cash used in investing activities was $982 for the nine months ended September 30, 2015 was $113 lower compared to $1,095 for the nine months ended September 30, 2014.  The decreased use of cash in investing activities was due to the lower net cash payment for the purchase of MDE compared to the net cash payment for the purchase of SUNworks plus increased purchases of property and equipment.
 
Net cash provided from financing activities during the nine months ended September 30, 2015 was $11,621 compared to $1,955 for the nine months ended September 30, 2014.  The $9,666 increase was primarily due to an increase in equity financing through the issuance of new common shares compared to proceeds from the issuance of convertible promissory notes.

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.
 
 
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
 
Not Applicable.
 
ITEM 4. CONTROLS AND PROCEDURES
 
Evaluation of Disclosure Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)).  Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered in this report, our disclosure controls and procedures were effective to ensure that information required to be disclosed in reports we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms and is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
 
Our management, including our principal executive officer and principal financial officer, do not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud.  A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.  Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs.  Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.  To address the material weaknesses, we performed additional analysis and other post-closing procedures in an effort to ensure our consolidated financial statements included in this annual report have been prepared in accordance with generally accepted accounting principles.  Accordingly, management believes that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.

Changes in Internal Control over Financial Reporting
 
There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended September 30, 2015 that has materially affected, or is reasonably likely to materially affect, our 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.
 
(All dollar figures are in thousands (000’s) unless otherwise specified)
 
During the three months ended September 30, 2015, we issued 53,649 shares of common stock for cashless exercise of stock options.

The Company relied on an exemption pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, in connection with the foregoing issuance.
 
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
 
None.
 
ITEM 4. MINE SAFETY DISCLOSURES.
 
None.
 
ITEM 5. OTHER INFORMATION.
 
None.
 
ITEM 6. EXHIBITS.

Exhibit No.
 
Description
10.1
 
Amendment No. 1 to Merger Agreement to the Agreement and Plan of Merger with Plan B Enterprises, Inc., a California corporation and d/b/a Universal Racking Solutions, Kirk R. Short and Elite Solar Acquisition Sub., Inc., a wholly owned subsidiary of the Company.(Incorporated by reference to the Company’s current report on Form 8-K filed on November 2, 2015)
31.1*   Certification of Principal Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.
31.2*
 
32.1*
 
101.INS**
 
XBRL Instance Document.
101.SCH**
 
XBRL Taxonomy Extension Schema Document.
101.CAL**
 
XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF**
 
XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB**
 
XBRL Taxonomy Extension Label Linkbase Document.
101.PRE**
 
XBRL Taxonomy Extension Presentation Linkbase Document.
 
*
Filed herewith
**
Furnished herewith
 
 

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, in the City of Los Angeles, State of California, on November 5, 2015.


 
Solar3D, Inc.
     
Date: November 5, 2015
By:
/s/ James B. Nelson
   
James B. Nelson, Chief Executive Officer
   
(Principal Executive Officer)
     
Date: November 5, 2015
By:
/s/ Tracy M. Welch
   
Tracy M. Welch, Chief Financial Officer
   
(Principal Financial Officer)
 
 
 
 
21

 


EXHIBIT 31.1

CERTIFICATION

I, James B. Nelson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Solar 3D, Inc. for the quarter ended September 30, 2015;

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; and

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 (or 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 registrant's internal control over financial reporting.

November 5, 2015
 
/s/ James B. Nelson
James B. Nelson
Chief Executive Officer (Principal Executive Officer)
 
 

 
 
 


EXHIBIT 31.2

CERTIFICATION

I, Tracy Welch, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Solar 3D, Inc. for the quarter ended September 30, 2015;

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; and

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 (or 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 registrant's internal control over financial reporting.

November 5, 2015
 
/s/ Tracy Welch
Tracy Welch
Chief Financial Officer (Principal Financial and Accounting Officer)

 
 
 
 
 


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 quarter ended September 30, 2015 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), each of the undersigned officers, does hereby certify, pursuant to 18 U.S.C. section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.


November 5, 2015
 
/s/ James B. Nelson
James B. Nelson
Chief Executive Officer (Principal Executive Officer)

 
November 5, 2015
 
/s/ Tracy Welch
Tracy Welch
Chief Financial Officer (Principal Financial and Accounting Officer)

 

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