Item
1. Business.
Overview
TGI
Solar Power Group, Inc. (“TGI” or the “Company”) is a publicly held corporation formed under the laws
of the State of Delaware as Liberty Leasing Co. Inc. in 1967. The Company changed its name to LIBCO Corporation on June 29, 1973,
RDIS Corporation on January 11, 1993 and TenthGate International, Inc. on February 20, 2007, before adopting its current name
in June 2008.
On
June 26, 2016, the Company sold 137,500 shares of its Series C Convertible Preferred Stock (the “Series C Stock”)
each to Ensure HR, LLC, a New Jersey limited liability company (“Ensure”) and Meros HR, LLC, a New Jersey limited
liability company (“Meros”). The Series C Stock is convertible into a number of shares of the Company’s common
stock, par value $0.001 per share (the “Common Stock”) at the conversion price of $0.0000161240 per share and votes
on an as converted basis, multiplied by 1.9. As a result, the sale of the Series C Stock resulted in a change of control of the
Company.
The
Company’s strategy is to acquire innovative and patented technologies, components, processes, and designs with commercial
value that will give the Company a competitive market advantage and generate shareholder value. In addition, the Company plans
to align itself through acquisition and joint ventures with partners whereby the Company can provide project management consulting
and develop custom tools software.
The
Company has also initiated plans to develop a line of electric vehicles and build five prototype electric vehicles for testing
and attracting orders. Engineering, design and key component sourcing has been initiated. The Company has also signed an agreement
with a Ukraine insurance company (Finex) to develop a line of insurance products for TGI to include comprehensive polices for
future car owners, extended warranties, roadside assistance and battery replacement. The Company will be able to utilize Finex
office space, back office, accounting and legal personnel for operations conducted in the Ukraine.
While
the Company has not generated revenues from its business activities for the periods reported in this Annual Report, it has since
been retained to provide consulting services.
Market
Overview
Growth
Strategy
Our
growth strategy is to expand our consulting service offerings, which may require investments in new hires, acquisitions of complementary
businesses, possible expansion into other geographic areas, and related capital expenditures.
Our
business development and marketing activities are aimed at cultivating relationships, driving demand for our consulting services,
generating leads and attempting to increase penetration and visibility with potential customers. Currently, we have one existing
client and we anticipate that any new engagements would be generated through relationships with existing providers from our contacts
in the industry. We actively seek to identify new business opportunities. We hope to retain dedicated business development professionals
who are focused exclusively on developing client relationships and generating new business.
Competition
Consulting:
The consulting services industry is extremely competitive, highly fragmented, and subject to rapid change. The industry includes
a large number of participants with a variety of skills and industry expertise, including other consulting firms, the consulting
practices of major accounting firms, technical and economic advisory firms, regional and specialty consulting firms, and the internal
professional resources of organizations. We compete with a large number of service and technology providers in all of our segments.
Our competitors often vary, depending on the particular practice area. We expect to continue to face competition from new entrants.
We
believe the principal competitive factors in our market include recognition, reputation, the ability to attract and retain top
talent, and the capacity to manage engagements effectively to drive high value to clients. There is also competition on price.
Our competitors have a greater geographic footprint, a broader international presence, and more resources than we do.
Government
Regulation
We
are not currently a “regulated utility” in the United States under applicable national, state or other local regulatory
regimes. In the United States, we would be required to obtain federal and state regulatory exemptions by establishing “Qualifying
Facility” status with the Federal Energy Regulatory Commission for all of our qualifying projects. Also, we would likely
be required to obtain interconnection agreements from the applicable local primary electricity utility. Depending on the size
of the solar energy system and local law requirements, interconnection agreements are between the local utility and either us
or our customer. In most cases, interconnection agreements are standard form agreements that have been pre-approved by the local
public utility commission or other regulatory body with jurisdiction over interconnection agreements. As such, we believe no additional
regulatory approvals would be required once interconnection agreements were signed. We may be required to maintain a utility administration
function, with primary responsibility for engaging with utilities and ensuring our compliance with interconnection rules.
Federal
and/or state prevailing wage requirements, which generally apply to any “public works” construction project that receives
public funds, may apply if potential installations of our solar energy systems were on government facilities. The prevailing wage
is the basic hourly rate paid on public works projects to a majority of workers engaged in a particular craft, classification
or type of work within a particular area. Prevailing wage requirements are established and enforced by regulatory agencies.
Employees
As
of the end of the reporting period, the Company had one employee, its Chief Executive Officer
,
Henry Val. Mr. Val does
not have an employment agreement and is not covered by a collective bargaining agreement.
Item
1A. Risk Factors.
Risks
Related to our Business
An
investment in our stock involves a high degree of risk. You should carefully consider the following information, together with
the other information in this Form 10-K, before buying shares of our stock. If any of the following risks or uncertainties occur,
our business, financial condition, and results of operations could be materially and adversely affected and the trading price
of our stock could decline.
We
are at a very early operational stage and our success is subject to the substantial risks inherent in the establishment of a new
business venture.
The
implementation of our business strategy is still in development. Our business and operations should be considered to be in a very
early stage. Accordingly, the intended business and operations may not prove to be successful in the near future, if at all. Any
future success that we might enjoy will depend upon many factors, several of which may be beyond our control, or which cannot
be predicted at this time, and which could have a material adverse effect upon our financial condition, business prospects and
operations and the value of an investment in the Company.
We
have suffered operating losses since inception and we may not be able to achieve profitability.
We
had an accumulated deficit of $14,771,647 as of July 31, 2017 and we expect to continue to incur significant set up expenses in
the foreseeable future. As a result, we are sustaining substantial operating and net losses, and it is possible that we will never
be able to sustain or develop the revenue levels necessary to attain profitability.
Our
independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt
about our ability to continue as a “going concern.”
As
of July 31, 2017, we had $1,095 in cash and a working capital deficiency of $89,016. Further, we have incurred and expect to continue
to incur significant costs in pursuit of our plans. Any plans to raise capital and to consummate our business operations may not
be successful. These factors, among others, raise substantial doubt about our ability to continue as a going concern. The financial
statements contained elsewhere in this prospectus do not include any adjustments that might result from our inability to consummate
this offering or our inability to continue as a going concern.
Our
future success depends on our ability to retain our key associates and to successfully integrate them into our management team.
We
are dependent on the services of our Chief Executive Officer. The loss of our Chief Executive Officer could have a material adverse
effect on us. We may not be able to retain or replace our Chief Executive Officer, and we may not have adequate succession plans
in place.
If
we are unable to attract, train, and retain key personnel, our business may be materially and adversely affected.
Our
future success depends, to a significant extent, on our ability to attract, train, and retain management, operations, sales, training
and technical personnel, including in foreign jurisdictions as we continue to execute on our long term strategic plan. Recruiting
and retaining capable personnel, particularly those with expertise our industry across a variety of technologies, are vital to
our success. There is substantial competition for qualified technical personnel and there can be no assurances that we will be
able to attract and retain our technical personnel. If we are unable to attract and retain qualified associates, or otherwise
experience unexpected labor disruptions within our business, we may be materially and adversely affected.
Our
largest stockholders have significant influence over us and their interests may conflict with or differ from interests of other
stockholders.
Our
largest stockholders, consisting collectively of Henry Val and his wholly-owned corporation Netter Capital, Inc., Meros HR, LLC
and Ensure HR, LLC (collectively, the “Significant Stockholders”), owned approximately 93% of our outstanding voting,
capital stock at July 31, 2017, on an as-converted basis. As a result, the Significant Stockholders have substantial influence
over all matters requiring stockholder approval, including the election of our directors and the approval of significant corporate
transactions such as mergers, tender offers, and the sale of all or substantially all of our assets. The interests of the Significant
Stockholders could conflict with or differ from interests of other stockholders. For example, the concentration of ownership held
by the Significant Stockholders could delay, defer or prevent a change of control of our Company or impede a merger, takeover,
or other business combination that a majority of stockholders may view favorably.
Unanticipated
changes in our tax provisions, the adoption of a new U.S. tax legislation, or exposure to additional income tax liabilities could
affect our profitability.
We
are subject to income taxes in the United States and the foreign jurisdictions in which we may someday operate. Our tax liabilities
are affected by the amounts we charge for inventory, services, licenses, funding, and other items in inter-company transactions
that may occur in the future. We are subject to potential tax examinations in these various jurisdictions. Tax authorities may
disagree with our inter-company charges if we had any or other tax positions and assess additional taxes. We regularly assess
the likely outcomes of these examinations in order to determine the appropriateness of our tax provision. However, there can be
no assurance that we will accurately predict the outcomes of these potential examinations, and the amounts ultimately paid upon
resolution of examinations could be materially different from the amounts previously included in our income tax expense and therefore,
could have a material impact on our tax provision, net income, and cash flows. In addition, our future effective tax rate could
be adversely affected by changes to our operating structure, changes in the mix of earnings in jurisdictions with differing statutory
tax rates, changes in the valuation of deferred tax assets and liabilities, changes in tax laws, and the discovery of new information
in the course of our tax return preparation process
Risk
Related to Our Securities
There
is a substantial lack of liquidity of our common stock and volatility risks.
Our
common stock is quoted under the symbol “TSPG” On the OTC Pink Sheets. The liquidity of our common stock may be very
limited and affected by our limited trading market. The OTC Pink Sheets quotation platform is an inter-dealer market much less
regulated than the major exchanges, and is subject to abuses, volatilities and shorting. There is currently no broadly followed
and established trading market for our common stock. An established trading market may never develop or be maintained. Active
trading markets generally result in lower price volatility and more efficient execution of buy and sell orders. Absence of an
active trading market reduces the liquidity of the shares traded.
The
trading volume of our common stock may be limited and sporadic. This situation is attributable to a number of factors, including
the fact that we are a small company which is relatively unknown to stock analysts, stock brokers, institutional investors and
others in the investment community that generate or influence sales volume, and that even if we came to the attention of such
persons, they tend to be risk-averse and would be reluctant to follow an unproven company such as ours or purchase or recommend
the purchase of our shares until such time as we became more seasoned and viable. As a consequence, there may be periods of several
days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large
and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. We
cannot give you any assurance that a broader or more active public trading market for our common stock will develop or be sustained,
or that current trading levels will be sustained. As a result of such trading activity, the quoted price for our common stock
on the OTC Pink Sheets may not necessarily be a reliable indicator of our fair market value. In addition, if our shares of common
stock cease to be quoted, holders would find it more difficult to dispose of, or to obtain accurate quotation as to the market
value of, our common stock and as a result, the market value of our common stock likely would decline.
The
market price for our stock may be volatile and subject to fluctuations in response to factors, including the following:
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the
increased concentration of the ownership of our shares by a limited number of affiliated stockholders following the sale of
our Series C Preferred Shares may limit interest in our securities;
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variations
in quarterly operating results from the expectations of securities analysts or investors;
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revisions
in securities analysts’ estimates or reductions in security analysts’ coverage;
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announcements
of new products or services by us or our competitors;
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reductions
in the market share of our products;
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announcements
by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments;
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general
technological, market or economic trends;
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investor
perception of our industry or prospects;
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insider
selling or buying;
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investors
entering into short sale contracts;
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regulatory
developments affecting our industry; and
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additions
or departures of key personnel.
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Many
of these factors are beyond our control and may decrease the market price of our common stock, regardless of our operating performance.
We cannot make any predictions or projections as to what the prevailing market price for our common stock will be at any time,
including as to whether our common stock will sustain current market prices, or as to what effect that the sale of shares or the
availability of common stock for sale at any time will have on the prevailing market price.
Our
common stock may never be listed on a major stock exchange.
We
currently do not satisfy the initial listing standards and cannot ensure that we will be able to satisfy such listing standards
or that our common stock will be accepted for listing on any such major stock exchange. Should we fail to satisfy the initial
listing standards of such exchanges, or our common stock is otherwise rejected for listing, the trading price of our common stock
could suffer, the trading market for our common stock may be less liquid, and our common stock price may be subject to increased
volatility.
A
decline in the price of our common stock could affect our ability to raise working capital and adversely impact our ability to
continue operations.
A
prolonged decline in the price of our common stock could result in a reduction in the liquidity of our common stock and a reduction
in our ability to raise capital. A decline in the price of our common stock could be especially detrimental to our liquidity and
our operations. Such reductions may force us to reallocate funds from other planned uses and may have a significant negative effect
on our business plan and operations, including our ability to develop new services and continue our current operations. If our
common stock price declines, we can offer no assurance that we will be able to raise additional capital or generate funds from
operations sufficient to meet our obligations. If we are unable to raise sufficient capital in the future, we may not be able
to have the resources to continue our normal operations.
Concentrated
ownership of our common stock creates a risk of sudden changes in our common stock price.
The
sale by any shareholder of a significant portion of their holdings could have a material adverse effect on the market price of
our common stock.
Sales
of our currently issued and outstanding stock may become freely tradable pursuant to Rule 144 and may dilute the market for your
shares and have a depressive effect on the price of the shares of our common stock.
A
number of the outstanding shares of common stock are “restricted securities” within the meaning of Rule 144 under
the Securities Act of 1933, as amended (the “Securities Act”) (“Rule 144”). As restricted shares, these
shares may be resold only pursuant to an effective registration statement or under the requirements of Rule 144 or other applicable
exemptions from registration under the Securities Act and as required under applicable state securities laws. Rule 144 provides
in essence that a non-affiliate who has held restricted securities for a period of at least six months may sell their shares of
common stock. Under Rule 144, affiliates who have held restricted securities for a period of at least six months may, under certain
conditions, sell every three months, in brokerage transactions, a number of shares that does not exceed the greater of 1% of a
company’s outstanding shares of common stock or the average weekly trading volume during the four calendar weeks prior to
the sale (the four calendar week rule does not apply to companies quoted on the OTC Pink Platform). A sale under Rule 144 or under
any other exemption from the Securities Act, if available, or pursuant to subsequent registrations of our shares of common stock,
may have a depressive effect upon the price of our shares of common stock in any active market that may develop.
If
we issue additional shares or derivative securities in the future, it will result in the dilution of our existing stockholders
.
Our
Articles of Incorporation authorizes the issuance of up to 2,400,000,000 shares of common stock, $0.001 par value per share, and
100,000,000 shares are designated as “blank check” preferred stock, par value $0.001 per share (the “Preferred
Stock”). Our board of directors may choose to issue some or all of such shares, or derivative securities to purchase some
or all of such shares, to provide additional financing in the future.
We
do not plan to declare or pay any dividends to our stockholders in the near future.
We
have not declared any dividends in the past, and we do not intend to distribute dividends in the near future. The declaration,
payment and amount of any future dividends will be made at the discretion of the board of directors and will depend upon, among
other things, the results of operations, cash flows and financial condition, operating and capital requirements, and other factors
as the board of directors considers relevant. There is no assurance that future dividends will be paid, and if dividends are paid,
there is no assurance with respect to the amount of any such dividend.
The
requirements of being a public company may strain our resources and distract management.
We
are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
and the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). These requirements are extensive. The Exchange Act
requires that we file annual, quarterly and current reports with respect to our business and financial condition. The Sarbanes-Oxley
Act requires that we maintain effective disclosure controls and procedures and internal controls over financial reporting.
We
may incur significant costs associated with our public company reporting requirements and costs associated with applicable corporate
governance requirements. We expect all of these applicable rules and regulations to significantly increase our legal and financial
compliance costs and to make some activities more time consuming and costly. This may divert management’s attention from
other business concerns, which could have a material adverse effect on our business, financial condition and results of operations.
We also expect that these applicable rules and regulations may make it more difficult and more expensive for us to obtain director
and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher
costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals
to serve on our board of directors or as executive officers. We are currently evaluating and monitoring developments with respect
to these rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.
Persons
associated with securities offerings, including consultants, may be deemed to be broker dealers.
In
the event that any of our securities are offered without engaging a registered broker-dealer, we may face claims for rescission
and other remedies. If any claims or actions were to be brought against us relating to our lack of compliance with the broker-dealer
requirements, we could be subject to penalties, required to pay fines, make damages payments or settlement payments, or repurchase
such securities. In addition, any claims or actions could force us to expend significant financial resources to defend our company,
could divert the attention of our management from our core business and could harm our reputation.
Future
changes in financial accounting standards or practices may cause adverse unexpected financial reporting fluctuations and affect
reported results of operations.
A
change in accounting standards or practices can have a significant effect on our reported results and may even affect our reporting
of transactions completed before the change is effective. New accounting pronouncements and varying interpretations of accounting
pronouncements have occurred and may occur in the future. Changes to existing rules or the questioning of current practices may
adversely affect our reported financial results or the way we conduct business.
“Penny
Stock” rules may make buying or selling our common stock difficult.
Trading
in our common stock is subject to the “penny stock” rules. The SEC has adopted regulations that generally define a
penny stock to be any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. These
rules require that any broker-dealer that recommends our common stock to persons other than prior customers and accredited investors,
must, prior to the sale, make a special written suitability determination for the purchaser and receive the purchaser’s
written agreement to execute the transaction. Unless an exception is available, the regulations require the delivery, prior to
any transaction involving a penny stock, of a disclosure schedule explaining the penny stock market and the risks associated with
trading in the penny stock market. In addition, broker-dealers must disclose commissions payable to both the broker-dealer and
the registered representative and current quotations for the securities they offer. The additional burdens imposed upon broker-dealers
by such requirements may discourage broker-dealers from effecting transactions in our common stock, which could severely limit
the market price and liquidity of our common stock.