ITEM 3 -
KEY INFORMATION
A. Selected
Financial Data
The
following tables set forth the Companys selected consolidated financial data.
Investors should read the following selected consolidated financial data in
conjunction with the Companys audited consolidated financial statements and
accompanying notes in Item 18 of this Annual Report and Operating and
Financial Review and Prospects included in Item 5 of this Annual Report.
Natcores
consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS) issued by the
International Accounting Standards Board (IASB) and interpreted by the
International Financial Reporting Interpretations Committee (IFRIC). As a
result of the Accounting Standards Board of Canadas decision to adopt IFRS for
publicly accountable entities for financial reporting periods beginning on or
after January 1, 2011, the Company adopted IFRS for the 2011 and 2010 annual
financial statements.
Since
Natcore began preparing its financial statements in accordance with IFRS,
having reviewed significant transactions and compared them to United States
generally accepted accounting principles (GAAP), Natcore concluded that there
are no material differences that would impact the users of the accompanying
financial statements other than terminology and headings.
The
Company has derived the summary consolidated statements of comprehensive income
data for each of the years ended December 31, 2015, 2014, 2013, 2012 and 2011
from its audited consolidated financial statements (included elsewhere in this
prospectus).
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Year Ended December 31,
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2015
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2014
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2013
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2012
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2011
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Expenses
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Consulting
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181,589
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229,792
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108,657
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70,410
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46,607
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Depreciation and amortization
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279,527
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412,492
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359,178
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325,648
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143,848
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Filing fees
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25,016
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34,090
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32,082
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26,743
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10,920
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Foreign exchange (gain) loss
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5,159
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41,344
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90,060
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(62,086
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)
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151,504
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Interest and bank charges
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2,383
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1,581
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1,269
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2,056
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4,102
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Marketing
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268,853
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81,401
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96,641
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56,553
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216,267
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Office and miscellaneous
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216,811
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273,264
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267,532
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500,322
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286,998
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Professional fees
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335,762
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213,888
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129,499
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204,442
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247,946
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Research and development
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1,203,716
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1,634,864
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1,480,058
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781,042
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452,959
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Stock-based compensation
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387,648
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301,732
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325,686
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609,400
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1,287,021
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Travel
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45,858
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73,922
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126,668
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216,725
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275,822
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Wages and salaries
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778,339
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770,105
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855,853
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821,365
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947,111
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(3,730,661
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)
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(4,068,475
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)
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(3,873,183
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)
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(3,552,620
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)
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(4,071,105
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)
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Other Income (Expense)
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Fair value adjustment on warrants
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226,827
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1,842,317
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(79,353
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)
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1,690,715
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349,711
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Other income
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14,124
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Interest income
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1,581
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32,626
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13,708
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23,550
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26,762
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242,532
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1,874,943
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(65,645
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)
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1,714,265
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376,473
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Net and comprehensive income (loss)
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(3,488,129
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)
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(2,193,532
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)
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(3,938,828
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)
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(1,838,355
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)
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(3,694,632
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)
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Loss per share - basic and diluted
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(0.07
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)
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(0.05
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)
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(0.10
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)
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(0.05
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)
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(0.11
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)
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Weighted average number of shares
outstanding - basic and diluted
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51,329,138
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42,294,310
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41,097,726
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36,014,144
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32,756,376
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5
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As of December 31,
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2015
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2014
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2013
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Assets
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Current Assets
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Cash and cash equivalents
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521,521
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548,387
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2,849,022
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Receivables
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29,057
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5,939
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26,016
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Prepaid expenses
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148,076
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60,395
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94,000
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698,654
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614,721
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2,969,038
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Non-Current Assets
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Equipment
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366,729
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582,503
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680,353
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Intangibles
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36,568
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171,623
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366,729
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619,071
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851,976
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1,065,383
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1,233,792
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3,821,014
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Liabilities and Equity
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Current Liabilities
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Trade payables and accrued
liabilities
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749,985
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289,688
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201,521
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Derivative liability
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1,135,157
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124,823
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1,967,140
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1,885,142
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414,511
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2,168,661
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Equity
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Share capital
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15,690,371
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13,977,256
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13,030,362
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Share-based payment reserve
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3,375,710
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2,956,964
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|
2,857,272
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Share subscriptions receivable
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|
|
31,102
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|
|
313,874
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Deficit
|
|
|
(19,916,942
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)
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|
(16,428,813
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)
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|
(14,235,281
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)
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
(819,759
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)
|
|
819,281
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|
|
1,652,353
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|
|
|
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|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
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|
1,065,383
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|
|
1,233,792
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|
|
3,821,014
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|
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B.
Capitalization and Indebtedness
Not
Applicable.
C.
Reasons for the Offer and Use of Proceeds
Not
Applicable.
D.
Risk Factors
An investment in Natcore common shares involves a
high degree of risk. Investors should consider carefully the risks described
below, together with the financial and other information contained in this
prospectus, before investors decide to invest in Natcore common shares. The
occurrence of the risks described below could have a material adverse impact on
Natcores business, financial condition or results of operations. In any such
case, the trading price of Natcore common stock could decline and investors may
lose part or all of his or her investment. Various statements in this
prospectus, including the following risk factors, contain forward-looking
statements.
6
Risks Related to Natcores Business
There is no assurance that the
Company will turn a profit.
The
Company is currently not profitable. There is no assurance as to whether the
Company will be profitable, earn revenues or whether the Company will be able
to return any investment funds, to make cash distributions or to meet its
operating expenses and debt service, if any.
Our independent auditors reports on
our financial statements for the years ended December 31, 2014 and 2013
includes a going concern explanatory paragraph.
Our
independent auditor has presented our financial statements on the basis that we
are a going concern, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business over a reasonable
length of time. This means that we may not generate enough funds to pay our
general operating expenses and bills from professionals and other advisors that
we are obligated to pay. Since we have not generated any revenues from
operations management intends to finance operating costs over the next twelve
months with existing cash resources and the private placement of common stock. There may be situations where all sources of revenue
described (or any revenue at all) may not be available given market conditions
and customer requirements. The Company has had net losses in each of the last
three fiscal years and as of December 31, 2015; the Company has had recurring
losses from operations and a cumulative deficit of approximately $19,916,942.
There is no assurance that the
Company will generate immediate revenues; the Company projects cash on hand
sufficient to fund operations for approximately 6 months.
The
Company anticipates that it will incur substantial expenses relating to the
implementation of its business plan and cost overruns may be incurred. The
Company currently expects the initial expenses it incurs to result in operating
losses for the Company for the foreseeable future. Furthermore, no assurance
can be made that a shareholder will realize any return on his or her
investment, or that such shareholder will not lose his or her entire
investment. In 2015 the Company completed non-brokered private placements
issuing 8,146,745 units for gross proceeds of $3,017,290. As of December 31,
2015, the Company had $521,521 in cash. The Company anticipates its current
cash and cash equivalents will be sufficient to fund operations for
approximately 6 months. The company has entered into a structured financing
agreement with Dutchess Opportunity Fund, II, LP that has committed $5,000,000
in exchange for equity shares to be exercised at the Companys discretion, to
fund operations over the next 36 months. Additionally, the company may pursue
additional financing alternatives, including completing another private
placement.
Financial projections provided may
prove inaccurate.
The Companys Management may prepare financial projections concerning
the estimated operating results of the Company. These projections would be
based on certain assumptions that may prove to be inaccurate and that are
subject to future conditions be beyond the control of the Company, such as
changes in the condition of the national and international financial markets,
fluctuations in interest rates, changes in rules and regulations pertaining to
the securities markets and market participants, variations in the local and
national economy, acts of terrorism and occurrences of natural disasters or
other such disasters. The Company may experience unanticipated costs, or
anticipated agreements or contracts may not materialize, resulting in lower
revenues than forecasted. There is no assurance that the results that may be
illustrated in financial projections would in fact be realized by the Company.
The financial projections would be prepared by Management of the Company and
would not be examined or compiled by independent certified public accountants.
Accordingly, neither independent certified public accountants nor counsel to
the Company could provide any level of assurance on them.
The Company is in research and
development stage
Substantial
corporate resources are currently being expended on the development of the
Companys technologies. These technologies remain in the development stages and
have not yet been commercialized. There can be no guarantee that the Companys
technologies will achieve the objectives which Natcore believes are necessary
for successful products in the market. In addition, there are risks associated
with commercializing any product including the risk that full scale production
may not be achieved at an acceptable cost level. In addition, since the
Companys technologies are in the development stage, there can be no guarantee
that technical milestones can be achieved. Failure to successfully
commercialize the Companys technologies may materially and adversely affect
the Companys financial condition and results of operations.
7
The Company is entirely dependent on
its Management team.
The Companys Management makes all decisions with respect to the
Companys assets, including investment decisions and the day-to-day operations
of the Company. Other than as specified in the Companys notice of articles and
articles, the shareholders have no right or power to take part in the
management of the Company. As a result, the success of the Company for the
foreseeable future will depend largely upon the ability of Management.
PROSPECTIVE
INVESTORS ARE HEREBY ADVISED THAT THE SUCCESS OF PREVIOUS VENTURES OR PROJECTS
UNDERTAKEN BY THE COMPANYS MANAGEMENT OR THE MANAGEMENT OF ANY ACQUIRED
COMPANY CANNOT BE CONSTRUED AS A GUARANTEE OF THE SUCCESS OF THE VENTURE
OUTLINED HEREIN.
The Companys
Management may be subject to conflicts of interest.
The Companys Management may in the future become associated with or
employed by other companies, which are engaged, or may become engaged, in
operations similar to the operations engaged in by the Company. Conflicts of
interest between the Companys officers and/or directors and the Company may
arise by reason of such relationships. Management intends to resolve any
conflicts with respect to such operations in a manner equitable to the
shareholders of the Company, its management, and any of the Companys
affiliates. Officers and all employees are required to sign a proprietary
inventions agreement which means that anything that is invented while employed
at Natcore is owned by Natcore. Additionally all employees are required
annually to complete an outside employment disclosure which allows the
registrant to better control if there are any outside interests. Directors are
not required to do either and may pursue opportunities independently of the
registrant.
The Company may not
achieve its goals and objectives.
All investments in the Company risk the loss of capital. While the
Companys Management believes that its experience and relationships will
moderate this risk to some degree, no representation is made that the Companys
projects will be successful.
The Company is
subject to the possibility of future litigation that may have a significant
adverse effect on the Companys financial condition, operations and plans for
expansion.
There are many risks incident to providing the types of services
provided by the Company that may give rise to future litigation. Under such
circumstances, the Company may be named as a defendant in a lawsuit or
regulatory action. The Company may also incur uninsured losses for liabilities
which arise in the ordinary course of business, or which are unforeseen. There
is no assurance that the Companys shareholders will not lose their entire investment
in the Company as a result of unforeseen litigation.
The Company will indemnify its
officers and directors.
The Companys articles, as amended, provide that the Company will,
within the limits of capital contributions and retained assets, hold its directors
and officers harmless against certain claims arising from Company activities,
other than losses or damages incurred by it as a result of its gross
negligence, fraud or bad faith. If the Company were called upon to perform
under its indemnification agreements, then the portion of its assets expended
for such purpose would reduce the amount otherwise available for the
implementation of its business plan, or for distributions to its shareholders,
if any.
The enforcement of civil liabilities
against the Company and its officers and directors may be difficult to obtain.
We
are incorporated under the laws of the Province of British Columbia, Canada.
Service of process upon us and upon our directors and officers and the Canadian
experts named in this Prospectus, some of whom reside outside the United
States, may be difficult to obtain within the United States. Furthermore, some
of our assets and some of our directors and officers are located outside the
United States, any judgment obtained in the United States against us or any of
our directors and officers, including one predicated on the civil liability
provisions of the U.S. federal securities laws, may not be collectible within
the United States.
The Company is
subject to certain institutional risks.
The institutions with which the Company (directly or indirectly) does
business may encounter financial difficulties that impair or would impair the
operational capabilities or the capital position of the Company.
8
There may be changes
in laws applicable to the Company.
The Company must comply with various legal requirements, including
requirements imposed by the state and federal securities laws and pension laws.
Should any of those laws change over the scheduled term of the Company, the
legal requirements to which the Company and its shareholders may be subject
could differ materially from current requirements.
The Company may face adverse tax
consequences and may be audited by the Internal Revenue Service or the Canada
Revenue Agency.
While
the Company is advised in tax matters by its accountants, the Internal Revenue
Service (the IRS) or the Canada Revenue Agency (CRA) may not accept the tax
positions taken by the Company. As a result, the IRS or CRA could audit the
Companys information and adjustments to the Companys tax returns may result.
Any such adjustment could subject the shareholders to additional tax, interest
and penalties, as well as incremental accounting and legal expenses. In
addition, an audit of the Companys tax returns could lead to audits of the
individual tax returns of the shareholders, resulting in adjustments and
additional tax with respect to non-Company items.
Government Regulation General.
The Company may be subject
to regulation by county, state and federal governments, governmental agencies,
and regulatory authorities from several different countries. Failure to obtain
regulatory approvals or delays in obtaining regulatory approvals by the
Company, its collaborators, customers, vendors or service providers would
adversely affect the marketing of products and services developed by the
Company, and the Companys ability to generate product and service revenues.
Further, there can be no assurance that the Company, its customers, vendors, or
service providers will be able to obtain necessary regulatory approvals.
Although the Company does not anticipate problems satisfying any of the
regulations involved, the Company cannot foresee the possibility of new
regulations, which could adversely affect the business of the Company. While
the Company anticipates that all regulatory approvals required will be granted,
violations by the Company and/or its customers of, and/or non-compliance with,
such regulations and approvals may adversely affect the Companys ability to
acquire capital, or adversely affect the Companys ability to conduct its
business as intended.
The Company is
subject to various economic risks.
Local, national and international economic conditions may have a
substantial adverse effect on the efforts of the Company. The Company cannot
guarantee its anticipated results of operations against the possible
eventuality of any of these potential adverse conditions.
The Company is subject to foreign exchange risk
The Company operates in
the United States but typically raises funds in Canadian dollars which creates
exposure to changes in exchange rates, primarily as between the US dollar and
the Canadian dollar. Changes in the exchange rates faced by the Company may
have a material adverse impact on its future financial performance. In recent
years, the Canadian dollar has dropped in value as against the U.S. dollar and
has performed with increased volatility relating to general economic
conditions.
The Company may suffer uninsured losses.
The Company plans to
obtain comprehensive insurance coverage, including liability, fire and extended
coverage, as is customarily obtained for businesses similar to the Company.
Certain types of losses of a catastrophic nature, such as losses resulting from
floods, tornadoes, thunderstorms, and earthquakes, are uninsurable or not
economically insurable to the full extent of potential loss. Such Acts of God,
work stoppages, regulatory actions or other causes, could interrupt or delay
the Companys development or expansion, and would adversely affect the
Companys business, results of operations, and profitability.
Dependence on Management and absence
of Key Man Insurance.
The
Companys business, to date, and for the foreseeable future, will be
significantly dependent on the Companys management team, directors and key
consultants, including but not limited to Charles Provini, Brien Lundin, and
David Levy.
The
loss of any one of these officers could have a material adverse effect on the
Company. If the Company lost the services of one or more of its executive
officers or key employees, it would need to devote substantial resources to
finding replacements, and until replacements were found, the Company would be
operating without the skills or leadership of such personnel, any of which
could have a significant adverse effect on the Companys business. The Company
currently does not carry key-man life insurance policies covering any of these
officers.
9
Risks associated with expansion.
Any
expansion plans undertaken by the Company to increase or expand its operations
entail risks, which may negatively impact the profitability of the Company.
Consequently, investors must assume the risk that (i) such expansion may
ultimately involve expenditures of funds beyond the resources available to the
Company at that time, and (ii) management of such expanded operations may
divert Managements attention and resources away from its existing operations,
all of which factors may have a material adverse effect on the Companys
present and prospective business activities. The Company cannot assure
investors that its products, procedures or controls will be adequate to support
the anticipated growth of its operations.
Inability to protect
proprietary and technology rights.
The
Companys success will depend in part on its ability to protect its proprietary
rights and technologies, including, but not limited to,
Patent
2340039, Patent 7,718,550, Patent 7,253,014, Patent 7,682,527, Patent
7,491,376,
and
Patent
7,692,218
. The Company relies on a combination of patents,
trademark laws, trade secrets, confidentiality provisions and other contractual
provisions to protect its proprietary rights. However, not all of these
measures may apply or may afford only limited protection. The Companys failure
to adequately protect its proprietary rights may adversely affect the Company.
Despite the Companys efforts to protect its proprietary rights, unauthorized
parties may attempt to copy aspects of the Companys services or to obtain and
use trade secrets or other information that it regards as proprietary. Based on
the nature of its business, it may or may not be able to adequately protect its
rights through patent, copyright and trademark laws. The Companys means of
protecting its proprietary rights abroad may not be adequate, and competitors
may independently develop similar technologies. The Company may become involved
in litigation over proprietary rights. In the event of an adverse result in any
future litigation with third parties relating to proprietary rights, the
Company could be required to pay substantial damages, including treble damages
if the Company is held to have willfully infringed or to expend significant
resources to develop non-infringing technology. In addition, litigation
frequently involves substantial expenditures and can require significant
management attention, even if the Company ultimately prevails. However, there
can be no assurance that the Company would be able to successfully resolve such
disputes in the future.
No assurance of profitability.
The
Company may experience operating losses as it develops, produces and
distributes its products and services. As a result, the Company may not be able
to achieve profitability in a commercially acceptable time frame, if ever.
Natcore is an emerging growth
company with reduced reporting requirements that may make its common shares
less attractive to investors.
Natcore
is an emerging growth company, as defined in the JOBS Act. Although the
Company has elected not to take advantage of certain reporting exemptions
available it, for so long as Natcore remains an emerging growth company, it
will not be subject to the provision of Section 404(b) of the
Sarbanes-Oxley Act, applicable to non-emerging growth companies, that requires
that an independent registered public accounting firm provide an attestation
report on the effectiveness of the Companys internal control over financial
reporting. This may increase the risk that the Company will fail to detect and
remedy any weaknesses or deficiencies in its internal control over financial
reporting. In general, these reduced reporting requirements may allow the
Company to refrain from disclosing information that investors may find
important. It is also possible that investors may generally find Natcores
common shares less attractive due to its status as an emerging growth company
and its limited disclosures. Any of the foregoing could adversely affect the
price and liquidity of the Companys common shares.
Natcore
may take advantage of these disclosure exemptions until it is no longer an
emerging growth company however it may still take advantage of certain
reduced reporting requirements if it remains a small company. The Company will
cease to be an emerging growth company upon the earliest of:
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the
last day of the fiscal year in which the fifth anniversary of this offering
occurs;
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the
last day of the fiscal year in which the Companys annual gross revenues are
$1 billion or more;
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the
date on which the Company, during the previous three-year period, issued more
than $1 billion in non-convertible debt securities; or
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the last day of any fiscal year in which the market value of the
Companys common shares held by non-affiliates exceeds $700 million as
of the end of the second quarter of that fiscal year.
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10
Risk
Factors Associated with the Industry in which the Company Operates
The demand for solar power products
is dependent on volatile market and industry trends that can affect demand for
Natcores products and negatively impact its revenue.
The
global economic downturn that began in the fourth quarter of 2008 highlighted
the volatility associated with the solar power industry. The capital-intensive
nature of implementation requiring access to capital sources caused an overall
reduction in demand for solar power technology. While global markets have
stabilized and access to capital has returned the demand for solar power
products, the potential for soft demand and the trend of reduced cost of
production could again have the effect of an over-supplied market place. The
effects of a supply driven market place due to soft demand would be adverse to
the Companys margins and in turn revenues.
In
addition, macroeconomic and geopolitical events influence the demand for solar
power products. Specifically, currency exchange rates and governmental
regulation affect the price of other energy resources like oil, natural gas and
coal. A reduction in the price of these traditional energy resources, such as
the recent significant decrease in the oil and natural gas markets,could result
in a reduction in the demand for alternative energy sources such as solar
power; which in turn could reduce the margins of the Companys products and
result in a decrease in revenue.
Unforeseen technological failings
that increase the cost of adoption of solar products may inhibit widespread
implementation of solar solutions that would result in reduced revenue or the
inability for us to maintain Natcores profitability.
The recent discovery of
hardware failure and technical issues related to solar power equipment that
occurred earlier in product life that had been expected could alter the
associated cost of implementation of solar power products that could in turn
lead to a drop in demand. Historical data is not as readily available for the
solar industry as it is for the traditional sources of energy limiting the
ability to determine a reliable trend upon which to base future results.
Increased costs associated with implementation could lead to the failure of
solar power technology being widely adopted resulting in Natcores inability to
sustain revenue growth and profitability.
If third parties claim that the
Companys products infringe their intellectual property rights, the Company may
be forced to expend significant financial resources and management time, and
operating results would suffer.
The
Companys portfolio of intellectual property is significant to its financial
condition and operations. Third parties may claim that the Companys products
and systems infringe their patents or other intellectual property rights.
Identifying third-party patent rights can be particularly difficult, especially
since patent applications are not published until 18 months after their filing
dates. If a competitor were to challenge the Companys patents, or assert that
its products or processes infringe its patent or other intellectual property
rights, the Company could incur substantial litigation costs, be forced to
design around their patents, pay substantial damages or even be forced to cease
operations, any of which could be expensive and/or have an adverse effect on
the Companys operating results. Third-party infringement claims, regardless of
their outcome, would not only drain financial resources, but also would divert
the time and effort of management, and could result in customers or potential
customers deferring or limiting their purchase or use of the affected products
or services until resolution of the litigation.
The Company is subject to
certification requirements and other regulations. Future more stringent
regulations may impair the Companys ability to market its products.
The
Company must obtain product certification from governmental agencies, such as
the EPA, to sell certain products in the United States, and must comply with
other product certification requirements in other countries. A portion of the
Companys future sales will depend upon sales of solar power products and
technologies that are certified to meet existing and future air quality and
energy standards. The Company cannot assure that its products will meet these
standards. The failure to comply with these certification requirements could
result in the recall of the Companys products, or civil or criminal penalties.
Any
new government regulation that affects solar power products and technologies,
whether at the foreign, federal, state, or local level, including any
regulations relating to installation and service of these systems, may increase
the Companys costs and the price of its systems. As a result, these regulations
may have a negative impact on the Companys revenue and profitability and
thereby harm its business, prospects, results of operations, or financial
condition.
Changes in tax policies may reduce
or eliminate the economic benefits that make the Companys products attractive
to consumers
.
In
some jurisdictions, such as the United States, governments provide tax benefits
for solar cell technologies, including tax credits, rebates and reductions in
applicable tax rates. In certain markets of the Company these benefits extend
to users of the Companys products. From time to time, governments change tax
policies in ways that create benefits such as those for the Companys
customers. Reductions or eliminations in these benefits may adversely affect
the Companys revenue.
11
New technologies could render the
Companys existing products obsolete.
New
developments in technology may negatively affect the development or sale of
some or all of the Companys products or make its products obsolete. The
Companys inability to enhance existing products in a timely manner or to
develop and introduce new products that incorporate new technologies, conform
to increasingly stringent emission standards and performance requirements, and
achieve market acceptance in a timely manner could negatively impact the
Companys competitive position. New product development or modification is
costly, involves significant research, development, time and expense, and may
not necessarily result in the successful commercialization of any new products.
Risks Related to the Companys Common Shares and the
Offering
Authorized capital consists of an
unlimited number of shares of one class designated as common shares
The
Companys authorized capital consists of an unlimited number of shares of one
class designated as common shares. The directors may create any class or series
of shares by resolution but may not make any modification to the provisions
attaching to our common shares without the affirmative vote of two-thirds of
the votes cast by the holders of the common shares. Natcores common shares do
not have pre-emptive rights to purchase additional shares. Shareholders should
be aware that the exercise of warrants described herein will dilute the value
of current holdings.
Volatility of the market price of
the Companys common shares could adversely affect its shareholders and
Natcore.
The
market price of the Companys common shares could be highly volatile and could
be subject to wide fluctuations in response to numerous factors, including the
following:
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actual
or anticipated variations in Natcores operating results or those of
Natcores competitors,
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technological
enhancements or developments by Natcore or its competitors,
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regulatory
changes effecting Natcores industry,
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changes
in the roles of key personnel,
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geopolitical
events effecting Natcores industry,
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disputes
concerning proprietary rights concerning patents that Natcore holds.
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Natcore has not paid dividends in
the past and does not expect to pay dividends in the future. Any return on an
investment could be limited to the value of the common stock.
Natcore
has never paid cash dividends on its common shares and do not anticipate paying
cash dividends in the foreseeable future. The payment of dividends depends on
the financial condition of the Company, with other business and economic
factors influencing the decision by the board of directors in determining the
issuance of a dividend. If dividends are not issued, the Companys common
shares may be considered less valuable because a return on an investment
will only occur if the Companys stock price appreciates.
Stockholder ownership interest in
Natcore may be diluted as a result of future financings or additional
acquisitions.
Natcore
may seek to raise funds from time to time in public or private issuances of
equity in the near future or over the longer term. Sales of the Companys
securities offered through future equity offerings may result in substantial
dilution to the interests of the Companys current shareholders. The sale of a
substantial number of securities to investors, or anticipation of such sales,
could make it more difficult for the Company to sell equity or equity-related
securities in the future at a time and at a price that the Company might
otherwise wish to effect sales. In addition, the Company has issued shares of
its common stock for various acquisitions in the past and may do so in the
future, which may also result in substantial dilution to the interests of the
Companys current shareholders.
Investors may experience dilution as
a result of future purchases exercised on outstanding options and warrants.
As
of December 31, 2015, the Company had 5,275,000 options outstanding. Each
option entitles the holder to purchase one additional common share at exercise
prices ranging from CDN$0.51 to CDN$1.11 and expiring on dates ranging from
February 8, 2016 to June 15,2020.
As
of December 31, 2015, the Company had 18,708,732 warrants outstanding. Each
warrant entitles the holder to purchase one additional common share at an
exercise prices ranging from CDN$0.70 to CDN$1.00 and US$0.62 and with
expiration dates ranging from January 4, 2016 to December 18,2018.
12
To
the extent these options or warrants are ultimately exercised, investors will
sustain future dilution.
THE COMPANY CANNOT PREDICT WHETHER
IT WILL SUCCESSFULLY EFFECTUATE ITS CURRENT BUSINESS PLAN. EACH PROSPECTIVE
PURCHASER IS ENCOURAGED TO CAREFULLY ANALYZE THE RISKS AND MERITS OF AN
INVESTMENT IN
THE COMPANYSCOMMON STOCK AND
SHOULD TAKE INTO CONSIDERATION WHEN MAKING SUCH ANALYSIS, AMONG OTHERS, THE
RISK FACTORS DISCUSSED ABOVE.
ITEM 4 -
INFORMATION ON THE COMPANY
A.
History and Development of the Company
Natcore
Technology, Inc. (Natcore or the Company) is a corporation organized under
the laws of British Columbia, Canada organized on August 9, 2007 for the
purpose of commercializing technology that intends to make solar energy
cost-competitive with energy derived from fossil fuels. More specifically,
Natcore has technology which enables the controlled deposition of silicon
dioxide and mixed silicon oxides from an aqueous solution at ambient
temperatures and pressures. That technology is called liquid phase deposition
and Natcore is the exclusive licensee.
Natcore
was a capital pool company
1
until it completed a Qualifying
Transaction on May 8, 2009. The Qualified Transaction involved a reverse
take-over of Syracuse Capital Corp. by Natcore Technology Inc., a Delaware
company, which is now a wholly owned subsidiary of the Company. Syracuse
Capital Corp. was a company incorporated under the British Columbia
Business
Corporations Act
and a Capital Pool Company, having its common
shares listed on the TSX Venture Exchange under the trading symbol SYU.P.
Natcore
completed its Qualifying Transaction by acquiring all of the issued and
outstanding securities of Natcore Technology, Inc. a private Delaware company
in consideration of the issuance of 12,960,686 common shares of the Company
having a deemed price of CDN$0.40 per share and the issuance of 2,145,000 share
purchase warrants, each warrant exercisable into one additional common share at
a price of CDN$0.40 per share for a period of five years expiring May 9, 2014.
The Common Shares of the Company are listed for trading on the TSX Venture
Exchange under the symbol NXT.
Natcore
is currently focused on using its proprietary nanotechnology discoveries to
enable a variety of compelling applications including laser processing, tandem
quantum-dot solar cells and its all-back-contact silicon heterojunction (HIT)
cell structure, the development of which eliminates the need to use high-cost
silver in mass-manufactured silicon solar cells. Natcores laser and
all-back-contact cell technologies are also aimed at replacing traditional high
cost processes, while also allowing for cell efficiencies well above todays
standard products. This technology combines two traditional steps in the
manufacturing process thus reducing cost.
To
protect the Companys exclusive rights in such technologies, as of December 31,
2015, Natcore had licensed or owns 27 granted and 36 pending patents
The
addresses (and telephone number) of Natcores principal offices are:
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New York Office
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Registered Office
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189 N. Water Street, Suite
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Suite 2080-777 Hornby
Street
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Rochester
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Vancouver,
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New York, NY 14604-1163
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British Columbia, V6Z 1S4
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(545) 286-9180
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Background
Natcore
is a research and development company pioneering solar cells with improved
efficiency and reduced cost. Natcore has developed technology that enables the
controlled deposition of silicon dioxide and mixed silicon oxides from an
aqueous solution at ambient temperatures and pressures (Liquid Phase
Deposition or LPD). Using LPD and black silicon, Natcore grows a thin anti-reflective
coating on a silicon disc without the need for toxic chemicals or a
high-temperature vacuum furnace. Natcore is replacing the traditional thermal
vacuum processes, such as chemical vapor deposition and plasma enhanced
chemical vapor deposition, for making solar cells with its LPD wet chemistry
process
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1
The
Capital Pool Company program is a two-step listing process offered by the TSX
Venture Exchange. In step one, a new company(a Capital Pool Company) is
listed on the TSX Venture Exchange as an initial public offering. In step two
(the Qualifying Transaction), the Capital Pool Company acquires an asset or
completes a transaction with a private business which results in the listing
of the acquired business on the TSX Venture Exchange. If the acquired
business can meet the minimum listing requirements of the Toronto Stock
Exchange (the TSX); it can be directly listed on the TSX at the closing of
the Qualifying Transaction. The listing of a business via the Capital Pool Company
program can be more cost and time efficient than a listing through a
traditional initial public offering.
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13
Three Year
History
R&D
Milestones
On
October 25, 2012, the Company announced that its scientists created the worlds
first black silicon solar cell using processes amenable to low-cost mass
production. After having previously treated a wafer to make it the blackest
silicon solar cell surface ever recorded, Natcores technicians used their
scalable LPD process to create the black silicon solar cell, from wafer to
finished cell.
On
January 27, 2015, Natcore announced that it had used its proprietary advances
in laser technology to produce an all-low-temperature laser-doped solar cell
with all of its electrical contacts on the back of the cell. Eliminating the
contacts from the cell increases output by a similar amount. While other
all-back-contact cells have been produced, those cells use high-temperature
diffusion in their doping steps and highly complex multi-step patterning
processes to apply the electrical contacts. Natcores all-back-contact cell, on
the other hand, uses only high-speed, inexpensive laser processing to define
the doping regions and the contacts.
On
February 17, 2015, the Company announced that it had formed a heterojunction solar
sell using germanium quantum dots on an ordinary n-type silicon wafer.
Quantum-dot solar cells have the potential to be transformational for
terrestrial solar energy, with efficiencies far above anything available
commercially as of the date of their formation. One month later, Natcore
produced an all-back-contact silicon HIT-structure (heterojunction with
intrinsic thin layer) solar cell using their proprietary laser technology. On
July 9, 2015, Natcore developed a new solar cell structure that was expected to
completely eliminate high-cost silver from mass-manufactured silicon solar
cells. By August 2015 the Company was able to build an all-back-contact silicon
heterojunction cell structure in which the use of silver was eliminated. This
substitution was accomplished with no loss of performance and a substantial
decrease in the metallization cost of a solar cell and total raw material cost
of a solar module. In March 2016, the Company announced that it had reached an
efficiency level of 17.5% for its laser processed cells through further
refinement of its all-back contact silicon cell structure.
Natcore
is currently focused on using its proprietary nanotechnology discoveries to
enable a variety of compelling applications including laser processing, tandem
quantum-dot solar cells and its all-back-contact silicon heterojunction (HIT)
cell structure, the development of which eliminates the need to use high-cost
silver in mass-manufactured silicon solar cells. Natcores laser and
all-back-contact cell technologies are also aimed at replacing traditional high
cost processes, while also allowing for cell efficiencies well above todays
standard products. This technology combines two traditional steps in the
manufacturing process thus reducing cost. To protect the Companys exclusive
rights in such technologies, as of March 7, 2016, Natcore had licensed or owns
27 granted and 36 pending patents.
Recent
Financings
On
March 17, 2016, the Company completed a non-brokered private placement of
2,244,497 units at a price of CDN$0.36 per unit for gross proceeds of
CDN$808,019. Each unit comprised one common share and one share purchase
warrant, with each whole warrant exercisable at a price of CDN$0.55 per share
and expiring on March 17, 2019.
Between
November 30, 2015 and February 5, 2016, the Company completed a non-brokered
private placement of 3,648,691 units at a price of CDN$0.36 per unit for gross
proceeds of CDN$1,313,529. Each unit comprised one common share and one share
purchase warrant, with each whole warrant exercisable at a price of CDN$0.55
per share and expiring on dates between November 30, 2018 and February 5, 2019.
On
July 15, 2015, the Company entered into an investment agreement, as amended on
August 21, 2015, for the provision of an up to $5 million investment facility
by Dutchess Opportunity Fund II. During the 36-month term of the agreement,
Dutchess will be required, at the option of Natcore, to purchase up to $5
million of Natcore common stock. Natcore will control the timing and amount of
any share sales to Dutchess and a minimum price of the common stock to be
issued. Under the agreement, Dutchess is required to purchase Natcore shares at
a discount of 5% from the market price of the shares on the OTCQB at the time
of each transaction. No commissions or compensation is to be paid by Natcore as
a result of signing the agreement. As of the date hereof, the Company has not
drawn upon the investment agreement.
Between
July 23-31, 2015, the Company completed a non-brokered private placement of
1,822,000 units at a price of CDN$0.54 per unit for gross proceeds of
CDN$983,880. Each unit comprised one common share and one share purchase
warrant, with each whole warrant exercisable at a price of CDN$0.74 per share
and expiring on dates between July 23-31, 2018.
14
Between
April 14-27, 2015, the Company completed a non-brokered private placement of
1,597,050 units at a price of CDN$0.70 per unit for gross proceeds of
CDN$1,117,935. Each unit comprised one common share and one share purchase
warrant, with each whole warrant exercisable at a price of CDN$0.95 per share
and expiring on dates between April 14-27, 2018.
Between
January 21-23 2015, the Company completed a non-brokered private placement of
1,352,062 units at a price of CDN$0.43 per unit for gross proceeds of
CDN$581,388. Each unit comprised one common share and one share purchase
warrant, with each whole warrant exercisable at a price of CDN$0.70 per share
and expiring on dates between January 21-23, 2018.
Between
August 20-28, 2013, the Company completed a non-brokered private placement of
6,290,740 units at a price of US$0.50 per unit for gross proceeds of
US$3,145,370. Each unit comprised one common share and one share purchase
warrant, with each whole warrant exercisable at a price of US$0.62 per share
and expiring August 20, 2016.
On
July 20, 2012, the Company completed a non-brokered private placement of
4,166,700 units at a price of CDN$0.60 per unit generating aggregate gross
proceeds of CDN$2,500,020. Each unit comprised one common share and one share
purchase warrant, with each whole warrant exercisable at a price of CDN$0.90
per share until July 20, 2014.
Registration
with SEC
On
June 2, 2015, the Company became a fully reporting company with the Securities
and Exchange Commission (the SEC) in the United States following the filing
of an SEC Form F-1 Registration Statement effective as of May 26, 2015.
On
July 22, 2015, the Company commenced trading on the OTCQB, an over the counter
marketplace organized for venture-stage or early-stage companies
Employees
As
of the date of this annual report, the Company has 14 full-time employees all
of which are located in the United States.
Significant Acquisitions or Developments
No
significant acquisitions or significant dispositions have been completed by
Natcore during the most recently completed financial year or are contemplated.
B.
Business
Overview
Natcore
is a research and development company pioneering solar cells with improved
efficiency and reduced cost. Natcores intellectual property is currently
protected by 63 patents granted or pending. Natcore does not plan to
manufacture solar cells, but rather to license its technology to manufacturers
through partnerships that will ultimately yield licensing and royalty revenue.
Natcores
primary technology is laser-processed back-contact cells. The vast majority of
solar cells produced today limit cell efficiency to about 19%. This is due to
the use of front contact and thermally diffused emitters. Many front contact
cells have a grid of thin metal lines that block light and thus reduce
efficiency. In addition, standard solar cells are made using a thermally
diffused emitter, which requires very high process temperatures (>800C). The
combination of front contact and thermally diffused emitters limits current
cell efficiency.
Recently,
a company reported 25.6% efficiency the highest efficiency ever reached for a
silicon solar cell using only back contact and a silicon heterojunction (SHJ)
emitter, eliminating the high-temperature diffusion steps. While this
achievement showed the value of these approaches, the cell was produced using a
complicated, high-cost process.
Natcores
process uses highly defined regions of heavily doped silicon to form a base
contact of the solar cell. Natcore then uses a powerful, focused laser beam to
melt small regions of the silicon surface, which allows a specially applied
dopant to penetrate the silicon matrix. Natcore has also discovered a method to
laser-form the dopant regions without disturbing the high-quality emitter
already present on the solar cell. This process is rapid, and thus can be
performed with low-capital equipment at atmospheric conditions.
In
addition, Natcore has developed technology which eliminates the need for
high-cost silver from mass-manufactured silicon solar cells. Currently, silver
is used in the metallization process as it is highly conductive and easy to
process. However, silver can represent 30% to 50% of the fabrication cost of a
solar cell. Natcores unique approach to metallization relies on a simple
multilayer structure, which uses inexpensive aluminum as its main conductor,
and thus results in lower production costs. This cell technology may also
result in cost savings when incorporated into other modules. Generally,
cell-to-module loss is 8%-10%. However, when Natcores cells have been
incorporated into the production of photovoltaic modules the cell-to-module
loss was 0%, resulting in cost savings.
15
The
Company continues to be in the research and development stage and its potential
products are not yet at the stage of commercial production. The Company
anticipates generation of initial revenues within the fiscal year 2016, but
plans to continue its research and development programs for the purposes of
developing additional applications for its technologies. The Company is
currently conducting its own research and development but does anticipate
subcontracting certain work with joint venture partners, as described below. The Companys
long-term objective is to commercialize its technologies in order to generate
commercial revenues. In order for the Company to meet this long-term objective,
the following events must occur:
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Event
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Target Date
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Cost
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Research and development for the Companys technologies, including
identifying additional applications
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Ongoing
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Not
known
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Additional patent and
other intellectual property applications
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Ongoing
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Not
known
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The short-term objectives of the Company over the
next 12 months are to improve the efficiencies of the Companys technologies
and commence licensing of the Companys technologies. In order to complete
same, the Company anticipates spending between $470,000 and $670,000
outsourcing certain work with joint developer partners, including use of
equipment. At this stage, it is not anticipated that the Company must expend
further funds to commence licensing, but may consider allocating funds towards
marketing in the future.
The
solar cell market is one of the fastest growing sectors of the United States
economy. A significant shift is underway in the world-wide silicon solar cell
industry, driven by the rising prices of silicon feedstock material. Cell
producers are now moving to produce thinner solar cells to reduce their
requirements for silicon feedstock. Technologies that reduce or eliminate high
temperatures will be required and will be in demand. Making this long-term
shift will enable the silicon solar cell industry to sustain its historic
annual growth rates well into the future.
New
developments in technology may negatively affect the development or sale of the
Companys products or make the Companys technologies obsolete. Natcore intends
to maintain its competitive position and prevent the impacts of obsolescence by
continuing to develop and perfect its technologies and find additional
commercial usages for its technologies.
Natcore
is not aware of any material market controls or regulations within the
technology sector which might affect the marketing of its technologies.
Natcore
is not aware of any material regulatory approvals necessary for its research
and development work, other than approval of appropriate patent applications in
the jurisdictions the Company intends to do business.
Production
and Services
Natcore
does not plan to manufacture solar cells. Instead, Natcore plans to license its
technologies to manufacturers, receive royalties from cells manufactured using
its technologies and from equipment and chemical sales. Customers will be
required to execute non-exclusive license agreements or exclusive license
agreements unique to specified jurisdictions. Royalty rights will entitle the
Company to benefit from residual income on each product that utilizes the
Companys technology. In addition, Natcore intends to sub-contract the
manufacturing of the equipment necessary for the black silicon process and the
lasers. There will be a mark-up, to Natcores benefit, on each piece of
equipment. Finally, Natcore intends to produce recurring revenue by engaging
third-parties to mix and ship the patented chemical mixture for the various
applications.
Specialized
Skill and Knowledge
Certain
aspects of Natcores business, relating to the development and discovery
process, require specialized skills and knowledge, including chemical,
electrical and mechanical engineering. Increased activity in the technology and
research and development industry may make it more difficult to locate
competent employees and consultants in such fields, and may affect Natcores
ability to grow at the pace it desires. However, Natcore does not anticipate
any significant difficulties in locating appropriate personnel as the employees
and consultants it needs to conduct appropriate studies on its technologies are
available.
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Competitive
Conditions
Given
the complex nature and cost of the systems now in use by the solar cell
industry, Natcore expects to offer value to its customers. Natcores black
silicon technology is expected to replace an expensive, energy and manpower
intensive, thermal vacuum process with a simple wet chemistry process that will
make an improved anti-reflection surface on silicon solar cells. In addition,
the Companys all-back contact cell will increase efficiency and power output
without an increase in manufacturing cost.
An
independent engineering study comparing Natcores technology to that now used
by the solar cell industry shows conclusively that solar cell manufacturing
costs can be reduced by up to 23.5%. The study included both capital and
lifecycle costs when making the comparison. Other studies completed by the
Company have shown that Natcores LPD technology can be tailored to solar cell
technologies other than silicon, and while costs savings have not been
quantified, preliminary results indicate they will result in at least single
digit percentage cost reductions.
The
Company expects to see growing demand for low-temperature, non-vacuum,
anti-reflective coating systems for the emerging solar cell market. The Company
is unaware of any competing room temperature anti-reflective coating technology
in development or commercial use. While current thermal and vacuum systems are
adequate, Natcores technology will enable cell producers to improve their
profit margins by offering lower cost and higher throughput rates. In addition,
while there are some companies that manufacture high-efficiency HIT cells,
those companies use a very complicated and costly process to produce such
cells. Typically, the production costs of such companies are twice as expensive
as the standard commercial cells currently available.
Independent
industry studies also confirm substantial global growth in the production of
monocrystalline silicon (mono-silicon) and the oversupply in the market. This
is particularly important since Natcores technologies are particularly suited
to maximize the efficiencies of mono-silicon, n-type solar cells. In
particular, industry studies project global mono-silicon demand will top out at
less than 10GW in 2015, but global mono-silicon wafer capacity has already
reached 14GW. This oversupply has led to a substantial price drop in the
mono-silicon wafer market. In 2016, wafer manufacturers have been expanding
their mono-silicon capacity as they are optimistic about the market prospects.
In sum, industry analysts project that the global mono-silicon capacity will
surpass 17GW in 2016, with the annual growth rate exceeding 20%. Nonetheless,
oversupply will persist in the mono-silicon wafer market next year unless
end-market demand increases substantially. Therefore, Natcore will be able to
maximize the efficiencies of mono-silicon, n-type solar cells at a lower cost.
Given
the increasing demand for solar cell technology, competition can be expected to
increase substantially. Accordingly, there can be no assurances that the
Company will compete successfully with existing or new competitors, or that the
competition will not have a material adverse effect on the business, operating
results or financial condition of the Company. At the same time, this increased
competition could also benefit Natcore since manufacturers would be anxious to
access a technology that would give them cost or efficiency advantages.
Components
Over
the past several years, increased solar cell activity on a global scale has
made some services and materials, such as silicon, difficult to procure. It is
possible that delays or increased costs may be experienced in order to proceed
with Natcores proposed activities during the current period. Such delays could
significantly affect Natcore if the delay reduces the opportunity Natcore may
have had to develop a particular project had such tests been completed in a
timely manner before the fall of such prices. The balance of the raw materials
Natcore requires to carry on its business are available through normal supply
or business contracting channels in North America. Natcore has secured
personnel and/or consultants to conduct its currently contemplated programs.
Cycles
Natcore
does not expect its business to be cyclical or seasonal.
Economic
Dependence and Changes to Contracts
It
is not expected that Natcores business will be affected in the current
financial year by the renegotiation or termination of contracts or
sub-contracts.
Natcores
success will depend in part on its ability to protect its proprietary rights
and technologies. Natcore relies on a combination of patents, trademark laws,
trade secrets, confidentiality provisions and other contractual provisions to
protect its proprietary rights.
However,
not all of these measures may apply or may afford only limited protection.
Natcores failure to adequately protect its proprietary rights may adversely
affect Natcore.
17
Environmental
Protections
The
materials used in the Companys processes have no extraordinary environmental
protection requirements. As a result, Natcore does not currently anticipate
that any environmental regulations or controls will materially affect the
Company or its processes under development.
Foreign
Operations
Natcore
currently conducts business and maintains its offices in the United States.
Natcore does intend to market its technologies on a world-wide basis, so there
will be risk associated with the ability to enforce its intellectual property
rights in certain jurisdictions. In jurisdictions in which there is a history
of intellectual property infringement, Natcore would seek to obtain a strategic
joint venture partner prior to accessing such markets to assist in the
protection of its technologies.
Lending
Natcore
does not currently hold any investments or owe any material liabilities.
Natcore
has not adopted any specific policies or restrictions regarding investments or
lending, but will ensure any investment or debt activities incurred are in the
best interests of Natcore and its security holders. Natcore expects that in the
future in order to develop its technologies it will need to raise additional
capital through a combination of debt and equity.
Bankruptcy
and Similar Procedures
There
are no bankruptcies, receivership or similar proceedings against Natcore or any
of its subsidiaries, nor is Natcore aware of any such pending or threatened
proceedings. There has not been any voluntary bankruptcy, receivership or
similar proceedings by Natcore or its subsidiaries since its incorporation.
Reorganization
Natcore
has not completed any reorganization since its incorporation.
Social or
Environmental Policies
Natcore
has not adopted any specific social or environmental policies that are
fundamental to its operations (such as policies regarding its relationship with
the environment, with the communities in the vicinity of its facilities or
human rights policies). However, Natcores management, with the assistance of
its contractors and advisors, ensures its ongoing compliance with local
environmental laws in the jurisdictions in which it does business.
Natcore
believes that its operations comply in all material respects with applicable
laws and regulations concerning the environment. While it is impossible to
predict accurately the future costs associated with environmental compliance
and potential remediation activities, compliance with environmental laws is not
expected to require significant capital expenditures and has not had, and is
not expected to have, a material adverse effect on our earnings or competitive
position.
C.
Organizational
Structure
The
consolidated financial statements include the accounts of the Company and its
controlled entities. Details of controlled entities are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage
owned
|
|
|
|
|
|
|
|
|
|
Jurisdiction
of incorporation
|
|
December
31,
2015
|
|
December
31,
2014
|
|
|
|
|
|
|
|
|
|
Natcore Technology, Inc.
|
|
|
United
States
|
|
|
100
|
%
|
|
100
|
%
|
Newcyte, Incorporated
|
|
|
United
States
|
|
|
100
|
%
|
|
100
|
%
|
Vanguard Solar, Inc.
|
|
|
United
States
|
|
|
100
|
%
|
|
100
|
%
|
Natcore Asia Technology,
Limited
|
|
|
Hong
Kong
|
|
|
100
|
%
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
_______________
|
*Percentage of voting power is in proportion
to ownership.
|
18
Natcore
Technology, Inc. is the entity holding a large portion of the Companys
licensing and intellectual property rights and through which the Company
conducts the majority of its active operations.
NewCyte,
Inc., holds a portfolio of intellectual property including issued and pending
patents covering the coating of fullerenes (including carbon nanotubes) with
silica, dielectric and semiconducting films for a variety of potential
applications, including photon, chemical and biomolecule sensing.
Vanguard
Solar, Inc. holds intellectual property in the field of solar energy relating
to the development of a flexible, thin-film photovoltaic material believed to
be capable of silicon solar cell-like efficiency performance.
Natcore
formed Natcore Asia Technology Ltd., which holds the Companys fifty-five (55)
percent share of Natcore Technology (Zhuzhou) Ltd., a joint venture formed with
the Zhuzhou Hi-Tech Industrial Development Zone, a government-supported zone in
Hunan province, and Chuangke Silicon Ltd., a polycrystalline silicon producer.
ITEM 5-
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The
following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our consolidated financial
statements and the related notes thereto included elsewhere in this annual
report on Form 20-F. This discussion may contain forward-looking statements
based upon current expectations that involve risks and uncertainties. Our
actual results may differ materially from those anticipated in these
forward-looking statements as a result of various factors, including those set
forth under Item 3. Key InformationD. Risk Factors or in other parts of this
annual report on Form 20-F.
A. Operational
Results
Year Ended December 31, 2015
Compared to the Year Ended December 31, 2014
As
the Company is in the development stage, it is expected the Company will
continue to generate losses for the upcoming fiscalyear.
During
the year ended December 31, 2015, the Company did not generate any revenue. The
principal activity of the Company during the year ended 2015 and the year ended
2014 was that of research giving rise to normal recurringcosts.
The
Company reported a net loss of $3,488,129 for the year ended December 31, 2015
compared to a net loss of $2,193,532 for the year ended December 31, 2014. The
primary reason for the change was a result of non-cash revaluations of our
derivative liabilities (income of $226,827 in the year ended December 31, 2015
compared to income of $1,842,317 in the prior year ended December 31, 2014).
The change in expense and income from the expiration and addition of warrants
being valued in the derivative liability during the year.
19
The
Companys operational expenses for the year ended December 31, 2015 were
$3,730,661 compared to $4,068,475 for the prior year ended December 31, 2014.
Significant expense changes in the year ended December 31, 2015 compared to
prior year ended December 31, 2014 are in the table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
|
|
2015
|
|
2014
|
|
Variance
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting
|
|
|
181,589
|
|
|
229,792
|
|
|
(48,203
|
)
|
Depreciation and amortization
|
|
|
279,527
|
|
|
412,492
|
|
|
(132,965
|
)
|
Filing fees
|
|
|
25,016
|
|
|
34,090
|
|
|
(9,074
|
)
|
Foreign exchange (gain) loss
|
|
|
5,159
|
|
|
41,344
|
|
|
(36,185
|
)
|
Interest and bank charges
|
|
|
2,383
|
|
|
1,581
|
|
|
802
|
|
Marketing
|
|
|
268,853
|
|
|
81,401
|
|
|
187,452
|
|
Office and miscellaneous
|
|
|
216,811
|
|
|
273,264
|
|
|
(56,453
|
)
|
Professional fees
|
|
|
335,762
|
|
|
213,888
|
|
|
121,874
|
|
Research and development
|
|
|
1,203,716
|
|
|
1,634,864
|
|
|
(431,148
|
)
|
Stock-based compensation
|
|
|
387,648
|
|
|
301,732
|
|
|
85,916
|
|
Travel
|
|
|
45,858
|
|
|
73,922
|
|
|
(28,064
|
)
|
Wages and salaries
|
|
|
778,339
|
|
|
770,105
|
|
|
8,234
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,730,661
|
)
|
|
(4,068,475
|
)
|
|
337,814
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Expense)
|
|
|
|
|
|
|
|
|
|
|
Fair value adjustment on warrants
|
|
|
226,827
|
|
|
1,842,317
|
|
|
(1,615,490
|
)
|
Other income
|
|
|
14,124
|
|
|
|
|
|
14,124
|
|
Interest income
|
|
|
1,581
|
|
|
32,626
|
|
|
(31,045
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
242,532
|
|
|
1,874,943
|
|
|
(1,632,411
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
(3,488,129
|
)
|
|
(2,193,532
|
)
|
|
(1,294,597
|
)
|
|
|
|
|
|
|
|
|
|
|
|
As
a result of the acquisitions of Natcore US and the Companys operations in the
United States, the Company and its financial results are exposed to
fluctuations between the Canadian and United States dollars. The foreign
exchange (gains) or loss present for the periods above, results from certain
monetary items, primarily cash equivalents, being denominated in Canadian
dollars.
Stock-based
compensation relates to options granted under the Companys stock option plan
to directors, officers, employees and consultants. Compensation expense is
recorded using the fair value method over the vesting periods of the options.
The fair value of each option granted is estimated as at the date of grant
using the Black-Scholes Option Pricing Model.
Selling and Marketing Expenses
The
Company did not recognize any revenue, as it was still in the development stage
for many of its applications. The Company planned to have its black silicon
technology available to the solar industry in the following 30-36 months;
Natcore did not believe it would require a direct sales force in the
foreseeable future. Natcore chose to market its technology though the industry
with its management staff at the time. As the company moved through the proof
of concept phase and closer to commercialization for its applications, it began
making more presentations to manufacturers and potential customers as well as
equipment builders who would adapt existing machinery to accommodate Natcores
process.
20
General and Administrative Expenses
Natcores
general and administrative expenses consisted primarily of costs associated
with marketing activities, outside professional fees, travel costs, facilities
costs and other corporate expenses. Its professional and consulting fees for
the year ended December 31, 2015 increased approximately $74,000 over the prior
year ended resulting from increased costs relating to patents and accounting,
legal fees relating to this filing and the Company using additional consultants
for marketing purposes. For the year ended December 31, 2015 Natcores office
and other operational expenses decreased approximately $56,000. Travel expenses
decreased approximately $28,000 for the year ended December 31, 2015 compared
to prior year ended as a result of the Company consolidating laboratories in
Rochester in 2014. In 2014, Natcore closed a facility in Ohio which reduced the
need for travel between several locations. Additionally there was no overseas
travel to China and Europe since the infrastructure in those locations was
already established and precluded the need for several visits.
Wages and Salaries Expenses
Natcores
wages and salaries expenses consisted of compensation costs for management,
finance and other administrative personnel, these costs also included payroll
taxes and benefits associated with its personnel functions. For the year ended
December 31, 2015 compared to the prior year, the changes in wages and salaries
expense versus the prior year increased approximately $8,000. This increase was
a result wage increases.
Research and Development Expenses
Natcores
research and development expenses consisted of all expenses incurred in
research and development activities, including compensation associated with its
research staff. The Companys decreases in R & D expense of approximately
$431,000 over the year ended were primarily due to additional staff hired to
expand its R &D studies in 2014, all of which did not continue in 2015.
Stock Based Compensation Expense
Natcores
stock based compensation expense consisted of fair value costs associated with
the issuance of stock, stock options and warrants for services that were
preformed or to be performed. The stock based compensation for the year ended
December 31, 2015 increased approximately $86,000 over the prior year.
Depreciation and Amortization Expenses
Natcores
depreciation and amortization expenses were costs for the depreciation and
amortization of its equipment and intangible assets. Natcore computed
depreciation using the straight-line method over the useful lives of the
related assets, which ranged from three to seven years. Intangible assets with
finite useful lives were amortized on a straight-line basis over their
estimated useful lives. The estimated useful life and amortization method were
reviewed at the end of each reporting period, with the effect of any changes in
estimate being accounted for on a prospective basis. For the year ended
December 31, 2015 depreciation and amortization expense decreased approximately
$133,000 over the prior year because of intangible assets becoming fully
amortized in the prior year.
Other Income (Expense)
Other
income (expense) primarily consisted of gains and losses related to Natcores
investment activities from its cash equivalent investments and other
non-recurring items.
Operating (Loss)
Natcore
did not have any sales revenue, consequently it generated only operating
losses. Natcores operating expenses consisted of general and administrative
expenses, wages and salaries expenses, research and development expenses,
depreciation and amortization costs and stock-based compensation expenses
discussed above
Year Ended December 31, 2014
Compared to the Year Ended December 31, 2013
During
the year ended December 31, 2014, the Company did not generate any revenue. The
principal activity of the Company during year ended 2014 and the year ended
2013 was that of research giving rise to normal recurring costs.
The
Company reported a net loss of ($2,193,532) for the year ended December 31,
2014 compared to a net loss of ($3,938,828) for the year ended December 31,
2013. The primary reason for the change was a result of non-cash revaluations
of our derivative liabilities resulting from a decrease in our stock price at
December 31, 2014 compared to December 31, 2013.
21
Our
operational expenses for year ended December 31, 2014 were $4,068,475 compared
to $3,873,183 for the prior year ended December 31, 2013.
Significant
expense changes in 2014 compared to 2013 are as follows:
|
|
|
|
|
an
increase in consulting expenses of approximately $121,000 resulting from the
addition of marketing consultants
|
|
|
|
|
|
an
increase in depreciation and amortization of approximately $53,000
|
|
|
|
|
|
an
increase in professional fees of approximately $84,000 resulting from
increased costs relating to patents and accounting, and legal fees relating
to this filing.
|
|
|
|
|
|
an
increase in research and development expenses of approximately $155,000
|
|
|
|
|
|
a
decrease in the foreign exchange loss of approximately $49,000
|
|
|
|
|
|
a
decrease in travel expenses of approximately $53,000
|
|
|
|
|
|
a
decrease in wages and salaries of approximately $86,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
|
|
2014
|
|
2013
|
|
Variance
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
Consulting
|
|
$
|
229,792
|
|
$
|
108,657
|
|
$
|
121,135
|
|
Depreciation and amortization
|
|
|
412,492
|
|
|
359,178
|
|
|
53,314
|
|
Filing fees
|
|
|
34,090
|
|
|
32,082
|
|
|
2,008
|
|
Foreign exchange (gain)/loss
|
|
|
41,344
|
|
|
90,060
|
|
|
(48,716
|
)
|
Interest and bank charges
|
|
|
1,581
|
|
|
1,269
|
|
|
312
|
|
Marketing
|
|
|
81,401
|
|
|
96,641
|
|
|
(15,240
|
)
|
Office and other operational expenses
|
|
|
273,264
|
|
|
267,532
|
|
|
5,732
|
|
Professional fees
|
|
|
213,888
|
|
|
129,499
|
|
|
84,389
|
|
Research and development
|
|
|
1,634,864
|
|
|
1,480,058
|
|
|
154,806
|
|
Stock-based compensation
|
|
|
301,732
|
|
|
325,686
|
|
|
(23,954
|
)
|
Travel
|
|
|
73,922
|
|
|
126,668
|
|
|
(52,746
|
)
|
Wages and salaries
|
|
|
770,105
|
|
|
855,853
|
|
|
(85,748
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(4,068,475
|
)
|
$
|
(3,873,183
|
)
|
$
|
(195,292
|
)
|
Other Income (Expense)
|
|
|
|
|
|
|
|
|
|
|
Fair value adjustment on warrants
|
|
|
1,842,317
|
|
|
(79,353
|
)
|
|
1,921,670
|
|
Interest income
|
|
|
32,626
|
|
|
13,708
|
|
|
18,918
|
|
|
|
|
|
|
|
|
|
|
|
|
Net and Comprehensive Loss
|
|
$
|
(2,193,532
|
)
|
$
|
(3,938,828
|
)
|
$
|
1,745,296
|
|
|
|
|
|
|
|
|
|
|
|
|
As
a result of the acquisitions of Natcore US and the Companys operations in the
United States, the Company and its financial results are exposed to fluctuations
between the Canadian and United States dollars. The foreign exchange (gains) or
loss present for the periods above, results from certain monetary items,
primarily cash equivalents, being denominated in Canadian dollars.
Stock-based
compensation relates to options granted under the Companys stock option plan
to directors, officers, employees and consultants. Compensation expense is
recorded using the fair value method over the vesting periods of the options.
The fair value of each option granted is estimated as at the date of grant
using the Black-Scholes Option Pricing Model.
Selling and Marketing Expenses
The Company did not
recognize any revenue, as it was still in the development stage for many of its
applications. The Company planned to have its black silicon technology
available to the solar industry in the following 30-36 months; Natcore did not
believe it would require a direct sales force in the foreseeable future.
Natcore chose to market its technology though the industry with its management
staff at the time.As the company moved through the proof of concept phase and
closer to commercialization for its applications, it began making more
presentations to manufacturers and potential customers as well as equipment
builders who would adapt existing machinery to accommodate Natcores process.
22
General and Administrative
Expenses
Natcores
general and administrative expenses consisted primarily of costs associated
with marketing activities, outside professional fees, travel costs, facilities
costs and other corporate expenses. Its professional and consulting fees for
the year ended December 31, 2014 increased approximately $205,000 over the
prior year ended resulting from increased costs relating to patents
and accounting, legal fees relating to this filing and the Company using
additional consultants for marketing purposes. For the year ended December 31, 2014 Natcores office and other
operational expenses decreased approximately $6,000. Travel expenses decreased
approximately $53,000 for the year ended December 31, 2014 compared to prior
year ended as a result of the Company consolidating laboratories in Rochester.
Natcore closed a facility in Ohio which reduced the need for travel between
several locations. Additionally there was no overseas travel to China and
Europe since the infrastructure in those locations was already established and
precluded the need for several visits.
Wages and Salaries Expenses
Natcores wages and
salaries expenses consisted of compensation costs for management, finance and
other administrative personnel, these costs also included payroll taxes and
benefits associated with its personnel functions. For the year ended December
31, 2014 compared to the prior year, the changes in wages and salaries expense
versus the prior year decreased approximately $86,000. This decrease was a
result of some personnel headcount adjustments.
Research and Development Expenses
Natcores research and
development expenses consisted of all expenses incurred in research and
development activities, including compensation associated with its research
staff. The Companys increases in R & D expense of approximately $155,000
over the year ended were primarily due to additional staff hired to expand its
R &D studies.
Stock Based Compensation Expense
Natcores stock based
compensation expense consisted of fair value costs associated with the issuance
of stock, stock options and warrants for services that were preformed or to be
performed. The stock based compensation for the year ended December 31, 2014
decreased approximately $24,000 over the prior year.
Depreciation and Amortization
Expenses
Natcores depreciation
and amortization expenses were costs for the depreciation and amortization of
its equipment and intangible assets. Natcore computed depreciation using the
straight-line method over the useful lives of the related assets, which ranged
from three to seven years. Intangible assets with finite useful lives were
amortized on a straight-line basis over their estimated useful lives. The estimated
useful life and amortization method were reviewed at the end of each reporting
period, with the effect of any changes in estimate being accounted for on a
prospective basis. For the year ended December 31, 2014 depreciation and
amortization expense increased approximately $53,000 over the prior year
because of purchases in 2013 and 2014 were put into operation and have more
depreciation to expense.
Other Income (Expense)
Other
income (expense) primarily consisted of gains and losses related to Natcores investment
activities from its cash equivalent investments and other non-recurring items.
Operating (Loss)
Natcore
did not have any sales revenue, consequently it generated only operating
losses. Natcores operating expenses consisted of general and administrative
expenses, wages and salaries expenses, research and development expenses,
depreciation and amortization costs and stock-based compensation expenses
discussed above
23
B.
Liquidity and Capital Resources
The
following table summarizes the Companys cash flows by activity and cash on hand
for the years ended December 31, 2015 and 2014:
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31,
|
|
|
|
|
|
|
|
2015 (Audited)
|
|
2014 (Audited
)
|
|
|
|
|
|
|
|
Activity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating
activities
|
|
|
(2,588345
|
)
|
|
(3,179,776
|
)
|
Net cash used in investing
activities
|
|
|
(27,185
|
)
|
|
(179,587
|
)
|
Net cash provided by
financing activities
|
|
|
2,588,664
|
|
|
1,058,728
|
|
|
|
|
|
|
|
|
|
Net decrease in cash
|
|
|
(26,866
|
)
|
|
(2,300,635
|
)
|
Cash at the beginning of
the period
|
|
|
548,387
|
|
|
2,849,022
|
|
|
|
|
|
|
|
|
|
Cash at the end of the
period
|
|
|
521,521
|
|
|
548,387
|
|
|
|
|
|
|
|
|
|
The
Company reported working capital (deficit) of ($1,186,488) as of December 31,
2015 and $200,210 at December 31, 2014. As of December 31, 2015, the Company
had cash of $521,521 compared to cash of$548,387 as of December 31, 2014. The
decrease of $26,866 for the year ended December 31, 2015 is the result of an et
loss for operational expenses and cash paid for equipment which are off set by proceeds
of $2,588,664 from private placements. In addition to the cash on hand, the
Company has $5,000,000 available under the Dutchess agreement. The Company
anticipates its current cash and cash equivalents will be sufficient to fund
operations for the next six months and is currently pursuing additional
financing alternatives, including completing another private placement, to fund
operations beyond one year.
Current
assets excluding cash and cash equivalents at December 31, 2015 consisted of
receivables of $29,057 and prepaid expenses of$148,076.
Current
liabilities at December 31, 2015 consisted of accounts payable and accrued
liabilities of $749,985 and the derivative financial liability of$1,135,157.
The
Company may continue to have capital requirements in excess of its currently
available resources. In the event the Companys plans change, its assumptions
change or prove inaccurate, or its capital resources in addition to projected
cash flow, if any, prove to be insufficient to fund operations, the Company may
be required to seek additional financing. There can be no assurance that the
Company will have sufficient financing to meet its future capital requirements
or that additional financing will be available on terms acceptable to the
Company in thefuture.
The
following table summarizes the Companys cash flows by activity and cash on hand
for the years ended December 31, 2014 and 2013:
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31,
|
|
|
|
|
|
|
|
2014(Audited)
|
|
2013(Audited)
|
|
|
|
|
|
|
|
Activity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating
activities
|
|
$
|
(3,179,776
|
)
|
|
(3,097,859
|
)
|
Net cash used in investing
activities
|
|
|
(179,587
|
)
|
|
(93,741
|
)
|
Net cash from financing
activities
|
|
|
1,058,728
|
|
|
3,834,913
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in
cash
|
|
|
(2,300,635
|
)
|
|
643,313
|
|
Cash at the beginning of
the period
|
|
|
2,849,022
|
|
|
2,205,709
|
|
|
|
|
|
|
|
|
|
Cash at the end of the
period
|
|
$
|
548,387
|
|
$
|
2,849,022
|
|
|
|
|
|
|
|
|
|
The
Company reported working capital of $200,210 as of December 31, 2014 and
$800,377 at December 31, 2013. As of December 31, 2014, the Company had net
cash of $548,387, compared to cash of $2,849,022 as at December 31, 2013. The
decrease of $2,300,635 for the year ended December 31, 2014 is the result of a
net loss for operational expenses and cash paid for equipment which are offset
by proceeds from the exercise of warrants and options. Also, in January 2015
and April 2015 the Company completed non-brokered private placements issuing
2,552,112 units for gross proceeds of $1,143,507 (see 1.4 Recent Financial
Events). As of April 15, 2015, the Company had $793,829 in cash. The Company
anticipates its current cash and cash equivalents will be sufficient to fund
operations for approximately 6 months and is pursuing additional financing alternatives,
including completing another private placement, to fund operations beyond one
year.
24
Current
assets excluding cash and cash equivalents at December 31, 2014 consisted of
receivables of $5,939 and prepaid expenses of $60,395.
Current
liabilities at December 31, 2014 consisted of accounts payable and accrued
liabilities of $289,688 and the derivative financial liability of $124,823.
The
Company may continue to have capital requirements in excess of its currently
available resources. In the event the Companys plans change, its assumptions
change or prove inaccurate, or its capital resources in addition to projected
cash flow, if any, prove to be insufficient to fund operations, the Company may
be required to seek additional financing. There can be no assurance that the
Company will have sufficient financing to meet its future capital requirements
or that additional financing will be available on terms acceptable to the
Company in the future.
C.
Research and
development, patents and licenses
In
2004, the Company entered into a License Agreement with a university under
which the university is entitled to receive: (i) 2% of the Companys adjusted
gross sales as defined in the License Agreement, and (ii) 2% of the adjusted
gross sales of any sublicensee as defined in the License Agreement. The License
Agreement gives the Company an exclusive license to a certain United States
patent and the related technology for low temperature growth of inorganic
materials from solution using catalyzed growth and re-growth.
On
September 1, 2009, the Company entered into a sponsored research agreement with
Rice University to develop thin films incorporating silicon quantum dots. The
initial term of the agreement is one year and the proposed budget is $100,000.
Both the term and the funding could be extended by mutual agreement. As of the
date of this filing the agreement has not been extended and no money has been
paid to Rice University beyond the original $100,000.
On
December 12, 2011 the Company entered into a Patent License Agreement with the
National Renewable Energy Laboratory (NREL) to use certain licensed patents
for technologies for creating a black silicon antireflection layer integrated
into high efficiency solar cells. The Company agreed to pay a running royalty
of two and one half percent (2.5%) on all Net Sales of Licensed Products
(excluding Licensed Chemicals) sold by or on behalf of Licensee. The Company
also agreed to pay an annual running royalty of ten percent (10%) of Net Sales
of Licensed Chemicals sold by or on behalf of Licensee. Should the running
royalty not achieve $25,000, then the Company would have to pay the difference
up to $25,000. The License Agreement estimates that the Companys estimated
contribution is $100,000 a year. NRELs estimated in-kind contribution is
$50,000, conditioned on available funding. While neither party has an
obligation to continue performance of its work at a contribution in excess of
the estimated amount, each party shall provide at least thirty days notice if
complete performance will exceed the estimated costs. The License Agreement was
amended on July 27, 2012 in order to modify a section of the License pertaining
to Licensed Intellectual Property. The modification entailed the specific
titles and application numbers of the licensed patents. The License Agreement
was further amended on January 30, 2014 to delete and replace Exhibit C, 2)
Market Milestones.
The
License Agreement gives the Company an exclusive license to the aforementioned
patents for the development of a commercial manufacturing process for both
multicrystalline and monocrystalline solar cells that combines the Companys
passivation technology. All patent license agreements are for the duration of
the life of the patent as established by the USPTO when the patent is granted.
The
License Agreement is subject to early termination. Either the Company or NREL
has the right to terminate the License Agreement with cause and without
judicial resolution upon written notice to the other in the case of a breach of
the License Agreement. The Company shall provide NREL will sufficient advance
funds to maintain approximately 90-day advance of funds during the entire
period of work. No work shall begin before the receipt of a sufficient
cash-advance. If the Company fails to provide the necessary advance funds is
cause for termination by NREL. Further, the License Agreement shall terminate
automatically upon a final adjudication of invalidity, unenforceability, or the
extinguishment of all Licensed Patents, for any reason. In addition, NREL may
terminate the License Agreement if the Company fails to satisfy the
requirements set forth in Exhibit B and C of the License Agreement, attempts to
transfer the Companys rights under the License Agreement or the Company becomes
a party to a Bankruptcy proceeding. Exhibit B outlines the financial
considerations of the License Agreement: specifically concerning the Fields of
Use, the Upfront Fee of $20,000, the Continuous Royalty Rate Structure due by
the Company, the Subleasing Royalties due by potential Sub-Licensees, and
states the minimum annual payment must be at least $25,000. Exhibit C outlines
the technical and marketing milestones pursuant to this agreement.
Specifically, the agreement also outlines certain market milestones for the
parties. The first milestone stipulates the achievement of cumulative Net Sales
of Licensed Products in excess of $1 million on or before December 1, 2014.
This milestone has not been met by the company. Milestones for cumulative Net
Sales of Licensed Products in excess of $2 million and $3 million are set for
December 1, 2015 and December 1, 2016, respectively. The Company believes,
based on conversation with representatives from NREL, that all such milestones
are eligible for renegotiation as desired by the Company. The License Agreement
shall automatically terminate if the Company attempts to pledge its rights
under the License Agreement as collateral to a third party. The Company may
terminate the License Agreement upon sixty days prior notice to NREL provided
that all outstanding fees, reimbursements and royalties (as detailed in the
License Agreement) are satisfied.
25
In
March 2012, the Company opened its Research and Development Center (the
R&D Center) in Rochester, NY. The R&D Center enables Natcore to
develop applications based on the companys proprietary liquid phase deposition
technology. On June 1, 2013, the Company entered into a new two year lease for
its research and development facility in Rochester, New York. The Company will
pay a base rent of $103,596 per year in monthly installments of $8,633. The
lease was set to expire on June 30, 2015. On June 26, 2015, the Company
extended the lease from July 1, 2015 to June 30, 2017 at a base rent of
$105,212 per year in monthly installments of $8,768.
As
of December 31, 2015, the Company had 27 granted patents and 36 patents
pending, including but not limited to the following:
Patent
7,999,176 - Expiration date: 5/18/2029
Nanostructured
solar cells
Improved
photovoltaic devices and methods are disclosed. In one embodiment, an exemplary
photovoltaic device includes a semiconductor layer and a light-responsive layer
(which can be made, for example, of a semiconductor material) which form a
junction, such as a p-n junction. The light-responsive layer can include a
plurality of carbon nanostructures, such as carbon nanotubes, located therein.
In many cases, the carbon nanostructures can provide a conductive pathway
within the light-responsive layer. In other embodiments, exemplary photovoltaic
devices include semiconductor nanostructures, which can take a variety of
forms, in addition to the carbon nanostructures. Further embodiments include a
wide variety of other configurations and features. Methods of fabricating
photovoltaic devices are also disclosed.
Patent
8,431,818 - Expiration date: 5/5/2030
Solar
cells and photodetectors with semiconducting nanostructures
Improved
photovoltaic devices and methods are disclosed. In one embodiment, an exemplary
photovoltaic device includes a semiconductor layer and a light-responsive layer
(which can be made, for example, of a semiconductor material) which form a
junction, such as a p-n junction. The light-responsive layer can include a
plurality of carbon nanostructures, such as carbon nanotubes, located therein.
In many cases, the carbon nanostructures can provide a conductive pathway
within the light-responsive layer. In another embodiment, an exemplary
photovoltaic device can include a light-responsive layer made of a
semiconductor material in which is embedded a plurality of semiconducting
carbon nanostructures (such as p-type single-wall carbon nanotubes). The
interfaces between the semiconductor material and the semiconducting carbon
nanostructures can form p-n junctions. In yet other embodiments, exemplary
photovoltaic devices include semiconductor nanostructures, which can take a
variety of forms, in addition to the carbon nanostructures. Further embodiments
include a wide variety of other configurations and features. Methods of
fabricating photovoltaic devices, as well as nanostructured photodetectors, as
also disclosed.
Patent
8,433,417 - Expiration date: 12/12/2029
Carbon
nanostructure artificial retinal implant
A
retinal implant can include an array of photoreceptors adapted for positioning
in the eye. Each photoreceptor can include a core, for example a carbon
nanostructure, and a shell. The shell can include a light-responsive layer, and
in many cases, the light-responsive layer can be formed of two semiconductor
layers forming a heterojunction. The photoreceptors can be adapted to generate
an electric field in response to incident light so as to stimulate a retinal
neuron in its vicinity. The photoreceptors can be micron-sized or nano-sized,
and can be arranged in densities similar to the density of rods and cones in
the human eye. In one embodiment, an exemplary sensor for an imaging device can
include a plurality of photosensors disposed on a substrate. Each photosensor
can include a carbon nanostructure, a light-responsive layer coating at least a
portion of the carbon nanostructure.
Patent
7,718,550 - Expiration date: 1/16/2026
Method
for Low Temperature Growth of Inorganic Materials from Solution Using Catalytic
Growth and Re-growth
The
present invention involves a method and apparatus for depositing a silicon
oxide onto a substrate from solution at low temperatures in a manner that
produces homogeneous growth of the silicon oxide. The method generally
comprises the following steps: (a) chemically treating a substrate to activate
it for growth of the silicon oxide, (b) immersing the treated substrate into a
bath with a reactive solution, (c) regenerating the reactive solution to allow
for continued growth of the silicon oxide. In another embodiment of the present
invention, the apparatus includes a first container holding a reactive
solution, a substrate on which the silicon oxide is deposited, a second
container holding silica, and a means for adding silica to the reactive
solution
26
Patent
7,253,014 - Expiration date: 11/19/2023
Fabrication
of light emitting film coated fullerenes and their application for in-vivo
light emission
A
nanoparticle coated with a semiconducting material and a method for making the
same. In one embodiment, the method comprises making a semiconductor coated
nanoparticle comprising a layer of at least one semiconducting material
covering at least a portion of at least one surface of a nanoparticle,
comprising: (A) dispersing the nanoparticle under suitable conditions to
provide a dispersed nanoparticle; and (B) depositing at least one
semiconducting material under suitable conditions onto at least one surface of
the dispersed nanoparticle to produce the semiconductor coated nanoparticle. In
other embodiments, the nanoparticle comprises a fullerene. Further embodiments
include the semiconducting material comprising Cadmium Sulfide (CdS) or Cadmium
Selenide (CdSe).
Patent
7,682,527 - Expiration date: 11/19/2023
Fabrication
of light emitting film coated fullerenes and their application for in-vivo
light emission
A
nanoparticle coated with a semiconducting material and a method for making the
same. In one embodiment, the method comprises making a semiconductor coated
nanoparticle comprising a layer of at least one semiconducting material
covering at least a portion of at least one surface of a nanoparticle,
comprising: (A) dispersing the nanoparticle under suitable conditions to
provide a dispersed nanoparticle; and (B) depositing at least one
semiconducting material under suitable conditions onto at least one surface of
the dispersed nanoparticle to produce the semiconductor coated nanoparticle. In
other embodiments, the nanoparticle comprises a fullerene. Further embodiments
include the semiconducting material comprising Cadmium Sulfide (CdS) or Cadmium
Selenide (CdSe).
Patent
7,491,376 - Expiration date: 3/5/2027
Chemical
derivatization of silica coated fullerenes and use of derivatized silica coated
fullerenes
This
invention is directed to a new composition of matter in the form of chemically
derivatized silica coated fullerenes, including silica coated C.sub.60
molecules and silica coated carbon nanotubes, processes for making the same and
to uses for the derivatized silica coated fullerenes. (Derivatization of silica
coated fullerenes refers to chemically modifying surface of the silica to have
a similar chemical structure but different chemical reactions with specifically
chosen reagents.) Included among many uses in chemical, physical or biological
fields of use, but not limited thereto, are high speed, low loss electrical
interconnects for nanoscale electronic devices, components and circuits. In one
embodiment, this invention also provides a method for preparing silica coated
fullerenes having substituents attached to the surface of silica coated
fullerenes by reacting silica coated fullerenes with a wide range of organic or
inorganic chemical species in a gaseous or liquid state. Preferred substituents
include but are not limited to organic groups and organic groups containing
heteroatoms (i.e. non-carbon atoms) such as oxygen, nitrogen, sulfur, and
halogens. The identity of the surface functional group is chosen to provide
desirable properties to the silica coated fullerenes including but not limited
to solubility, miscibility, stickiness, and melting point. The present
invention also describes the application of surface functionalized silica
coated fullerenes as components of polymer blends and composites (i.e. the
surface is treated with certain substances that allow the silica to react to
certain other specific materials).
Patent
7,692,218 - Expiration date: 8/21/2025
Method
for creating a functional interface between a nanoparticle, nanotube or
nanowire, and a biological molecule or system
A
field effect transistor and a method for making the same. In one embodiment,
the field effect transistor comprises a source; a drain; a gate; at least one
carbon nanotube on the gate; and a dielectric layer that coats the gate and a
portion of the at least one carbon nanotube, wherein the at least one carbon
nanotube has an exposed portion that is not coated with the dielectric layer,
and wherein the exposed portion is functionalized with at least one indicator
molecule (i.e. has a specific molecule attached to the nanoparticle that will
attach only to certain desired molecules out of a broad mixture of molecules).
In other embodiments, the field effect transistor is a biochem-FET.
D.
Trend
Information
Other
than as disclosed elsewhere in this annual report on Form 20-F, we are not
aware of any trends, uncertainties, demands, commitments or events that are
reasonably likely to have a material adverse effect on our net revenues,
income, profitability, liquidity or capital resources, or that caused the
disclosed financial information to be not necessarily indicative of future
operating results or financial conditions.
27
E.
Off-Balance
Sheet Arrangements
As
at December 31, 2015, we had not entered into any off-balance sheet
arrangements.
F. Tabular
Disclosure of Contractual Obligations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments by periods as of December 31, 2015
|
|
|
|
|
|
|
|
Total
|
|
less than 1 year
|
|
1 - 3 years
|
|
3 - 5 years
|
|
> 5 years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contractual Obligations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating lease
|
|
$
|
171,436
|
|
$
|
118,828
|
|
$
|
52,608
|
|
|
|
|
|
|
|
Contract payments
obligations
|
|
|
175,000
|
|
|
50,000
|
|
|
50,000
|
|
|
50,000
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
346,436
|
|
$
|
168,828
|
|
$
|
102,608
|
|
$
|
50,000
|
|
$
|
25,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ITEM 6 -
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A.
Directors and Senior Management
The
following is a list of our current directors and officers as of December 31,
2015. There are no family relationships between the directors and officers.
|
|
|
|
|
|
|
|
|
Name and Jurisdiction
of Residence
(1)
|
|
Current Positions and Offices Held
|
|
Principal Occupations During Last Five Years
(1)
|
|
Date of Appointment as a Director or Officer
|
|
Number of Common Shares
(1)
|
|
|
|
|
|
|
|
|
|
Charles Provini
(2)
, Florida, U.S.A.
|
|
Chief Executive Officer,
President, Director
|
|
President and Chief
Executive Officer of the Company and its predecessors from January 2003 to
present; President of C.R. Provini & Co. Inc., a private consulting firm
from July 1996 to present.
|
|
May
8, 2009
|
|
1,000,000
|
|
|
|
|
|
|
|
|
|
Brien Lundin
(2)
, Louisiana,
U.S.A.,
|
|
Director and Chairman
|
|
President of Jefferson
Direct, Inc. (private consulting company) from November 2003 to present.
|
|
May
8, 2009, as a director and September 30, 2013 as chairman
|
|
3,006,223
(2)
|
|
|
|
|
|
|
|
|
|
John Calhoun
(2)
, Louisiana,
U.S.A.,
|
|
Director
|
|
President of Fort Hill
Resources LLC (private consulting company) from December 1997 to present.
|
|
May
8, 2009
|
|
640,900
|
|
|
|
|
|
|
|
|
|
John Meekison
, British Columbia, Canada
|
|
Director
|
|
Chief Financial Officer,
iCo Therapeutics Inc., a biotech company developing drugs for eye diseases,
April 2005 to present;
|
|
August
9, 2007
|
|
10,000
(3)
|
|
|
|
|
|
|
|
|
|
Richard Childs
,New Jersey, United States
|
|
Chief Financial Officer
|
|
Self-employed (forensic
accounting practice) from 2001 to present;
|
|
November
5, 2015
|
|
Nil
|
|
|
|
|
|
|
|
|
|
Shauna Hartman
,British Columbia, Canada
|
|
Corporate Secretary
|
|
Solicitor at Armstrong
Simpson from September 2003 to present.
|
|
May 8, 2009
|
|
Nil
|
|
|
|
|
|
|
|
|
|
Dennis Flood
,Ohio, USA
|
|
Chief Technology Officer
|
|
Chief Technology Officer
for the Company from August 2010 to Present; President and CEO of North Coast
Initiatives, Ltd. from May 2001 to Present (a private consulting firm
providing management and technical services to the photovoltaic (PV) energy
conversion industry)
|
|
August 17, 2010
|
|
985,500
(4)
|
|
|
_______________
|
Notes:
|
(1)
|
Does not include options or warrants held by directors and officers
of the Company.
|
(2)
|
Of which 1,906,223 shares are held directly and 1,100,000 shares are
held through Jefferson Financial Inc.
|
(3)
|
All of which shares are indirectly held by Mr. Meekisons spouse.
|
(4)
|
Of which 15,500 shares are held directly and 970,000 shares are held
through North Coast Initiatives Ltd.
|
28
There are no loans or debentures due to or from the directors,
management, promoters and principal holders of the Company.
As
of the date of this annual report, the Companys directors and officers, as a
group, owned or had control or direction over, directly or indirectly,
5,942,623 of the Common Shares representing approximately 10.09% of the
outstanding Common Shares.
A
brief profile of each of the Directors and the senior management is given
below:
Charles Provini,
Director, President & Chief Executive Officer
Mr. Provini holds an Engineering degree from The U.S. Naval Academy in
Annapolis, Maryland and a Masters from the University of Oklahoma. Previously,
he was the President of Ladenburg Thalmann Asset Management and a Director of
Ladenburg Thalmann, Inc., one of the oldest members of the New York Stock
Exchange from 11/1997- 10/2000. He served as President of Laidlaw Asset
Management as well as Chairman and Chief Investment Officer of Howe
&Rusling, Laidlaws Portfolio Management Advisory Group from 11/1995-
09/1997. Prior to this, he served as President of Rodman & Renshaws
Advisory Services from 02/1994- 08/1995 and President of LaSalle Street
Corporation, a wholly-owned subsidiary of Donaldson, Lufkin & Jenrette from
01/1983-04/1985. Mr. Provini has been a leadership instructor at the U.S. Naval
Academy, Chairman of the U.S. Naval Academys Honor Board, and is a former
Marine Corp. officer. Mr. Provini has been a director, President and Chief
Executive officer of the Company since May 8, 2009.
Brien F. Lundin
, Chairman
of the Board
Brien
Lundin has been a director of the Company since May 8, 2009. He was appointed
as Chairman of the Board on September 30, 2013. The president/CEO of Jefferson
Financial, Inc. since 2003, Mr. Lundin is a marketer, investor and investment
banker with experience in financing and advising early-stage technology and
natural resource enterprises. Mr. Lundin has been the operator of the New
Orleans Investment Conference since 2003. Mr. Lundin is also a director and
member of the audit committee for Thunderstruck Resources Ltd. and Sojourn
Ventures, Inc
John C. Calhoun
, Director
Mr. Calhoun has over 20 years of experience in corporate finance. Mr. Calhoun has
served as managing director of Fort Hill Resources since 1997,
president/director of North American Water from 1998-2004, president/director
of Grammercy Investments from 2000-presemt, president/director of Vignette
Publications, treasurer/director of Computer Wholesale Corporation from
1995-2001, and managing director of the Shadows Bend Court long-term care
facility from 2001-present. He is the founder/director of FNBC Bank
(2005-present), the largest,
De Novo
bank in Louisiana and the founder
and managing director of the Suites at Sugar Mill Point and Oak Grove Senior
Living (2002-present), long term care facilities. Mr. Calhoun has been a
director of the Company since May 8, 2009.
John
Meekison
, Director
Mr.
Meekison has been a director of the Company since August 9, 2007 and is a
founder and Chief Financial Officer of Vancouver based iCo Therapeutics Inc.
(iCo) (from 03/2005- Present), a biopharmaceutical company developing
clinical stage drugs for ophthalmic (eye) diseases. In his capacity as Chief
Financial Officer, he manages all accounting, finance, risk management,
investor relations and human resource activities for iCo. He also works closely
with the rest of the iCos executive team in business strategy, license
renegotiations and merger and acquisitions activities. Mr. Meekison was an
investment banker with a specialization in both the life sciences and
technology sector at Haywood Securities Inc. (10/1991-02/2000), Diouhy Merchant
Group Inc. (10/2001-12/2002), and Pacific International Securities Inc., now PI
Financial group (03/2004-03/2005). He has also acted as the Chief Financial
Officer for a TSX listed company developing a novel clinical diagnostic
platform from 02/2003-2004, where Mr. Meekison supervised all public reporting
functions and accounting and finance functions. He is also the director of
Pacific Cascade Minerals Inc. and a member of the audit committee and the Chief
Financial Officer, a director, and member of the audit committee for Sojourn
Ventures, Inc. Mr. Meekison received his Bachelor of Arts from the University
of British Columbia and is a certified Investment Manager and Professional
Logistician.
29
Richard Childs
, Chief Financial Officer
Mr.
Childs has a forensic accounting practice that serves more than 100 lawyers
across the United States. He is a member of the American Institute of Certified
Public Accountants and the Society of Certified Fraud Examiners, as well as a member
of the New Jersey State Society of CPAs. In the private sector, he served for
six years as Vice President, Director of Finance and Internal Security for
Deak-Perera, the foreign exchange, Swiss banking and precious metals company.
In the government sector, he has served as a fraud investigator for the Office
of the (NJ) Attorney General; the Supervising Accountant for the Essex County
(NJ) Division of Accounts and Control; and, most recently, as the Chief of the
Union County (NJ) Sheriffs Department Economic Crime/Inspection Bureau. He has
frequently provided expert testimony in economic crime cases in Federal and New
Jersey state courts and the New Jersey grand jury. Mr. Childs holds a Bachelor
of Science degree in accounting from Rutgers University.
Dennis J.
Flood,
Chief Technology Officer
Dennis
Flood, PhD, is a co-founder of and technical consultant to Natcore. He is also
President and CEO of North Coast Initiatives, Ltd. (05/2001-present), a
consulting firm providing management and technical services to the photovoltaic
(PV) energy conversion industry. Dr. Flood has more than 30 years of experience
in developing solar cell and array technology. Prior, Dr. Flood was Chief of
the Photovoltaic and Space Environments Branch at the NASA Glenn Research Center
in Cleveland, Ohio (from 06/1985-06/2000), where he lead Agency programs in
advanced photovoltaic systems development. He served as Chair of the Institute
of Electrical and Electronics Engineers (IEEE) Photovoltaic Devices Technical
Committee from 1998-2005. And he currently serves on the International Advisory
Committees of the European, the U.S., the Japan/Asia and the World Photovoltaic
Conference organizing committees (from 1992-present).
Shauna
Hartman
,
Corporate
Secretary.
Shauna
Hartman obtained her law degree from the University of British Columbia in 2001
and holds a Bachelor of Commerce from Saint Marys University. She has
practiced corporate and securities law for Canadian listed companies with
Armstrong Simpson since 2003. She also held the title of corporate secretary at
International Enexco Ltd. (02/2008-06/2014), NexOptic Technology
Corp.(03/2011-present), and Doxa Energy Ltd.(04/2010-present), all listed on
the TSX Venture Exchange.
Arrangements,
Understandings, etc.
The
Company has no arrangements or understanding with any major shareholders,
customers, suppliers or others, pursuant to which any person referred to above,
was selected as a director or member of senior management.
30
B.
Compensation
Summary
Compensation Table
Years Ended Decem
ber 31, 2015, 2014, 2013,
2012 and 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and
Principal Position
|
|
Period Ended Dec. 31
|
|
Salary
($)(1)
|
|
Share-based awards
($)
|
|
Option-based awards
($)(2)
|
|
Non-equity incentive plan compensation
|
|
Pension value
($)
|
|
All other compensation
($)
|
|
Total compensation
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual incentive plans ($)
|
|
Long term incentive plans ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles
Provini
|
|
2015
|
|
$
|
275,000
|
|
|
Nil
|
|
$
|
102,000
|
|
Nil
|
|
Nil
|
|
Nil
|
|
$
|
60,000
|
|
$
|
437,000
|
|
President/
|
|
2014
|
|
$
|
275,000
|
|
|
Nil
|
|
|
Nil
|
|
Nil
|
|
Nil
|
|
Nil
|
|
$
|
60,000
|
|
$
|
335,000
|
|
Chief
|
|
2013
|
|
$
|
275,000
|
|
|
Nil
|
|
|
Nil
|
|
Nil
|
|
Nil
|
|
Nil
|
|
$
|
60,000
|
|
$
|
335,000
|
|
Executive
|
|
2012
|
|
$
|
275,000
|
|
|
Nil
|
|
|
Nil
|
|
Nil
|
|
Nil
|
|
Nil
|
|
$
|
60,000
|
|
$
|
335,000
|
|
Officer
(6)
|
|
2011
|
|
$
|
366,666
|
|
|
Nil
|
|
$
|
226,116
|
|
Nil
|
|
Nil
|
|
Nil
|
|
|
Nil
|
|
$
|
592,782
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard
Childs
|
|
2015
|
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
Nil
|
|
Nil
|
|
Nil
|
|
$
|
6,000
|
|
$
|
6,000
|
|
Chief
|
|
2014
|
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
Nil
|
|
Nil
|
|
Nil
|
|
$
|
3,000
|
|
$
|
3,000
|
|
Financial
|
|
2013
|
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
Nil
|
|
Nil
|
|
Nil
|
|
$
|
10,000
|
|
$
|
10,000
|
|
Officer
(4)
|
|
2012
|
|
$
|
16,000
|
|
|
Nil
|
|
|
Nil
|
|
Nil
|
|
Nil
|
|
Nil
|
|
$
|
8,200
|
|
$
|
24,200
|
|
|
|
2011
|
|
$
|
28,000
|
|
|
Nil
|
|
|
Nil
|
|
Nil
|
|
Nil
|
|
Nil
|
|
|
Nil
|
|
$
|
28,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian
|
|
2015
|
|
$
|
48,000
|
|
|
Nil
|
|
|
Nil
|
|
Nil
|
|
Nil
|
|
Nil
|
|
|
Nil
|
|
$
|
48,000
|
|
Zucker
(3)
|
|
2014
|
|
$
|
48,000
|
|
|
Nil
|
|
$
|
18,300
|
|
Nil
|
|
Nil
|
|
Nil
|
|
|
Nil
|
|
$
|
66,300
|
|
Former
Chief
|
|
2013
|
|
$
|
48,000
|
|
$
|
12,450
|
|
|
Nil
|
|
Nil
|
|
Nil
|
|
Nil
|
|
|
Nil
|
|
$
|
60,450
|
|
Financial
Officer
|
|
2012
|
|
$
|
48,000
|
|
|
Nil
|
|
|
Nil
|
|
Nil
|
|
Nil
|
|
Nil
|
|
|
Nil
|
|
$
|
48,000
|
|
|
|
2011
|
|
$
|
48,000
|
|
|
Nil
|
|
$
|
67,836
|
|
Nil
|
|
Nil
|
|
Nil
|
|
|
Nil
|
|
$
|
115,836
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
Meekison
(5)
|
|
2015
|
|
|
Nil
|
|
|
Nil
|
|
$
|
102,000
|
|
Nil
|
|
Nil
|
|
Nil
|
|
$
|
40,000
|
|
$
|
142,000
|
|
Chief
|
|
2014
|
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
Nil
|
|
Nil
|
|
Nil
|
|
$
|
48,000
|
|
$
|
48,000
|
|
Financial
Officer
|
|
2013
|
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
Nil
|
|
Nil
|
|
Nil
|
|
$
|
28,000
|
|
$
|
28,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dennis
Flood
|
|
2015
|
|
$
|
82,500
|
|
|
Nil
|
|
|
Nil
|
|
Nil
|
|
Nil
|
|
Nil
|
|
|
Nil
|
|
$
|
82,500
|
|
Chief
|
|
2014
|
|
$
|
165,000
|
|
|
Nil
|
|
|
Nil
|
|
Nil
|
|
Nil
|
|
Nil
|
|
|
Nil
|
|
$
|
165,000
|
|
Technology
|
|
2013
|
|
$
|
165,000
|
|
|
Nil
|
|
|
Nil
|
|
Nil
|
|
Nil
|
|
Nil
|
|
|
Nil
|
|
$
|
165,000
|
|
Officer
|
|
2012
|
|
$
|
123,750
|
|
|
Nil
|
|
|
Nil
|
|
Nil
|
|
Nil
|
|
Nil
|
|
|
Nil
|
|
$
|
123,750
|
|
|
|
_______________
|
Notes:
|
1.
|
The
value of perquisites and benefits,
if any, for each Named Executive
Officer was less than the
lesser of $50,000 and 10% of the total
annual salary and bonus.
|
2.
|
The
value of the option-based award was determined
using the Black-Scholes option-pricing
model.
|
3.
|
Appointed
as Chief Financial Officer on April 27, 2012; Resigned as Chief
Financial Officer on June 7, 2013. After resignation as CFO, Mr. Zucker
continues to perform tax and administrative functions for which he is
compensated $4,000 per month.
|
4.
|
Resigned
as Chief Financial Officer on April 27, 2012. After resignation as CFO,
Mr. Childs has continues to perform consulting services for the Company, on
an as needed basis, specifically in the area of performing due diligence. Mr.
Childs was re-appointed as Chief Financial Officer on November 5, 2015
|
5.
|
Appointed
as Chief Financial Officer on June 7, 2013; Resigned as Chief Financial
Officer on November 5, 2015. Certain payments were requested by Mr. Meekison
to go to Tanum Holdings of which he is an owner, instead of directly to him
|
6.
|
Mr.
Provini has an employment agreement for $275,000 per year. He also receives
$60,000 in other compensation for administrative functions performed for
NewCyte, which is a subsidiary that gets consolidated in the financial
statements.
|
31
The
Company
has calculated the grant date
fair value amounts
in the
Option-based
Awards
column using
the Black-Scholes model, a mathematical
valuation model that ascribes a value
to a stock option based
on a number of factors
in valuing the option-based
awards,
including the
exercise price of the
options, the price
of the
underlying security on
the date the option was
granted, and assumptions with
respect to the volatility of the price of the
underlying security and the
risk-free
rate of return. Calculating the
value of stock options
using this methodology is
very different from simple
in-the-money value calculation. Stock options that
are well out-of-the-money can still have a significant
grant
date
fair value based on a Black-Scholes valuation. Accordingly, caution must
be exercised in comparing grant date
fair value amounts with
cash compensation or an in-the-money
option value calculation. The
total
compensation
show in the last column
is total compensation
of each NEO reported in
the other columns. The
value of the in-the-money options currently held by each
director (based on share price less
option exercise price) is set forth
in the Value of Unexercised
in-the-money Options
column
of the Outstanding
Share-
Based and Option-Based Awards
table below.
Incentive
Plan Awards
Outstanding
share-based awards
and
option-based awards
The
Plan has been established
to attract and
retain employees,
consultants, officers or
directors to
the
Company
and to
motivate
them to
advance
the
interests
of the Company
by affording
them
with the opportunity
to acquire
an equity interest in
the
Company. The
directors and Compensation Committee of the
Company administer the Plan. The Plan
provides
that the number of
Shares issuable under
the
Plan, together
with
all of
the
Companys
other
previously established or
proposed share compensation
arrangements may not exceed
10% of
the
total number
of issued
and outstanding shares
of the Company. All options
expire on
a date not later than
five years
after the date
of grant
of such option.
32
The following
table sets for the
details of all awards outstanding
as at December 31, 2015 including awards granted
prior to the most recently completed financial year to the Named
Executive Officers (NEOs). Values expressed in Canadian
(CDN$).
|
|
|
|
|
|
|
|
|
|
|
|
|
Option-Based Awards
|
|
Share-Based Awards
|
|
|
|
|
Name
|
Number of Securities Underlying Unexercised Options (#)
|
|
Option Exercise Price (CDN$)
|
|
Option Expiration Date
|
|
Value of Unexercised In-the-Money Options
1
(CDN$)
|
|
Number of Shares or Units of Shares That Have Not Vested
(#)
|
|
Market or Payout Value of Share-Based Awards That Have Not
Vested (CDN$)
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles
Provini
|
300,000
|
|
0.97
|
|
February
8, 2016
|
|
Nil
|
|
Nil
|
|
Nil
|
President
and CEO
|
300,000
|
|
0.58
|
|
April
30, 2020
|
|
Nil
|
|
Nil
|
|
Nil
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian
Zucker
|
90,000
|
|
0.97
|
|
February
6, 2016
|
|
Nil
|
|
Nil
|
|
Nil
|
Former
CFO
|
20,000
|
|
0.80
|
|
January
4, 2018
|
|
|
|
|
|
|
|
10,000
|
|
1.08
|
|
January
10, 2019
|
|
|
|
|
|
|
|
10,000
|
|
0.75
|
|
December
17, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
Meekison.
|
300,000
|
|
0.97
|
|
February
8, 2016
|
|
Nil
|
|
Nil
|
|
Nil
|
Chief
Financial Officer
|
300,000
|
|
0.58
|
|
April
30, 2020
|
|
Nil
|
|
Nil
|
|
Nil
|
|
|
|
|
|
|
|
|
|
|
|
|
Dennis
Flood
Chief Technology
Officer
|
90,000
|
|
0.97
|
|
February
6, 2016
|
|
Nil
|
|
Nil
|
|
Nil
|
|
_______________
|
1 This
amount is based on the difference
between the market
value of the Companys
common shares underlying the options as at December 31, 2015, which
was $0.044 and the exercise price of the option.
|
Subsequent
to the financial year ended December 31, 2015, each of Mr. Provini and Mr.
Meekison were granted options to acquire 350,000 common shares of the Issuer at
an exercise price of $0.40 expiring on January 13, 2021. Additionally, all of
the options having an expiring date of February 8, 2016 as noted above, expired
unexercised
Value Vested or Earned During
the Twelve Months Ended December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Option-based awards Value vested during the year(1) ($)
|
|
Share-based awards Value vested during the year ($)
|
|
Non-equity incentive plan compensation Value earned
during the year ($)
|
|
|
|
|
|
|
|
|
|
Charles
Provini
President
and CEO
|
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard
Childs,
Chief Financial
Officer
|
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
|
|
|
|
|
|
|
|
|
|
|
John
Meekison
Former
Chief Financial Officer
|
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
|
|
|
|
|
|
|
|
|
|
|
Dennis
Flood
Chief
Technology Officer
|
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
|
________________
|
1.
Dollar value that would have been realized
if calculated by determining the difference between the market price
of the underlying securities at exercise
and the exercise or base price of the options under the option-based award on
the vesting date.
|
33
Option-based Awards
Exercised During the Twelve Months Ended December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Securities Acquired on Exercise (#)
|
|
Exercise Price
$
|
|
Date of Exercise (m/d/y)
|
|
Aggregate Value Realized(1) ($)
|
|
|
|
|
|
|
|
|
|
|
|
Charles
Provini
President and CEO
|
|
|
Nil
|
|
|
N/A
|
|
|
N/A
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard
Childs
Chief Financial Officer
|
|
|
Nil
|
|
|
N/A
|
|
|
N/A
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
Meekison
Former Chief
Financial Officer
|
|
|
Nil
|
|
|
N/A
|
|
|
N/A
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dennis
Flood
Chief Technology
Officer
|
|
|
Nil
|
|
|
N/A
|
|
|
N/A
|
|
|
0
|
|
|
_______________
|
1.
Calculated using the closing market
price of the common shares on the
date(s) of exercise less the
exercise price of the stock options multiplied by
the number of shares
acquired.
|
Option-based Awards
Granted During the Twelve Months Ended December 31,
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Date of Grant
|
|
Number of Option-Based Awards Granted
|
|
Exercise Price
|
|
Expiry Date (m/d/y)
|
|
|
|
|
|
|
|
|
|
|
|
Charles
Provini
President and CEO
|
|
|
04/30/15
|
|
|
300,000
|
|
|
0.58
|
|
|
04/30/20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard
Childs
Chief Financial
Officer
|
|
|
N/A
|
|
|
Nil
|
|
|
Nil
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
Meekison
Former Chief
Financial Officer
|
|
|
04/30/15
|
|
|
300,000
|
|
|
0.58
|
|
|
04/30/20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dennis
Flood
Chief Technology
Officer
|
|
|
N/A
|
|
|
Nil
|
|
|
Nil
|
|
|
N/A
|
|
34
Pensio
n Plan
Benefits
The
Company
does not have a pension plan
that provides for
payments or benefits to the Named Executive Officers at,
following or in
connection with retirement.
Termination
of Employment, Change in
Responsibilities and Employment
Contracts
Other
than disclosed below,
the Company does not
have an employment contract with
any of its Named Executive Officers. Each Named
Executive Officer devotes a portion of his or
her time to the Company
and a portion of his or her time to other companies
where he or she is a director and/or officer.
Accordingly, the Named
Executive
Officers invoice the Company
based on the percentage of
time
devoted to the
Company.
Other
than
as disclosed below,
neither the Company nor
any of its subsidiaries
have any plan or arrangement with
respect to compensation
to its
executive officers which would result from the
resignation, retirement or any
other
termination
of the executive officers
employment with
the
Company and its subsidiaries or from
a change of control of the
Company or any
subsidiary of the
Company
or a change in the executive officers
responsibilities following
a change in control.
The
Company
entered
into
an Employment Agreement
dated April 5, 2012
with Charles Provini for
his services as President
and Chief Executive Officer
and such other
capacities
as the board of directors
of the Company may designate from
time
to time. Pursuant to
the Employment Agreement, Mr.
Provini isbe paid a base
salary of US $275,000 per
year. After the first
anniversary of
the date of the Employment Agreement,
the base salary of US $275,000 per
year may be reviewed periodically
and increases in such base salary may be granted
at the sole discretion of
the Companys board of
directors. The Employment Agreement ends on the earliest of two
years from the date of the
Employment Agreement
or any extension thereafter.
On April 5, 2014, the employment agreement was extended for an additional three
years. Mr. Provini is entitled to
certain option grants upon the achievement of certain
revenue
milestones by the
Company. Mr. Provini shall also be entitled to
receive options to purchase up to Five Hundred Thousand (500,000) shares of the
Companys common stock (the Stock Options) as follows: He shall receive Stock
Options to purchase One Hundred Thousand (100,000) shares of the Companys
common stock upon the Companys receipt of One Million Dollars ($1,000,000) of
net revenue during the Term of his employment, and he shall receive Stock
Options to purchase One Hundred Thousand (100,000) shares of the Companys
common stock for each additional One Million Dollars ($1,000,000) of net
revenue received by the Company during the Term of his employment (up to a
maximum of Five Hundred Thousand (500,000) shares of the Companys common
stock). Options granted under this incentive plan will be priced at the lowest
possible strike price approved by the TSX Venture Exchange at the time of the
grant. Mr. Provini may
terminate
the Employment Agreement at any time upon
30 days written notice to
the Company or
immediately for cause. Should the
Company terminate the Employment Agreement
without cause, it
is obligated
to pay to Mr. Provini a lump
sum payment of an
amount equal to
three months base salary, plus one years
benefits. The Employment
Agreement contains certain
non-competition and non-solicitation
provisions during
the employment term. For
a period of one
year following
the employment
term,
Mr. Provini cannot solicit business from
current or
potential clients or customers
of Natcore or induce employees, consultants, etc. of the Company to
terminate
or not renew with the
Company
and may not directly or indirectly,
engage in any business in
the state of New Jersey
or any other location in
which
the Company is then
doing
business, for
the development,
sale, service or distribution
of process or equipment for the
manufacture of solar panels
(or any component thereof)
or other alternative energy technology
products or
any similar business that
is competitive with
the business of the
Company or its
affiliates, including
as a proprietor, principal, agent,
partner, officer,
director, shareholder,
employee, member,
consultant or otherwise.
Compensation of Directors
The
following table sets
forth
all amounts of compensation
provided to directors who
were not NEOs of the Company duringthe twelve months ended December 31, 2015.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Fees Earned
($)
|
|
Share-Based Awards
($)
|
|
Option-Based Awards
($)
|
|
Non-Equity Incentive Plan Compensation
($)
|
|
Pension Value
($)
|
|
All Other Compensation
($)
|
|
Total Compensation
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
Calhoun
|
|
|
Nil
|
|
|
Nil
|
|
$
|
174,000
|
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brien
Lundin
1
|
|
|
Nil
|
|
|
Nil
|
|
$
|
174,000
|
|
|
Nil
|
|
|
Nil
|
|
$
|
60,000
|
|
$
|
60,000
|
|
|
_______________
|
Notes:
|
1. Chairman of the Board
|
35
Directors are
also eligible to
participate in the Plan.
Directors are
entitled
to be reimbursed for
expenses
incurred by them in their capacity
as directors.
Outstanding
share-based awards
and
option-based awards
The
following table sets
forth information
concerning all awards outstanding under
share-based or option-based
incentive plans of the Company as
of December 31, 2015including
awards granted prior
to the
most
recently completed financial
year to each of the Directors
of the Company who were not Named
Executive Officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option-Based Awards
|
|
Share-Based Awards
|
|
|
|
|
|
|
|
Name
|
|
Number of Securities Underlying Unexercised Options (#)
|
|
Option Exercise Price
1
(CDN$)
|
|
Option Expiration Date
|
|
Value(1) of Unexercised In- The-Money Options
1
($)
|
|
Number of Shares or Units of Shares That Have Not Vested
(#)
|
|
Market or Payout Value
1
of Share-Based Awards
That Have Not Vested ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brien
Lundin
|
|
|
300,000
|
|
$
|
0.97
|
|
|
02/08/16
|
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
|
|
|
300,000
|
|
$
|
0.58
|
|
|
04/30/20
|
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
Calhoun
|
|
|
300,000
|
|
$
|
0.97
|
|
|
02/08/16
|
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
|
|
|
300,000
|
|
$
|
0.58
|
|
|
04/30/20
|
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
|
_______________
|
1.
This
amount is based on the difference
between the market
value of the Companys
common shares underlying the options as at December 31, 2015, which was
$0.44, and the exercise price of the option.
|
Subsequent
to the financial year ended December 31, 2015, each of Mr. Lundin and Mr.
Calhoun were granted options to acquire 350,000 common shares of the Issuer at
an exercise price of $0.40 expiring on January 13, 2021. Additionally, all of
the options having an expiring date of February 8, 2016 as noted above, expired
unexercised
Value Vested or Earned During
the Twelve Months Ended December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Option-based awards Value vested during the year
1
($)
|
|
Share-based awards Value vested during the year
($)
|
|
Non-equity incentive plan compensation Value earned
during the year
($)
|
|
|
|
|
|
|
|
|
|
Brien
Lundin
|
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
|
|
|
|
|
|
|
|
|
|
|
John
Calhoun
|
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
|
_________________
|
1.
Dollar value that would have been realized
if calculated by determining the difference between the market price
of the underlying securities at exercise
and the exercise or base price of the options under the option-based award on
the vesting date.
|
36
Option-based Awards
Exercised During the Twelve Months Ended December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Securities Acquired on Exercise (#)
|
|
Exercise Price
|
|
Date of Exercise (m/d/y)
|
|
Aggregate Value Realized
1
($)
|
|
|
|
|
|
|
|
|
|
|
|
John
Calhoun
|
|
|
Nil
|
|
|
N/A
|
|
|
N/A
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brien
Lundin
|
|
|
Nil
|
|
|
N/A
|
|
|
N/A
|
|
|
0
|
|
|
_________________
|
1.
Calculated using the closing market
price of the common shares on the
date(s) of exercise less the
exercise price of the stock options multiplied by
the number of shares
acquired.
|
Option-based Awards
Granted During the Twelve Months Ended December 31,
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Date of Grant
|
|
Number of Option-Based Awards Granted
|
|
Exercise Price
|
|
Expiry Date (m/d/y)
|
|
|
|
|
|
|
|
|
|
|
|
Brien
Lundin
|
|
|
04/30/15
|
|
|
300,000
|
|
|
CDN$0.58
|
|
|
04/30/20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
Calhoun
|
|
|
04/30/15
|
|
|
300,000
|
|
|
CDN$0.58
|
|
|
04/30/20
|
|
Securities
Authorized for Issuance Under Equity Compensation Plans
The
only equity compensation
plan
that the Company has in place is its stock option plan (the Plan), which was previously adopted by the
Company. As of December 31, 2015 the Stock
Option Plan reserves a maximum of 10,520,000
Common Shares for issuance upon
the exercise of options.
Options
granted under the
Stock
Option
Plan will comply
with the rules and regulations
of the Exchange regarding
share incentive arrangements.
The
purpose
of the
Stock Option Plan is
to attract and retain employees, consultants, officers and directors to
the Company and
to motivate
them
to advance
the interests of the
Company by affording
them
with the opportunity, through share options, to
acquire an equity
interest
in the
Company and
benefit from
its growth. The
Stock
Option
Plan authorizes
the Board to grant, in
its absolute discretion,
stock options to
directors, officers,
employees or consultants on such terms, limitations, conditions
and restrictions,
as it deems necessary and advisable, subject
to terms of the
Plan and regulatory and TSX Venture Exchange
approval.
Equity Compensation
Plan Information
as of December 31, 2015
|
|
|
|
|
|
|
Plan Category
|
|
Number of securities to be issued upon exercise of
outstanding options, warrants and rights
|
|
Weighted-average exercise price of outstanding options,
warrants and rights
|
|
Number of securities remaining available for future
issuance under equity compensation plans (excluding securities reflected in
column (a))
|
|
|
|
|
|
|
|
Equity
compensation plans approved by security holders
|
|
3,775,000
common shares
|
|
CDN$0.88
|
|
6,745,000
common shares
|
|
|
|
|
|
|
|
Equity
compensation plans not approved by security holders
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
|
Total
|
|
3,775,000
common shares
|
|
CDN$0.88
|
|
6,745,000
common shares
|
37
C. Board
Practices
Terms of Directors and Executive
Officers
The
Companys officers are appointed by and serve at the discretion of the board of
directors. The current directors have not been elected to serve for a specific
term and, unless re-elected, hold office until the close of the Companys next
annual meeting of shareholders or until such time as their successors are
elected or appointed.
Committees of the Board of Directors
Audit Committee
Item 306 of Regulation S-K requires the Companys
audit committee (in this section
the Audit Committee) to meet certain
requirements. It
also requires the Company
to disclose in this Management
section certain information
regarding
the Audit Committee.
That information is disclosed
below.
Ove
r
view
The
Audit
Committee is principally
responsible for:
|
|
|
|
i.
|
recommending to
the Board the external
audit
or to be nominated for election
by the shareholders
at each annual general meeting
and negotiating the compensation of such external
auditor,
|
|
|
|
|
ii.
|
overseeing the work of the external auditor,
|
|
|
|
|
iii.
|
reviewing the Companys annual and
interim financial statements,
MD&A and press releases regarding
earnings
before they are reviewed and
approved by the
Board and publicly disseminated
by the Company,
and
|
|
|
|
|
iv.
|
reviewing the
Companys financial
reporting procedures and internal controls to ensure adequate
procedures are in place for the Companys
public disclosure of financial
information extracted or derived from its financial
statements, other than disclosure
described in the previous paragraph.
|
Th
e Audit
Committees Charter
The
Audit
Committee has
various responsibilities
as set
forth
inItem 306 of Regulation S-K. The
Board has adopted a Charter
for the Audit Committee which sets
out the Audit Committees
mandate, organization, powers
and
responsibilities. The
complete Charter is
below:
Purpose of the Committee
The
Audit Committee represents the Board
in discharging its responsibility relating
to the accounting, reporting and financial practices of the Company and its
subsidiaries, and has general responsibility for
oversight of internal controls, accounting and auditing activities, and legal compliance of the Company and its subsidiaries.
Members of the
Committee
The
Audit Committee shall consist
of no less than three Directors a majority of whom shall be independent as defined under Exchange Act Rule
10A-3, while the Company is in the
developmental stage of its business.
The members of the Committee
shall
be selected annually by
the Board and shall serve
at the pleasure of the Board.
38
At
least one Member of the Audit Committee must be financially literate
as defined
under Canadian private placement law, National Instrument 52-110, having
sufficient accounting or related financial management
expertise to read and understand a
set of financial statements,
including the related notes, that present
a breadth and level of complexity
of the accounting issues that
are generally comparable to the breadth
and complexity of the issues that can reasonably
be expected to be raised by
the Companys financial
statements.
Meeting Requirements/Quorum
The
Committee will, where possible,
meet on a regular basis at least once every quarter, and will
hold special meetings as it deems necessary
or appropriate. Meetings may be held in person or telephonically, and shall be at such times and places as the Committee determines.
Without meeting, the Committee
may act by unanimous written consent of all members, which shall constitute a meeting
for the purposes of this charter.
A
majority of the members of the Committee shall constitute a quorum.
Dutie
s and Responsibilities
The
Audit Committees function is one of
oversight only and shall not relieve the Companys management of its responsibilities for
preparing financial statements that accurately and fairly
present the Companys
financial results and conditions or
the responsibilities of the external
auditors relating to the auditor
review of financial statements. Specifically, the Audit Committee will:
|
|
|
|
(a)
|
have
the authority with respect to the appointment, retention
or discharge of the independent public
accountants as auditors of the
Company (the Auditors) who
perform the annual audit in accordance with applicable securities laws, and who shall be ultimately accountable to the Board through the
Audit Committee;
|
|
|
|
|
(b)
|
review
with the Auditors the scope of the
audit and the results of the annual
audit examination by
the auditors, including any
reports of the auditors prepared
in connection with the annual audit;
|
|
|
|
|
(c)
|
review
information, including
written statements from the Auditors, concerning any
relationships between the Auditors and the Company, or any other relationships that may adversely
affect the independence of
the Auditors and assess the independence of the Auditors;
|
|
|
|
|
(d)
|
review
and discuss with management and the Auditors the Companys
audited financial
statements and accompanying
Managements Discussion and Analysis of Financial Conditions (MD&A),
including a discussion with the
Auditors of their judgments as to the quality of the Companys accounting
principles and report on them to
the Board;
|
|
|
|
|
(e)
|
review and discuss with management the Companys
interim financial statements and
interim MD&A and report on them to the Board;
|
|
|
|
|
(f)
|
pre-approve
all auditing services and non-audit services
provided to the
Company by the Auditors
to the extent and
in the manner required by applicable law or regulation. In no circumstances
shall the Auditors provide any non-audit
services to the Company that are prohibited by applicable law or regulation;
|
|
|
|
|
(g)
|
evaluate the
external Auditors performance
for the preceding fiscal
year, reviewing their fees
and making recommendations to the
Board;
|
|
|
|
|
(h)
|
periodically
review the adequacy of
the Companys internal controls and ensure that such internal controls are effective;
|
|
|
|
|
(i)
|
review
changes in the accounting policies of the Company and accounting and financial reporting proposals that are provided by the Auditors that may have
a significant impact on the Companys financial
reports, and report on them to the Board;
|
|
|
|
|
(j)
|
oversee
and annually review the Companys
Code of Business Conduct and
Ethics;
|
|
|
|
|
(k)
|
approve
material contracts where the Board of Directors determines
that it has a conflict;
|
|
|
|
|
(l)
|
establish
procedures for the receipt, retention and
treatment of complaints received by the Company regarding
the audit or other accounting matters;
|
39
|
|
|
|
(m)
|
where
unanimously considered necessary by
the Audit Committee, engage independent
counsel and/or other advisors at the Companys expense
to advise on material issues
affecting the Company
which the Audit Committee considers are not appropriate for the full Board;
|
|
|
|
|
(n)
|
satisfy itself that management has put into place
procedures that facilitate
compliance with the provisions of applicable securities laws and regulation
relating to insider trading,
continuous disclosure and financial reporting;
|
|
|
|
|
(o)
|
review
and monitor all related party transactions
which may be entered into by the Company; and
|
|
|
|
|
(p)
|
periodicallyreview
the adequacy of its charter
and recommending any changes thereto to the Board.
|
Miscellaneous
Nothing
contained in this Charter is
intended to extend applicable standards of liability
under statutory or regulatory
requirements for the directors of the
Company or members
of the Committee. The purposes and responsibilities
outlined in this Charter are meant
to serve as guidelines rather
than as in flexible rules
and the Committee is encouraged
to adopt such additional procedures and standards
as it deems necessary from time to time
to fulfill its responsibilities.
Co
m
position of the Audit
Committee
The
Audit
Committee consists of three
directors. Unless a company
is a venture issuer (an
issuer the securities
of which are not
listed or quoted
on any of the TSX Venture Exchange, a market
in the United States of America other
than the over-the-counter market,
or a market outside
of Canada
and the
U.S.A.)
as of the end of its last
financial year, Exchange Act Rule 10A-3 requires each of the members
of the
Committee
to be
independent and financially
literate. Since the Company is
a venture issuer (its
securities are listed on
the TSX Venture Exchange, but
are not listed or quoted on
any other exchange or market)
it is
exempt from this requirement.
In addition, the Companys
governing corporate legislation requires the
Company to
have an Audit Committee composed of a minimum of three directors, a majority of whom are not officers or employees of the
Company.
As
noted above, the members of the audit committee are Charles
Provini, John Calhoun
and
Brien Lundin. All of the
members
of the
Audit
Committee
are considered independent, with the exception of Mr. Provini, who is
a member of management. All members
are considered financially
literate.
A
member
of the audit committee
is
independent
if the member
has no direct or indirect
material relationship
with
the Company. A material relationship
means
a relationship that could,
in the
view
of the Companys board of
directors, reasonably interfere
with the exercise of
a members
independent
judgment.
A
member of the audit committee is considered
financially literate
if
he or she has the ability to
read and understand
a set of financial statements
that present a breadth and
level
of complexity
of accounting
issues that are generally comparable
to the
breadth and complexity
of the
issues that can reasonably
be expected to be raised by the Company.
There
are no other management functions
of the Company, which are
to any substantial degree performed by a person or company other than the
directors or senior officers of the
Company.
Pursuant
to the
provisions of the
Business Corporations Act
of British
Columbia, the Company
is required to
have an audit committee, which at the present
time, is comprised
of Charles Provini, John Calhoun and Brien
Lundin. For
additional information
regarding
the Companys
Audit
Committee, please see below.
The Company does not have
an executive committee.
As
at the
date of this Information
Management section and within
the ten years before the
date of this Information
Management section, no proposed
director:
(a)
is or has been a director or executive
officer of any company (including
the Company),
that
whilethat
person was acting in
that capacity:
|
|
|
|
|
was
the subject of a cease
trade order or similar
order or an order that denied the
relevant company access
to any exemption under
securities legislation, for a period of more
than 30 consecutive
days;
|
40
|
|
|
|
|
was
subject
to an event that resulted,
after the director or
executive officer ceased
to be a director or executive
officer, in the company being the subject of a cease trade or similar order
or an order that denied
the relevant company
access to any exemption under
securities legislation, for a period of more
than30 consecutive
days;
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|
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within
a year of that person ceasing to act in that capacity,
became bankrupt, made
a proposal under any legislation
relating to bankruptcy
or insolvency or was subject to
or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed
to hold its assets; or
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(b)
has within 10 years before the date
of the Information Management
section became bankrupt, made a proposal under any
legislation
relating to bankruptcy
or insolvency
or was
subject
to orinstituted any
proceedings,
arrangement or compromise with creditors or had a receiver, receiver manager or trustee
appointed to hold the assets of the
director, officers or
shareholders.
D.
Employees
The
number of full-time employees as of each of last three fiscal years is as
follows:
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December
31, 2015
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December
31, 2014
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December
31, 2013
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|
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Research Employees
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5
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6
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5
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|
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Administrative Employees
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7
|
8
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8
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Our
employees are not governed by a collective agreement. We have not experienced a
work stoppage and believe our employee relations are satisfactory.
The
nature of our business requires the recruitment and retention of a highly
educated and skilled workforce, including highly qualified management,
scientific and manufacturing personnel for innovation, research and
development. Typically a high proportion of our employees have a Bachelors
degree or higher. For each of the last three fiscal years, all employees of the
Company were employed at the Companys offices in New Jersey and/or New York.
E.
Share Ownership
(a) The
direct and indirect shareholdings of the Companys Directors and Officers as at
March 31, 2016 were as follows:
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Name and Municipality of
Principal Residence
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Positions held with the Issuer
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Number of Common Shares,
Options and Warrants
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Charles Provini
, Delray Beach, Florida, USA
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Director, President and
CEO
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1,300,000
(1)
common
shares,
650,000 options
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John Meekison
, Vancouver, B.C., Canada
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Director and CFO
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10,000
(2)
common
shares,
650,000 options
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Brien Lundin
, Metairie, LA, USA
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Director
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3,006,223
(3)
common
shares,
650,000 options
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John Calhoun
, New Orleans, LA, USA
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Director
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640,900
common shares, and
650,000 options
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Dennis Flood
, Columbus, OH, USA
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Chief Technology Officer
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985,500common
shares,
Nil options
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Shauna Hartman
, Surrey, B.C., Canada
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Corporate Secretary
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100,000
options
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All
of the shares held by the Directors are voting common shares and do not have
any different voting or other rights than the other outstanding common shares
of the Company.
As
of the date of this annual report, the Companys directors and officers, as a
group, owned or had control or direction over, directly or indirectly,
5,942,623 of the Common Shares representing approximately 10.09% of the
outstanding Common Shares.
41
The
information as to shares beneficially owned or controlled or directed, not
being within the knowledge of the Company, has been furnished by the respective
directors and officers individually.
(b) Share
purchase options outstanding as of March 31, 2016
See
Item 6.B of this annual report
ITEM 7 -
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A.
Major Shareholders
Please
refer to Item 6. Directors, Senior Management and EmployeesE. Share Ownership.
B.
Related Party Transactions
The Company has an agreement (the Employment Agreement) dated October
1, 2007, and amended July 31, 2008, with Mr. Charles Provini under which the
Company pays a fee for employee services at a base salary of $220,000 per
annum. On April 30, 2010, the Board of Directors passed a resolution to
increase this to $250,000 per annum and on May 13, 2011 the Board of Directors
passed a resolution to increase this to $275,000 per annum. The Company was not
obligated to commence payments until the Company raised at least $1,000,000,
which occurred during the year ended December 31, 2009. Mr. Provini is entitled
to receive options under the terms and conditions of the Companys stock option
plan. Mr. Provini will serve as the President and Chief Executive Officer of
the Company. On April 5, 2012, the employment agreement was extended for an
additional two years under the same terms. On April 5, 2014, the agreement was
extended for an additional three years under the same terms.
Mr. Provini has the right, upon 30 days notice, to terminate the
Employment Agreement. The Company may terminate the Employment Agreement on 10
days notice if for cause or on 30 days notice if without cause. Should the
Company terminate the contract without cause, it is obligated to pay Mr.
Provini an amount equal to three months base salary.
In addition to his employment agreement, Mr. Provini, receives $60,000
per year for various administrative functions performed for the NewCyte
subsidiary which is consolidated in the financial statements.
On June 1, 2013, the Company entered into a consulting agreement with
Mr. John Meekison under which the Company paid a fee for consulting services in
relation to Mr. Meekisons appointment as Chief Financial Officer of the
Company at a rate of CDN$4,000 per month. The consulting agreement had a
three-month term, extendable by the parties. Either party had the right to
terminate the agreement on 30 days notice unless there was a material breach,
in which case the agreement was able to be terminated on seven days notice.
Mr. Meekison resigned as Chief Financial Officer on November 4, 2015.
On November 5, 2015, the Company entered into a consulting agreement
with Mr. Richard Childs under which the Company pays a fee for consulting
services in relation to Mr. Childs appointment as Chief Financial Officer of
the Company at a rate of $4,000 per month. The consulting agreement has a
three-month term, extendable by the parties. Either party has the right to
terminate the agreement on 30 days notice unless there is a material breach,
in which case the agreement is able to be terminated on seven days notice.
Mr. Brian Zucker personally received a salary of $48,000 for the year
2012 and 2013. On May 8, 2009, Mr. Zucker bought 50,000 shares of common stock
at CDN$0.40 through the exercise of stock options. After his resignation as
CFO, Mr. Zucker continues to perform tax and administrative functions for which
he receives annual compensation of $48,000.
Armstrong Simpson, the Law Firm for which Ms. Shauna Hartman is an
employee received $84,467 during 2012 and $6,516 during 2013. On May 8, 2009,
the Law Firm bought 50,000 shares of common stock at CDN$0.40 through the
exercise of stock options.
Finally, each of Charles Provini, President, Chief Executive Officer
and a director of the Company and Brien Lundin and John Calhoun, directors of
the Company participated in the acquisition of shareholders of Natcore US and
Brien Lundin participated in the concurrent as well as the recent private
financing as a subscriber for units. Natcore (Canadian parent company) used to
be called Syracuse Capital Corp. and was a capital pool company on the TSX
Venture Exchange.
On May 8, 2009, Syracuse Capital Corp. acquired all of the shares of
Natcore Technology, Inc. (the Delaware now subsidiary company). At the time,
each of John Calhoun, Brien Lundin and Charles Provini were shareholders,
either directly or indirectly, of the Delaware Company and received
consideration from Natcore parent.
42
John Calhoun (as the controlling shareholder of Fort Hill Resources
Inc.) held 1,000,000 shares of the Delaware company and received in
consideration therefore 1,100,000 Natcore parent shares (at a deemed price of
CDN$0.40 per share). Mr. Calhoun had also held at the time warrants to acquire
shares in the Delaware company (225,000 to be specific) which were exchanged
for 247,500 warrants of Natcore parent. The warrants were exercisable at
CDN$0.40 per share and were all exercised on May 5, 2014.
Brien Lundin held 926,112 shares of the Delaware company directly and a
further 1,000,000 shares through Jefferson Direct, LLC. As a result, he
received 1,018,723 common shares of Natcore parent directly and 1,100,000
common shares of Natcore parent indirectly through Jefferson (at a deemed price
of CDN$0.40 per share). Mr. Lundin had also held at the time warrants to
acquire shares in the Delaware company (225,000 to be specific) which were
exchanged for 247,500 warrants of Natcore parent. The warrants were exercisable
at CDN$0.40 per share and were all exercised on May 2, 2014.
Charles Provini (as the controlling shareholder of Hawk Partnership LP)
held 1,050,000 shares of the Delaware company which were exchanged for
1,155,000 common shares of Natcore parent (at a deemed price of CDN$0.40 per
share). Mr. Provini had also held at the time warrants to acquire shares in the
Delaware company (225,000 to be specific) which were exchanged for 247,500
warrants of Natcore parent. The warrants were exercisable at CDN$0.40 per share
and were all exercised on May 7, 2014. Since that time, neither Mr. Provini nor
Mr. Calhoun have subscribed for shares in a Natcore placement. Mr. Lundin,
however, has bought in Natcore private placements as follows:
On May 9, 2009 as part of a financing completed in conjunction with
the Qualifying Transaction noted above Mr. Lundin, in his individual
capacity, purchased 300,000 units of Natcore parent at a price of CDN$0.40 per
unit. This entitled him to 300,000 shares and 300,000 warrants exercisable until
May 9, 2011 at a price of CDN$0.75 per share. The warrants were exercised on
April 11, 2014.
On December 22, 2010, Mr. Lundin, in his individual capacity, bought
40,000 units of Natcore (at a price of CDN$0.75 per unit). This entitled him to
40,000 shares and 20,000 warrants (exercisable until December 22, 2015 at a
price of $1.00 per share originally the expiry date was December 22, 2013,
but we extended the term of all the then outstanding warrants in that batch to
December 22, 2015). The warrants are still outstanding as of the date of this
filing.
Pursuant to the Companys Form F-1 registration statement filed with
the SEC on August 31, 2015, the Company registered 325,000 shares of Common
Stock issued to LoPresti Law Group, P.C. (LLG) in exchange for the provision
of legal services renderedin preparation of the aforementioned registration
statement.
Related Party Balances
As
of December 31, 2015 and 2014 there was $204,060 and $60,760, respectively,
owed to directors, officers, and companies controlled by directors that has
been included in trade payables and accrued liabilities.
Key Management Personnel
Compensation
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Year Ended
December 31,
2015
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|
Year Ended
December 31,
2014
|
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Year Ended
December 31,
2013
|
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Administrative fees
|
|
$
|
60,000
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|
$
|
60,000
|
|
$
|
60,000
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|
Consulting
|
|
|
100,200
|
|
|
108,000
|
|
|
58,000
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|
Wages and benefits
|
|
|
558,230
|
|
|
558,500
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|
12,847
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Stock-based compensation
|
|
|
239,875
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|
|
38,222
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|
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488,000
|
|
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|
|
|
|
|
|
|
|
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$
|
958,305
|
|
$
|
764,722
|
|
$
|
618,847
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|
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C.
Interests of Experts and Counsel
Not Applicable
43